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CTA Trading Desk Morning Report

[7:00am ET] Good morning.

I am perplexed and hence have given the matter much thought this month. What underlies the present malaise in global equity markets is not, in my view, caused by worries over Greece or even a slowing of the global economy. This time we don’t even have the banksters to blame. The causative factor of crashing prices in some sectors today is an entirely new one.

CTA Trading Desk Morning Report

[8:30am ET] Good morning, Geoff here.

Yesterday, it was risk off as traders worried about the Greek tragedy taking place before our eyes and its effect on the eurozone. The US Dollar was bought for the 10th day in a row and stocks and gold suffered for it.

The S&P 500 is at a critical juncture. I am reposting the S&P 500 chart from yesterday. You can see how the 1340 area that I targeted as 1st support held yesterday. This is a key area – it could move bounce or fail at this area.

CTA Trading Desk Morning Report

[9:00am ET] Good morning, Geoff here.

Stock and commodity futures are lower this morning due to worries about Greece pulling the $USD higher.

Here is a repeat chart on gold. Clearly the supports have held so far, but prices are on the edge so we shall see how it goes today.

The second chart shows that gold’s weekly cycle count is at a timing band for a turn higher. From low to low, gold averages about 20 weeks so time is on the bullish side of the argument.

CTA Trading Desk Morning Report

[9:00am ET] Good morning, Geoff here.

JP Morgan loses $2 billion on a derivatives trade.

As Bill notes each week in his Week In Review, we have traded a few Canadian banks (TD, RY) but we generally have only held Charles Schwab in the Financial sector of Cara 100 stocks for longer periods of time. The reason for this stance is that the large banks hold portfolios consisting of derivatives that have counterparty risk with some not marked to market. At any time, a blow-up can occur so we would rather not hold that risk, so we don’t.

CTA Trading Desk Morning Report

[7:00am ET] Good morning, Geoff here.

When both time and price line-up, you have a higher probability trade.

GDX formed a bullish engulfing candle and may have formed a high volume reversal yesterday. The chart shows a few arguments for the bullish reversal case including a bullish divergence in money flow (MFI).