MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR WEDNESDAY, OCT. 1, 2008)
888-301-8120
jcrawford@zaner.com
GENERAL COMMENT: In last Tuesday's Update I pointed out the obvious volatility of the markets and how many markets followed the strength in the gold due to the "monkey see monkey do" tendency. I also pointed out that when all is said and done, when markets do that without any change in their fundamental or technical scenario, it should give the trader an opportunity to position according to the original trend of the market. Such has been the case. The grains are back to selling off. And the softs sold off too. Eventually all markets will return to their original major long term trend. The one difficulty in this entire situation is that the current financial mess of our country causes much uncertainty and that has been reflected in the various market's erratic behavior making it very difficult to position for a trade.
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 mini japanese yen. Buy 95.61 stop. Protective stop 94.19. Potential projection 98.50.
(I suggest the mini yen as the amount required to risk is best suited for the smaller contract).
Reasons for the Trade:
1. On the monthly chart the yen sold off the to 90.00 support area and held. This is also where the 20 day moving average intersects.
2. The weekly chart has two buy signals.
3. On the weekly chart, the yen rallied over the 95.00 resistance last week. That is now support.
4. On the daily chart, the yen has rallied over the downtrend line formed since the high made last March. This suggests a trend change from down to up.
5. On the daily chart, all sell-offs have held at the 20 day moving average since the contract low was made in mid August. That is positive.
6. On the daily chart, the yen triggered a buy today that is still intact.
Sell December bonds. Sell 116.220 stop. Protective stop 118.130. Potential projection 112.00.
Reasons for the Trade:
1. Long term bonds rallied to the major 124.00 resistance this month and have sold off since forming a major key reversal top. That same area produced a sell-off to 103.27 in 2003. At that time they also formed a key reversal top.
2. The weekly chart has a key reversal top suggesting a trend change from up to down.
3. On both the weekly and daily chart, after the initial sell-off, bonds rallied to the 121.00 resistance and have been selling off.
4. On the daily chart, bonds sold off under the 20 day moving average today. That is negative.
5. Today was an inside day that can trigger a signal and market direction.
CHANGE IN OPEN STOPS:
Short December canadian from 97.11 down to 94.85.
Short December bean oil from 48.52 down to 45.41.
GRAIN COMMENTS:
DEC CORN: I have been just watching this market. It sold off Friday through today. The previous low was made in early Aug. at 504 1/2. It took it out today when it reached 485 1/2. The weekly triggered a preliminary sell this week. On the weekly chart in mid August corn reached 485 1/2 (basis the Sept. contract at that time). It is right back at that level today. Longer term projections technically suggest 380. I see more sell-off. Closed 487 1/2, down 25 1/2.
DEC WHEAT: Early last week I attempted to buy it even though long term the charts were negative because the daily chart did have several nearterm technical indicators that were supportive. It was not enough and wheat could not hold. In spite of its attempts to rally today, long term it is still in big trouble. It failed to hold the 750 major support on the monthly this month. To make matters worse it also failed to hold at the 20 day moving average and left that in the dust as well. Long term it has very minor support at 650 but the real support is down between 500-550. Closed 680 up 12.
NOV BEANS: Last time I pointed out that they had triggered a sell and should test the previous low at 1099 1/2. They did that and then some indicating a start of a new wave down. Long term they have violated the 20 day moving average this month and do not have any real support until 1000. On the daily chart that sell signal continued to follow through today as they continue to follow through with a new wave down on the daily chart. Today's low 1039. Closed 1045, down 49.
DEC MEAL: It triggered a sell on the weekly chart this week. It has some minor support long term at 280 but the real support is at 250. Today's low 283.50. Closed 285.00, down 16.40.
DEC BEAN OIL: I moved stops this morning from 48.52 down to 46.02. I lowered it again to 45.41. It is in the process of testing the low made on Sept. 17 at 43.52. Closed 44.48, down 95.
Position: Short 47.65 (9.25).
Projection: 41.00.
DEC HOGS: They have continued to consolidate between 64.50 up to 67.50. As you know, whenever a market does this, it is "setting up" for a move. Today they finally took out that range when they sold off to 63.65 but they did close back over it. They also formed a huge outside day. Another outside day on Friday triggered a sell on Monday. Just watching. Closed 64.20, down 85.
DEC CATTLE: Switching to the December contract. The buy signal on the monthly chart was negated. That is even more supportive of a major top in the making. On the daily chart, cattle have been in a downtrend and are now trying to hold at 99.50. Chart wise that price does not have any significance but they did form a key reversal bottom today. Just watching. Closed 100.37, up 50.
SOFTS COMMENTS:
DEC COTTON: Last time I thought it might try to rally - setting up an opportunity to short. It didn't. It has continued to sell off with a new low today at 55.11. Historically cotton is following the same pattern in selling off that it did with the correction to the first major wave up in 2003 that I have pointed out to you before. It drifted lower for several months, then had one month in which it sold off over 14.00 points. This month seems to be an equivalent of that as the total sell-off this month on the monthly has been 13.85 points. In 2003 it then drifted lower for a couple more months but not by a lot before bottoming. Right now cotton is pushing into good support formed between 2004 and early 2007. In short, I suspect we are starting to look at the later stages of the correction to the second major wave up that peaked in March of this year. Closed 57.25, up 44.
NOV ORANGE JUICE: It has continued to drift lower. The last inside day formed last week triggered another sell. The low today is 85.20. Long term 85.10 was the low in Aug. 2005 before it started its huge bull move that ended at 209.50 in March of last year. Just watching for now. Closed 89.20, up 1.35.
