| |
TRADE Focus
10/24/2008
We wonder how many times we heard the question, "When will we get back to normal again?" We always have to ask in turn, "What is normal?" Obviously volatility levels in most all markets whether financial or pure commodity have been quite high but it is what it is. The market is a price decided upon buy someone who is willing to buy what another is willing to sell. That will never change. We are witnessing a period where that velocity of turnover and price uncertainty is rapid and high respectively. We have seen it before and will, hopefully, see it again. And it just so happens this is taking place in a presidential election year and with the most extreme portion of the volatility thus far now within mere days of hitting the voting booth. Advantage....... democrats, most likely. As wild as many have declared this trading period to be it still amazes how many opportunities have arisen. Many of them short lived, but with bounces off lows and drops off highs coming at such a rapid pace we have seen measured price moves being made. Having profit orders and your protective money management orders in place ahead of time has probably made no better sense than it has these past months.
Keeping with the money management theme we will continue to stress its importance. It is truly difficult to be successful at all and more so with any consistency without its utilization. We postulate that its not as important whether you are choose long or short but that it be far more important how you manage any given position once you have entered. In short, it's how you play the game that counts.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Silver - Silver slowed its rate of descent and actually consolidated this week. A new low of 909 was made, only slightly below the 925 of last week. If the December silver contract holds this 909 level the retracement resistance levels are approximately 1090; 1147; 1204. There is a smaller secondary wave formation that produces the resistances of approx. 1033; 1072; 1110. Expanded extension targets to the downside are approx. 803 and 678. The 860 we mentioned last week does remain in play.
|
Gold - Gold accelerated its downward thrust this past week, surpassing the near term targets of 776 and 742 mentioned last week.  As of this writing the low is 69520 basis the December Comex/Globex contract. The double top formation provided an objective of approx. 715 as we stated and this has now been achieved. We also see this low hitting near the low end of a trading channel and as we view it at this moment we see this could be the 3 rd set in a series of lower lows and lower highs. Retracement resistance levels given the current data are approx. 786; 815; 843.50 basis the December contract.
|
 Euro Currency - Last week we presented the idea of reducing or liquidating positions if short as the December contract achieved a target level of 13280 / 13275 and to consider a retracement rally or the making of a new low to reestablish the short. The rally that followed that low fell short at only 13775 before penetrating the 13280. The targets we mentioned of 12980 and 12795 were hit as the new low as of this moment has been 12717. An extended near term target has been activated at approx. 12600. If this 12717 low does hold, retracement resistance levels will be approx. 13135; 13270; 13400. New lows below 12717 will negate these. The bigger picture, as we look at it now, has levels of 12100 and 11200 as possibilities if the down trend continues. Let us warn that a retracement of some of this lost value could occur at any time so make sure appropriate money management protection is employed.
|
Canadian Dollar - We wanted to add this to our mix this week as we believe a significant price level may have been reached. We show the futures contract initiating January of 1977.  The lowest price our data contains since then is 6186 in January 2002 basis monthly continuation chart. Its high 11009 in November of 2007. The key Fibonacci retracement using those parameters comes to 8028. The low of this week as we are writing has been 7863. We feel this level of enough significance that long positions can be established. The current price as we write for example is 7969. We would suggest utilizing dollar value stops to start, depending on your personal risk tolerance. If this 7863 low holds the retracement resistance levels are approx. 8230; 8350; 8466 using just a more recent secondary down wave. The larger and what we would consider more primary down wave provides the levels of approx. 8570; 8790; 9000. |
 Chicago Wheat - Prices eroded some more this week with a new low for the move of 516 basis the December CBT Wheat contract. Using monthly continuation data we find possible extension targets in the area of 500 and 485. We also notice that in its past history, the wheat has returned into the mid to low 2.00 area after hitting extreme highs such as in 1973 and 1996. The Head & Shoulders we've talked about suggests this could happen again. This is something that would have seemed inconceivable earlier in the year but under the current global financial circumstances and the fact that world wheat stocks are being replenished maybe this is not so out of line. |
S&P 500 -  We spoke last week of a relief rally in the offing with retracement resistance levels of 965.50 and 989.50 basis the December emini S&P contract. The high made since then has been 992.75. As of this moment the December emini S&P is 87500 and the low, since the 99275 retracement high, was made today at 85600.  In the course of completing the move and stopping at 99275 that produced a new set of extension targets at approx. 86600, which has been hit, and approx. 83900. So, if this is met we would be seeing another retest of the 83700 low. |
| Dow Jones Industrial - Last week we talked about the Dow retraced half way back from the 1987 crash low to the October 2007 high. So far this retracement low is holding and a relatively wide consolidation is taking place. The trend, of course, is still down until further notice. |
| Soybeans - The 825 low basis the November CBT contract remained in tact this week. There has been a rally to 944.50. The market has since fallen back to 850. There was a reversal bar at the 825 low which is still intact. There are retracement resistance levels of 972.5; 1018; 1064. If new lows (beneath 825) are seen first these will be negated. Extension targets in play are approx. 802.5 and 762.5 and new lows will create new possibilities. |
Bonds / Notes - We recently spoke of the monthly reversal made with the September price action. This remains a key factor for our focus on this market group. In the case of the T-Bonds, last week we said retracement resistance levels were 116-23.0; 117-25.0; 118-28.0. The high this week as we are writing has been 118-06.5. If shorts were entered we suggested protective stops be used somewhere above the 119-03.0 level. This view has not changed. We will be looking for new patterns and new targets to develop. The 105-00.0 area remains a possibility over time.
|
Archive
|
