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TRADE Focus
11/26/2008
If any questions, comments, observations or more importantly any answers, please feel free to contact us at : 1 800 321-5810 ; email cbands@cbandsbrokerage.com
The market analysis section of this edition of Trade Focus was prepared and written during the course of the day Wednesday November 26. The charts were prepared the evening of Wednesday the 26th.
We will be brief in our commentary this week due to the Thanksgiving holiday. We feel it is a good excuse. It is perhaps our favorite holiday and one where for many of us the food is fantastic and the company of family and friends is equally good. All this without the exchanging of gifts or the need to shop for them.
The Dow and S&P 500 ran off a streak of four consecutive higher closes. This was the first string of such duration since late August we believe. This was done while the economic news released during the course of the week was as or even more dismal than what it has been. Often it can be taken that market action of this nature is a sign of strength - rally in the face of bad news. We wonder, though, if the short holiday week and lighter trading volumes may be the culprit and therefore find it difficult to become too "giddy" over this week's gains. Also during the course of this past week the President-Elect held a series of news conferences naming new members to the economic team. He also made what we felt were some powerful statements regarding what will be his approach to budgetary issues and how business would be conducted under his administration. We have ourselves preached or better still, fantasized, the same sort of A-Political toughness as needed in government leadership. We believe it to be correct and time will only tell if this can be accomplished.
We realize that when most of you read this it will be post Thanksgiving. We hope it was enjoyable to its fullest.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
Silver - We now switch from the December to the March silver contract. Silver was able to move up to the higher end of its recent trading pattern and its high for the week of 107050 coincided nicely with the 50 day moving average. It appears to be forming a small bull pennant at this time. A broader view shows a breakout above 1077.50 suggests a measuring objective of approx 127000. Near term retracement resistances are approx. 105620 (hit); 1120.50; 1184.50. Extension targets below the market basis the March contract that apply are approx. 81850; 69500 and we believe these will be negated on a close above 1077.50.
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 Gold - We now switch coverage from December to the February Gold contract. February Gold is now above its 50 day moving average with the past two closes. The structure of the chart appears near term bullish to us with a potentially bullish pennant in the making following the early week run up. The pennant or triangle formation we mentioned previously took a different direction than we would have expected based on where and how it formed. It broke out to the upside and provides price objectives of 845 and possibly potential to 860. Retracement resistance levels are approx. 843; 866; 908.
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Euro Currency - Last week we said, " The November 13 th reversal day's range for the December euro contract may provide the parameter to gauge a breakout for either direction. That would be 12848 and 12372. If entered either long or short based on these levels we suggest making sure it closes in your favor to determine if wise to hold." Monday Nov. 24 the December euro closed at 12947 which ignited the possibility of long positions based on what we said. A near term price objective we approximate to be 13320. There remains a .618 retracement resistance mentioned last week at 13255. The next series of retracement resistances are approx.: 13265; 13560; 13850. There also remains an active extension target at the 12188 level as stated previously. This will be extinguished on a close above 13277. Short term extension targets converge at the 13100 area and may pose near term resistance. Long positions based on the 12969 close should take appropriate protection. New lows below 12326 may likely lead to reaching the 12188 target in quick fashion. Two weeks ago we mentioned a measured objective of 12075 based on a pattern breakout but the action since has negated this. 12165 and 11265 remain the major retracement support levels beneath the market.
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|  Canadian Dollar - We had described approaches to the December Canadian Dollar from the long side over the past number of weeks and finally said that a close below 8000 would terminate that approach for now. The low for the week since our last edition was 7692. This now, however, establishes the potential for a double bottom as the previous low was 7686 on October 28. A close above 8724 will trigger a double bottom confirmation buy signal. The measured objective would be in the 9750 area. Based on the 8724 high of November 5 and this week's low the retracement resistance levels are approx.: 8082 (hit); 8204 (hit); 8327. We will update next week. |
Chicago Wheat - We said last week that a new low below the 49650 low based on the December contract would activate new extension targets of approx 425 and 390. The low this week was 49600. This is what we used to refer to as the old "half cent rule." The market since has rallied to short term trend line resistance at its 559 high on Monday November 24. We believe the market is bearish and will need at least to close above this trend line to allow us to consider higher price levels. We need to now switch our coverage from the December to the March contract. The March contract did not display the "half cent" rule and the extension targets are approx.: 447 and 412.50. The wheat corn spread we have been alluding to perked up some in the past week and we wish we would have been more assertive with a strategy. We are forced to hold off for now. |
 S&P 500 - This week saw some recovery in the stock indices. Overall, at this point, we believe the signals are mixed. Our idea that a close below 800 be used to establish short positions based on December S&P or emini contracts was activated. The low for the week was 739 for the emini, not quite reaching the first suggested target of 720. A daily reversal was again recorded for this contract on the day the low made. We have also spoke of the triangle formation from which it first broke down but it quickly retraced back into.  The fact that it has gone back above 800 and back into that triangle formation is strong enough evidence that the timing may not be right. Near term retracement resistance levels based on December emini S&P are approx.: 84070 (hit); 87275 (hit); 90450. The next higher series of retracement significance are approx.: 863 (hit); 902; 94050. The recent chart construction suggests potential of further attempts to the upside with this week's pattern creating extension targets of approx. 91150 and 92950.
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Soybeans - March beans did have one close below 850 at 847.25. We had suggested that a close below 850 would trigger new extension targets of approx. 750 and 698. There was only the one close below the alleged trigger point and March soybeans then rallied to a high of 90750. There was near term trend line resistance at the high but we see the very near term construction of the chart suggesting potential for higher. Signals still remain mixed, however. The new near term retracement resistances created with the new low are approx.: 898 (hit); 916.25; 934.50. The next series of retracement resistance levels are approx.: 993.25; 1040.50; 1088.
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 Bonds / Notes - We had suggested that a close above the 120-00.0 level would confirm a double bottom formation and that it projected a price objective of approx. 127-09.0. The high for the move thus far has been 129-19.0 basis the December contract and it stands at 128-00.5 as we write. It is, however, time to roll out of December and in to the March contract. We will pick up next edition with coverage on the March T-Bonds but will say here that a new high close above 128-10.0 in the March T-Bonds will activate target levels of approx.: 131-10.0 and 133-01.0. Adjust protective stops accordingly.
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Coffee - We had suggested long positions could be established in the March Coffee contract and used the 11500 as a benchmark price with a close below 11000 as stop protection. The 11000 level held this week in the March Coffee contract and we finished our week off at 11630. We still need more development in order to provide retracement levels and extension targets.
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| Crude Oil - We have no signal here at this time. We had thought there was reason for an attempt at the long side 2 editions ago but that idea was rather quickly terminated. We will provide our retracement and extensions, however. For the January Crude Oil contract we see near term retracement resistance levels of approx.: 5730; 6015; 6300. We are revising extension targets to approx.: 4295 and 3665. A close above 7237 in the January contract would deactivate these targets.
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