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Author: JsnStein Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 113  
Subject: Market Summary 8-13-06 Date: 8/13/2006 1:43 PM
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Introduction

My full-time job and life in general has been absorbing a lot of my time lately. Also, I will be going on vacation fairly soon. So this post may be somewhat erratic over the next month. At the very least I will attempt to post updates on my biases and positions.

The most salient feature of the markets right now is volatility and indecision; most markets are at an inflection point. There are pennants in the metals, a potential intermediate top in energy, a potential bottom in treasuries, and stock indexes meandering sideways. The action over the next month or two could set the direction for the foreseeable future.

Currencies

The currencies are still acting indecisive. However, there are a few bullish U.S. Dollar signals beginning to appear. Is this because the market might be beginning to expect an accelerating growth and inflation picture in the U.S. to cause the fed to starting cranking rates aggressively higher? However, an acceleration to the downside for the U.S. Dollar would be a strong sell signal.

Australian Dollar: Neutral to slightly bearish.
British Pound: Neutral to bullish.
Canadian Dollar: Neutral to slightly bullish.
Euro: Neutral to bullish.
Japanese Yen: Neutral.
U.S. Dollar Index: Neutral to bearish.


Energy

We got the break to the downside. However, unleaded gasoline is the only market that breached support. I have gotten sell signals, so on Monday or Tuesday I will be shorting gasoline unless there is a reversal back above support. I still believe that if a top is formed here it will only be an intermediate top. Also, a large hurricane could turn any bearish moves around very quickly. There is a lot of risk to the upside so when/if I do get short I will take profits at the first drop to (lower) support.

Crude Oil: Neutral, potential top.
Heating Oil: Neutral, potential top.
Natural Gas: Neutral.
Unleaded Gasoline: Neutral, potential top.


Grains

It appears that all the grains are breaking lower. All these markets are potential shorts. I would preference the corn or soybean meal shorts as those markets look the weakest but there are sell signals in all of the grains.

Corn: Neutral to bearish.
Oats: Neutral to slightly bearish.
Rough Rice: Neutral to slightly bullish.
Soybean Meal: Neutral to bearish.
Soybean Oil: Neutral.
Soybeans: Neutral to slightly bearish, trading in a channel.
Wheat (CBOT): Neutral to slightly bearish.


Interest Rates

A break higher now would finally make me bullish, although I am seeing short term sell signals. Actually, a break higher now would coincide with trade signals in a bunch of markets and would have the potential to shift my thinking on the entire environment. If the downtrend holds I will be looking to short aggressively, if a bottom is put in I will wait for confirmation before I think of going long.

2-year Notes: Neutral to slightly bearish.
5-year Notes: Neutral to slightly bearish.
10-year Notes: Neutral to slightly bearish.
30-year Bonds: Neutral to slightly bearish.


Meats

The uptrend in cattle remains intact; pork is looking increasingly weak.

Feeder Cattle: Neutral to bullish.
Live Cattle: Neutral to bullish.
Lean Hogs: Neutral to slightly bullish.
Pork Bellies: Neutral to slightly bullish.


Metals

These markets are meandering at the tip of their pennants. I believe these markets will be a harbinger of what can be expected in other markets that are also at inflection points. These markets are the most glaring asset bubble created from the period of easy money. I am anxiously awaiting the break, although my bias is lower that is just a hunch and will play a break either way.

Copper: Neutral, pennant.
Gold: Neutral, pennant.
Palladium: Neutral, pennant.
Platinum: Neutral, pennant.
Silver: Neutral, pennant.


Softs

Sugar #11 is still in a solid bear tread and I still think Orange Juice is topping.

Cocoa: Neutral.
Coffee C: Neutral.
Cotton #2: Neutral to bullish.
Lumber: Bearish.
Orange Juice: Neutral.
Sugar #11: Bearish.


Indexes (Stock Markets)

I am short the Nasdaq at a small profit and have been short for over a week. However, if the market continues to be unable breakout to the downside I will begin looking to liquidate and reposition myself later.

Dow Jones Industrial Index: Bearish.
Nasdaq 100: Bearish.
S&P 500: Bearish.


Open Positions (average true range)
Short Sept Nasdaq, (29.8)


Liquidated (trade results)


Jason
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