Trading recap Monday 18th of July

See the full trading log here

I did close the 6x short ES (S&P 500 Emini futures) position that I had from Friday at 1307.25 in the Globex session. I was quite heavy short in the ES following the Friday's excersise of the 1300 calls and give that I plenty of short calls it made sense to get a bit more delta neutral. I did one long trade in the ES at 1293.75 for 1.25 points gain. That was it for today.

That being said the ES did go down and test the 1293.75 key level that was the break out level on the run higher from 1252 to 1352 move. That break out level held yesterday, ok the low 1291.25, but that I count as a false break as we closed well above the 1293.75 key support. Technically it is bullish above this 1291.25 level for Tuesday I reckon. We have Friday's high at 1315.50 as the key resistance now.

See chart below

I will look to add to the ES structure Tuesday, most likely by selling short term puts to hedge the short calls at 1340.

I still look for a move lower in Corn and Crude looks heavy below 97.80.

Good Luck

Market Report 18th of July

see full version here:http://avantagefinancial.ch/images_up/avantagefinancial.ch/pdfs/daily18jul11.pdf


The European stress test has been analyzed over the weekend and the verdict seems to be that risk off modus is back. Italian vs. German bonds widens to 320 bps. USD is stronger this morning, gold at record highs and equities down. S&P 500 futures gap lower on the open and is down by 19 points or 1.4% as the time of writing (about 1 hour and 50 minutes into the session). It seems like market players are very short term in their trading views at the moment and more playing news as we continue to swing up and down the 1250 – 1350 range. No real directional conviction to spot and the volume in the S&P 500 emini futures (ES) have also been rather low recently. One thing I would like to point out is that the rally to make new highs clearly failed at 1352, which is actually quite negative in price action terms and makes me think we could see a rather aggressive down leg next below the 1250 support. For a break lower to materialize we need to see increasing volume on the down bars as we head lower and preferably the close to be at the very low or lower end of the daily ranges. This clearly indicates sellers taking over. We have a key support level in the S&P 500 emini futures (ES) at 1293.75, which was the former break out level. A daily close below 1293.75 is certainly bearish and opens for a test of 1250 support.
See S&P 500 Emini futures (ES) daily chart below:

Gold is making record high, trading 1606 in the spot at the moment. It seems that Gold is tracking US 10 year Treasury pretty tight over the last weeks, which makes sense. The risk for gold is clearly if we get higher rates in the US in my opinion. That might take some time though as the latest economic data have been far from good. More money printing is also of course bullish for gold and seems to be the major factor behind the latest rally.

The Euro is lower across the board as it seems the market see little positive for the Euro in the near term at least. EURCHF below 1.15 level, very rich in my opinion, but I am not looking to put on any position yet. EURGBP is back below 0.88 and we have the Bank of England minutes out on Wednesday, which is quite open in my opinion. Seen comments from Ernst and Young ITEM club that they are looking for rate hikes around November, but they did cut their 2011 UK growth forecast. See article below:
http://www.telegraph.co.uk/finance/economics/8643256/Interest-rates-to-rise-in-November-as-recovery-strengthens.html

Today’s calendar (CET):
12.00 Bundesbank monthly report
14.30 Canada motor vehicle sales
15.00 US TICS data
16.00 US NAHB housing market index
03.30 RBA Minutes

Looking at a few interesting points in the markets trading wise:
- Key level in the S&P 500 emini futures at 1293.75 that will decide the next directional move in my opinion.
- Looking for a move back lower in Corn to fill the gap at 669. Chart can be seen here: http://chart.ly/5y9bfyv
- Crude has key support at 94.50 and key resistance at 97.74, watch those levels for the next directional move.
- Looks attractive to sell US 10 year Treasury futures above 125, will update on Twitter if I open any positions.


Technical’s and comments

Euro: Euro looks weak below the 100 day moving average at 1.4293. I prefer selling rallies for a move down to the 200 day moving average at 1.3913 near term.
Cable: Sell on rallies towards 1.61 is my favored strategy today. I expect the 1.5900 support to hold, so possibly down there as well should work.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 78.44 to 81.78.
Swissy: I am not looking to chase this pair lower at this stage. To me it looks actually more interesting to look at buying some calls. Will update on twitter if I do anything.
AUDUSD: Risk off and we are down towards the 1.0550 level again(, which has worked well as a long entry in the past, worth another try if we see 1.0550?
USDCAD: I prefer selling rallies below 0.98 for a move back to 0.9500.
S&P Future (ES): Key level at 1293.75, which is the former break out level of the move 1252 to 1352. We also have 61.80% Fibonacci retracement of the 1252 – 1352 move coming at 1290. Key resistance today is Friday’s high at 1315.50.
Gold: 1606 high so far, the sky is the limit. The most important I reckon is the US 10 year rate, so keep an eye on that.
Crude oil: Looks like plenty of selling towards 99.50 last week and I expect a move down to test the key support at 94.50 near term. Minor resistance at 97.74.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading Recap Friday 15 Jul

Please see the updated trading log here for full list of today's trades.

