ETF ANALYSIS FOR:
DBA – JJG – GLD – JJC – USO – UNG – FXE – EEM – SPY
Core Position: $50,000,000
Current Profits: $1,459,989 (2.92%)
Largest Drawdown: $160,590 - (0.32%)
Return-on-Risk: 9.09 : 1
(UNLEVERAGED and FULL SHARE VALUE)
KEY TERMS
OVB: Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar
PowerShares DB Agriculture (DBA):
10/26/2012 Closing Price: 28.81
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .68
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.
- Following a strong bullish OVB, last week failed to violate either the high or low, creating an inside vertical bar. Although price action was bearish last week, closing below the midrange, below the open and below the previous week’s close, the 78% chance of trading 29.47 before 28.57 still exists. Failure to follow though is certainly a bearish indicator, especially when paired with Friday’s close in the bottom 3% of the weekly range. If the OVB fails and price action leads to lower trading this week, expect strong support to appear within our downside target range.
IPath DJ-UBS Grains (JJG):
10/26/2012 Closing Price: 58.39
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 2.16
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 higher trading yet largely within the previous week’s range. For over a month JJG has trended sideways, failing to establish a clear direction. Sideways movement occurs when the market is unsure about current price levels, usually correcting or rallying significantly. In most cases, the longer prices remain within a confined range, the larger the break-out movement. Price action was bullish divergent with a higher high and higher low, yet bearish weekly close. Last week formed a VRCB due to largely equal buyers and sellers, and also reduced trading volume.
SPDR Gold Shares (GLD):
10/26/2012 Closing Price: 165.93
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41
Projected Weekly Range: 3.07
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.
- Trading was as predicted last week. GLD fell further on the current correction, confirming the bearish price action with a weekly close below the midrange, below the previous open and below the previous close. This correction was expected due to the reversal of volatility and buying-selling pressure indicators nearly a month 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. Trading should definitely be lower this week, but the late intraweek rally could result in sideways movement. Currently approaching our downside price target, we expect GLD to find strong support above $161.
10/26/2012 Closing Price: 44.93
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.44
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.
- JJC closed exactly on our monthly price prediction of 44.93 last Friday. This price represents the downside range movement we thought JJC would experience in October. Our current downside target of 44.51 is yet to be achieved, but should be realized this coming week. Price action certainly followed through last week, trading significantly lower as expected. Price action was bearish and confirmed by Friday’s close in the bottom 10% of the weekly range. Although directional movement was visible to the downside, strong buying pressure resulted in formation of a VRCB. Trading volume was above average which indicates this strong support could potentially follow though this coming week.
United States Oil (USO):
10/26/2012 Closing Price: 31.79
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.
- After four weeks of stagnant trading, USO finally made a move in a clear direction. Breaking through all levels of support, Tuesday gap lower-opened following Monday’s bearish trading. The remainder of the week stayed relatively steady, closing out the week at 31.79. The previous week’s price action and very bearish close indicated last week’s trading should be to the downside. Bearish price action says trading should be lower this week, yet the short-term appears to have found support above $31. We are currently flat and are evaluating optimal trade entries.
United States Natural Gas (UNG):
10/26/2012 Closing Price: 21.89
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 19.83 on 09/25/12. STOP @ 21.52
Upcoming Cover: COVER 22,500 (15%) @ 23.57
Current Upside Target = 23.57 – 24.11
Projected Weekly Range: 1.56
Trading 150,000 Shares; COVERED 22,500 (15%) @ 21.98
I.T. ANALYSIS:
- UNG total trade profits since 07/25/2012 equal $400,625 or 0.80%.
- Initial trade risk was $142,500 or .29%. Current trade risk is $0. Current trade profits are $311,025 or .62%.
- UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
- For the third week, UNG has failed to trade 23.57, our next profit-taking price. Strong resistance and heavy selling pressure has kept prices down, trading below the previous week’s low. This has resulted in the setup for a correction to be confirmed this week, assuming 21.73 trades. Price action was bearish and confirmed by Friday close below the midrange, below the previous close and below the open. Our current trade exit price of 21.52 is only 37 cents away from Friday’s close. At this price, total trade profits will be $263,850 or 0.53%. 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.
10/26/2012 Closing Price: 128.47
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 128.87 on 10/08/12. STOP LIMIT @ 128.87 or 127.72
Upcoming Cover Price: 132.20; COVER 10,000 (20%)
Current Upside Targets = 132.20
Projected Weekly Range: 1.67
Trading 50,000 Shares; COVERED 10,000 (20%) @ 130.30
I.T. ANALYSIS:
- FXE total trade profits since 07/25/2012 equal $423,800 or 0.85%.
- Initial trade risk was $71,000 or .14%. Current trade risk is $31,700 or 0.06%. Current trade losses are $1,700 or 0.01%.
- FXE seeks to track the movement of the Euro currency.
- Although price action from the previous week indicated trading should be higher, strong selling pressure resulted in a much lower than expected weekly close. Price action was bearish confirmed, making new lows and violating the previous week’s low. FXE is yet to form a correction since the July rally and our most recent long position was entered to capitalize on this information. Failure to trade higher has resulted in our stop price remaining at 127.72, within our projected weekly range and likely to trade this week. If the position is stopped out, total trade losses will amount to $31,700 or 0.06%, an amount roughly eight times smaller than our average winning trade.
IShares MSCI Emerging Markets Index (EEM):
10/26/2012 Closing Price: 41.21
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 1.03
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.
- Following what could possibly be called a “predictable” pattern, EEM reversed directions for the sixth week in a row. Trading was lower than the previous week, forming bearish confirmed price action. EEM has remained very choppy since late September, failing to move in a single direction for more than a week. This type of pattern is common among markets with heavy investor uncertainty. Price action indicates trading should be lower this week, yet following the current pattern, trading will likely be the opposite. Such high levels of volatility reduce the probability of accurate price predictions; for this reason, we maintain our flat position.
SPDR S&P 500 (SPY):
10/26/2012 Closing Price: 141.35
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Targets: 154.21 – 159.39
Projected Weekly Range: 3.44
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.
- Price action and close-strength indicators followed through as expected last week, resulting in significantly lower trading for SPY. Although trading ranges over the last month had remained relatively stable, the weekly closes indicated market weakness. Friday’s close is considered an intellectual indicator of investor sentiment, while overall trading ranges are often more emotional. Supporting this is the very high correlation of the weekly close, relative to its range, and the following week’s trading direction, especially on Monday. Close-strength indicators are currently lower than in April, even though market prices are higher. This bullish divergence indicates an overall systematic weakness with equity markets. Over the last eleven weeks, ETF analysis and trading has resulted in $1,459,989 (2.92%) in total profits, $1,213,399 of which is closed and locked-in.
