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):
11/16/2012 Closing Price: 28.29
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 28.59 – 28.34
Projected Weekly Range: 0.39
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.
- After moderate support kept prices above 28.50 for four week, bears overpowered bulls and pulled DBA to new correction lows. The two consecutive VRCBs, which displayed a large contraction of volatility, failed to reverse the direction into a rally. By trading below 28.58, DBA has made new lows and will prevent a rally for at least two more weeks. Price action was bearish and confirmed by Friday’s close below the midrange, below the open and below the previous close. Expect commodity prices to fall further next week, finding support near 28.00.
IPath DJ-UBS Grains (JJG):
11/16/2012 Closing Price: 54.89
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 56.94 – 55.80 – 51.98
Projected Weekly Range: 1.93
Trading 50,000 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.
- While three consecutive VRCBs normally indicate a reversal of selling to buying pressure, this was not the case for JJG. Largely due to severely reduced trading volume, this exceptionally rare pattern formed with consistently bearish price action, a counter-indicator for placing long positions. Instead of bouncing above 59.75 and forming a bottom, JJG fell out of bed and continued the current correction. Last Monday gap-lower-opened and continued lower from there. Price action was bearish and confirmed by the weekly close. After achieving 100% of both our downside targets, we have issued an extended downside target of 51.98.
SPDR Gold Shares (GLD):
11/16/2012 Closing Price: 165.88
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 162.41 – 158.59
Projected Weekly Range: 4.60
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.
- Although overall prices were higher compared to the previous week, GLD failed to make new highs at 168.55. The price represents the end of the current correction and the beginning of a new rally. GLD has seen very unpredictable trading action over the previous three weeks with three consecutive close reversals. Last week barely retraced down to the previous week’s midrange, a sign of bullish support, yet Friday’s close was below the midrange, open and previous close. Mixed signals plague many of the markets as investors are unsure about policy changes, the fiscal cliff and European debt situation. Remember, if GLD trades 168.55 before 162.29, the correction will end and new rally will begin.
11/16/2012 Closing Price: 43.52
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.14
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.
- After a five-week sell-off, JJC finally found moderate support, keeping prices above the previous week’s low. Although last week’s close was barely below the midrange, it was the first weekly close in six weeks that wasn’t in the bottom quartile. JJC saw a significant change in buying-selling pressure last week as bulls finally began to equalize bears. This resulted in the formation of a Volatility Reduced Compression Bar as trading volume was actually above average. A VRCB at the bottom of a sharp correction normally indicates a reversal is coming. In August, a third VRCB formed right before the previous rally began.
United States Oil (USO):
11/16/2012 Closing Price: 31.93
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bearish.
Current Position: FLAT
Working Order: BUY @ 32.06; STOP @ 30.99
Break-Even Price: 33.13; COVER 20,000 (20%)
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.25
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 $107,000 or 0.21%.
- USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
- Our working order to BUY 100,000 shares of USO was nearly filled last week, falling 21 cents short of our 32.06 limit price. Although we weren’t filled, price action was favorable, closing above the midrange, above the open and above the previous close. Trading volume was average yet still formed a VRCB, indicating a fairly equal amount of buying and selling pressure. The formation of a VRCB, OVB, VRCB is a rare and high quality technical pattern, especially at the bottom of a correction. We have moved our entry price and break-even price down to 32.06 and 33.13, respectively. Our exit price of 30.99 essentially forces an OVB reversal to stop us out, a bar that only forms about 10% of the time.
United States Natural Gas (UNG):
11/16/2012 Closing Price: 22.28
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 18.88
Projected Weekly Range: 1.33
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.
- Bearish price action failed to follow through as last week soared to a high of 22.52. The previous week’s close of 20.63 represents an 8% increase in just one week. Tuesday gap higher opened at 22.02 above Monday’s close of 21.01. Price action was decisively bullish and confirmed by the weekly close at 22.28. If this week trades 22.53, the correction will officially end, confirming a higher bottom, and continuing the bullish trend. Be aware though that large daily price gaps are almost always filled in the near future.
11/16/2012 Closing Price: 126.49
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Targets = 124.26 – 123.54
Projected Weekly Range: 1.38
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.
- The bearish price action of the previous week resulted in a lower high and lower low last week. Trading volume was nearly identical yet still well below average. This part of the reason why a second consecutive VRCB formed, an equalization of buyers and sellers also contributed. Price action was slightly bearish with Friday closing slightly below the weekly midrange. The combination of two VRCBs in a row normally indicates a reversal in directional price movement and the formation of a support zone. We believe the euro has further to fall before finding a true support zone and forming a rally. The I.T. trend suggests that trading should be flat to slightly lower this week.
IShares MSCI Emerging Markets Index (EEM):
11/16/2012 Closing Price: 40.41
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 1.27
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.
- Price action finally obtained last week, trading lower following the bearish OVB of the previous week. For eight consecutive weeks, EEM reversed the weekly close, showing instability and unpredictable trading patterns. Last week marks the first time where trading clearly followed the direction of the previous week’s close. This could mean directional trading will begin to resume. Price action was bearish and confirmed by Friday closing below the open, below the midrange and below the previous open. Volatility and unreliable I.T. trading continues to make placing trades very risky; we therefore maintain our flat position.
SPDR S&P 500 (SPY):
11/16/2012 Closing Price: 136.37
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target: 133.83
Projected Weekly Range: 4.52
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.
- SPY continued to fall on bearish investor sentiment last week, plummeting to new sixteen week lows. Friday’s close marks just the third time this year a weekly bar closed below the 200-day moving average. Currently near our downside price target of 133.83, SPY should begin to find support and potentially begin a rally. Many different indicators have accumulated around this price point, a positive sign of things to come. Daily price action formed an OVB on Friday, closing in the upper quartile of the daily range, bouncing off the weekly low of 134.70. I.T. term price action was bearish though, and confirmed by Friday’s close. Although trading should be slightly lower this week, we believe falling prices should begin to find support in the coming weeks. Over the last seventeen weeks, ETF analysis and trading has resulted in $1,433,614 (2.87%) in total profits, all of which are closed and locked-in.