We had a bounce of expirations in the S&P 500 emini (ES) options today and basically it left us with 6 positions short at 1300. I will sell some puts against these futures on Monday, so see twitter for live update on that.

I also did one adjustment to the Crude oil and added 2 more short 101 Sep calls for 1,91.
One new trade as well, sold 4X 760 Sep calls in Corn, looking at the chart the recent bull run really looks overdone. The supply of Corn still loooks good and even though the weather outlook have been a bit bearish last week, it still does not warrant this latest bull run in my opinion. The reason for picking 760 as the strike is that it we have a series of resistance around 730 to 764 and it gives me a break even of 780, which means it has to make a new yearly high to lose money. Another point is that the option is trading above 42% volatility, which is in the upper end of the range. I am looking for a move back down to fill the gap at 669 in the near term.
See daily Corn chart below:

Trading recap Thursday 7th of July

ECB out of the way and they decided to raise rates by 25 bps and ECB have suspended collateral rules for Portugal until further notice.
http://www.ft.com/intl/cms/s/0/a7743bec-a87c-11e0-8a97-00144feabdc0.html

It seems like the ECB is desperately kicking the debt crisis further down the road, which at this point seem logical. But at some point the real problem have to be dealt with.
Trading wise I closed out the Euro options structure that I put on yesterday for 300 USD profit.
Did further adjustment in the S&P structure after the S&P just pushed right through another resistance level at 1340.25. Actually it gapped above it on the open and never looked back. Next key resistance is the yearly high at 1361 now. My problem with this rally is that it is going up a bit too quick to be healthy and suspect we are getting a correction in the next few sessions. Another reason for my thinking of a correction lower before new highs is the fact that the volume on the last few sessions have been falling. This is certainly not a good sign for a break out. To take out a major resistance level you want to see increasing volume to punch through the prior top. Of course nothing is guaranteed here, so one had to be careful.

In crude I sold Aug 100 calls for expiration 15 July and I bought 1x mini futures at 98.50. There has been a nice bounce from 90 level up to 99.40 high today following the Crude oil inventories. We are now well back into the old range from 96 to 104 that we saw from start of May to mid June. I think we see a correction back towards the 96.50 level next, there for I put on the options position. If we break higher I will contiune to hedge the delta. So it leaves me with a bit more flexbility and given that we have only 1 week left until expiration, the time value is dropping off fast.

Full trading log here

Good luck

Market Report Thu 7th of July

See full version here with links

Bank of England just held interest rates at 0.5% to aid the economic recovery and they held its bond-purchase program at 200bln pounds. This was in line with market expectations. http://www.bloomberg.com/news/2011-07-06/king-diverges-further-from-europe-as-boe-set-to-maintain-record-low-rate.html
ECB interest rate announcement is the major event today and the market expectation is for a 25 bps increase to 1.50%. We just saw The Portuguese bond yields widened to 17.8% yesterday and the CDS market has upped the chances for sovereign default across the board basically. I expect to see a decent move following the ECB press conference today. I think the largest potential move in the Euro will be if Trichet is more dovish than anticipated in the press conference at 14:30.This will flatten the interest rate path and hit the Euro. If Trichet is more hawkish, I expect to see a short squeeze higher. However the latest scenario is less likely, given the recent news on the European debt crisis. Trichet is not expected to use the strong vigilance word today. If he does it would indicate a rate hike next month as well, which I see very unlikely.
Short dated option volatility is up in the Euro ahead of the ECB and NFP payrolls and overnight is trading at 21%, up 2% from yesterday and 1 week is at 13.3%, up 1% from yesterday.
We had a mixed equity market in Asia, with Shanghai down 0.58% and the S&P 500 futures are trading above the 1340.25 key resistance in Globex. I think a daily close above 1340.25 level in the S&P 500 emini futures would open for a test of the yearly high at 1361.
We have both US ADP employment data and US initial jobless claims out today, which can both move the market substantially and shape expectations for tomorrow’s US nonfarm payrolls. So keep an
I still think CHF looks rich and I favor going long below 1.2050 for a move back to 1.2250.
I am still looking to add some type of position in Corn following the huge sell off week, but I have not made up my mind what the position will be yet. I will come back on that during the next few sessions.
I will keep an eye on the US debt ceiling talks going forward, some talk of a possible of a new Homeland Investment Act that would allow repatriation of overseas earnings at a lower tax rate. This happened last in 2005, which saw the USD strengthen by about 15% vs. Euro and 20% vs. Yen. This make it interesting to look at the Yen, which has been range bound for a few months, with high at 81.78 and low of 79.70. I am longer term bearish on the Yen and I think we could see a break out higher in the next week or so. A trigger could be a strong than expected NFP report. See chart next page.

