ETF ANALYSIS FOR:
DBA – JJG – GLD – JJC – USO – UNG – FXE – EEM – SPY
Core Position: $50,000,000
Current Profits: $1,647,049 (3.29%)
Largest Drawdown: $160,590 - (0.32%)
Return-on-Risk: 10.26:1
(UNLEVERAGED and FULL SHARE VALUE)
KEY TERMS
OVB: Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar
PowerShares DB Agriculture (DBA):
10/19/2012 Closing Price: 29.27
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .64
Trading 185,000 Shares
I.T. ANALYSIS:
- DBA trade losses since 07/25/2012 equal $99,000 or 0.20%.
- DBA is a comprehensive agricultural ETF. Holdings include fairly equally-weighted futures contracts in sugar #11, live cattle, corn, soybeans, cocoa, coffee, lean hogs, wheat, and cattle feeder.
- Currently in a full correction, DBA found strong support within our downside price range of 28.59 – 28.34. After making new monthly lows on Monday, commodities rallied strong, violating the previous week’s high. The higher-high and lower-low formed a weekly OVB, a strong indicator of volatility change. This bar type occurs when selling pressure get overpowered by new buying pressure. Price action was bullish, closing out the week above the midrange and above the previous close. There is a 78% chance of trading 29.47 before seeing 28.57.
IPath DJ-UBS Grains (JJG):
10/19/2012 Closing Price: 58.73
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 2.46
Trading 87,000 Shares
I.T. ANALYSIS:
- JJG total trade profits since 07/25/2012 equal $38,280 or 0.08%.
- JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
- As expected, price action followed through last week with slightly lower trading yet largely within the previous weeks range. Last week’s low fell within our downside target zone, where support rallied the grains back to the previous week’s midrange. Sideways movement occurs when the market is unsure about current price levels, usually correcting or rallying significantly, evidenced by the stagnant prices from March to June and then followed by the 40% summer rally. Price action was bearish divergent with lower highs and lows yet a close above the midrange and above the previous two weekly closes. Trading should be slightly higher this week, yet continue to remain nondirectional, trending sideways for a while.
SPDR Gold Shares (GLD):
10/19/2012 Closing Price: 166.97
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41
Projected Weekly Range: 2.89
Trading 35,000 Shares
I.T. ANALYSIS:
- GLD total trade profits since 07/25/2012 equal $413,695 or 0.83%.
- GLD’s single holding is gold bullion.
- GLD traded as predicted last week, lower without finding any form of support. Volatility and buying-selling pressure indicators have fully reversed, beginning with the VRCB top from three weeks ago. The formation of dual weekly Volatility Reduced Compression Bars at the top of a fast rally is an exceptionally strong indicator of a correction to follow. Last week guaranteed this correction by trading below 169.81 and confirmed it by closing even lower. Price action was decisively bearish; trading should continue lower this week. Our previous GLD trade was exited at 170.05, over $3 higher than Friday’s close, taking home $64,680 more than if we remained long. Our trading philosophy believes in high-quality, risk-adjusted trade entries with intelligent trailing stops, locking-in profits at optimal prices.
10/19/2012 Closing Price: 45.98
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.46
Trading 128,000 Shares
I.T. ANALYSIS:
- JJC total trade profits since 07/25/2012 equal $379,840 or 0.76%.
- JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
- Price action predicted last week’s trading and followed through as expected. JJC closed lower than the previous close and below the midrange, forming bearish price action. Currently approaching our downside price target, expect JJC to trade lower this coming week, finding support above $44. The correction made new monthly lows last week, nearing our monthly price objective of 44.93. Any trading below this point, during the month of October, is exceptional and abnormal. Friday’s daily gap lower open and lower close is an intellectual indicator of the bearish sentiment that should continue this Monday morning.
United States Oil (USO):
10/19/2012 Closing Price: 33.34
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bearish.
Current Position: FLAT
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.65
Trading 100,000 Shares
I.T. ANALYSIS:
- USO total trade losses since 07/25/2012 equal $160,590 or 0.32%.
- USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
- For the fourth week, USO has failed to establish a clear direction, trading entirely within the previous week’s range. WTI has found support above $88 and strong resistance below $94 since mid-September. Price action was slightly bearish with a lower weekly open, lower close and close below the midrange. Stagnant movement has plagued many of the markets, especially commodities, as investors remain hesitant to make any major bets before the presidential election. For this reason, we maintain our flat position.
