ETF ANALYSIS FOR:
DBA – JJG – GLD – JJC – USO – UNG – FXE – EEM – SPY
START DATE: July 25, 2012
CORE POSITION: $50,000,000
CURRENT PROFIT: $1,433,614 (2.87%)
LARGEST DRAW-DOWN: $160,590 - (0.32%)
RETURN-ON-RISK: 8.93 : 1
(UNLEVERAGED and FULL SHARE VALUE)
KEY TERMS
OVB: Outside Vertical Bar
VRCB: Volatility Reduced Compression Bar
PowerShares DB Agriculture (DBA):
11/09/2012 Closing Price: 28.69
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Working Order: BUY @ 28.96; STOP @ 28.57
Break-Even Price: 29.35; COVER 27,750 (15%)
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: .43
Trading 185,000 Shares
I.T. ANALYSIS:
- DBA trade losses since 07/25/2012 equal $99,000 or 0.20%.
- Initial trade risk is $72,150 or 0.14%.
- 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.
- DBA formed its second consecutive VRCB last week, a pattern that occurs less than two percent of the time. Although the previous week’s VRCB was largely because of reduced trading volume, last week formed because of an equalization of buyers and sellers. Finding support early in the week, DBA fell back down to close out in the bottom quartile of the trading range. Price action was bearish confirmed, indicating trading should start lower this week. We have issued a BUY at 28.96 with the anticipation of trading 28.64 early this week; if DBA rallies up to 28.96, a weekly OVB will form generating an optimal buy signal.
IPath DJ-UBS Grains (JJG):
11/09/2012 Closing Price: 57.15
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Working Order: BUY @ 58.59; STOP @ 56.66
Break-Even Price: 60.52; COVER 7,500 (15%)
Current Downside Targets = 56.94 – 55.80
Projected Weekly Range: 1.48
Trading 50,000 Shares
I.T. ANALYSIS:
- JJG total trade profits since 07/25/2012 equal $38,280 or 0.08%.
- Initial trade risk is $96,500 or 0.19%.
- JJG is concentrated in agricultural grain futures, holding 46% soybeans, 30% wheat and 24% corn.
- Commodity grain futures have seen a significant reduction in trading volume, down more than 50% in the last three weeks. The below trading volume paired with reduced volatility has formed three consecutive VRCBs, an exceptionally rare technical pattern. This normally indicates a change of directional movement and often forms at the top of rallies and bottom of corrections. We believe the grains have found a moderate to strong support level that will keep prices above 55. We currently have a Working Order to BUY 50,000 shares of JJG at 58.59, risking $96,500 or 0.19% of our core position. This order entry is a very low risk trade with historically high probabilities of success.
SPDR Gold Shares (GLD):
11/09/2012 Closing Price: 167.82
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41 – 158.59
Projected Weekly Range: 4.58
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.
- After achieving 100% of our initial downside price target, gold rallied up $6 last week on the news of President Obama’s reelection. While equity markets tumbled, safe havens such as gold found strong support from investors. Price action was bullish and confirmed by Friday’s close above the midrange, above the previous close and above the open. After four weeks of steady sell-off, GLD finally managed to violate and close above the previous week’s high. Price action dictates that trading will be higher this week with a continuation of people moving into hard assets.
11/09/2012 Closing Price: 43.45
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.25
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.
- Copper has closed in the bottom quartile of the weekly trading range for six weeks in a row now, displaying an extremely bearish investor sentiment. The correction continues lower and is yet to provide any evidence of slowing down, although we believe support will keep prices above 41.70. Price action was bearish confirmed for the fifth consecutive week. Currently at the same price levels as early summer, JJC has taken back any profit made on the previous rally. Our trading philosophy believes in locking-in profits as quickly as possible with short trailing stops and continuous profit-taking cover exits.
United States Oil (USO):
11/09/2012 Closing Price: 31.73
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bearish.
