February 12, 2013

Logical Market Update | Yen Takes Nosedive | Is Inflation Talk, Hyper-Talk Like BOJ Says?

The Japanese Yen Takes A Nosedive – The BOJ says All the Inflation Talk is Hyper – Talk! – There are still many Opportunities for Traders to Participate.

As I said regarding Friday’s trade if it wasn’t for the Japanese Yen I’d be mumbling to myself somewhere. So, again let me start by saying if it wasn’t for the Japanese Yen Monday’s trade would have had trouble keeping me awake. (DTS users don’t let these opportunities pass you by – and if you aren’t a DTS user check out the links to your right)

Now here’s the good news, Japan has pledged to goose – oops I meant boost it’s market by 17% by the end of their fiscal year – March 31. How you might ask – well by buying up assets worth trillions of yen and pushing interest rates to below zero – yes – you read correctly. So the party is really just getting into full swing. Who said marching towards inflation and economic ruin shouldn’t be fun?

All kidding aside, the future of the global economies has already been cast – the corner that most central banks have painted themselves into leaves very little in the way of choices. Regardless of what politicians pontificate about, to stop the process of “feeding the kitty” or to be more appropriate inflating our way out of the ever deepening pit would topple the global economies on a scale not many believe could happen. So the FED and ECB continue to print dollars and Euros to pay it’s bills and now the BOJ is deciding to do the same thing. Could this be considered inflationary policies? DUH – yeah they are! I for one would prefer not to deny the inevitable but educate, accept and grab the next wave and participate!

Notable Action from Monday:

LinkedIn – (LNKD) pushed higher again on Monday adding $4.9 to the tally with a trading range of $9. Volume shrank a bit from Friday but remained solid with two-way trade taking place. Apple (AAPL) also performed well breaking through resistance at the 481 area with a trading range of $11. Although prices dropped back below 481 with after hours trade seeing lower prices AAPL remains on track to reaching back above $500 before all is said and done. News from Google (GOOG) that Eric Schmidt intends to sell up to 3.2 million shares (40% of his holdings) this year has capped the rally for now. The number of shares being sold is easily absorbed by the market but the reality that Mr. Schmidt’s decision to do so comes at all time highs could be perceived as somewhat of a “downer”.

Here again is a brief list of the markets I have found the DTS trading software to very profitable:

• US$/Euro
• Japanese Yen against the US $ or the Eu
• GS (Goldman Sachs)
• AAPL (Apple Computer)
• E-mini S&P 500
• GLD (Gold ETF)
• SLV (Silver ETF)
• TLT (Treasury Bond Long ETF)
• TBT (Treasury Bond Short ETF)
• LNKD
• FB

Within the coming weeks I’ll be providing more details and suggestions on trading both equities and options using DTS trading signals.

Expectations for Tuesday (2/12/2013)

Not to sound like a broken record but the overbought nature remains intact. The Russell Index (RUT) continues to be where I believe the breakdown will begin and be sustained. The RUT, TF, and IWM were all down on the day and today’s trade did little to nothing to relieve the overbought reading. Volumes remain on the low side, which does not bode well for the market.

I am continuing to look for more of a pull back. It may take a some time to fully digest the news out of Japan but it has been in the works for some time already.

Intraday Support and resistance zones (daily) to watch for:

DJIA: support at 13,800 and resistance at 13,965 to 14,150
SPX: support at 1500, 1495 and resistance at 1525

Treasuries:

30yr – support at 142’16 to 141’16 and resistance at 143’29 to 144’12
10yr – support at 131’14 to 131’06 and resistance at 131’22 to 131’26

TLT – support at 116.50, 116.00, 115.50 and resistance at 117.15, 117.85, and 118.20
TBT – support at 67, 66. 55 and resistance at 68.10, 68.70, 69.15

Stocks:

AAPL: support at 469 to 452, 440 – 439 and resistance at 485 and then 500
GS: support at 147, 146 to 143 and resistance at 152 and then 164
LNKD: support at 150 and then 135 – resistance at 159 to 161. A break above 161 may see upward acceleration as prices move into “uncharted” territory.

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