United States Natural Gas (UNG):
10/19/2012 Closing Price: 23.09
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 19.83 on 09/25/12. STOP @ 21.46
Upcoming Cover: COVER 22,500 (15%) @ 23.57
Current Upside Target = 23.57 – 24.11
Projected Weekly Range: 1.52
Trading 150,000 Shares; COVERED 22,500 (15%) @ 21.98
I.T. ANALYSIS:
- UNG total trade profits since 07/25/2012 equal $553,625 or 1.11%.
- Initial trade risk was $142,500 or .29%. Current trade risk is $0. Current trade profits are $464,025 or .93%.
- UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
- Price action was bullish last week, making new monthly highs by one cent and closing above the midrange. We would have liked to see our next profit taking price traded last week; if this week doesn’t trade 23.57 we will reevaluate the trade. In four weeks, our current long position in UNG has generated $464,025 in total profits and locking-in over $250,000. Our second profit-taking price of 23.57 was only 0.19 away from being fulfilled; look to cover these 22,500 shares this week. The current trade entry was based on a very profitable I.T. pattern that occurs less than twice a year: buying the first correction following a bullish trend reversal.
10/19/2012 Closing Price: 129.32
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 128.87 on 10/08/12. STOP @ 127.72
Upcoming Break-Even Price: 132.20; Cover 10,000 (20%)
Current Upside Targets = 132.20
Projected Weekly Range: 1.75
Trading 50,000 Shares; COVERED 10,000 (20%) @ 130.30
I.T. ANALYSIS:
- FXE total trade profits since 07/25/2012 equal $457,800 or 0.92%.
- Initial trade risk was $71,000 or .14%. Current trade risk is $31,700. Current trade profits are $32,300 or .06%.
- FXE seeks to track the movement of the Euro currency.
- The most recent trade entry risked only $71,000 or 0.14% of our core position on 50,000 shares. This risk has been further reduced by covering 10,000 shares at our break-even price of 130.30. If this week trades higher and closes above its midrange, the new exit price will be at our entry price, guaranteeing a profitable trade. Last week gap higher opened on Tuesday and Wednesday, making new monthly highs, and then sold off on Thursday and Friday. Price action was bullish and slightly divergent by closing seventeen cents below the weekly midrange. We stand by our upside price target of 132.20 and believe it should be achieved within three weeks.
IShares MSCI Emerging Markets Index (EEM):
10/19/2012 Closing Price: 41.50
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 0.92
Trading 135,000 Shares
I.T. ANALYSIS:
- EEM total trade losses since 07/25/2012 equal $7,560 or 0.02%.
- EEM seeks to replicate the performance of the MSCI Emerging Markets Index by investing in the underlying international securities.
- Last week rallied strong early in the week, only to fall back down and close near the weekly low. Price action was bullish divergent, with much higher weekly trading yet still closing below the midrange. EEM has been very choppy the previous five weeks, reversing directions for the fifth week in a row, sending mixed signals for upcoming trading. Still within the very bullish weekly range ending 09/14/12, EEM has completely failed to move in a clear direction. The indecisiveness of the emerging markets remains the primary reason for maintaining our flat position.
SPDR S&P 500 (SPY):
10/19/2012 Closing Price: 143.39
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Targets: 154.21 – 159.39
Projected Weekly Range: 3.46
Trading 39,000 Shares
I.T. ANALYSIS:
- SPY total trade profits since 07/25/2012 equal $71,799 or 0.14%.
- SPY seeks to track the movement of the S&P 500 Index.
- Although the previous week’s price action indicated last week’s trading would be definitively lower, the indecisiveness of equity markets has maintained the sideways trend. Price action was bullish divergent, rallying strong on Monday, Tuesday and Wednesday, then plummeting on Friday. Thursday formed an OVB to Wednesday’s trading range, violating the high then correcting down below its low. This formation indicates the direction of the following bar’s trading, in this case, Friday’s bearish sell-off. Price action and weekly closing strength indicates trading should be lower this week, yet investor uncertainty leads us believing the nondirectional trading will continue. Over the last ten weeks, ETF analysis and trading has resulted in $1,646,989 (3.29%) in total profits, $1,213,399 of which is closed and locked-in.
