The Options Queen, Jeanette Schwarz has just released her first book:
The Options Doctor: Option Strategies for Every Kind of Market (Wiley Trading)
INFLATION HITS THE BEER MARKET!
The craze in corn and soybeans has threatened the availability of the barley crop! Worse, the rise in the price of aluminum is putting dents in the pockets of the producers who are considering passing on these additional costs of glass as in beer bottles along with the costs for the energy to make the stuff, where it always goes, on to the consumer. So, college kids unite, buy wine, abandon “beer pong” and let’s go for some “wine pong;” it just could be a cheaper alternative.
The unemployment rate is reported to be at 4.4%, with implications that the slow-down in spending will be but a phantom occurrence. Such a report gave hope to the continuation of spending, by the consumer. By the end of the Friday’s electronic session, most of the gains remained. The players don’t seem to realize that a strong job market and full employment, do not lead to rate cuts. But then, it does lead to growth, which is good for the economy. As the players became aware that a strong economy will not lead to are deduction in interest rates, and, at best, we could see the Fed holding steady. This, of course, is supportive to the strength of the US Dollar, which appreciates, in anticipation of any Fed hike in the rates.
Now that the credit mess is over�.yeah, sure it is!…just kidding of course; the lenders are going again to loosen up on their requirements. This should help the spring selling-season to blossom, fully. Because the economy looks strong, with good job growth, this sector of the skittish equation will be balanced with skittish optimism. Naturally, we are just skittish too, thinking that, although the economy looks good and the “junk bond” market is thriving, there are problems that we are not addressing. We have a merger bubble, rumbling, just below the surface and, like the plankton that glows and grows, underneath our melting ice caps, trouble is a-brewing. The self-sustaining lie of “global-warming” and merger melt-down are in our future, or, are they?
We have seen some press output that indicates that the Susquehanna Investment Group or SIG, as it is know on the floor, has an interest in buying the American Stock Exchange�.talk about owning the market! D ya guess that’s one way? We have noticed their ever-increasing numbers on the futures markets, where they are real players! Remember that just prior to the ICE announcement, regarding the take-over of the NYBOT, Susquehanna Investments bought more than a few seats, beginning at $800,000 this turned into $1,800,000.00. These guys are aggressive gamblers, who always try to stack the decks, in their favor.
The US Dollar index opened the Friday session, rallied and remained at the appreciated value, into the early holiday close. Although, the US Dollar had a very nice rally in the Friday session, it did not remove the downside trend that has been in place for most of this year. The good news is that we have defended the recent lows; well, so far, weave. We constantly remind you:: we need to stay above that low, which is at 82.37, yes, we did expand the low by one tick on Thursday, but it really wasn’t a large enough violation to worry anyone. The stochastic indicator is issuing a buy-signal, approaching neutral levels. The RSI is pointing higher, approaching neutral. Our own indicator is issuing a continued, buy-signal. The Thomas DeMark Expert indicator is issuing a solid sell-signal. The 5-period exponential moving average is at 82.68. The top of the Bollinger band is at 83.491 and the lower edge is seen at 82.3049. As of this past Thursday, an extra digit has been added, in these quotes. We currently carry out the quotes to three places, after the decimal point. The weekly chart is somewhat encouraging, with a red- 9count on the chart. We also see that the buy-setup, is done. The indicators are uniformly, issuing a buy-signal on the weekly chart. The monthly chart isn’t showing anything remarkable. None of the indicators are issuing anything of value, but they are at oversold levels. The Market Profile chart on the 30 minute-chart, continues to look very scary, showing that there is a downside risk to the trade and, that should we revisit the lower levels, seen on Thursday, of this past week, we could easily see a fast flush-out, to the downside.
