Monday, December 10, 2012

Dull Day, Boring Markets.

It was another dull day in a boring market. Only the “short oil trade” did well. Oil closed below $ 86 and slowly but surely it is going to test its support at $ 80. It might take some time to reach there but that is the only way for now.

In the morning, I sent out an email urging readers to wait for “short silver trade” a little while more. I sent out email highlighting the level for short.  And as mentioned in last night’s email, I am looking for NDX to attempt to reach somewhat higher level before taking a position with the ETF mentioned in the email.

From January all trade ideas and updates will be sent out by email to the subscribers and alert of the email by Twitter.

Back to markets, they are being propped up by hope and greed. None of that is a good strategy and yet I cannot short the market with any conviction. That is the irony of central bank manipulated market.  The only thing to do in such situation is to learn patience and not front run.  Look out for danger signals and be safe.
One such danger signal is coming from AUD.  From the latest COT data we see that speculative long position in AUD is at record high.

As you know, non commercials tend to be on the wrong side at the turn and commercials on the correct side.  The only question I have is how long we have to wait for the turn. Reason being, the correlation between AUD and SPX is very close.

Moreover the cycle of AUD is pointing down.

In fact copper is also giving a sell signal short term and Dr. Copper normally shows the way to the equities market.  That’s all fine and dandy but I would like to see some price action confirming that this charade is about to end. To start with, can we have SPX close below 1400 please?

How many days are left for this lame duck congress to solve the mess? Less than five you say? What are the chances that everything will be resolved by then? I don’t know and although I think more selling ahead, I am not going to front run. As I have mentioned in last night’s email, we have other things to do which have better risk return ratio.

Thanks for sharing my thoughts. Please forward it to your friends and colleagues who might enjoy the post. And as the holiday season is upon us in full swing, please do keep in mind the Amazon link in the blog, should you plan to buy anything from Amazon. Have a wonderful evening everyone.