MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR WEDNESDAY, AUGUST 12, 2008)
888-301-8120
jcrawford@zaner.com
ABOUT TRADING:
A client of mine, Larry, made the following comment: "When trading you are committing your money to something that you have no control over so you have to do it in a way to keep yourself out of trouble. You need a system to help you in volatile markets." No truer words were spoken. Statistics show that the successful trader is wrong well over 50% of the time but still makes money because he uses a system.
Developing a system takes time. The purpose of my Market Update is not only to give market guidance but also to show you what the basic components to any system should have prior to placing a trade: an Entry, an Exit, and a Projection. The goal of the Update is to point you in the right direction, save you time and, hopefully, improve your trading skills.
SOME IMPORTANT THINGS TO KNOW:
1. "Trade Alerts" are good for the next day only.
2. I do not enter markets during the night session.
3. I always have stops in during the night session.
4. I will move stops during the day and only existing clients are notified of these changes at that time.
5. You are welcome to contact me at any time (whether you're a client or not) to discuss a market or anything in question in the Updates. Either email or phone is fine. I personally answer all inquiries.
OPENING AN ACCOUNT:
Please feel free to contact me regarding opening an account. You will work with me personally. I'm affiliated with Zaner Group, an Introducing Broker, which enables us to clear more than one clearing firm so we can fit the trader to the firm best suited for them. Looking forward to hearing from you!
TRADE ALERT:
Buy December corn. Buy 536 1/4 stop. Protective stop 504. Potential projection 580.
Reasons for the Trade:
1. On the monthly chart, corn has had a 61.8% Fibonnacci retracement since the contract high made on June 1 - increasing the potential for a retracement rally.
2. On the monthly chart, corn is back over the 500 support.
3. The weekly chart is forming a preliminary key reversal bottom and is also back over the 500 support.
4. On the daily chart, corn has previous support at 520 that held the market in March. Today it rallied back over that support and formed a key reversal bottom suggesting a trend change from down to up. This is the same formation that created a turn around and formed the bottom in March.
5. The USDA Report issued this morning was bearish and the market rallied. Normally when a market ignores a negative report, it is telling you that the report is already in the market. Consequently, the market rallies.
6. Today was an outside day that can trigger a signal and market direction.
Buy December wheat. Buy 825 1/4 stop. Protective stop 800 1/2. Potential projection 880.
Reasons for the Trade:
1. On both the monthly and weekly chart, wheat continues to hold at the 750 support.
2. On the daily chart, wheat continues to hold at the 780 support level that goes back to last December.
3. On the daily chart, wheat formed a key reversal bottom on Aug. 5 indicating a trend change from down to up.
4. The daily chart has a previous buy signal that is still intact.
5. Today was an inside day that can trigger a signal and market direction.
Sell October cattle. Sell 106.10 stop. Protective stop 107.87. Potential projection 100.00.
Reasons for the Trade:
1. On the monthly and weekly charts cattle are in major resistance territory between 102.00 and 104.00. This has produced trend changes in the past.
2. On the monthly chart, cattle formed a key reversal top last month suggesting a trend change from up to down.
3. On the weekly chart, cattle appear to be setting up the same 1,2,3 top formation that they did in March prior to a major sell-off.
4. On the daily chart, a buy signal triggered on Thursday was negated Monday. Normally that produces further follow through in the new direction.
5. On the daily chart, the recent rally formed a key reversal top suggesting a trend change from up to down.
6. On the daily chart, a sell signal would push cattle under the 20 day moving average which is negative.
Sell December cotton. Sell 68.15 stop. Protective stop 71.76. Potential projection 62.00.
Reasons for the Trade:
1. On the monthly chart, cotton appears to be starting the correction to a second major wave up. The first major wave up had a correction of 48 points. The current wave up has had a correction of only 28 points - suggesting additional sell-off to set up for a third wave.
2. On the monthly chart, the high in march formed a key reversal top.
3. On the weekly chart, a buy signal triggered two weeks ago was immediately negated suggesting further follow through in the new direction.
4. On the weekly chart, cotton failed to rally back over the 20 day moving average last week and also this week.
5. On the weekly chart, two weeks ago cotton violated the uptrend formed since the April low - suggesting a trend change from up to down.
6. On the daily chart, a buy signal triggered on Thursday was negated today.
7. The daily chart is in a downtrend. It appears to be starting a fifth wave down.
Sell September coffee. Sell 133.90 stop. Protective stop 138.30. Potential projection 119.00.
