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Dr. Kris has two degrees from MIT because one just wasn't enough. Her life goal was to figure out the universe and having done that (at least to her satisfaction), she decided to tackle something even more difficult—the stock market. Applying the scientific method along with an insatiably... More
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  • Intraday Market Notes -- July 2: Bad Weather Sparks A Rally In Soft Commodities 4 comments
    Jul 3, 2012 1:18 PM | about stocks: CORN, JO, SGG, GRU, JJA

    **Note: I forgot to post this yesterday.

    2:30 pm ET: The market is spinning its wheels today as conflicting economic reports virtually canceled each other out. (Increased housing starts (bullish); decelerating manufacturing (bearish).) That, plus an extra helping of bearish news concerning record high unemployment in Europe (11.1% total) helped to put a damper on what appeared to be an opening rally.

    But the bulls are clawing their way back from the post-opening slump. Market internals are favoring them at the moment as both the Trin and the VIX are dropping. However, the negative VWAPs are on the rise indicating that a bear takeover is possible. This is a holiday shortened week (tomorrow the market closes at 10am ET and will remain closed through the 4th) and as such volume will be light, meaning that it will take less pressure to move a stock (or an index) so don't be surprised if we see greater than average price fluctuations.

    Party pooper Goldman Sachs (NYSE:GS) reiterated its bearish stance saying that the expected protracted slowdown in Europe and China will impact US corporate profits. Their near-term goal on the S&P 500 (SPX) is 1285 (see below for current levels) with 1250 being their year-end projection. Supporting this bearish outlook is a CNBC pundit who said that the ratio of US companies estimating an earnings slowdown this year is 4:1. What does this mean for you? If you're itching to buy stocks, you may want to wait for technical confirmation on the upside (the SPX clearing 1375 resistance would be one good indication). On the flip side, should the market begin to move back down, hedging and/or exiting your positions would be prudent.

    Commodity Alert: Agriculture etfs on the move!
    Adverse weather conditions are putting pressure on crops and now might be a good time to add some soft commodity exposure to a diversified portfolio. You don't have to go to the futures market to trade them; there are exchange traded notes (etns) that make it easy. The corn fund (AMEX: CORN -- that should be an easy symbol to remember!) has risen over 20% in just the past couple of weeks and is breaking another resistance level ($43) today. Following suit are other ag-based funds: Grains (AMEX:GRU, +1.8%), Sugar (AMEX:SGG, +1.4%), and Coffee (AMEX:JO, +2.3% -- this was also my Stock of the Day pick on 6/26). If you'd rather not do your own stock selection, look at the Agriculture etn (AMEX:JJA) which is a basket of the following commodities: soybeans, corn, wheat, cotton, soybean oil, coffee and sugar. It, too, is breaking a resistance level today (up 1.6%). For you options traders, all of the individual stocks mentioned above have options but most are very thinly traded except for CORN which has a more robust field. The aggregate fund, the JJA, does not (as yet) have any options. Since these funds are all futures-based, they pay no dividends.

    Themes: long ideas, commodities Stocks: CORN, JO, SGG, GRU, JJA
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Comments (4)
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  • triguy
    , contributor
    Comments (6) | Send Message
     
    Dr. Kris, thanks for the post. Is the movement in JO?I have been looking for news but have not been able to find much.

     

    Thanks,
    5 Jul 2012, 11:13 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (327) | Send Message
     
    Author’s reply » Tri,

     

    These trade calls are based mainly on chart technicals. JO rebounded from testing last year's $36 low. It broke through $42.50 resistance and is looking to test $45. A break through that could send it to $50.

     

    For further info on the background and mechanics of the trade coffee, I urge you to check out these SA articles:

     

    http://seekingalpha.co...

     

    http://seekingalpha.co...

     

    Hope this helps. Happy trading!

     

    Dr. K
    5 Jul 2012, 01:16 PM Reply Like
  • triguy
    , contributor
    Comments (6) | Send Message
     
    Very useful articles. Appreciate your help.
    6 Jul 2012, 08:03 AM Reply Like
  • Dr. Kris
    , contributor
    Comments (327) | Send Message
     
    Author’s reply » You're welcome!
    6 Jul 2012, 01:54 PM Reply Like
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