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Markets driven largely by dollar valuation

Top Day Recommendations

6.02.11

Initial claims come in soft with productivity numbers coming in slightly higher. Yesterday was a simple demonstration that the markets are being driven largely by dollar valuations. With the anemic ADP number, the immediate thought was fewer jobs, less income, less discretionary spending all working to jeopardize corporate profits. Fewer fill ups too and crude took a tumble. So, what can we take away, that asset inflation is based on the devaluation of the currency? Pretty much, I guess. Moody’s downgrade of Greece wasn’t particularly helpful. Truthful, just not helpful to overall tone. Even the EC came off a bit yesterday. Actually, from a German perspective, the EC at 135 is better than the EC at 144 if your country is an export machine. Markets in general continue to be news driven and volatile. Yesterday’s decline, occurring as it did on the first day of the month, was a divergence and not a good one. Meanwhile, the world continues to "kick the can down the road." At some point, they are going to lose the can. At some point, the EC will trade at a 130.00 handle. ECB will push back rate increases and Greece will only get worse. Meanwhile, the EC at 130 only boosts German exports. See the chart below.

Conveniently enough, 149.25 (the approximate high) - 139.63 (proximate low) = 9.62. 139.63 – 9.62 = 130.01. Fearful symmetry?

Week of May 30 - June 03

Date ET Release For Actual Briefing.com Consensus Prior Revised From
May 31 09:00 Case-Shiller 20-city Index Mar -3.7% -3.4% -3.33%
May 31 09:45 Chicago PMI May 63.0 62.5 67.6
May 31 10:00 Consumer Confidence May 67.5 66.3 65.4
Jun 01 07:00 MBA Mortgage Index 05/27 NA NA +1.1%
Jun 01 07:30 Challenger Job Cuts May NA NA -5.0%
Jun 01 08:15 ADP Employment Change May 190K 170K 179K
Jun 01 10:00 ISM Index May 57.0 57.6 60.4
Jun 01 10:00 Construction Spending Apr -1.0% -0.5% 1.4%
Jun 01 15:00 Auto Sales Jun NA NA 4.73M
Jun 01 15:00 Truck Sales Jun NA NA 5.38M
Date ET Release For Actual Briefing.com Consensus Prior Revised From
Jun 02 08:30 Initial Claims 05/28 400K 413K 424K
Jun 02 08:30 Continuing Claims 05/21 3700K 3688K 3690K
Jun 02 08:30 Productivity-Rev. Q1 1.6% 1.6% 1.6%
Jun 02 08:30 Unit Labor Costs-Rev. Q1 1.0% 0.9% 1.0%
Jun 02 10:00 Factory Orders Apr -2.0% -1.0% 3.4% 3.0%
Jun 02 11:00 Crude Inventories 05/28 NA NA 616K
Jun 03 08:30 Nonfarm Payrolls May 175K 185K 244K
Jun 03 08:30 Nonfarm Private Payrolls May 190K 220K 268K
Jun 03 08:30 Unemployment Rate May 9.1% 9.0% 9.0%
Jun 03 08:30 Hourly Earnings May 0.1% 0.2% 0.1%
Jun 03 08:30 Average Workweek May 34.3 34.3% 34.3
Jun 03 10:00 ISM Services May 53.5 53.3 52.8

- Numbers are good up until the close of business today. These are strictly technical in nature, not fundamentally based or biased.

Legend

P is Positive

N is Negative

PRD is Potential Reversal Day

S2 is strong support

S1 is good support

DS is Daily Support

DR is Daily Resistance

R1 is Good Resistance

R2 is Strong Resistance

Levels are for the most active futures contract

Daily Support and Resistance

Some of these numbers are badly skewed due to Monday’s holiday when some markets were closed, others open

Trend S2 S1 DS DR R1 R2

Emini S+P P 1290.50 1310 1299.50 1336.00 1342.5 1353.50
Emini Naz P 2257 2295 2298 2360 2257 2380.50
Yen P 120.80 122.57 122.88 124.19 124.57 125.40
EC P 138.40 140.50 143.05 145.21 143.90 145.14
Sep 10 Year P 122.10 12303 122.19 123.25 124.10 124.25
Sep 30 Year P 124.04 125.0 124.28 126.22 126.13 126.30
Soybeans P 13.485 13.642 13.74 13.94 13.966 14.136
Corn P 7.05 7.317 7.46 7.655 7.75 8.015
August Gold P 1456.6 1485.0 1531.0 1552.2 1529.4 1545.4
July Silver P 32.56 35.29 36.53 38.67 39.80 41.57
July Copper P 386.50 402.5 406.20 417.40 426.6 435.16
July Crude N 94.14 97.44 98.84 102.52 103.22 105.20

N.B.: if you initiate a trade using ANY of these

numbers use a STOP at least equivalent to 2 ½%.

Repeat: use Stops. Don’t think about using Stops.

Use Stops. Some find it appropriate to look at the

margin requirement and use that as a Stop or if

it’s a steep initial requirement, use half. But

whatever you do, stop thinking about any other

alternative and use Stops.

********************************************

Futures trading entails considerable risk and is not for

everyone. An account can lose more than its initial investment.

Stops are not necessarily filled at the stop level. Past

performance is not a guarantee of future results.

 

Charles Kespert

***********************

HYPOTHETICAL PERFORMANCE RESULTS HAVE

MANY INHERENT LIMITATIONS, SOME OF WHICH

ARE DESCRIBED BELOW. NO REPRESENTATION IS

BEING MADE THAT ANY ACCOUNT WILL OR IS

LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR

TO THOSE SHOWN. IN FACT, THERE ARE

FREQUENTLY SHARP DIFFERENCES BETWEEN

HYPOTHETICAL PERFORMANCE RESULTS AND THE

ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY

ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL

PERFORMANCE RESULTS IS THAT THEY ARE

GENERALLY PREPARED WITH THE BENEFIT OF

HINDSIGHT. IN ADDITION, AL TRADING DOES NOT

INVOLVE FINANCIAL RISK, AND NO

HYPOTHETIOTHETICAL TRADING RECORD CAN

COMPLETELY ACCOUNT FOR THE IMPACT OF

FINANCIAL RISK IN ACTUAL TRADING. FOR

EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR

TO ADHERE TO A PARTICULAR TRADING PROGRAM

IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS

WHICH CAN ALSO ADVERSELY AFFECT ACTUAL

TRADING RESULTS. THERE ARE NUMEROUS OTHER

FACTORS RELATED TO THE MARKETS IN GENERAL

OR TO THE IMPLEMENTATION OF ANY SPECIFIC

TRADING PROGRAM WHICH CANNOT BE FULLY

ACCOUNTED FOR IN THE PREPARATION OF

HYPOTHETICAL PERFORMANCE RESULTS AND ALL

OF WHICH CAN ADVERSELY AFFECT ACTUAL

TRADING RESULTS.