Analyst picks for 6 March 2012


My pick: Sell dollar-yen above ¥81.00, stop-loss on close above ¥82.50
Expertise: Technical analysis
Average time frame of trades: 1 day to 1 week

Although we are in the process of a major structural shift, with the market looking to carve a longer-term cyclical bottom after record lows back in October, the latest surge has been quite intense, leaving shorter-term daily studies well overbought. Daily RSI recently peaked at its highest level in over ten years. We are finally starting to see signs of some pullback and contend that short-term risks are for additional weakness before the market resumes its newly-adopted uptrend. Target ¥78.00.


My pick: Sell S&P 500 (pending)
Expertise: Global macro
Average time frame of trades: 1 week to 6 months

Last week resolved two sources of uncertainty in the macro landscape. The second three year European Central Bank LTRO delayed the chance of a Eurozone-driven credit crisis for at least a year, and Ben Bernanke’s congressional testimony validated stronger US data with clues that QE3 is unlikely. The spotlight returns to fundamental considerations, where a growth slowdown is expected in 2012. That should weigh on the S&P 500 and I will look to enter short on a daily close below 1,358.60.


My pick: Short S&P 500, long euro-Swiss franc and dollar-yen
Expertise: Fundamental and technical analysis with risk
Average time frame of trades: 1 day to 1 week

I continue to carry forward my two longer-term positions: long dollar-yen and euro-Swiss franc. After the former’s massive rally, it’s worth moving the stop up to ¥80. The euro-Swiss franc is waiting on either Swiss National Bank action or a seismic shift from the market. In the meantime, I want to prepare for any major swells in volatility in the near future. There are lots of risk-sensitive setups, but an S&P 500 channel break below 1,350 would headline.