Current Position: FLAT
Working Order: BUY @ 32.26; STOP @ 30.99
Break-Even Price: 33.53; COVER 20,000 (20%)
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.66
Trading 100,000 Shares
I.T. ANALYSIS:
- USO total trade losses since 07/25/2012 equal $160,590 or 0.32%.
- Initial trade risk is $127,000 or 0.25%.
- USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
- Trading followed through as expected last week, finding support off the previous week’s VRCB. USO experienced a very volatile trading week, rallying big on Tuesday, falling back down on Wednesday, then closing out the week near the midrange. The trading volatility resulted in the formation of an OVB, a strong buy signal at the bottom of a rally following a VRCB. This normally indicates that selling pressure is beginning to be overpowered by buying pressure. We believe the current correction has found an I.T. bottom and will begin to rally higher. For these reasons we have issued a Working Order to BUY 100,000 shares of USO at 32.26, risking only .25% of our core position.
United States Natural Gas (UNG):
11/09/2012 Closing Price: 20.63
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 18.88
Projected Weekly Range: 1.19
Trading 150,000 Shares
I.T. ANALYSIS:
- UNG total trade profits since 07/25/2012 equal $353,450 or 0.71%.
- UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
- UNG fell further last week, continuing the current correction. Price action was bearish and confirmed by the weekly close below the midrange, below the open and below the previous close. The weekly close has a very strong correlation with the early trading direction of the following week. Price action continues to be a reliable indicator; therefore trading is likely to continue lower this week. Last week formed a VRCB due primarily to the equalization of buyers and sellers, not a significant reduction in trading volume. This means support could be reentering the market and rally could soon begin.
11/09/2012 Closing Price: 126.23
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 124.26 – 123.54
Projected Weekly Range: 1.54
Trading 50,000 Shares
I.T. ANALYSIS:
- FXE total trade profits since 07/25/2012 equal $425,500 or 0.85%.
- FXE seeks to track the movement of the Euro currency.
- FXE failed to rally back to our trade entry point of 128.25, preventing our second chance opportunity to enter a short position. Trading followed through as expected, making new weekly lows on the current correction, which officially began last week. Although the reduced trading range did form a VRCB, this was due in part to both significantly below average volume and support from buying pressure. Friday close was in the bottom ten percent of the weekly trading range, resulting in a 78% chance of trading lower this week. Expect the correction to continue lower in the coming weeks, until support within the 124.26 to 123.54 price range comes into play.
IShares MSCI Emerging Markets Index (EEM):
11/09/2012 Closing Price: 41.00
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 1.22
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.
- EEM has totally failed to establish a clear direction over the last two months. Currently trading within the strong bullish weekly range of Sept. 14, prices seem to have found support above 40.50 and resistance below 42.50. Price action last week formed an OVB, or a higher high and a lower low. When OVBs form, the weekly close indicates the trading direction for the following week. Last week’s close in the bottom 25% of the weekly range indicates there is an 82% chance of trading 40.86 before 42.27. We believe the sideways trading that has plagued emerging markets will largely continue for the remainder of 2012. For this reason, we maintain our flat position.
SPDR S&P 500 (SPY):
11/09/2012 Closing Price: 138.16
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target: 133.83
Projected Weekly Range: 4.10
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.
- Investor sentiment was very clear in regards to President Obama’s reelection; SPY fell from 142.96 on Monday to 139.72 on Tuesday, and closed out the week at 138.16 on Friday. Last Wednesday experienced the largest single day drop in prices in nearly a year. Price action was bearish confirmed and should continue lower this week. Our downside price target of 133.83 represents a support level where SPY should bounce back and begin to form a rally. We believe the current correction will fail to retest the previous bottom of 127.14 formed in June. The divergence between market prices and relative closing strength was a key indicator for the impending current correction. Over the last sixteen weeks, ETF analysis and trading has resulted in $1,433,614 (2.87%) in total profits, all of which are closed and locked-in.