Reasons for the Trade:
1. A sell signal would trigger a sell signal on the monthly chart.
2. On the weekly chart, coffee is again under the 20 day moving average.
3. On the daily chart, coffee is back under the 20 day moving average. An attempt to close back over it today failed.
4. On the daily chart, a buy signal triggered last Thursday was negated on Friday. That normally produces follow through in the new direction.
5. On the daily chart, a double bottom formed yesterday was negated today.
6. Seasonally coffee sells off at this time in August. It has done so 14 out of the last 15 years.
Sell September cocoa. Sell 26.59 stop. Protective stop 27.37. Potential projection 25.00.
Reasons for the Trade:
1. Both the monthly and weekly charts have key reversal tops.
2. The weekly chart has a previous sell signal.
3. On the weekly chart, cocoa violated the 20 day moving average last week and closed under it.
4. The daily chart is in a nearterm downtrend.
5. The daily chart has a previous sell signal.
6. The daily chart triggered a second sell signal today.
Buy September bonds. Buy 116.26 stop. Protective stop 115.13. Potential projection 118.24.
Reasons for the Trade:
1. On the monthly chart, sell-offs have consistently held at the 20 day moving average for the last four month.
2. On the monthly chart, bonds have strong support at 114.00. Even though they have "dipped" under that price level, they have held that support and closed above it for the last four months.
3. On the monthly chart, the sell-off that bottomed in June, formed a key reversal bottom suggesting a trend change from down to up.
4. The weekly chart has a double bottom, technically suggesting a trend change from down to up.
5. On the weekly chart, bonds are back over the 20 day moving average. That is positive.
6. The daily chart has a previous buy signal that is still intact.
7. Today was an inside day that can trigger a signal and market direction.
GRAIN COMMENTS:
DEC CORN: Switching to the December contract. Last time corn had formed an inside day and attempted to rally. It failed and sold off to form a new low today for the move (504 1/2). It is now attempting to hold the 520 support. I still suspect it will try to rally. A near term trade could be developing. See Trade Alert for details. Closed 528 1/2, up 11 1/2.
DEC WHEAT: Switching to the December contract. Long term negative developments have occurred that I have pointed out before. In spite of that, wheat is holding on long term support. In addition, on the daily chart it has developed several position indications suggesting an attempt at a rally. See Trade Alert for details. Closed 815 1/4, down 3 1/4.
NOV BEANS: Switching to the November contract. They formed a key reversal bottom yesterday but not a very aggressive one. They are in support and the current wave down has met projections. A rally could be in the making. Closed 1214, up 18.
DEC MEAL: It formed a key reversal bottom yesterday and is in better support than beans. It has the potential for a rally to 355.00. Just watching. Closed 332.00, up 11.50.
DEC BEAN OIL: Still the pathetic one in the group. It closed near its low today which was 50.54. The 50.00 level is the closeth support which is very minor besides. Just watching. Closed 50.78, down 67.
MEAT COMMENTS:OCT HOGS: They are finally starting to sell off. In my last report they were getting very close to their historic high made in 1997 at 86.60. Since my last report they have taken it out. The new historic high is 90.00 made yesterday (basis the August contract that is now used for the monthly chart). The monthly has triggered a buy this month. They have done this before near major tops. They did it twice in 2004 as they attempted to get over 80.00 at that time. That was the top of the market and they sold off a good 30.00 points. I'm still watching them closely to sell but entering is the trick. Closed 76.10, down 1.10.
OCT CATTLE: I have been attempting to sell them both yesterday and today. In spite of the negative developments on the long term charts, on the daily chart they are trying to hold at the 20 day moving average that intersects at 106.24. There is also technical support at 106.50 but not a lot. Possibly this combination is, for now, holding the market. See Trade Alert for details. Clsoed 107.12, up 30.SOFTS COMMENTS:
DEC COTTON: I attempted to sell it today but my price was not reached. It continues to try to hold the 69.00 area which is now minor support that was originally formed in August of last year. There is also twice as much resistance directly above the market between 72.00 and 75.00. With more resistance above than below, the market is usually dominated by the more extensive consolidation area. Closed 69.63, up 76.
SEPT ORANGE JUICE: This is a tough market. It just reached support longterm but the long term charts have developed more negative indicators this month. The daily chart is attempting to consolidate and, so far, has triggered two buy signals. And then we have the hurricane season issue. Hurricanes or not, it usually creates support for the market this time of year. I would like to see more encouragement that it may try to hold the long term support. At least the grains are making that effort. Not so with OJ so far. Watching closely to possibly buy. Closed 100.75, up 2.35.
