The Bondocalypse may be over

CNBC/Bloomberg guys all out in force telling us it’s over for bonds..  So..I’m buying Treasuries today.

See chart. If this higher floor develops properly it should mean another run at the 160’s which is quite a bit higher than now.

Keep in mind each bar on this chart is one month…long term.



The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Another successful trade

The crude oil short i posted a few days ago worked out nicely. Took profit on the crude oil futures and options around session close last night.

You can see that post here.

As you can see from this trade and the Home Construction ETF trade before it i am trading more the reactions than longer staying wiht a longer term trend lately. With the increased volatility we’ve been seeing it seems best to take the high potential, low risk reactions rather than sticking wiht any theme. the recent madness seen in German Bunds is a good example of what’s only going to increase in frequency.

Here’s the same chart of crude oil futures, current. You can see the nice reaction we got just where the short was taken, only missing the peak by a few cents.

Price fell almost -6% from that resistance as you can see.






The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Another successful trade

Back on April 6th i noted that US home construction was peaking by what i was seeing technically on ITB, the US Home construction ETF.

You can see that article here.

We actually nailed it to the very day.  We have seen a -10% drop in 3 weeks.

One of the better calls of the year i’d have to say.

Here’s current chart showing how it played out.

itb fin


The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Lena tells us how markets are doomed

Will earnings season be the catalyst for a move down in US equities? Or USD strength..or both..

To me it seems the smallest trigger anywhere globally could be enough to send Chinese markets into turmoil.




Hi I’m Lena,

Welcome to James Farro’s Market Overview.

Earnings Season begins today with a number of large companies reporting including J.P. Morgan, Johnson & Johnson and Intel among others.

The technical picture continues to be bullish but basically riding along very long term resistance levels as you can see here on the S&P futures monthly chart.

You can see the same overall picture here with Russell 2000 futures. And here with the I-Shares US housing construction ETF
James feels that these resistance levels will hold and the market will have a substantial correction with the catalyst either being continued Dollar Strength, the massive bubble we are seeing in Asian markets or negative earnings surprises out of the US.

The alternative would be for resistance levels to break and a subsequent parabolic move to new highs. But with the market totally ignoring USD strength for months now that case seems less probable.

Now, let us take a closer look at the US Dollar. This has been totally ignored by the US market. Here you see the USD Index going back to 1987. To maintain this trend the Dollar currently has an upside target of 1 point zero 8. This level is another 9 percent above where we are now. From here on up USD strength could become an issue for US equities. The knee-jerk reaction here is to assume the Fed will of course hold-off on raising rates as USD strength becomes a major drag on US growth.

The Fed can either lose credibility quickly by raising rates and crashing the markets and economy or they can lose credibility slowly over time as their attempt to eliminate the natural market cycle brings us all closer to a crash of epic proportions.

The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan

Russell2000 again at long term resistance

Here we are again. Russell 2000 futures, the screaming high-multiple sector of the final stage of what i believe will be remembered as the “Activist Central Bank” bull market of the go-go 2000 teens is once again at long term resistance.

What could go wrong?

Well,  April is historically an up month and with buy-backs showing no signs of letting up any time soon it could be a while until any sizable down-leg. And dont forget it’s only another month until the front-running of the summer rally that is now required by Executive Decree begins..

But what will get me in the short position is that fact i will be risking 6 points to the upside with ~200 to the downside.

Russell2000 Futures:











The best charting teacher I know:
The Morning Analysis Service by Paul Coghlan