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TRADE Focus
12/24/2008
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 Trade Focus commentary was written Tuesday evening December 23. The market analysis and chart sections were prepared during the course of the day on Thursday December 24.
There really were no surprises this week with economic news. It was bad. We believe this will remain the norm for some time to come. While there may be some respite from this from time to time, we feel it likely that data reflecting economic activity, conditions and expectations will not provide reason to celebrate. The situation we face we fear is likely far worse than we would like to believe. The fact that the President had to address the nation and call for immediate governmental action to be taken speaks volumes to us. We believe that over time we may witness a significant shrinking of the economy. The fact that the government is and will be involved in the fixing process from bailout to regulation will create its own set of effects. Will it make a smoother but more drawn out adjustment period or will it cause just plain ineffectual chaos?
We do not mean to paint a picture of gloom, though, because we believe that some very interesting times lie ahead. President Elect Obama promised change and change we shall have. It may not be the kind of change we were expecting. The new administration appears ready for action and ready for involvement. The economy has demanded this and so far we see that the new administration wants to take office ready, willing and hopefully able. They are talking about stimulating the economy and creating jobs with much of the rhetoric focused on infrastructure projects. Wherever the money is directed we hope that there is a pot of gold at the end of the rainbow; that the projects embarked upon will serve to encourage, promote and support a higher standard of living. We believe this was achieved under President Eisenhower with the interstate highway system. We would find infrastructure projects that serve merely as band aids, like some of the stories we have heard as related to Japan's malaise of the 80's and 90's, to be unacceptable. We suggest projects that not only put people to work but keep them working. We also favor educational projects that begin at the roots of the communities that so desperately need them. We favor programs that will encourage, promote and support the desire to learn, to stay in school and teach that education is the answer to an individual's dream of a better way of life and standard of living not only for himself but for his children and his children's children. No matter what the programs are that the new administration chooses for us there will likely be many and various reactions that will create many and various trading opportunities. So this should give us something for all of us to look forward to.
We wish everyone a very healthy, happy and safe holiday season.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
Sugar (march) - Two weeks ago we said that we felt there was a zone of resistance between 1175 and 1205. The high has been 1207 and the market has since fallen to as low as 1076. We initiated our coverage of sugar some weeks ago because of the potential of the market to seek a double top price objective in the area of 900. We hold to that. Similarly, a penetration above 1300 would present a stop and reverse strategy as long as 1044 is not broken on the downside first. A move above 1300 without breaking 1044 would set up a double bottom price objective of 1550. For now however, the short side remains the active trade seeking the area of 900. It would appear to be advisable that if short that stop protection could be reduced to just above the recent 1207 high.
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 Feeder Cattle (march) - We have advocated the short side of the Feeder Cattle based on what we believe was the confirmation of a major top formation as demonstrated on the monthly charts. At this time, however, the construction of the daily charts is suggesting that a further recovery may be in the offing. We previously pointed out what we saw a sell area between 9265 and 9465. The high has been 9400. We suggest that if short positions have been taken that they be put on a short leash. The significant downtrend line has now been broken, but the market remains near but still below the 50 day moving average which is currently 9395. On the way up from the 8420 low there were two price gaps left and those were positive signs. That and the downtrend penetration are warnings of potential further gains. We suggested a close above 9550 as stop protection but based on what we have described here we feel this can be reduced to a close above 9465. Another approach may be to monitor the 50 day moving average and use that as your barometer for stop protection on a closing basis.
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Silver (march) - Since the emergence above the 1077.50 level the high has been 1161.50. It has now settled back down below that supposed break out level. It has fallen a bit shy on the upside of the initial third retracement resistance level we mentioned at 1184.50. Underneath the market the levels of retracement support are approx.: 1006.00 and 969.50. We can add here too that some weeks ago it did break out over a significant downtrend line. This could be a sign of things to come as far as a low, temporary or not, being in place and an eventual move to first the previously mentioned 1270.00 and then possibly the 1400.00 area which is measured by the depth of the channel it has broken out of. This may take some time to develop and Gold may be giving other signals.