The Euro retreated in the Friday session, removing almost all of the gains it had made in the Thursday session. The trading session left a large red candle in its wake, but its range was less than that of the Thursday session. The stochastic indicator is issuing a sell-signal. The RSI is pointing lower. The Thomas DeMark Expert indicator continues to issue a buy-signal. Our own indicator has turned downwards, and is issuing a sell-signal. The uptrend line for the Monday session is at 1.34057. The 5-period exponential moving average is at 1.34121. The top of the Bollinger band is at 1.34741 and the lower edge is seen at 1.32451. Unless, or until were move 1.34780, Thursday’s high print, we will hold to the belief that the direction will be to retreat, backing and filling, to elevate some of the overbought conditions. The weekly chart has a 9-count on the top, which is a warning signal that we are overbought and are vulnerable, for some profit-taking. Neither the stochastic indicator, nor our own indicator are issuing any signal. The stochastic indicator is at overbought levels, on the weekly chart. The Thomas DeMark Expert indicator is issuing a sell-signal, and the RSI is simply hanging there, at near-overbought levels. The monthly chart continues to look good, but is overbought.
The S&P 500 futures contract inched its way higher in the last session of the week on Thursday. The electronic platform did trade in the Friday session, on the heels of the robust “jobs report” for March, gaining on he release and giving back that gain, by the end of that session. The stochastic indicator is overbought but is not issuing a sell-signal, rather, it is keeping you long. The RSI is somewhat over- bought and curling over, to the downside. Our own indicator is about ready to issue a sell-signal, and the Thomas DeMark Expert indicator is overbought, and going sideways. The 5-period exponential moving average, is at 1447.73. The top of the Bollinger band is at 1467.75 and the lower edge is seen at 1392.67. We seem to be trying to make a run, back to the highs of February 22, 2007, a level that is only several strong, up-days, away; although, on this push, we are not going to make it. The weekly chart shows that we are at overbought levels and the stochastic indicator and the RSI are issuing a continued buy-signal on the chart. The monthly chart is also overbought, but all the indicators we follow are pointing higher, at extremely overbought levels.
The NASDAQ 100 poked its head above the recent highs, in the Friday abbreviated, electronic session. The stochastic indicator is curling over to the downside, and will issue a sell-signal, within a day or so. The RSI has curled over to the downside. Our own indicator is about to issue a sell-signal. The 5-perioe exponential moving average is at 1818.77. The top of the Bollinger band is at 18.44.09 and the lower edge is seen at 1748.55. We definitely are leaning to the upper edge of the chart, at overbought levels. When you look at the weekly chart of the NASDAQ 100, you are impressed with the steepness of the most recent uptrend. The uptrend line on the weekly chart is at 1764.75. The downtrend line is at 1840.25. The RSI has stopped trending higher, and is going sideways. The stochastic indicator is curling over to the downside, but has not issued a sell-signal. The monthly chart is overbought, by all measures, but continues to point higher. We certainly would use caution, at this point in the game. The upside reward may not be worth the downside risk.
The chart of the Russell 2000 looks as though it is have a difficult time making progress to the upside. We look as though we want to remove 821.30, but we might not have the strength on this push, to get back to 831.30, without a little backing and filling. The RSI is going sideways. The stochastic indicator is at overbought levels and has stopped trending. Both our own indicator and the Thomas DeMark Expert indicator, are going to issue a sell-signal, as early as the end of today’s session. The 5-period exponential moving average is at 807.87. The top of the Bollinger band is at 827.93 and the lower edge is seen at 769.65. For the last four days, we have been unable to make any notable progress to the upside, and, unless we can jump above this daily resistance level, we will most likely resolve to the downside. The weekly chart shows that this market is overbought, with the risk overwhelmingly to the downside. The monthly chart is overbought, but isn’t giving us a sell-signal. This chart shows that the upside reward isn’t as great as the risk to the downside.
The Continuous Commodity Index is breaking out, to the upside. Yes, we are overbought, by all measures, but we continue to see buy-signals. We are so overbought, that our progress to the upside is limited. The 5-period exponential moving average is at 408.05. The top of the Bollinger band is at 411.73 and the lower edge is seen at 396.54. The weekly chart looks even better than does the daily chart; however; we continue to see an overbought market, with more room to the upside. The monthly chart shows that we are simply a sneeze away from the old high. Looking at this index, brings to mind that raw materials costs are getting higher. This index is not industrial in its nature, and reflects raw materials costs, including agriculturals.
