Commodity ETFs move lower on confluence of technical indicators

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

CurrencyShares Euro Trust (FXE):
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.

Parrish-Hicks 2012 Performance Report

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About the Author
Jim Parrish, Kris Hicks and Robert Calhoun

Parrish Hicks Capital Research is a trading and technical analysis firm that specializes in Energy and Metal commodity futures. The two founders, Jim Parrish and Kris Hicks, have a combined 38 years’ experience in the commodity business and in 2011 accurately forecasted both $25 moves to the downside in May and July and the $25+ move to the upside in October. They also called the all-time high day for Gold on September 6, 2011 and forecasted a projected downside target of 1528.10 in March 2012.  Their trading methodology has a high degree of accuracy which confirms tops/bottoms, projected trading ranges and projected targets for those ranges. Their expertise is focused on 16 commodities plus the comparable ETF markets. You can reach them at Jim@ParrishHicks.com and Kris@ParrishHicks.com or at www.ParrishHicks.com.

IMPORTANT DISCLOSURE

Transactions in ETF (Exchange Traded Funds) carry a high degree of risk. This material is not intended as an offer or solicitation for the purchase of any financial instrument. The data and these comments are provided for information purposes only and may or may not be intended to be used for specific trading strategies. ETF trading is risky and Parrish Hicks Capital Research assumes no liability for the use of any information contained herein. Any examples are strictly hypothetical and no representation is being made that any person will or is likely to achieve profits or losses similar to those examples. ETF strategies mentioned herein may not be suitable for all investors. The opinions and recommendations herein do not take into account individual client circumstances, objectives or needs and are not intended as recommendations of a particular ETF or ETF strategies to a particular client. The recipient of this report must make his own independent decisions regarding any ETF instrument to a particular client.

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