Today’s calendar (CET):
13.45 ECB rate announcement
14.15 US ADP employment data
14.30 ECB/Trichet press conference
14.30 US initial claims
16:30 DOE Crude oil inventory
18:30 Feds Hoenig speaks in Oklahoma
Looking at a few interesting points in the markets trading wise:
- A daily close in the S&P 500 futures above the high from 31st of May at 1340.25 would open for a test of the yearly high at 1361. Break out level of 1317 is now key support.
- Crude punching through the 96.00 resistance yesterday, next key level is 98.35.
- Silver bouncing off the lower end of the last month’s range of 32.75 to 38.76. Can we head back up towards the upper end of the range?
- Gold got up to 1534 and I now expect it to trade back down to at least 1520 support.
- 100 day moving average coming in at 1.4256 in the Euro today, so expect bids ahead of that. Watch out for noise during the ECB press conference.

Interesting news stories:
Exclusive: Treasury secretly weighs options to avert default - Reuter -
http://www.reuters.com/article/2011/07/07/us-usa-debt-exclusive-idUSTRE7660GE20110707
Movement in Budget Impasse - The WSJ -
http://online.wsj.com/article/SB10001424052702304793504576430301748287970.html?KEYWORDS=Movement+in+Budget+Impasse
The Only Reform That Will Restrain Spending - The WSJ -
http://online.wsj.com/article/SB10001424052702304760604576428273248743348.html?KEYWORDS=demint
How the private sector could rescue Greece - The Telegraph -
http://www.telegraph.co.uk/finance/economics/gilts/8621006/How-the-private-sector-could-rescue-Greece.html
Europe declares war on rating agencies - The Telegraph -
http://www.telegraph.co.uk/finance/economics/8621520/Europe-declares-war-on-rating-agencies.html
US will enter second recession if debt limit is not raised, warns President Barack Obama - the Telegraph -
http://www.telegraph.co.uk/finance/financialcrisis/8621582/US-will-enter-second-recession-if-debt-limit-is-not-raised-warns-President-Barack-Obama.html
Germany Revisits Greek Debt Plan - The WSJ -
http://online.wsj.com/article/SB10001424052702303544604576429754231439240.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
Moody's: Stress Tests Set to Fail 26 Banks - The WSJ -
http://online.wsj.com/article/SB10001424052702303544604576429713440829554.html?mod=WSJEUROPE_hps_LEFTTopWhatNews
What to Expect From Trichet’s Press Conference - the WSJ -
http://blogs.wsj.com/economics/2011/07/06/what-to-expect-from-trichets-press-conference/
‘Good Ship Dollarpop’ Is About to Sail Again - the WSJ -
http://blogs.wsj.com/source/2011/07/06/good-ship-dollarpop-is-about-to-sail-again/?mod=WSJBlog&mod=thesource
Basel on wrong path to tackle systemic risk - The FT -
http://www.ft.com/intl/cms/s/0/d063596c-a268-11e0-9760-00144feabdc0.html#axzz1RNAE222R
Inflation fears spark rate rise in China - The FT -
http://www.ft.com/intl/cms/s/0/d077fe34-a7be-11e0-a312-00144feabdc0.html#axzz1RNAE222R
Investors overreact to the blindingly obvious - The FT -
http://www.ft.com/intl/cms/s/0/70a3e368-a801-11e0-afc2-00144feabdc0.html#axzz1RNAE222R
Downgrade blow knocks wind out of Portugal - The FT -
http://www.ft.com/intl/cms/s/0/90ef90b4-a800-11e0-afc2-00144feabdc0.html#axzz1RNAE222R
Doubts over banks’ role in Greek bailout - the Times -
http://www.thetimes.co.uk/tto/business/economics/article3085717.ece
China May Limit Rates on ’Controllable’ Inflation - Bloomberg -
http://www.bloomberg.com/news/2011-07-06/china-may-pause-after-third-rate-move-as-wen-bets-inflation-controllable-.html


