Trends in Futures - Commentary for Week 12/01/08, sent to subscribers on 11/30/08
My thoughts for the upcoming week:
Not much has changed in my near term or long term thoughts. More observation is needed to reinforce my views or to make changes.
The S&P’s are beginning the new month with 5 days in a row closing higher, but closed the month lower. Still a bearish chart no matter how you look at it. Bonds are on a mission to the moon, buying breaks had been my view, and taking profits on rallies.
Grains are showing strength in times of bearish fundamentals, cautions me to press the short side. Selling at chart resistances is what I want to do, although I do have a minimum amount of bull ratio spreads that I morphed from existing bull butterfly spreads that I did when at resistances the last few weeks. I will get out on any rally now.
Metals and energies could continue their upside correction, but I want to sell resistance levels, thinking more deflation, fund liquidation, depressed worldwide economies, and at least a stable dollar will not help the upside view for a rally to sustain.
Commodities such as coffee, sugar, OJ, cotton, cocoa, cattle, are in bear markets but some show signs of correcting to the upside. These are trading affairs, not buy and hold markets. Look for trades with a good risk reward, rather than long term positions.
Stay objective, open minded, and wait for a place to take a clear shot, with a target that you can hit without shooting and wasting too many bullets, then pull the trigger.
Last week’s call for possible change of trend or at least corrections was a great call. It saved my profit for the month of 3% from vanishing!
Quick Look: Coffee (monthly chart)
7 year rally ends, look familiar? Like many other, looking for value in price. Near term trading range 110-120. If it would rally to the bottom channel line, it would be a sell.
Monthly Sugar
Below 9 cents has been past resistance, now support. 10 to 14 cents is where we are range bound, trading at 12 now, in the middle of the range.
Cocoa Monthly
For years trading in a 3 cent range, got caught up in fund buying with bullish fundamentals, and now hurt by the opposite. Volatile swings now likely due to bottom picking.
All these markets and many more are trading affairs that I break down using the daily to look for short term trades. Before trading a market you should take a look at where it has been and where it is now. I take my cues from the daily seeing as no matter what anyone says, the last settle is always the TRUE price.
Above is the daily bar chart for Feb. Cattle Bear market now, but really in the middle of the range for the last 10 years. You could make a case that year over year it is in a sideways to bull market.
Commentary for the week of 12/1
Bulls are hugging but need to get above the key downtrend line (red) resistance which now comes in at $9.00. Correction to the upside is due, maybe to retest $9.22 ¼, and needs to close above that to turn this market friendly. Last week I said I wanted to sell at the downtrend line, but only liquidated some call spreads.
My bias was to sell the grains on rallies if we got to resistance levels. This week produced a $.43 gain although nothing changed fundamentally. My comments, thoughts, and charts are also unchanged the last few days. The point of my comments is to let you know my thoughts and the main factors, news, and important statistics, not be a market reporter who reports the general news and what has happened already. I will report what happened if it is important to me, and I am using that news to trade going forward. I still think that the crude oil market will rollover near $60 and make new lows in the next 2 or 3 months (my first resistance of $55 is holding for now). Watch crude oil, stocks, and the $, for clues to direction in the near term for price direction of soybeans. Only 5% of the time have I ever looked at outside markets to give me direction trading grains, but this certainly is that time. Bottom line, Rallies will not hold very long and these markets will sell off in time. For now, they are in corrective mode.
On Friday in the daily numbers service my resistance was $.04 from the actual high and my pivot acted as support and was $.02 from the actual low.
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