{"id":9740,"date":"2011-02-07T08:51:11","date_gmt":"2011-02-07T13:51:11","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=9740"},"modified":"2011-02-07T08:51:11","modified_gmt":"2011-02-07T13:51:11","slug":"morning-thoughts-2711","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/morning-thoughts-2711","title":{"rendered":"Morning thoughts 2\/7\/11"},"content":{"rendered":"<p>Good Morning Traders,<\/p>\n<p>I will be in and out of the office this week, so keeping today&#8217;s comments a little shorter than usual.\u00a0 In general, there are 4 macro themes I am watching this week.<\/p>\n<ul>\n<li>Interest rate futures (10 and 30 year) have a pretty good longer-term sell setup.\u00a0 This is an outright directional play, but also has implications for the curve.\u00a0 Worth keeping an eye on because these markets tend to be fairly &#8220;smart predictors&#8221;.\u00a0 Good downside momentum in either the 10 or 30 years this week would be confirmation of\u00a0 last week&#8217;s break.\u00a0 (Again, ETF&#8217;s like TLT are very very poor substitutes.\u00a0 Do not do longer term technical work on these ETFs and I would ignore anyone who does.)<\/li>\n<li>The picture in the broad US market is fairly clear:\u00a0 Arguably overextended, no real momentum at new highs, but also a very difficult time to be leaning short.\u00a0 Personally, I think the bulls deserve the benefit of the doubt until proven wrong in this case, as it is possible we can just bleed upwards a lot further and longer than anyone would expect.\u00a0 In addition, and real break is probably a good long entry for swings, so be careful of getting too negative on the market.\u00a0 It is also important to keep in mind that everything I started this paragraph with is true&#8230; and it does add up to a market that could potentially be vulnerable to a sharp break.\u00a0 Daytraders find themselves in a difficult environment:\u00a0 currently no followthrough and lots of chop, but you have to be prepared to hit from either side of the plate on a moment&#8217;s notice.\u00a0 Swing traders with a 3+ week horizon need to play some defense but keep leaning long.<\/li>\n<li>Precious metals are a mess.\u00a0 (Yes, I think that&#8217;s actually a theme.)\u00a0 Platinum and Palladium both point up, while Gold and Silver seem to be set for a breakdown.\u00a0 Careful of committing to either side without a lot of confirmation.\u00a0 Most moves will probably be fakeouts, so, if you&#8217;re going to play this game, be very quick to admit when you&#8217;re wrong.\u00a0 I&#8217;m taking a step back and avoiding the whole complex until something changes.\u00a0 (Note that Copper is trading cleanly at new highs.)<\/li>\n<li>Grains, in particular Wheat, are set up to be strong.<\/li>\n<\/ul>\n<p>&lt;previous comments were written over the weekend.\u00a0 morning update follows.&gt;<\/p>\n<ul>\n<li>This morning, traders arrive at their desks to find world equity markets generally higher to strongly higher.\u00a0 Asia is up roughly a percent, with South Korea up nearly 2% and putting in a new 52 week high.\u00a0 Europe is up across the board, averaging a little less than a percent, with the UK leading at 1.2% (and also making a new 52 week high).\u00a0 Middle Eastern markets (Israel, Dubai, etc) are getting a little bounce after the reaction the the Egypt crisis, but enough technical damage has been done in those markets to suggest further downside.<\/li>\n<li>No large moves in currencies, but general themes are EUR weakness against AUD \/ NZD strength.\u00a0 Net impact to the US Dollar index (which is heavily weighted toward EUR) is slightly positive.<\/li>\n<li>Copper continues to press to new highs overnight.\u00a0 Precious metals are flat.<\/li>\n<li>More strength in the Crack this morning with WTI crude down and distillates up.\u00a0 Natural Gas futures are off rather strongly at 1.5% in early trading.<\/li>\n<li>Strength in foods seems to be an early theme this Monday morning:\u00a0 all NYBOT softs, ex Cocoa, and CBOT grains are up to strongly up.<\/li>\n<li>Today, we have less earnings stocks to watch, but perhaps a cleaner setup on the overall market.\u00a0 24 hour futures show a clean bullflag that should be good for at least a retest of the overnight highs.\u00a0 Everyone short-term trading index products has to realize that there has not been much followthrough (paying breakouts or hitting breakdowns has been a fairly consistently losing strategy), but the market is at a potential &#8220;tipping point&#8221;.\u00a0 Strong momentum, either up or down, could lead to a move that has some multiday followthrough, so keep an eye out for this and plan accordingly.<\/li>\n<li>Still looking for leadership in Energy and Industrials.\u00a0 If the market fails and turns back down, probably good opportunities on the short side in Consumer stocks and Financials.<\/li>\n<\/ul>\n<p><a href=\"http:\/\/www.twitter.com\/AdamG_SMB\"><img decoding=\"async\" src=\"http:\/\/twitter-badges.s3.amazonaws.com\/follow_me-c.png\" alt=\"Follow AdamG_SMB on Twitter\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Good Morning Traders, I will be in and out of the office this week, so keeping today&#8217;s comments a little shorter than usual.\u00a0 In general, there are 4 macro themes I am watching this week. Interest rate futures (10 and 30 year) have a pretty good longer-term sell setup.\u00a0 This is an outright directional play, but also has implications for &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/morning-thoughts-2711\" class=\"more-link\">Read More<\/a><\/p>\n","protected":false},"author":388,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[943,1],"tags":[],"class_list":["post-9740","post","type-post","status-publish","format-standard","hentry","category-adam-grimess-blogs","category-general-comments-2","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Morning thoughts 2\/7\/11 | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/morning-thoughts-2711\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Morning thoughts 2\/7\/11 | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Good Morning Traders, I will be in and out of the office this week, so keeping today&#8217;s comments a little shorter than usual.\u00a0 In general, there are 4 macro themes I am watching this week. Interest rate futures (10 and 30 year) have a pretty good longer-term sell setup.\u00a0 This is an outright directional play, but also has implications for ... 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