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 Gold (feb) - Gold stopped virtually at an important third retracement resistance we had mentioned at approx. 879.00. The high for the move has been 883.60. It has also stopped just shy of a solid downtrend line. We feel that short positions are worthy of consideration.  The 860.00 area may be a level to initiate and if so we would suggest stop protection above 890.00 on a closing basis. Another approach may be to enter on a penetration of 829.00 which is below the current market price of 846.00 as we write. We suggest 865.00 or so as initial stop protection if entering by this method. Initial targets if the 829.00 level is penetrated we see as approx. 820.00 and 813.00. The first series of retracement support levels are approx. 829.20; 812.40; 795.60.
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 Euro Currency (march) - The euro continued higher surpassing not only our stated objectives but the third significant retracement resistance level at 14430. The high of the move has been 14687 before making a daily reversal and closing well below that at 14223. We believe that it is time to consider short positions. If still long from previous suggestions we believe tightening stops or liquidating on a rally is warranted. One method of protecting longs and / or entering shorts would be on a penetration below 13790. We see current retracement resistance levels of approx. 14125; 14230; 14340. The area between 14230 and 14340 may be used as a sell zone if the opportunity presents itself. Stop protection of just above 14400 on a closing basis appears within reason.
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| Canadian Dollar (march) - The Canadian has over the course of the past few weeks broken to the upside from a triangle pattern that measured objectives of approx. 8560 and more aggressively 8890. Also, it confirmed the first of two possible double bottom patterns yielding an objective of the 8800 area. The high seen thus far during this process has been 8455. There was a minor reversal made the day of that high and that is reason for some concern. But we still believe that upward is the correct direction however it unfolds. The next series of retracement resistance levels not yet hit are approx.: 8460; 8700; 8940. Retracement support levels are approx.: 8165; 8075; 7985. We suggest that a close beneath 7950 negates our long side trade idea.
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S&P 500 (march emini)- There was no follow through to the upside when the e mini S&P closed out of its trading channel and its 50 day moving average. It is back within the channel and below its 50 day MA. We had pointed out last week that caution was required because the cash S&P hadn't cleared its trading channel barrier. If bearish or prefer the short side, rallies to the 880 - 885 level may provide that opportunity. Stop protection above the recent high of 91875 would be suggested at a maximum risk amount at this time. Consider penetration above that stop level as a breakout to the upside and we believe longs can be established on that basis. Retracement resistance levels of approx. 902 and 940 are the nearest of significance. The next series above is approx.: 95775; 102600; 109400. Retracement support levels are approx.: 85075; 82900; 80725. |
 Chicago Wheat - Wheat has broken above its 50 day moving average and a short tem trading channel. It appears the cause for upside momentum has been given and we expect that higher price levels may well be achieved. The channel breakout we believe measures a price objective of the 625 area. Retracement resistance levels of note are approx.: 587; 624; 660.5. The next higher series is approx.: 676.5; 740.5; 804.5. We shall continue to be patient before suggesting the next opportunity from the short side. There may actually be short to intermediate term potential entries from the long side. We shall monitor this for now as well.
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Soybeans (march)- We understand there is a seasonal tendency for soybeans to rally between now and February. The chart construction seems to agree with this. We see a measured price objective near term of the 940 area. The next series of retracement resistance levels are approx.: 954; 1009; 1064. The targets which lie below the market of 750 and 698 remain active but seem unlikely at this time. A close above 995 negates the targets. We will watch for trade scenarios as they develop
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Bonds / Notes (march) - The near term top potentials have been put aside in these interest rate futures markets. If reversals are not put in place soon, the upside in the US T-Bonds for instance, could carry to 160-00 or so as we mentioned last week. And that still seems scary to us!
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Coffee (march) - We shall suspend coverage for coffee until further development. |
| Crude Oil (march) - Crude oil continued to trade lower and in to new lows. The extension target of 3750 we mentioned last week has been achieved and exceeded. We see new target levels of approx. 3418 and 3015 as now being active.
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