Technical’s and comments

Euro: We are back below 1.4350 after the Portugal downgrade yesterday. The resistance levels today are the low from 7th of June at 1.4564 and the high from the same day at 1.4695. We have a series of support levels from 1.4320 down to 1.4237.
Cable: Sell on rallies towards 1.61 is my favored strategy today. I expect the 1.5900 support to hold, so possibly down there as well should work.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. I am looking for a break out to the upside of the 2 months range, which is 79.70 to 81.78.
Swissy: Have resistance at 0.85 at the moment, which is the pivot level in this pair for now I think. Bearish below this level and bullish above.
AUDUSD: Stronger than expected Aussie Jobs data overnight supporting the AUD. We have strong resistance around the 1.0770 level, so would not chase the price action above that level. The buy in level of 1.0550 or so is the place I would look to try long again.
USDCAD: Rapid move lower and I think it makes sense to wait for a rally back up towards 0.9730 or to get short again.
S&P Future (ES): Key level at 1340.25 and a daily close above here would open for a test of the yearly high at 1361. Key support is now Friday’s break out level of 1317.
Gold: Hit the extended upside target of 1530 yesterday and now I expect a correction back to at least 1520 support.
Crude oil: Took out the 96 key resistance yesterday and this 96 level held on the test lower this morning. That is bullish confirmation for me and looks like we will test next key resistance at 98.35 next, followed by 100.39. Key support is now down at 96. If we break below 96, the risk is for stop loss festival will send it lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.

Trading recap Wednesday 6th of July

The S&P 500 emini (ES) broke below yesterday's low of 1329.25 in early trading, as the China rate hike saw risk come off. It got down to 1326 before it reversed higher to close right up at the top of today's range and 0.50 point below yesterday's high of 1337.
The volume was higher than yesterday and the ability to hold the downside is rather impressive I have to say. Seems to be plenty of buyers on dips. I was looking for a deeper correction to test the 1317 support (break out level from Friday), but just not much downside momentum at the moment. It is difficult to be very bearish at the moment, just looks quite strong in my opinion. Need to see some pretty bad news to make it go much lower than 1317, is my feeling at the moment. Key resistance remains the 1340.25 (high from 31st of May). I still think it would be healthy to see a correction to 1317. We have 7 straight up sessions now, for 71.5 points in the ES.
No changes made to the S&P 500 emini structure today.

I did one trade today, put on a Euro options spread to crush some Theta (time value) in the 8 Jul 1.42 put options, which was trading close to 19% vols beacause of the ECB and NFP event risks over the next 2 sessions.
I sold 2x the 1.42 8 Jul puts for 40 pips each and bought 1X the 1,42 put for 5 Jul expiration. This position is slightly long delta and had Theta of 414 USD per day. I expect the Theta to drop substancially after the ECB press conference tomorrow.
I will hedge the delta if we break 1.4250 as well.

Gold moved up substancially today, taking out both 1520 and 1530 resitance levels.
I don't think it will expand much further heading into to NFP, so I will keep the Gold structure as it stands for now.

Crude had a successful test of the 96 break out level (now support) early on in the sessiosn and it looks rather bullish now for a test to break 98 key resistance. Looks tempting to put on a call structure above 98 and trade against it in the futures, cause I see 98.35 level as the pivot level now. Will see if we can get a test of 98 or so over the next few sessions to put on a trade.
Crude oil Aug futures chart below.

