MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR WEDNESDAY, FEBRUARY 8, 2012)
888-301-8120
jcrawford@zaner.com

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.

THE MAJOR PLAYERS:

In a previous Market Update I pointed out that the eurocurrency and dollar were starting to follow the same pattern technically that they did in October:  The eurofx had closed over the 20 day ma while the dollar closed under it.  This occurred in mid January for the first time since October.  I suggested that this behavior could be suggesting a repeat performance of their October near term trend changes.  So far it has.  The euro has continued to rally, the dollar to sell off.

In October the eurofx rallied 10.70 points.  The dollar sold off 5.235 points.  If you apply that potential to what these markets are doing now, the potential projection in the eurofx is 138.00; the dollar 76.800.  These prices are approximations.
What did this do to the other markets?  I have listed below the markets that were affected the most by the above trend changes in the major players in October and what they did movement wise from their lows.  It was no coincidence that they made lows (or highs) in almost the same time frame as the eurofx and dollar:
Corn:  rallied 75 points.  Beans:  rallied 1.09 points.  Bean oil:  rallied 5.00 points.  Emini:  rallied 221.00 points.  Silver:  rallied 7.000 points.  Gold: rallied 155.00 points.  Coffee:  rallied 32.00 points.  Sugar:   rallied 4.00 points.  10 year notes:  sold off 4.000 points.

I do not think that it is just a coincidence that these markets are responding in a similar fashion this time around either.  Let's just go through a few to see what their current potential could be if comparable to their October action:
Corn:  667.  Beans: 1250.  Bean oil: 55.00.  Emini:  1493.00.  Silver:  36.450.  Gold:  1783.00.

The point of bringing this up is that it appears the eurofx and dollar are giving us the near term direction of not only themselves but some other markets too.  Their near term trend changes in October lasted approximately one month before resuming the major trend again.  If that be the case, many of these markets could top out (and the dollar bottom) around mid February.   Time will tell but in the meantime it should help you get an overall picture of what could be really going on currently.

                "EMOTION is your enemy more than any market will ever be."

GOAL OF THE MARKET UPDATE: The purpose of my Update is to share with readers what the technical aspects of a market is suggesting.  It is not my personal opinion but merely conveying to readers what market action potentially suggests drawn from my years of experience with the markets and what similar behavior in the past has produced.  I do for you the technical analysis that most of you do not have the time to do personally. 
The Update is also designed to help you learn what to look for in a market technically and to develop good trading habits irrespective of the results of a particular trade. It is also a guide and tool for those who want to compare it with their own work.

TO RECEIVE THE COMPLETE MARKET UPDATE: Your access to the Update through Internet websites is not the complete Update. It does not include comments on alternate days (Monday, Wednesday & Friday) or not necessarily all the markets followed. To receive the complete Update via email, you may register for it on my website.  I also offer free trading booklets:  http://www.tradingfuturesmarkets.com/.

OTHER SERVICES AVAILABLE TO YOU: In addition to my advisory service I also offer brokerage services. My commission rates vary according to the services you want from me.  My clients range from self directed to full service. The Market Update is free to all clients.

MY TRADING APPROACH: I normally enter trades only on buy and sell stops. If the market is not going in the direction of the trade, I am normally not interested and the order is not executed.
I do not enter new positions during the night session but only during the day trading hours. I always use globex and always have a protective stop working - even during the night session.  My computation of trading costs for each trade in the Update includes commission plus an estimate of exchange fees.

TRADE ALERTS:

Buy March cocoa. Buy 23.35 stop. Protective stop 22.29. Potential projection 26.00. Potential risk $1060. Potential reward $2580.
Reasons for the Trade:
1. On the monthly chart cocoa closed back over the 100 day ma last month with follow through this month.
2. On the monthly chart cocoa is back over the 22.00 support.
3. The weekly chart formed a key reversal bottom in mid December that is still intact.
4. On the weekly chart cocoa closed over the downtrend formed since the late August high for the first time last Friday.
5. On the weekly chart, last week's low held at the 22.00 support. That is positive.
6. On the daily chart cocoa appears to be forming an uptrend. The recent sell-off could be the correction to the second wave up.
7.  A buy would negate a sell triggered today.  Normally when a market does so, it continues to follow through in the new direction.

GRAIN COMMENTS:  

MAR CORN:   I have tried to buy corn.  The price was reached during the night session but not during the day session.  Its trading pattern is beginning to resemble the same trading pattern that plagued the market in October into November.  At that time it struggled at 675 for quite some time to only fail.  It now seems to be starting the same behavior at 650.  Just watching.  Closed 642 1/4, down 2.

MAR MINI WHEAT:  I tried to buy it today.  The price was not reached.  Russia's wheat crop has been damaged by the bitter cold there but the market is not reflecting it.  Instead wheat is starting to form the same trading pattern it did in the same price range last October and November.  Just watching.  Closed 662 1/4, down 6 1/4.

