The Three Musketeers: USD/JPY, VIX, & SPX

USD/JPY 6 month Daily Chart



-I expect to see a retest of 83.75 levels, possibly as low as 83.25
-The BOJ cannot solely rely on tough talk to weaken the Yen, they must show & prove intervention to the market
-Momentum and Volatility remain flat; no reason to get long or short until a catalyst appears
-The 20 day SMA will serve as short-term resistance; 85.75-86.25
-RSI resistance at 55 levels remains firm
-Don't discount strong economic data; Unemployment sits at 5.3% and a Current Account Surplus is 3.3% of GDP.

Trade: I will get long once I see a retest of 83.75 lows. The BOJ will intervene through Quantitative Easing policies in order to allow the exchange rate to bounce to the upside. Once long, I'm looking for 800-1000 pips to the upside.

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VIX 6 month Daily



-200 Day SMA has held as a floor since the 'Flash Crash'
-The 20 day SMA is about to cross the 50 day
-RSI is poised to break through 60 and test 70 overbought levels last seen in May
-Momentum has plenty of room up to 2.5
-As long as money continues to flow out of Equities into Bonds, volatility will persist

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SPX 6 month Daily



-A head and shoulders reversal pattern is well underway
-RSI failed at 50 and will go low until it tests oversold territory at 30
-Momentum topped out and has plenty of room to the downside
-The 20 day SMA will converge with the 50 day SMA in the next couple of trading sessions
-The above chart supplements the VIX story
-This week Consumer Sentiment, China PMI, Euro Zone PMI, U.S. ISM, and NFP take the market sentiment spotlight

Trade: Short SPX till 1000. Look for short-covering/a relief rally before entry. ES Mini Futures are a great place to start. Also, the ProShares UltraShort S&P500 ETF SDS is another way to double down on your bets.

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Related ETFs: ProShares UltraShort S&P500 (SDS), CurrencyShares Japanese Yen Trust (FXY), iShares MSCI Japan Index (EWJ), Consumer Discret Select Sector SPDR (XLY)


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital

DJIA Update- Charting for Success

Dow Jones Industrial Average Technical Analysis

Daily Chart-6 months



Notes:
-Momentum still has plenty of room to fall as it just passed break-even territory
-Resistance appears to be forming at the 50-day SMA or 10,300 level
-We could see potential support slightly above 9900-9950
-If this level breaks, Dow could fall to 9300-9500 range, though next clear level of support on the daily chart is 9800
-Expect to see a retest of 50 on the RSI to confirm a downtrend if the re-test fails
-The most recent sell-off lacked aptly confirming volume
-Possibly a head and shoulders reversal pattern


Weekly Chart- 2 Years



Notes:

-Support may come at levels of 9,600-9,700
-200 day SMA acts as near-term resistance, this equates to a price level of 11,000
-The last rally to 11,000+ was confirmed by robust volume
-Momentum still has room to move to the downside, though it looks to be flattening out
-The 50 day SMA is poised to cross the 200-day SMA, ‘The Golden Cross’, which indicates a strong bullish signal
-35-37 will need to be broken on the RSI for this down-trend to continue

Conclusion:

The Daily and Weekly charts both tell equally convincing stories. The Daily chart indicates very bearish sentiment while the Weekly indicates a potential rally is on the way. Thus, in-lieu of the toss-up, I will look to volume over the next few trading days to indicate which way the tape might be headed. At this time, the Dow is up 151.90 points to 10,137.70. A short-covering rally may be underway, or the bulls may be winning the battle today. Regardless, many bears exist in the market, it is only a matter of time before market participants show their true costumes.


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital

Nat Gas Inventories/Trade

Working gas in storage was 3,052 Bcf as of Friday, August 20, 2010, according to EIA estimates. This represents a net increase of 40 Bcf from the previous week. Stocks were 198 Bcf less than last year at this time and 177 Bcf above the 5-year average of 2,875 Bcf. In the East Region, stocks were 15 Bcf above the 5-year average following net injections of 48 Bcf. Stocks in the Producing Region were 84 Bcf above the 5-year average of 865 Bcf after a net withdrawal of 5 Bcf. Stocks in the West Region were 78 Bcf above the 5-year average after a net drawdown of 3 Bcf. At 3,052 Bcf, total working gas is within the 5-year historical range.

ir.eia.gov

This morning I entered a long position in some QG futures. I believe we will see prices move up to 4.00-4.10 before the next pullback. The RSI on the the NG futures remains in oversold territory, and momentum is bottoming. In addition, The UNG confirms a similar trading trend in the RSI and MACD. Also, I expect the 20 day SMA to cross the 50 day. Prices are already bouncing back from the inventory data release.