SEPT COFFEE: I have attempted to sell it since Monday. So far it refuses to take out the low at 133.95 made on the24th. Today was a huge outside day. It did violate the double bottom formed yesterday. See Trade Alert for details. Closed 137.45, up 1.50.
SEPT COCOA: I tried to sell it Friday. Unfortunately it went past my entry point too much during the nite. I attempted again today. It reached my entry last night again and then rallied so I placed the orders when I came in and they were never reached. I'll try again tomorrow. See Trade Alert for details. Closed 26.93, up 44.
OCT SUGAR: Stops were reached last Friday. It triggered a sell on Friday from Thursday's inside day - the reason for my raising the stop. It has made a new low each day and is now at the 13.20 support. The 20 day moving average intersects right under that level at 13.13. Long term it started an uptrend when it bottomed in June of 2007. The first wave up peaked in March of this year. After the correction to that first wave up, it started to rally again. The problem is that it is now having difficulty taking out the high (15.07) of the first wave up. To continue and confirm an uptrend, it needs to do that. If it takes out 13.00 on the weekly, it will be triggering a sell and, most likely, failed for now at that attempt. If it rallies over 14.47, it will be triggering a buy. In short, sugar is struggling. The monthly reflects the same issue except it triggered a buy last month. It has been my experience over the years that normally the monthly chart is the leader.
Position: Long 14.17 (8.6). Exit 13.68 (8.8). Loss $548.80.
SEPT COPPER: Last time it was attempting to hold at 340.00. It has since sold off and the new low today is 321.85. It is now pushing into old support formed the first part of this year. Holding there remains to be seen as it has resistance above that extends for over a six month period. That is a lot. In short, it has sufficient resistance above to push it right through the support it is now approaching. Closed 322.75, down 6.40.
DEC GOLD: The last time I attempted to sell gold, it went through my entry point at night and I was not able to get in unfortunately. I was attempting to sell it at 901.50 but I would have had to "pay up" too much. It collapsed and ended up going down to 880.70 that day. It has been almost straight down since then to 808.60 today. It is now in some support formed late last year plus the current wave down has met projections. Long term, though, it is in trouble. Violating the major support at 860.00 added fuel to the flame and I don't see the current support as holding. Possibly it will develop a rally from here but it should be one to sell. Its more extensive support is down at 660.00 - 680.00. Watching closely. Closed 814.60, down 13.70.
SEPT SILVER: It violated support at 16.500 and has been selling off since. Its main support is around 14.000. It has minor support at 15.000 but any rally should be to sell. Watching closely. Closed 14.485, down 13.50.
MISC. MARKETS COMMENTS:SEPT CRUDE OIL: The 118.00 area mentioned last time did not hold. A new low was made today at 112.31. It has minor support at 112.00. Long term this sell-off looks like it is just beginning. The next support area is around 100.00. After that it is 85.00. Just watching. Closed 113.01, down 1.44.
SEPT (MINI) NATURAL GAS: I attempted to buy it last Friday but it triggered a sell instead. Long term it is starting to push into very heavy support around 8.00 down to 7.50. The daily chart has support at 8.20 that it is trying to hold for the third day in a row. Watching closely. Closed 8.33, up .008.
SEPT JAPANESE YEN: Stops were reached Friday with a profit. It has good support at 90.00 long term. Technically the current downtrend should extend beyond that as the major support is at 88.00. Historically, considering the level that it started to sell off from, the correction should be more than what has occurred to date. Waiting to sell again. Closed 91.50, up 42.
Position: Short 92.36 (8.5). Exit 91.67 (8.8). Profit $862.50.
SEPT DOLLAR INDEX: It has rallied into resistance on the monthly chart and that has caused it to stall. It has had such a "run" I would expect a setback at this level. If so, it should be an opportunity to buy - possibly in the 75.00 to 74.80 area. Watching closely to buy. Closed 76.32, unchanged.
SEPT EUROCURRENCY: On Friday it collapsed and went beyond my projection. I covered almost two full points beyond my objective. It is now in support at the 148.00 level. Right now it has good resistance above extending from March to August between 153.00 and 160.00. Waiting for a rally to sell again.
Position: Short 153.76 (8.6). Exit 150.50 (8.8). Profit $4075.00.
SEPT BONDS: They are their usual mess on the daily chart. Irrespective I see a rally long term. See Trade Alert for details. Closed 116.16, up 30.
There is substantial risk of loss in trading futures and options. Past performance is not indicative of future results.
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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.
