Trends in Futures - Commentary for Week 11/17/08

I am in negations with Barchart to bring you another year of providing my experience, wisdom, insights, and thoughts about today’s markets. I am not a market reporter of the news because you can get that anywhere for free, and news after it is known, is already in the market. I only talk about the news that really affects my bias. I do not listen to the daily chatter, which is really worthless. I am a trader! Win or lose, I tell you my thoughts. When I am wrong I stand up and acknowledge it, and when I am right I take credit. Most weeklies say something like “it looks like the market is going up, but if this happens, it will go down”. Big help, what does that tell you? Most authors that write articles who are brokers could not trade their way out of a paper bag, and their intentions are to create trade ideas that will lead you to place orders which results in commissions for them. Win or lose, they win. If you do not trade, they do not eat. If you can find a stock and commodity broker who is not just one step up from a used car salesman with a daily script, you are lucky. You have to search but some are excellent. Usually they are ex traders, who could not make it trading, but at least know many of the pitfalls and will treat your money like it was their money. The brokers that say they worked on the floor or managed a desk, are exactly what they are, workers, not traders. Being a poker dealer in Las Vegas, does not make you a professional poker player. I tell you, as I tell my Futures Flight clients, only to trade when you feel you have a good idea and the trade  location enables you to have a good profit if right, and a minimal loss if wrong. If wrong, make sure that the amount lost in relation to your account size is insignificant, just a trade that did not work, but not a bad trade. I tell you never trade to trade, trade like it is a business, do your homework before you open the store (trade) and make sure the location (entry of the trade) of the store will optimize the possibility for success.

I try and teach you about how I chart markets, a key factor to my success this year (my CTA fund account is up 32.98% after my payout). I explain what I think about the markets, the pitfalls, and do my best to  help you understand how and why I trade the markets. I do not trade to trade; I trade when I believe I can make money. Many opportunities present themselves with this volatility, but I wait for places to enter and exit to make trades. I want good risk reward ratios and have a plan and strategy at all times no matter if I am in or out of the market.

Now is the time I think you should write Barchart and tell them if you want me to continue this newsletter because you like it as much as I am proud of it, or tell them what you would like to replace it with. Another editor that will provide more news stories, or the race track tip sheet kind, or a person that is not trading but covers more or different markets. This is YOUR newsletter, you pay for it, and you should buy what you are looking for.

Since I started to do this newsletter Jan. 1, 2008 almost all of you have subscribed because I am the editor and you are glad to find a real trader that has been around for decades. How much was it worth to me the first 13 years I spent as a member and trading everyday in the trading pit as a floor trader, trading with my own money, and the person standing next to me with the experience I have now even talked to  me for 3 minutes telling me his thoughts? PRICELESS!!!

I guess that you will all want to continue hearing what I have to say, especially for having such a great year, staying focused and catching many a trend, staying with my bias and predicting price levels that seemed like pipedreams but came true. Hopefully my constant call for respect of the markets, money management, and talking about using known risk strategies has helped you not only survive, but profit. My track record for keeping my daily numbers subscribers speak for themselves. About 1/3 of them have paid for a year in advance (15% discount) but I encourage a monthly fee so every month they renew, I know it is helping them on a day by day basis, same numbers I use to trade with. Share my daily thoughts and bias with them. I cover 7 markets in there for less than $10 a day, and in my eyes giving it away for practically nothing.

I have asked you, my weekly subscriber what you would like to see more of, many have just asked if I could cover less traded markets like I do the main 7. I could cover them all, but I would not have the time to trade, and the time needed to do the work. Remember, I do this newsletter in its entirety; I do not hire college kids to help with the weekly or daily. You get the real deal, me. You should write me and let me know if you like it the way it is, want my comments on the other markets, more charting explanation, or whatever you would like. howardtyllas@howardtyllas.com

Bottoming/sideways action is trying to extend gains. Again, strong resistance is at the top downtrend channel line near $9.60. Beans need to get above top downtrend line to be bullish. New steep downtrend line (blue) is resistance near $9.22.

My take on the report was not much change, and so I think the market will be influenced more on crude and equities as it has all autumn. This week if equities and crude are under pressure, and the $ stays strong, I can see soybeans going lower and eventually testing the lows at $8.38 ½. If these outside markets are strong and the $ weak, soybeans could rally as high as $9.60 and I would consider that a place to sell. The reason I do not have a bias here is because the above statements will be the driver this week and I have no bias. My bias is to sell the grains on rallies if we get to a resistance levels. My CTA trading account reflects those thoughts with my position being long call spreads with a known risk, and a  reduced position.

Bottom Line: Final US soybean demand has exceeded USDA’s Nov forecast in 11 of last 14 years. Maybe the USDA is understating demand, and maybe overstating 2008 production. South American production will not be in a stage to cause loss of yield for at least another month and that would change the picture if that does happen. That factor will not be any help for now. These are the only bullish factors I can see from here. As I have said many times about soybeans being the only row crop I can see with the fundamentals in a position to create a rally. With that being said, reduced usage forecast in the US and elsewhere except for the PRC should make rallies difficult to sustain. With crude oil on track for my prediction of $50, my outlook for grains to trade lower to my support levels of $3.40 corn and $8 soybeans  is back on track too.

On Friday in the daily numbers my resistance was $.12 1/4 from the actual high and my support was $.05 1/4 from the actual low.

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