This page has been archived and commenting is disabled.

Pivot Galore

Tyler Durden's picture





 

Submitted by Nic Lenoir of ICAP

After pretty much two weeks waiting since what we thought was the last meaningful turn in risk appetite (towards risk appetite), I think the markets have reached a possibly key pivot area.

I will start with commodities where the pivot is the clearest on the day. Copper has retraced 61.8% of the recent sell off, and posted a quite nasty indecision candle on the day. If we gap lower tomorrow and close below 319 this would be a major evening star. Also note that today's pivot also corresponds to the level at which copper broke through the support of the bullish channel in place since March 2009. Gold similarly has hit an intermediate resistance at 1,120/1,125. As long as we do not post a daily close above that level there is risk to retest at least 1,074 before having a shot at further upside, and if we venture below 1,060 then we are headed for 980/1,008 which is the massive support zone (if broken this invalidates further upside for the medium term).

Fixed income is still holding on but we have two beautiful H&S in progression for the bund and the 10Y future. A break below 122.90 and 117-16 respectively should trigger quite a bit of downside, which remains our preference.

Equities are also on a relatively key pivot. Dax is a bit short of the 5,725/5,740 resistance be have a potential a-b-c correction completed with c=a here, and S&P futures resolutely refused to trade past 1,100 today. The key resistance is 1,100/1,107. A break of 1,092.50 would confirm we will drop to 1,080 and possibly 1,066 which is the key support.

Could we have a market in which commodities, equities, and bonds drop? Well, for one thing it would hurt the correlation high frequency platforms out there which could be fun for a change. The part that is hard to reconcile is the USD as EURUSD is already quite depressed so it is hard to iagine immediate downside here at least technically, and the dollar index has posted a perfect a-b-c with c=a since the lows, so something has to give. Our strongest conviction would be fixed income and copper here. Who knows, after all a weak USD with weak fixed income and weak equities would simply be a SELL US trade which happens every now and again. It only takes a leap of faith to believe commodities would sell-off in that environment. We will know shortly, and such an environment would have the stamp of deleveraging all over it!

Good luck trading,

Nic

 


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 02/17/2010 - 17:55 | Link to Comment lsbumblebee
lsbumblebee's picture

The one thing you need to remember about gold as it begins the next leg up is that it's not allowed to gain more than 2% on any day. That's a Cartel rule.

Wed, 02/17/2010 - 17:58 | Link to Comment Anonymous
Wed, 02/17/2010 - 18:18 | Link to Comment schatzingrid
schatzingrid's picture

buy (0,6 plat + 0,4 pall) sell (0,7 copper + 0,3 gold)

Wed, 02/17/2010 - 21:38 | Link to Comment RiskFreeT
RiskFreeT's picture

Every correlation breaks just in the nick of time to save the market. If the Euro correlation had held, the market would be much lower, not just today, but over the past few months.

Good read: Amerika the huge Ponzi scheme!

Wed, 02/17/2010 - 19:15 | Link to Comment Liberdadedescolha
Liberdadedescolha's picture

We have a nice Head and Shoulder formation on S&P500. Beware.

http://midasfinancialmarkets.blogspot.com/2010/02/o-perigo-espreita.html

Wed, 02/17/2010 - 20:02 | Link to Comment Miles Kendig
Miles Kendig's picture

Thanks for the continuing education for this non financial professional Nic.

Wed, 02/17/2010 - 20:20 | Link to Comment greg merrill
greg merrill's picture

Nice to see the traders are concerned about copper as well.  I recently blogged about the fundamentals and how rising copper inventories are going to cause problems with the current high price of copper.

http://merrillovermatter.blogspot.com/2009/12/how-many-more-days-until-copper.html 

To update the copper inventory data on that blog entry, copper inventories continue to rise and are standing at 759+k metric tons as of 02/12/10. 

I bought BOS (inverse copper, aluminum, zinc) yesterday. Hopefully the markets will agree with me for once.

 

 

Wed, 02/17/2010 - 20:37 | Link to Comment Hephasteus
Hephasteus's picture

It's good for fudging "restocking" data and showing how the economy is about to esplode to the upside any minute now.

Wed, 02/17/2010 - 20:46 | Link to Comment Anonymous
Wed, 02/17/2010 - 20:53 | Link to Comment gigeze787
gigeze787's picture

Will PPT target SPX >1100 thru Friday for options exp. (maybe after a bait and reversal switch on Thur)?

Wed, 02/17/2010 - 21:39 | Link to Comment Master Bates
Master Bates's picture

H&S patterns on S&P and GOLD.  The retracement has another day, at the most, then it's back to whence it came.

Wed, 02/17/2010 - 23:40 | Link to Comment Grand Supercycle
Grand Supercycle's picture

 

The impending dollar rally that I warned about from mid 2009 onwards has only just started.

USD Index daily and weekly charts remain bullish.

Vice versa for the EURO and DOW/SP00.

http://www.zerohedge.com/forum/market-outlook-0

Thu, 02/18/2010 - 01:45 | Link to Comment Anonymous
Thu, 02/18/2010 - 02:29 | Link to Comment Anonymous
Thu, 02/18/2010 - 04:03 | Link to Comment order6102
order6102's picture

Could we have a market in which commodities, equities, and bonds drop? 

 

YES WE COULD. this call first year of global tightening... Cycle started, and in first year of cycle - cash is the king. This why 3m t-bils at 17bps... CASH IS THE KING!

Do NOT follow this link or you will be banned from the site!