See complete trading log here

Market Report Tuesday 6th of July

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Portugal was downgraded to junk (Ba2) by Moodys yesterday and the European debt crisis suddenly back in focus, sending the Euro lower down below the 1.4350 support today. The market remains very news driven. The downgrade of Portugal was based on the view that Portugal will not be able to borrow as sustainable levels in 2013 and might need a second round of bailout. It seems to me that the rating agencies are now doing a better job than before the financial crisis at least, where they got way behind the curve on many fronts.
There seems to be a lot of indecisive comments out of Euro zone of late. I see a headline this morning that Germany wants to have another look at the Greek swap idea, which earlier ECB was opposed to. See link below:
http://www.reuters.com/article/2011/07/06/us-eurozone-germany-greece-idUSTRE7651N120110706
I just repeat my comment from yesterday, which I still stick to: “My thinking is that the European debt crisis will not go away quickly and probably come back to hit us sooner rather than later. We have had a nice rally in the S&P 500 over the last 2 weeks, but from here it will be more difficult to go higher in my opinion. With the QE2 over as well, the support for the equity markets could be thin during the summer months. Technically the 1340 resistance is an important level to get above to continue to the upside. I suspect a lot of traders looking to short up around the 1330 to 1340 and stops above 1361.75, the yearly high. It would be healthy for the rally to get some kind of pullback before going higher, if not I am afraid the selling pressure will get too big on any break higher. Friday’s break out level of 1317 is now support.”
EURCHF have corrected lower and slightly below the 1.2050 support level now at 1.2030. To me this level seems to be attractive level to have a look at the long side again for another drive to 1.22.
I am still looking to add some type of position in Corn following the huge sell off week, but I have not made up my mind what the position will be yet. I will come back on that during the next few sessions.
Today’s calendar (CET):
16.00 US ISM (non manufacturing)
02.30 Aussie employment data
The DOE Crude oil inventory and the US ADP report will be released tomorrow due to the holiday shortened week.


Looking at a few interesting points in the markets trading wise:
- 76,4% Fibonacci retracement of the 1361.75 – 1252.25 move comes in at 1336, which was right around the Friday’s high (1336.50). The high from 31st of May at 1340.25 is the next key target. Break out level of 1317 is now key support.
- Crude punching through the 96.00 resistance yesterday, next key level is 98.00.
- Silver bouncing off the lower end of the last month’s range of 32.75 to 38.76. Can we head back up towards the upper end of the range?
- Gold have broken above 1502 key resistance, next upside target is 1520. Target met and next level is 1530.
- Key resistance in Euro up at 1.4564, which I expect to hold for the next 2 sessions. Spot on yesterday with that view and we are down below 1.4350 today.

Technical’s and comments

Euro: We are back below 1.4350 after the Portugal downgrade yesterday. The resistance levels today are the low from 7th of June at 1.4564 and the high from the same day at 1.4695. We have a series of support levels from 1.4320 down to 1.4237.
Cable: We failed towards 1.6140 again yesterday. Looks likely we will drive down lower again with support at 1.5990 followed by 1.5910. I don’t expect to see a break below 1.59 before the Bank of England rate announcement tomorrow.
USDJPY: More up and down in the Yen, with lack of direction and focus this pair seems to be on the sideline for now. I remain longer term bearish on the JPY as the fundamental factors in Japan looks ugly, with huge public debt and unfavorable demographics going forward. However the risk off over the last days has taken us below 80 again. Not sure if we see any intervention unless the move picks up in speed and magnitude. Buy on dips for the brave.
Swissy: Have resistance at 0.85 at the moment, which is the pivot level in this pair for now I think. Bearish below this level and bullish above.
AUDUSD: We have strong resistance around the 1.0750 level, so would not chase the price action above that level. The buy in level of 1.0550 or so is the place I would look to try long again.
USDCAD: Rapid move lower and I think it makes sense to wait for a rally back up towards 0.9730 or to get short again.
S&P Future (ES): We have key resistance up at 1340.25 and minor resistance at 1337 (yesterday’s high). Looks overbought and selling rallies below 1340 looks the most attractive today. There is a potential double top on daily chart if we fail towards the 1340 level. If we break 1340, I would reverse to look long. Key support is not Friday’s break out level of 1317.
Gold: Break above 1520 opens for 1530 and higher next. I would look to buy if we see any dip towards 1515.
Crude oil: Took out the 96 key resistance yesterday and this 96 level held on the test lower this morning. That is bullish confirmation for me and looks like we will test next key resistance at 98 next. Key support is now down at 96. If we break below 96, the risk is for stop loss festival will send it lower.



________________________________________
Risk Warning: Any information in this report is based on data considered to be reliable, but no representations or guarantees are made by Avantage Financial GmbH with regard to the accuracy of the data. This information is provided on condition that we accept no responsibility, legal or other for its contents. We, including our directors, officers, employees or publishers, disclaim all liabilities. Any statement constitutes only current opinions, which are subject to change. Neither the information nor any opinion expressed shall be construed to be, or constitute an offer to sell or a solicitation of an offer to buy any investments mentioned herein. Regardless of the account type you choose, there are risks inherent in trading, including the risk of loss greater than the original investment. The opportunity for profit creates a corresponding risk of loss. Anyone wishing to invest in any of the products mentioned should seek their own financial or professional advice. Prices can go down as well as up. Past performance is no guarantee of future results.