DEC COFFEE: Long term there should be more to the downtrend in coffee. It is holding at the 20 day moving average on the monthly chart right now. It needs to sell off under 127.55 to violate it. I still see the potential for a projection to 120.00. Closed 130.45, up 20.
DEC COCOA: As mentioned in my general comment, cocoa's recent rally appears to have been a reaction to the gold move. It has been in a downtrend and yesterday appears to be resuming that when it gapped down and sold off over 100 points - just like it did when it started the previous wave down. Like that wave, it stopped near the previous low and is starting to consolidate. If it follows the pattern of the previous wave down, it should take it out. Watching closely. Closed 25.58, down 3.
MAR SUGAR: I wanted to sell it today, it reached my price during the nite, rallied and then sold off again to reach my price a second time today - allowing entry. Keep stops at 14.47. Closed 13.66, down 27.
Position: Short 13.65 (9.30).
Projection: 12.00.
DEC COPPER: Last time I pointed out that to confirm that copper was starting a new wave down, it needed to take out 300.00. It did and then some. The low today is 276.50. Technically that area means nothing on the daily chart. The potential projection for this wave down is 274.75. Just watching. Closed 287.90, down 2.75.
DEC MINI GOLD: I was short gold and was stopped out. Gold continues to fight to maintain its earlier gains in an area that is technically loaded with resistance. I also think it is reflecting a basic conflict between being a hedge in a nationally bad financial situation versus the fact that we are in a recession and that recession is not over. The recession should put pressure on the metals. In recessions, people "pull in their horns" and tend to save more, causing less demand (aside from losing jobs). That does not have the setup for an inflationary environment. Yet, with this financial mess and potential bailout, if that isn't inflationary, I don't know what is. I think it is a question of which one will win out first. I suspect the recession will. That is occurring now and statistics show that savings have gone way up. The inflationary repercussions (which should be a lot) of our infamous financial games of the last few years will take time to show up in the economy - longer term being bullish for gold. As I pointed out last time, the projection I originally had in gold when I was looking to buy it (and missed it) in early September was met in about a "New York second" and technically and should sell off from this level Longer term the major support in gold is at 675. Time will tell. Today's low 860.10. Closed 880.80, down 13.60.
Position: Short 883.90 (9.25). Exit 909.10 (9.26). Loss $836.64.
DEC SILVER: Since it formed that minor key reversal top referred to in my last Update, it has been selling off. It violated the 20 day moving average today. Long term it has minor support at 10.000. The major support is at 7.500 - 8.000. I see more sell-off. Closed 12.275, down .750.
MISC. MARKETS COMMENTS:NOV CRUDE OIL: Long term it has good support at 85.00. The current low is 90.42 made on Sept. 16. The recent sell-off reached 93.36 and is forming a key reversal bottom today. This, so far, is a test of the low. If it holds, there could be a rally that eventually could take out 110.00. It is just too early to tell. Closed 100.64, up 4.27.
NOV (MINI) NATURAL GAS: I was stopped out of my long position. It has good support at 7.000 that it has been holding for several weeks long term. I pointed out before that it is months ahead of many other bear moves and has yet to have a correction to the first major wave down. should be bottoming. On the weekly chart it has been consolidating around 7.00 support for over a month. Watching closely. Closed 7.438, up .217.
Position: Long 8.075 (9.23). Exit 7.650 (9.26). Loss $1062.50.
DEC JAPANESE YEN: I wanted to buy it today but it reached my price during the nite and then sold off. This is the third time that the yen has rallied over 97.00 only to immediately sell off the same day. Even so, it triggered a buy today that is still intact. I will try again tomorrow. See Trade Alert for details. Closed 94.98, down 163.
DEC DOLLAR INDEX: I moved the stop up this morning from 76.80 up to 77.68. I had projections to 80.00 and it reached 79.62. I took profit at 79.42. In two days it has rallied approximately 2.50 points without retracement. I would buy a setback again. Closed 79.36, up 1.76.
Position: Long 77.21 (9.25). Exit 79.42 (9.30). Profit $2210.
Projection: 80.00.
DEC MINI EUROCURRENCY: I attempted more than once to short it but it finally went to my price during the nite session. Since I don't position at nite, I missed the trade which sold off approximately 400+ points! Very frustrating. Closed 141.34, down 354.
DEC CANADIAN DOLLAR: It triggered a sell yesterday. It dropped to 94.07 today. Considering how it sold off through my projections so quickly, I'm lowering the stop to see where it goes. It also closed under the 20 day moving average. Move stops from 97.11 down to 94.85. Closed 94.27, down 204.Position: Short 96.47 (9.29).
Projection: 94.50.
DEC BONDS: After their extreme rally up to 121.000 yesterday, they sold off over two points today. They also formed an inside day. I would sell them. See Trade Alert for details. Closed 117.055, down 2.21.
There is substantial risk of loss in trading futures and options. Past performance is not indicative of future results.
The information in this email may be confidential and/or legally privileged. It is intended solely for the addressee. Access to this email by anyone other than the addressee is unauthorized. If you are not the intended recipient, please contact the sender and destroy any copies of this message and any attachments. Any unauthorized use or dissemination or any action taken or omitted to be taken in reliance on it, is prohibited and may be unlawful. This communication is neither an offer to sell nor a solicitation of an offer to buy any security or other investment product.
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.
