September 2 , 2003

 

September S&P:  The evidence strongly points to a bullish triple top as noted on the chart. A triple top is formed after a reaction from a double top. The fact that it is but a reaction (a three wave move) implies that prices intend to move to new highs in the form of a wave five.  I expect this index to move up to be a target defined by a Gann line at 1040 and a measured move up at 1050. That target is noted on the accompanying chart. It is expected that when prices break out above 1015 (the triple top) they will make a short run then turn down to test that area. In the meant time I would be on the long side of this index on that breakout initially risking a close below 1000.

 

September NASADAQ 100:  The three wave move noted on the chart was strong evidence that this contract was headed for new highs. Continue to protect long positions on this contract protecting it against a close below 1305. I expect prices to extend up to about 1380 before witnessing the next downward reaction. However, from an Elliott approach, that 3 wave downward reaction could be a wave 4 which should propel prices on this contract up to the area of 1425.

NASDAQ Composite:  Apparently the quality of the selling at 1776 was not good as prices sliced above that level, exhausting themselves at 1812. Should this index suffer a near term setback, I do not expect prices to extend much below 1775 before buyers emerge. The technical picture continues to look constructive.

 

December*r Ten Year Notes:. Traders should be sidelined since getting stopped out of the short September positions. I might consider the short side of the December contract  initially risking a close above 110:30. There is a good chance that this contract will see levels of 105:16 over the next few months.

 

Currencies: December* Euro: There is a good chance that this currency may have completed it downmove at the recent 1.07760 low. I would probe the long side of this contract only on decisive close above 1.09770. The first upside target extends to the area of 1.11200. December*  J Yen: I would consider the long side of this currency with an initial risk based on a close below .8550. Sellers may be lurking in the area of the May .8673 high but a push through that number would set the next target at .8945..December B Pound:. The double bottom that caused me to cover shorts proved to be a false signal. Short positions are called from in this currency so long as prices remember below 1.5700. The risk for those short positions is a close above 1.5700 with an SAR to the long side on that stop.  December* Canadian Dollar:  I would continue on the sidelines until this currency gives an indication of its next move. A close above 72.10 would indicate the move will be to the upside. I believe that the downside will be limited to about 69.85. December* Aussie Dollar:  I might consider the long side of this currency at current levels with a risk based on a close below 63.45. The first upside target measures in at 65.00 with the next at 66.35.

Energy Complex October* Natural Gas: After all was said and don’t, the rally from the late July low to the August high is a 3 wave move (even though to the untrained eye, it comes across as five waves). That three wave move is noted on the chart in red. It strongly implies that this contract at not put a low in place yet and that lower prices are on the horizon. My first estimate is to 4.40. I would consider the short side at this juncture risking a close decisively above 4.85. Bear in mind that weather in the gulf during this hurricane season can upset the plans of mice and gas traders. October* Crude:   Although 31.50 is a normal Gann level, prices have hovered both side of that number since early August. Although we have no positions to speak of, traders with long positions should liquidate on a close below 31.00 while shorts should be out on a close above 31.60. In the meantime, critical support lies down at 29.20 on this contract.

Metals – December*  Gold:  If you took the gutsy short trade you should have been stopped out by now and turned back to the long side of gold. When prices passed through 367 on the December contract, they passed through the critical Gann level and that should always be respected. The next stop should be 389 which would constitute a test of the early February high. December* Silver: With a risk of a close below 5.05 and a target of 5.28, the risk:reward is not an attractive one. Therefore,  I would leave this market alone for the time being.  December* Copper: (Unch) I would go long this contract on a close or two above 81.20 rising a failure below 80.00.  London 3mo Copper:  If traders were stopped out of the last long probe, I would reinstate such longs risking the same close below 1750.

 

Agricultural Complex:  November Soybeans: The protective stop for this contract may now be raised to a close below 5.85. December Wheat:  Long positions stopped out with a neat profit. I would be willing to sell a rally to 3.86 risking a close above 3.95. December Corn:  Long positions should still be intact. Those positions my be protected against a close below 2.34

 

Softs:
December* Cocoa: While the chart does not give me a pattern when I could raise my protective stop for long positions, I would raise my stop to a close below 1690. October Sugar:  Although my downside was 6.15, the momentum over the past week suggests that prices will exceed that level. Stay on the sidelines until we see signs of stability..