MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR FRIDAY, OCT. 10, 2008)
888-301-8120
jcrawford@zaner.com
A LITTLE PERSPECTIVE: Recent times have been pretty rough as everyone knows who owns stocks and/or are involved with commodities. The markets have been volatile. I have pointed out for some time that the futures markets were turning into bears which is normal after the huge runups we had. What surprised all of us is how quickly it has happened.
I normally do not talk about the indices or the stock market. But I do feel it timely now to gain a little perspective. The last time we had a stock market drop was when it peaked in March 2000 at 1574.00 (I'm using the S&P futures as my reference). After that top was made, the S&P went sideways for six months before the real sell-off started. It took two years to the month to reach the bottom. The subsequent drop stopped at 767.50.
Let's compare that with this bear market. In October 2007 we saw another new high at 1786.50. This drop has been very different. It immediately started to sell off and in eleven months it is at 962.50. That's a total drop of 624 points. In the previous bear move, in the first eleven months it had dropped 357 points.
We haven't reached the low experienced in the previous bear move and may not. What makes it seem so drastic is how quickly it is occurring. Excluding how rapidly it is occurring, this bear move is part of a normal process. What is compressing it into a smaller time frame is the financial mess of the U.S. and now other countries.
You are seeing the same occurring in the commodities. Their bear moves have been fast and furious. That normally has been their style anyway but I do believe this bear move is being fueled by not only the financial mess we are in but also because so many commodities rallied to prices that bordered on ridiculous. And what goes up, must go down.
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: None for Friday.
CHANGE IN OPEN STOPS:
Short December cotton from 54.82 down to 54.46.
GRAIN COMMENTS:
DEC CORN: My stop on my short position was reached on Wednesday with a profit. I then recommended buying it for today. It triggered a buy today. I paid 435 for it. My entry point was at 433 1/4. It had reached my entry price last night. Keep stops at 406 1/2 for now. Closed 438 1/4, up 10 3/4.
Position: Short 478 3/4 (10.2). Exit 430 3/4 (10.8). Profit $2400.
Position: Long 435 (10.9).
Projection: 500.
DEC WHEAT: It triggered a buy today from yesterday's inside day. On the daily chart it is in some decent support but long term it is in the middle of no where. I would like to see a rally to short. Closed 604 3/4, down 3 1/4.
NOV BEANS: They have a gap up at 991 1/4. Their high today 990. I would like to see a rally to short. Closed 980 up 16.
DEC MEAL: It triggered a buy yesterday when it traded over 260.00. It has continued to follow through today. It will be running into resistance around 290.00 so that is a level to watch. Closed 276, up 7.20.
DEC BEAN OIL: Still the lackluster one in the bean group. I see nothing going on here. Just watching. Closed 39.79, up 2.
MEAT COMMENTS:
DEC HOGS: They rallied to 62.57 yesterday but did not negate the most recent sell signal. I want to short them but longer term they are sitting on some decent good support. Just watching. Closed 61.12, down 77.
DEC CATTLE: They have been in a "free fall" since June. They have had some small rallies of maybe approximately 2.00 points or so but considering that they have dropped from 115.00 down to almost 92.00 on the daily chart, almost non- stop, they are overdue for a rally. Also the daily chart has a glaring gap from 97.50 down to 95.97 - one target for a rally. That rally should be an opportunity to sell now that the monthly chart has turned negative too. Closed 94.30, down 65.SOFTS COMMENTS:
DEC COTTON: It sold off to 52.00 yesterday. It tried to rally today but is still under pressure. Move stops from 54.82 down to 54.46. Closed 52.44, down 1.47.
Position: Short 55.75 (10.6).
Projection 50.00.
NOV ORANGE JUICE: It looked like it was trying to rally. It triggered a buy signal but it has fizzled out. It is now starting to drift lower and if it trades under 80.60, the buy signal will be negated. Just watching. Closed 81.75, down 11.
DEC COFFEE: It sold off to 109.35 yesterday and ralllied back to close 35 higher. Today it had a very narrow range and did not do much. Just watching. Closed 114.65, up 15.
DEC COCOA: I sold it Wednesday at 23.72. My projection was 23.00. I did not like the slow action so I covered it this morning at 23.29 with a profit. Today's low 23.25. Just watching. Closed 23.30, down 2.
Position: Short 23.72 (10.8). Exit 23.29 (10.9). Profit $430.
MAR SUGAR: It formed a key reversal bottom yesterday. It may try to consolidate at this level. Watching closely. Closed 11.90, down 5.
METALS COMMENTS:DEC COPPER: The inside day that I thought might trigger a buy did not. It triggered a sell instead. A new low was made yesterday at 228.50. Today was another inside day. Just watching. Closed 240.60, up 5.10.
DEC GOLD: After rallying again, it is again being stopped by that extensive resistance that I pointed out earlier. Trying to get over 920.00 to 930.00 stops the market every time. The first time it rallied to that level it could not get over it. If a market cannot do that, it will normally back off and try again from a lower level. That is exactly what gold did and this current rally is another attempt to get through it. I mentioned in my last Update that it could "trade back and forth at this level and do nothing for some time." As mentioned before, gold is in a struggle between reacting to the recession or the impending inflation that printing all this "funny money" will produce. I don't know. Just watching. Closed 886.50, down 20.00.
DEC SILVER: It triggered a buy yesterday at 11.950. Today's high 12.195. Keep stops at 10.910 and let the market work. Closed 11.875, up 10.30.
Position: Long 11.950 (10.8).
Projection: 14.500
NOV CRUDE OIL: Long term it had support at 85.00 and it traded through it today. In the after market it is now trading under that level. The next long term support is at 80.00. Closed 86.59, down 2.36.
NOV (MINI) NATURAL GAS: On the daily chart it is trying to hold 6.500. That is also a long term support area. I see nothing to do yet. Just watching. Closed 6.825, up 0.24.
DEC JAPANESE YEN: Long term it appears to be starting a new wave up. On the daily chart it formed an inside day today but this is after a huge rally from under 97.00 up to 102.00+. I would like to see a setback to go long. Just watching. Closed 101.27, up 79.
DEC DOLLAR INDEX: After a high at 82.03 on Monday, it has sold off - but not much. It now appears headed to test that high again. Just watching. Closed 81.36, up 52.
DEC EUROCURRENCY: It attempted to rally but is now selling off again. It rallied to 138.35 today and then sold off. Closed 136.90, down 280.
DEC CANADIAN DOLLAR: Another new low today at 87.09. Just watching. Closed 87.68, down 165.DEC BONDS: They triggered a sell yesterday. My projection was 117.000. They sold off to 117.130 yesterday. I covered them at 118.01. If I would have had the patience I could have gotten my projection today. However, with the craziness of the markets, I don't have much patience. Closed 116.165, down 1.245.
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.
