Chart of the Week : jan_2006_perf_sum

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The US Stock Market bounced back from its worst week of 2006 with one of its best rallies last week. Stocks were up across the board with various companies reporting very b 4th quarter earnings. SP futures climbed 1.93% for the week, while surprisingly good earnings from Microsoft pushed NASDAQ futures +2.19% higher. Small caps also enjoyed the rally with Russell 2000 futures gaining +3.61% and SP Midcap 400 futures were up +2.24%.

The stock future rally was helped by downward moves in the energy sector which saw Crude Oil futures fall -1.05%, Unleaded Gas futures dropped -3.07%, Heating Oil futures fell -3.17%, while Natural Gas futures remained very volatile falling -9.89% for the week!

Elsewhere many commodities continue to enjoy bull market conditions as the world’s economy continues to grow at a rapid pace. Sugar Futures remained in the spotlight last week after gaining another +7.85% as rumors of a short squeeze have surfaced. Copper is another market that has enjoyed the improved economic conditions as developing countries around the world continue to devour this precious metal. Copper was up 6.84% last week. Other commodity markets in the news include Coffee which gained +4.98%, Platinum was up +3.52%, Lean Hogs fell -4.03%, Live Cattle dropped -2.50%, and Cotton was down -1.84%.

Grains are also back in the spotlight as traders are forecasting an increase in demand across nearly all grain sectors in ’06. Corn, which can also be used in Ethanol production, gained +6.71% last week, followed by Wheat which was up 5.21%, and Soybeans which rallied +3.74% higher.

Finally US Bonds pulled back slightly (-1.50%) ahead of tomorrow’s FOMC meeting. Most traders and analysts are expecting the Fed to raise interest rates another 0.25 points however there is a growing sector of observers who feel the Fed might halt the recent run of quarter point increases. Regardless, volatility should increase of the next few months in the US Bond market with new Fed Chairman Bernanke taking over. Also on the radar for bond traders this week is the President’s State of the Union Address on Tuesday evening.

***Day Trading***

Last week may have been the “calm before the storm” as investor’s gear up for Greenspan’s last FOMC meeting this Tuesday. S&P futures rebounded from the decline the week prior but day trading systems struggled with direction as many of the biggest moves happened in overnight trading or right off the open. Friday was a perfect example of this situation, where 95 % of the day’s move higher occurred before 9:30 am CST and several systems went long near the highs of the day only to be stopped out later for small losses.

Tanker, a Crude Oil system by Compass developer Mariner futures, had two trades for a gain of +$1,000 for the week. The system can be traded on full-size or Emini Crude (1/2 the value of the full-size contract). Another system that has been performing week in and week out is RC Success eRL. The system profited another +$850 per contract for the week on three trades.

Impetus eRL finished the week with a small winner on Friday but finished the week down -$93 per contract. Clipper also finished in the red for the week down -$420 per contract on three trades.

It was a tough week for the bread and butter full size S&P system, as Daybreaker SP had two losing trades last week for a loss of -$2,650 while Compass and R-Mesa also saw losses. Compass SP is struggling to finish the month positive after a good start to the year and lost -$3,545 for the week. Finally, R-Mesa got tripped up on some counter-trend trades that amounted to losses of -$4,354 on five trades for the week.

***Swing Trading***

With last week’s stock index up trend, a majority of swing systems jumped on the band wagon and entered in line with the trend, going long or at least exited their prior short positions.

The trade of the week goes to the ever-patient Tzar eRL as it earned +$2,090 on the week after giving back a majority of its open trade profits the week prior. The system closed out a long traded from Jan 13th for profits of +$2,190 and is currently short, losing -$220 on the current position. Not far behind Tzar was Delphi eRL which added +$1,940 on the week after closing out a short position and reversing long on Monday.

In other trading for the week Tzar eMD added +$1,710, Tzar ES gained +$982.50 after reversing long, Tzar NQ gained $80 for the week after closing out a short trade for a loss of -$1,370, Axiom NQ lost -$70, Axiom ES ended down -$205 after reversing long late in the week, Delphi eMD and Eclipse eRL both ended down -$696.50 and -$880 and are now long, and finally Axiom eMD lost -$1,626.50 after being stopped out for a loss of -$1,284.10.

As for the Crude market, the trend for the week was down for both resulting in open trade losses on the week of -$720 for both Axiom CL 90 and 135. Both systems are currently long earning +$3,460 and +$1,910 respectively.

The story was much the same in the Bond market as a sharp sell off heading into this week’s FED meeting ended up giving back some prior profits. On the week Mesa Notes gave back -$921.87 while Mesa Bonds gave back -$1,718.75 on their existing long positions. Meanwhile Jaws Narrowneck Bonds also gave -$1,181.25 back to the market.

***Long Term***

Just one week after commenting on how few systems had established positions in the US bond markets - several trend following systems came to life last week with short trades in both US and European bond markets. Bonds eventually had to break out of the recent choppy pattern and for at least the short term, the trend is moving downward.

Systems with short positions include SEMA4 Symmetry which is short in the five year notes for open trade gains of $4.69, Trend Simplicity which is short in the 30 year bonds for open trade losses of -$518.75 per contract, short in the five years for open trade losses of -$3.13 per contract, and short in the 10 years for open trade loss of -$81.25 per contract.

Other systems went short in European bonds including Axiom LT which reversed short in the Eurobund and Swiss Government Bond. The system lost -$1670.00 per contract on the previous long Bund trade and -$2700.00 per contract on the previous long Swiss Bond trade. Trend Simplicity is also short in the Eurobund for open trade profits of +$950.00 per contract.

The metals sector has certainly been hot of a late as new highs are seemingly hit on a weekly basis in markets like Aluminum, Copper, Gold, Platinum, and Palladium. Last week Palladium and Gold took a breather with only small gains, but Aluminum, Copper, and Platinum continued to climb and several systems are beginning to accumulate impressive profits.

Notably, Aberration Plus is the only system that has taken full advantage of the LME (London) Aluminum contract for open trade gains of $9591.00 per contract on a long position entered in November. The system is also long in Palladium for open trade gains of +$1425.00 per contract.

Other systems with long positions include Axiom LT which is long in Palladium for gains of $7050.00 per contract, Andromeda is long in Palladium as well for open trade gains of +$5560.00, Trend Simplicity is long in Copper for open trade gains of +$4775.00 per contract, and SEMA4 Symmetry is long in Gold for open trade profits of +$6010.00 per contract.

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