MAR MINI BEANS:  Both the long-term 40-year seasonal average and the medium-term 15-year seasonal average forecasts that soybeans should establish an important seasonal low sometime between mid- to late February.  Technically they are in resistance and could sell off from the current level.  The daily chart appears to be forming a double top.  They made a high on Jan. 3 at 1244 3/4.  Yesterday's high was 1244 before they started to sell off.  Just watching.  Closed 1232, down 1.

MAR MEAL:  It rallied to the 330.00 resistance on the daily chart yesterday and stopped.  The 150 day ma hovers above that.  On the weekly it is back under the 100 day ma.  The 150 day ma is 2.00 below the market.  Failing that should push meal a lot lower.  Closed 325.40, down 2.10.

MAR BEAN OIL:  Open interest has jumped nearly 20% from the low seen a month ago. This suggests that bean oil is setting up for a sizable move.  Watching closely.  Closed 52.17, up .01.

MEAT COMMENTS: 

APR HOGS:  The rally that topped last week reached the 100 & 150 day ma on the daily chart and stopped.   Both those averages intersected at the same level.  Prior to that, the hogs did build a base between 85.75 up to 89.50 approximately.  Last week's rally broke out of that to the upside.  Could this sell-off be a test of that breakout?  On the monthly chart hogs have held around the 20 day ma and are triggering a buy.  The last time they sold off to the 20 day ma was in Nov. 2010.  That was the bottom of the market at that time.  That also suggests that on the monthly chart the 20 day ma is an important support.  On the daily they have been in an uptrend since the Dec. low.  This recent sell-off appears to be the correction to a third wave up.  If that be the case this sell-off should reach for 87.80 down to 87.50 to be comparable to the other corrections.  If they hold there, expect another wave up.  Just watching.  Closed 89.10, up .32.

APR CATTLE:  After they finally rallied back over the 20 day ma on the daily chart in late December, sell-offs have held that average consistently.  They did so again during this most recent correction.  On the daily chart they have been in a near term downtrend since the Jan. 25 high.  They need to take out 129.32 to change that.   Long term they are in resistance but just looking at the monthly chart, they sure suggest higher prices.  Closed 128.57, up 1.15.

SOFTS: 

MAR COTTON:  I tried to buy it today.  It sold off instead and triggered a sell.  It is now back under 95.00 support.  If cotton takes out 92.69 that would be very negative and suggest a target of 90.00.  Long term they continue to do a lot of consolidation.  Normally when a market does that after the considerable major sell-off that cotton has had, it is to set up for a strong rally.  Cotton has yet to have that occur since the high made in March 2011.  It is overdue.  Just watching.  Closed 94.57, down 1.74.

MAR ORANGE JUICE:  Today it not only violated but closed under the 20 day ma on the daily chart for the first time since it started its major rally in early January.  That is not good.  The major rally could be over with.  Long term this month's high corresponds with the high made in early 2007.  That was major resistance and last month's rally over that could have been a "blow off" as it is now back under major resistance.  Closed 195.85, down 5.65.

MAR COFFEE:  The 40-year seasonal average indicates that coffee normally strengthens throughout the month of February. However, the shorter 15-year seasonal average indicates that coffee normally plunges in the first half of February and then recovers in the second half. Therefore, the odds of a rally are much better for the second half of the month than the first half.  As of now, the monthly is triggering a preliminary sell signal while the weekly already has one.  On the weekly coffee is trying to get back over the 100 day ma.  But the 20 day ma has put a lid on rallies on the weekly since coffee violated it in September.  Right now that average intersects up at 227.50 approximately.  So if the market can get to that area, its reaction could be critical.  On the daily it violated the Dec. 19 low but did not follow through immediately.  It could try for 230.00 before resuming the downtrend.  Those two numbers are areas to watch.  The market still suggests 200.00 longer term. Closed 223.65, up 1.95.

MAR COCOA:  I have tried to buy cocoa.  It triggered a sell today instead.  It still appears to be basing and possibly starting a third wave up.  If it can negate that sell signal tomorrow that would be very positive.  I'll try again tomorrow.  See Trade Alert for details.  Closed 22.73, up .10.

MAY SUGAR:  Switching to May.  It triggered a buy today and rallied to 23.87.  Keep stops at 23.20.  Closed 23.58, down .16.
Position:  Long 23.85 (2.7).
Projection:  25.00.

Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.  Opinions are subject to change at any time and are not a solicitation or recommendation to buy or sell futures contracts or options on futures contracts.  The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness.  All known news and events have already been factored into the price of the underlying commodities discussed.

Past performance is not indicative of future results.  All suggested trades are based on technical signals/indicators and do not include slippage or cost.  Not all trades suggested are taken.  Results are based on what the signal indicates not necessarily an actual trade.  Actual results may vary.