Friday, was a very quiet pre-holiday session. By 10:22 in the morning, May cocoa rallied to the high of 19.27, where some selling appeared. The sellers drove the market down to 19.10, by 11:16AM, where buyers were found. The daily chart looks as though the market wants to test the recent highs of 19.69. The stochastic indicator is issuing a continued buy-signal; the RSI is in agreement with that signal. Last week’s sell-off on Monday, resulted in a very large red candle, on the chart. We have regained more than � of that day’s losses and appear to be ready to gobble up the rest. The 5-period exponential moving average is at 18.98. The top of the Bollinger band is at 19.86 and the lower edge is seen at 17.34. We have a red-13 count, on the bottom, which tells us that we will go higher. The problem arises when one looks at the weekly chart. It most certainly doesn’t look all that good, with a very large red candle and with a huge, long tail. The indicators on the weekly chart are also issuing a uniform sell-signal, at overbought levels. The monthly chart agrees with the weekly chart, and gives rise to some concern about further progress. If May cocoa cannot remove 19.69, in short order, we will return to 18.57 and, more likely to 18.00. The 9 day moving average is at 19.07, the 18 day moving average is at 18.66, and the 40 day moving average is at 18.07. The closing range for May cocoa was 19.16 to 19.10.
The May sugar-buyer’s strike, continues. We do see some rolling from the May to July expiry. May sugar dropped to 9.67, in the Thursday session, in an effort to test the previous day’s low of 9.66. The market rallied from that low, when the selling dried up, returning the price to 9.74. By 11:30AM, May sugar managed to rally to 9.80, where, resistance was found. The stochastic indicator and the RSI are issuing a buy-signal. Our own indicator is issuing a buy-signal, but the DeMarks is just going sideways, at oversold levels. The chart looks as though the market wants to go higher, but nobody trusts this signal. We need to see some buyers appear; then we will move higher, quickly. Into the closing minutes, the market rallied on short-covering, and perhaps, some speculation that the market might have seen a short-term low. Thursday’s session certainly was an encouragement. The 5-day exponential moving average is at 9.79. The top of the Bollinger band is at 10.59 and the lower edge is seen at 9.61. We would like to see May sugar close above 9.84, for some short-term encouragement. The weekly chart has a doji like candle, unfortunately last week’s lower low can’t be encouraging for the bulls. The indicators are oversold, but not pointing higher. The monthly chart looks dreadful. We do see a liability to 9.50 and 9.44, based on the monthly chart. The 9 day moving average is at 9.91, the 18 day moving average is at 10.09 and the 40 day moving average is at 10.38. The closing range for May sugar was 9.79 to 9.81.
May coffee opened the overnight session at 110.75; rallied to 110.90 and then retreated, into the opening of the New York session. The market retreated further after the New York open, and declined to 110.30. For much of the session, May coffee went nowhere and remained in a rather tight range. At 10:38, the day’s low was broken, which encouraged some sellers to go on a hunt for sell-stops. The market declined to 110.10, without finding those stops, and rallied back into the session highs. When the highs were exceeded, buy-stops became elected, driving the market to 111.60. The daily chart for May coffee looks good. All the indicators that we follow herein are issuing a solid buy-signal. Again, unless or until the market removes 108.30 on the downside, we will remain friendly to this market. Remember, that options go off the board this coming Friday, and that we will move our coverage to the July contract. When options expire, they have some strange effects on the markets. The 5-period exponential moving average is at 110.45. The top of the Bollinger band is at 114.17 and the lower edge is seen at 108.31. The weekly chart is hinting of a rally in the winds. The indicators are uniformly issuing a buy-signal, and the market looks as though it could move somewhat higher. We need to see a close above 112.50 to convince the bulls to re-enter this market. The 9-day moving average is at 111.36, the 18-day moving average is at 111.03 and the 40-day moving average is at 113.92. The closing range for May coffee was from 110.80 to 111.00.