Patrick M. Ambrus
Analyze Capital LLC
Twitter: Analyze Capital

Market Brief: Aug 25, 2010

EUR



YEN


CRUDE


GOLD








1 -2 weeks out:

Short EUR/USD short USD/JPY

Longer Term 3-4 weeks + :

Look for entry to long the EUR/USD and long the USD/JPY.

If crude is more related to European markets long crude with long EUR/USD

As risk aversion deteriorates around the world + continued weak US econ data, we will get continued relative flight to quality sentimentally (weather or not fundamentals support such a move). Though lessened risk aversion will be mild at best if we continue to see strong price pressure in stable european and asian bonds.

Overall Id say risk aversion will stay strong but will lessen in the short term. Though, US equities are going to continue to trend down which can quite possibly drive risk aversion back up if world indices follow the SPX.

All in all such a scenario would support a break in gold's recent resistance of 1256+ to higher highs.

Crude Oil Inventories & Commentary

Oil is falling sharply in reaction to large builds in weekly inventory data. Oil stocks rose 4.1 million barrels with gasoline stocks up 2.3 million and distillates up 1.8 million. The data are for the August 20 week.

Gasoline demand slowed to a 3.0 percent year-on-year pace vs. 3.5 percent and 3.3 percent in the prior weeks. Distillate demand has been slowing abruptly for nearly two months, now at plus 4.9 percent year-on-year. Supply has been heavy the past year but signs of trouble on the demand side may now begin to shift the picture for oil which has been narrowly rangebound all summer.

Bloomberg.com

Has Crude finally found a bottom to this downtrend? It is hard to say. To quote Alex, " 50/50 chance crude ticks up." I do concur. Supply levels of NYMEX WTI are out of control. However, as long as emerging markets demand remains robust, crude should not fall below $65/b. I need to see price movement above the $75-76 line before I turn bullish once again. For now the tape is range bound. Until supply witless down and the EUR/USD pops, I expect crude to trade between $70.50 -$74.

In case anyone was wondering, I was stopped out of My USO calls. Extremely poor trade on my behalf. At least I learned a valuable lesson. Don't buy calls without protection. I will be trading futures for the foreseeable future.

Related ETFs: PowerShares DB Crude Oil Dble Long ETN (DXO), UltraShort Oil & Gas ProShares (DUG), iPath S&P GSCI Crude Oil Ttl Ret Idx ETN (OIL)

Sports: Team USA smacked Greece 87-59. Eric Gordon led the way with 18 points, 4-7 from the promise land.

Patrick M. Ambrus
Analyze Capital LLC
Twitter: Analyze Capital

Energy Info Aug 25, 2010

FYI



Via: Travel Insurance



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Alexander Lê
Managing Partner
Analyze Capital LLC
analyzecapital@gmail.com

勝利 x 2

'I'm on a losing strike, I mean winning streak'

-Wasalu Muhammad Jaco

Today I made one of my best trades of this scorching summer. After a glut of discussion on M & A activity, economic data, trade flows, credit flows, and Technical analysis, the lords of trading spoke to me. I was fortunate in my timing because many times a bad entry point can ruin your trade.

Catalysts

The bond markets continue to rally as yields on 10 year government notes tighten to levels reminiscent of the Credit Crisis. Similarly, the USD has not been kind to commodities or U.S. equity markets. Lastly, poor expectations for Existing home sales data and GDP revision data sealed bearish sentiment.

Please view Alex's SPX update below for more in-depth technical analysis.


Related ETFs: CurrencyShares Euro Trust (NYSEArca:FXE), CurrencyShares Japanese Yen Trust (NYSEArca: FXY), ProShares Ultra S&P500 (NYSEArca: SSO)

Literature: Friedrish Engels, The Origins of the Family, Private Property and the State

Sports: The New York Jets and All-Pro center Nick Mangold have agreed on a new seven-year deal worth a maximum of $55 million.


Patrick M. Ambrus
Analyze Capital LLC
Twitter: AnalyzeCapital