Larry TV November 27, 2011
A Special S&P 500 Trade
November 27, 2011 Video Transcript
This is Larry Williams. This is recording of the Larry TV is being done on the 27th day of November 2011. And we have a trade coming right up on the long side in the S&P 500. Let me explain it to you.
The results really here show it all. $37,000 profit. 82% of the trades correct. Buying the S&P on the fourth trading day after Thanksgiving, as long as that day is not a Friday.
So there's a seasonal tendency to rally after Thanksgiving or around the first of December as you're going to see. So that's the first way of looking at this trade. 4 days after Thanksgiving we tend to have a rally in the marketplace.
But there's another way to look at this trade as well, let me show that to you.
I'm certain by now you've heard that there's usually a market rally around the first trading day of every month, but you probably haven't heard this.
Here is each month of the year and the potential profit that was made by buying on the first trading day of the month. But look at this, would you. The most successful month buying on the first trading day of the month has been December by a long shot, about $28,000 of profits, more than any other month. The worst trading day of the month has been in August. So here we are. We are at December. We have the first trading day of the month coming up this week. It sure looks to me like we have a trade.
Let me give you, just a little bit more, numbers behind this trade.
Here now, I've broken it down to trading, on buying long, on the first trading day of December. Except if that day is a Friday, we will not take the trade. 76% of the trades have been successful. $27,000 profit, driving home again this point that right around the first trading day of December we start to rally. So I think you want to be looking for a buy signal in here. Either the day before the first or on the first, or let the market dictate that for you. But it is time for this market to rally on a short term basis as well as a long term basis. We'll talk about that next.First of all, I certainly did not expect this decline in the S&P. I thought we would start to rally this coming week, a week ago. We didn't until Friday, it looks like to me. I continue to be bullish on this market. I'd like to show you why. Also, just because we had some great calls, remember, I got a lot of emails this week on Larry. You blew it. The market went down. You know, what I'm not perfect, I don't call everything all the time. So, don't get your expectations too high here. Most of the time we're right, but not always. I have losing trades. That's why we have stops. That's why we have money management. So I don't know what else to tell you. But I am still expecting a rally here. Here's why.
Here's WillGo, which continues coming up just last week. WillGo went up to 0.46. So we see this suggestion of a rally still there. Also, my forecast for 2011 shows right here we should start a rally. It's just about, well, December 1st, isn't?
In fact, the forecast said rally up, come back down here. I didn't anticipate this magnitude, but that's the forecast and it's now forecasting a rally starting about the 5th – 6th of December, again right in with that December 1st trade. So I think we're going to rally there. I know you're probably interested in some other trades, so let's go look at those next.
Let's review a couple of trades here. This is what I think is starting to shape up. But we've been just coming down so precipitous here in Soybean meal, I thought it would rally. It has not.
But what interests me is Open Interest is coming up here. The Small Specs, that's the gray line, have come way out of the market. And, the Commercials have been buyers. So is it a buy now? No. Is it approaching a buy point? Absolutely. So this is one not to look at this week but over the next few weeks. I think we definitely want to pay some attention to that market.
Another one that I think is closer to being right now would be Treasury Bonds. Look what happened there. An increase in Open Interest and an increase in the Small Specs. That's the gray line remember. They've been quite bullish on this market. Typically, when they get bullish the market (Bonds) come down. So I think there's a potential sell signal in Bonds, so look for one there.
On the long side... a couple of markets that I like for an immediate trade would be the Coffee. You see what Coffee has done. We had a huge decline in Open Interest this week, wow. Small Specs, Large Traders way out of the market. The Commercials have been buyers. So if we can get above Friday's high on Monday or Tuesday. I think that's a buy signal in the market.
Another market that the public likes, that I don't like a lot is Cattle. We see that the Small Specs have been bullish in the market. The Commercials have not been. Our accumulation line is really falling apart. Accumulation below this low, prices suggest to me that a potential selling opportunity in the Cattle market.
Coffee, we looked at that. You want to pay attention to that. Another one I think is close to a buy signal here is Copper.
Copper has drifted back in here, for almost a month now. Open Interest has declined. There's not been much interest by the Large Traders or the Small Specs. The Commercials have continued to be long in this market. So I want to take buy signals here. But we did have inside day on Friday. So getting above Thursday's high, maybe last Wednesday's high, some type of a trend change in this market, use your qualify trend line... I think represents a buy point in the market.
Now, here's the one that's a little difficult of a trade. If we look at Unleaded Gasoline... Unleaded Gasoline shows some nice accumulation work in. I'll blow this up for so you, so you can see we've gone to a new low in price not in accumulation. Commercials have not stepped in to be heavy buyers here nor have the Small Specs. But we did take a lot of stops, it looks like. I think, therefore, getting above Friday’s high is buy signal in this market.
You can also look at Crude Oil. It was stronger, a lot stronger. The weakest of the complex has been (on the short term basis) Heating Oil. Crude Oil has been the strongest. Large decline in Open Interest. Large Traders are still heavy. Commercials are not doing much in the market nor Small Specs. Now, the real failure in this market would be if we were to take out Friday's low. That would be an absolute failure in the market. Shorter of that, I think you can look for a buy point in this market, and a potential up move in here. It may not be a perfectly set up market but probably worth the shot in here, especially given the bullish I see in the S&P.
Finally, the Australian Dollar had a decline in Open Interest here. A potential, if we were to get above Friday's high, for a short term trade in the market. We have been in the nice downtrend here though so we're kind of against the trend in the market. I'd rather see the market come up, pull back, and then start an up move. But it is on my watch list.
So there are plenty of trades for you this week. So go attack them.
I will be in Brazil this coming weekend. I don't know if we'll be doing a Larry TV, but we'll at least send you a note advising you what the status is. Until then good luck and good trading.