May Frozen Concentrated Orange Juice did not present a friendly session on Thursday. We matched the opening and closing ranges of the previous day, but did expand the downside, just a tad. The RSI is issuing a solid sell-signal. Both the stochastic indicator and our own indicator are issuing a sell-signal. It looks as though we are going to retest the 185.00 level. The 5-period exponential moving average is at 190.25. The top of the Bollinger band is at 205.20 and the lower edge is seen at 185.57. The weekly chart shows us that so long as we hold above 185.00, we should be fine. The indicators on the weekly chart are oversold, but not issuing a buy-signal, at this time. The monthly chart warns of the same 185.00 level. The 9-day moving average is at 191.62, the 18-day moving average is at 195.60 and the 40-day moving average is at 195.71. The closing range for May Frozen Concentrated Orange Juice was 188.75.
May cotton opened at 53.25 at 5:15 in the morning, rallied to 53.47 by 09:58AM. The pit opened at 53.25. We continued to see sideways action, with an early downside-bias. The low appeared at 11:13AM, when 52.87 was printed. The market rallied from that level to 53.20, where the up-move ended. The daily chart continues to look lousy. All of the indicators that we follow herein, are issuing a continued sell-signal; several at oversold levels. The last time May cotton declined to 52.77, it bounced; will it this time? Only time will tell on this one. The weekly chart looks somewhat better than does the daily chart. The RSI is actually issuing a buy-signal, and the stochastic indicator is just about ready to issue a buy-signal, also. The 5-period exponential moving average is at 53.22. The top of the Bollinger band is at 54.43 and the lower edge is seen at 52.66. The 10-day moving average is at 53.42, the 20-day moving average is at 53.55 and the 50-day moving average is at 53.65.
Crude oil has been in retreat for the past five trading days. The RSI is losing some of its downside angle, but it continues to issue a sell-signal. The stochastic indicator is issuing a solid, sell-signal. The downtrend line for the Monday session is at 64.60. The 5-period exponential moving average is at 64.56. The top of the Bollinger band is at 67.27 and the lower edge is seen at 56.54. The weekly chart shows us an inside week. Both the RSI and the stochastic indicator are issuing a solid sell-signal. We would expect to see a first ledge of support at 62.59. The indicators on the monthly chart are also confused. The RSI is issuing a sell-signal, yet the stochastic indicator is not. We have a 12-count on the monthly chart, which could lead to a rally. Remember, it is a monthly chart not a daily.
Natural gas seems to be trying to form a base and looks as though it wants to rally. Both the stochastic indicator as well as the RSI is issuing a buy-signal. We need to see a close above 7.710 to get the bulls excited! The 5-period exponential moving average is at 7.563. The top of the Bollinger band is at 7.898 and the lower edge is seen at 6.674. The weekly chart looks like it is consolidating. The indicators are mixed at best, on the weekly chart. The monthly chart is forming a pennant. The indicators on the monthly chart are friendly.
Gold looks good on the chart. The stochastic indicator, although overbought, continues to point higher, without a bend. The RSI is pointing higher and is not overbought. Both our own indicator and the Thomas DeMark Expert indicator, are overbought and pointing higher. The 5-period exponential moving average is at 666.80. The top of the Bollinger band is at 689.10 and the lower edge is seen at 605.20. Although we do like gold, we would expect to see it do some backing and filling along the way. We are a bit steep in our ascent. The uptrend line for the Monday session is at 669.90. The weekly chart looks friendly, with the all-clear signal. The indicators are uniformly issuing a buy-signal. Even the monthly chart looks good. The indicators on the monthly chart are uniformly issuing a buy-signal.
By Jeanette Schwarz Young, CFP, CMT
Box 1952 c/o New York Board of Trade
One North End Avenue
New York, New York 1028