Trading Blog: TnT Group

Good morning all. I hit on this a litle bit in my webcast. I wanted to go a little more in depth about it though. When I left for vacation over the holidays I left a gold and S&P market that seemed to be somewhat correlated. To say it was a great correlation would be an absolute lie. However it seemed like gold was being traded solely as part of the commodity basket and was rising with oil, copper, rubber, etc which was also followed slowly but surely by equities and the free money that was being pumped into them.

Now after my first day back from vacation and stepping back into these markets it seemed as if there was a definite change of scenery. Overnight gold was getting hit harder than Brett Favre’s head on the frozen field in Minnesota while equities, continuing there impressive day from yesterday, gradually rose higher (as I type S&P 500 Minis are up 4.25 trading 1269.50 while gold is down 14.7 trading 1408.2). This was not a small divergence from what had been happening before I left. This was a farely large change of thought. Are people or the markets now thinking, more than we have in a while, that the economy may be on track?

Below is a daily chart showing the somewhat correlated gold and S&P markets and the slight divergence over the last few days.

The overnight session really made me think that way. We had a ton of risk on trading happening. Minis up 4.25, euro trading up 30 some pips, yen getting hit farely hard down 87 pips, debt (both US and European) down a good amount, and gold getting clobbered. Oil had a tough time doing anything overnight. I understand it. Do they want to rally it because of equities rallying and a slight sell off in the dollar or is it confused because gold is getting pounded. It eventually rallied slightly, as it should if the markets are showing signs of adding risk and the outlook being somewhat positive.

Below is a 5 minute  chart of last night session and the distinctive inverse relationship of gold and Minis.

I am not coming out and saying that our economy is back on track and let the jobs rain down from the heavens. I still whole heartedly believe we are nowhere near where we need to be. My point is to keep an eye out for this inverse type relationship as it will tell a story as to risk on or risk off trade. It is hard to deny how these markets moved last night and is something to pay close attention to moving forward into this new year.

Justin’s market overview for Wednesday….

All eyes continued to focus on the yen today. Whispers of a Japanese intervention sent the yen tumbling overnight. With nothing imminent, we saw the yen grind all the way back in the morning.

Unexpectedly, German IFO business sentiment rose to 3 yr. highs. Whereas U.S. durable goods released a number lower than forecasts. In addition, new home sales in the U.S. recorded record lows. Looks like the storm clouds in Europe have shifted over to the United States. I wouldn’t argue with anyone who would want to be short U.S. indexes against the European equivalent.

The rubber band is being stretched right now. When will it snap?

levels i am looking at……

short 1054 then 1075 with a final short at 1096 in the s&p minis. above there,  i am done trading from the short side.

the downside looks ugly in the minis, with a possible hiccup at 1017.5 to stop the bleeding.

long 13517 and 13500 in the u.s. 30 yr. bonds

long 12511 in the u.s. 10 yr. notes

long 116 58 in the yen

It’s not a question of enough, pal. It’s a zero sum game, somebody wins, somebody loses. Money itself isn’t lost or made, it’s simply transferred from one perception to another. – Gordon Gekko

This is Brian Tehako giving you my daily blog on the market.

I want to Thank Andy Turner for taking over my blog yesterday.  His blog was short and sweet…. But right to the point that leads right into my blog

The EURO/ YEN.  Holy crap did it get hammered overnight and continued through the early morning.  Being a macro trader I believe in the movement in money moves all markets.  This shift of money is unreal in the Euro/Yen.  In my trading career I have not seen the Euro/Yen in these areas it made this morning.

Yesterdays settle was 912 in the Euro/Yen.  It made a low today of 646.  With these levels here and we did make a nice bounce back above 800, but these equity markets could see a 10% drop easy, 20% probable, and maybe even back to our lows from 09/10.  I know this seems crazy…… But I still believe that the currency moves started the FLASH CRASH….. If  so……. We will BREAK HARD!!!

One thing I also noticed today that was very strange was the metal sectors.  Silver was really strong on the bounce in equities.  Silver was strong, then Gold, and Copper was really weak.  Keep one eye on that Silver in these moves…. Gold should stay stronger…. If it doesn’t, you may want to start bottom feeding on these equities.  It happened today and worked.

EXISTING HOME SALES……….. OHHHHHHH BOY…… IT WAS BAD!!!!!

We were looking for 4.65M and -13.4%.  It came out 3.83M and -27.2%.  You cant get much worse(15 year lows).  Equities hammered and debt continued it’s extreme BULL market.

Richmond Fed came out suprisingly a little better.  We were looking for 8, and it came out at 11.  That took me for a little bit of a surprise, but it is such a small number.

Going into the close today:

DON’T BUCK THE TREND.

Stay short equities

Stay long debt

THE TREND IS YOUR FRIEND.

Check out my live spot today on Fox Business News around 2:10 Central Time.

Remember…… No drinking and Trading!!!

Andrew Tehako here again to take a look at this last week. Since there is another Andy in the office and also another Tehako in here I will start to post by the name Spyder…Long story, but the short of it is that when I was younger I would go make drinks for my brother and his friends and fellow traders. I made one of the guys one too many drinks and he started yelling, ‘Spyder, go get me a drink!” which is the nickname the kid from Goodfellas was called who got the guys drinks. Anyways it stuck and now have Spyder as a nickname.

Looking back this week the market had the FED to look forward to. Like usual the days before the meeting the markets were dead and were not fun to try and be in. FED came out with what seems like some negative views on our economy and that we may not be out of the clear as much as some may think (AKA CNBC). FED decided that it needed more quantitative easing and since rates cannot go any lower they would go into the bond markets to keep rates as low as they can for now.

Markets took these steps as negative realizing that doing this shows that the shit has not quite stopped htting the fan. Equities took it on the chin the next day as well as the euro making a very large move to the downside. We are now back below the 128 handle.  It is crazy that with all that was and still may be going on over there, despite Germany holding them up, the Eurozone is still not that sound and the euro was as high as it was. And now, finally, maybe people will start to realize that we are not that sound over here either!!

There is still absolute fear in these markets even though S&P Minis are trading 1079.00 as I type. Yen hit a 15 year high against the dollar, gold is still over 1200.00 and treasury yields are yielding nearly nothing! Seems like a lot of fear and anxiety too me.

Now Spyder, go get me another drink!

Greetings all! My name is Justin Diamond and I will be posting the market events each Wednesday.

The dollar sell off yesterday was short lived. We held a small support at 8059 and basically steamrolled higher all morning.  Gold ripped higher as well off of recovery concerns. In my mind, something has to give here. With the dollar rallying, I have to believe that gold will come off at some point. I guess we will have to wait and see.

The U.S. treasuries got hit throughout the morning. That down move may have been triggered by a strong Canadian dollar as well as the Japanese yen getting a beat down.  A move above 9778 in the Canadian dollar created more energy to the upside.

The stock markets continued its death grind higher with a positive ADP employment change and ISM.

Trades I am eyeing tomorrow……

Long  US 30 yrs @ 12719

Long US 10 yrs @ 12314

Long S&P minis @ 1105

Long Eurostoxx @ 2757