AheadoftheNews Blog

Crude oil July contract gaping up and about to reach critical resistance between 52.50 and 52.60, A break above those levels would be very bullish, moving it out of the downward channel in force since April. However, any further sign of economic weakness, as in today's PMI, would make that level a good short candidate. Remember, oil prices are tied to demand. For now, looking bullish, so I would not jump the gun yet.

YM short 10552, lower stop to 10539, lock in +13.

We are trading below weekly pivot of 10517 and actually hit the target of weekly S1 at 10465 (10466 low). Gap from Thursday at 10475 is closed. YM ended at 10480 and the trade entered Friday is +72 (+$360 per contract). I might book it soon, I'll wait and see what the overnight session open gives (5:15 PM PST).

The end of month ramp up is over and looks like we have a decent swing top. The low volume breakout yesterday was a headfake. NQ could not move past 1555 and stay there. Bonds catching a nice bid on the weak PMI. Possibly lots of European money flowing to US treasuries as well. In any case, equities on the defensive.
YM has a gap to close at 10475 and weekly S1 is at 10465. Should be a magnet.
Open position: Short YM at 10552, stop 10572.

As I mentioned a few days ago, the no-vote could be good for European stocks, as exports get some help from a lower Euro. The question is how US stocks will respond to a rise in the dollar and their export costs. Oil could keep moving higher if the perception is that the European economies will pick up steam.
May 30 (Bloomberg) -- European stocks rose, led by exporters including Royal Philips Electronics NV and Porsche AG, as a French rejection of the new European Union constitution sent the euro to a seven-month low against the dollar.

NQ broke above 1555 on thin volume , but neverthless reversed overnight. This could now indicate a higher open for YM this evening. (Globex is open, but ECBOT is closed). If that is the case, it might be wise to exit the short. If however NQ settles below 1555 and ES below 1200, I might hold over. Right now looks like a stop run push in the morning which could take us to 10603. Keep tight stops.

June gold (YG05M) forming a bear flag, signaling lower lows. Gold is in a downtrend, with resistance at 425,429 and 438. Until that trendline is broken, I would be wary of going long, unless you are swing trading.

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CL July contract. Oil still in a downward channel, but should it break out above 52.60, watch out. That area corresponds to 38.2% retrace Dec low / April high, but also trendline resistance. It is stiff resistance, but any move on volume above that would be a strong negative for equities. There has been no better intraday tool for traders than watching oil. What a gift that has been.

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Open position: short 10552, stop 10572. Weekly R1 will be at 10603. Daily R1 is at 10567, just below last week's high. If we get stopped out, look to re-enter short at 10603. Ultimately, we have an old gap to close at 10781, probably where this rally is headed for. But we are due for a pullback to weekly S1 at 10465, which would also be the 10 day ema.

NQ stalled at 61.8% 1554.50 and looks about to correct here. We are 4% above the 20 dma, an automatic red flag. At the minimum, we will visit 1525 again, 50 % and now 10 day ema and further down 1500, right above 20 dma and 38.2% (1495). That would be a good long setup, although the jury is still out on the longer term sustainability of this rally. Above 1555, we have resistance at 1575 and 1588. YM has a gap fom 3/15 at 10781 and that will be what I'll cue off of, if we get there.

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VXN weekly chart. Bottom of weekly b-bands have always preceded sharp corrections, not to mention the fact that we hit all time lows. Notice also how price action is flattening, probably an indication that the two year bull run is about to end.

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Current open position: Short 10552, stop 10572.

YM analysis will be updated over the weekend.

ECB rate reduction is euro bearish and dollar bullish. No two ways about that. Feds in the US will help maintain a stronger dollar with continued rate hikes, at least another 1/2 point, as it is clear they see strength in the US economy. All bearish for gold. The daily chart is ugly with a steady series of lower lows and lower highs . Due for an oversold bounce, but stays bearish below 438/440.. Yes, there is a nice looking candle from a bounce off lows on 5/24, but that pattern occurred twice this year, on 3/27 and 4/13, both sucker's rallies.

If France votes against the constitution, it will have a negative effect on the Euro, which is good for France and business. The Euro has been too strong, crippling European exports and why the growth there has been anemic. I think conservatives in France might very well be for a no vote. As for the dollar, a no vote will boost its value. Net effect could be a wider trade deficit as US exports get more expensive. All in all, a very interesting weekend coming up.