Back to Trade Focus Archive
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 Wednesday evening, January 7th. The market analysis and chart sections were prepared during the course of the day on Thursday, January 8th.
The New Year has started off with somewhat of a bang in our opinion. It is not the up or down that we find so intriguing but the trading ranges and the power behind the moves. Already in these few days of 2009 the action of the markets and the conversations with market traders be they clients or not has strongly reinforced the notion of trade management. We realize that this has been talked about often in our commentary but with good reason. We feel and believe that our experience demonstrated to us that the money is in the management not the trade selection. We have found the baseball analogy to be very appropriate. Great hitters bat .300. That's less than one hit per every 3 at bats. Participants in the markets should not expect to be right every time. They should not expect to be right even more often than not. That being the case learning to accept and take losses is paramount to longevity. At least in our opinion and from what we have seen. It is in our opinion more important and more beneficial to know where you are wrong than what side of the market you have chosen. Consider that two separate traders can have opposing positions from the same price and same time. They can either each win, they can each lose, or each can scratch, or any combination thereof. It is more how the position is managed than the choice of buy or sell that determines success.
We believe this an important and beneficial message for the new trading year. The volatility of 2008 appears to be carrying over into 2009. No one can afford to ignore money management procedure in their trading tragedy. It only takes one time where lack of attention to this detail teaches a lesson that unfortunately can never be undone. Trading is real. It is live. Don't get caught napping . Ever! ..ever. Let one inviolable rule of yours be: always have a stop in. Make it a New Year's resolution; and have a happy and prosperous New Year.
Sugar (march) - We suggested stop protection for short positions could be placed just above the recent 1207 high. The high this week has been 1246. Shorts that may have been initiated within our suggested sell zone of 1175 - 1205 should be out of the market at this point. We believe a close above 1300 will confirm a double bottom with a price objective in the area of 1500 -1550. Long positions can be entered on that basis and if so, initial stop protection on a close below 1200 is suggested. |
Feeder Cattle (march) - Short positions from the suggested sell zone between 9265 - 9465 should have been stopped out on the close above 9550 which was elected with the 9552 close on Jan 2. We initially suggested the short side of this market based on what we believe to be a top formation on the monthly chart. We feel this view remains valid but will wait for new actionable indications. |
Silver (march) - Last week we pointed to constructive behavior in the silver and the fact that it has maintained a closing level above the 50 day moving average since December 10. That average as of now is approx 1014 and there appears to us a significant low at 1010.50. We believe that a close below the 50 day moving average or penetration of the 1010.50 level takes the constructive posture out of the silver market. We also see that a significant retracement resistance level at approx 1184.50 has thwarted the market's ability to advance at least to this point in time. The next retracement resistance levels above the market are approx.: 1278.00; 1411.00; 1544.00. Retracement levels of support under the current market price are now approx.: 1052.50; 1014.00; 975.50. We also find this situation somewhat of a dichotomy in that there is currently a short position in play for the gold and short positions in certain currencies (versus dollar). These are not normally congruous with long silver positions. If long make sure stop protection is in place and we suggest consideration be given to making this as tight as your strategy will allow.
|
 Gold (feb) - The price ratcheted down slightly over the past week with the low being 83600. The highest close thus far has been 88430. Stops can be lowered to a close above that level. Longs can still be initiated, we believe, with a close above 89000 with initial extension targets of 91780 and 93660. Stop protection for this we feel should be on a close below 88000. The other short entry method using penetration of the 82900 level has not yet occurred but we feel remains valid. Stop protection if entering a short this way should be on a close above 85000. Retracement levels of support are approx.: 83450; 81660; 79880. The next series of support levels under these are approx.: 81450; 79020; 76610.
|
 Euro Currency (march) - Both approaches to entering the short side of the euro currency have been satisfied. We had a suggested sell zone between 14230 and 14340 prior to the high of 14334 being made and / or a selling penetration of 13790. At the time we wrote that we were switching preference from the long side of the market, which we felt could be initiated on a close above 12848, to the short side. The retracement levels of support we mentioned at approx. 13798, 13521 and 13245 have all but been satisfied as the low since has been 13283. The new retracement resistance levels of significance are now approx.: 13817; 13983; 14149. We believe that the most comfortable stop protection be moved to a close above 14000, even for shorts entered on the 13790 penetration.
|
|  Canadian Dollar (march) - There was some upside progress made since last week's Trade Focus. The high since our last writing has been 8500 and the market is currently at 8456 as we prepare this section. The 50 day moving average is upwardly sloped and sits at 8173. Long positions initiated upon previous suggestions should at least maintain stops on a closing basis against the 50 day moving average. (Obviously this changes daily). There are now extension targets active at approx. 8528 and 8629. Retracement resistance levels in play are approx.: 8460 (hit); 8700; 8940. Retracement levels of support are now approx.: 8193; 8097; 8002. We believe that long positions can be added or initiated on a close above 8705. For initial stop protection if elected we would suggest using a close below 8550.
|
|
Japanese Yen (March) - We began coverage in the Japanese Yen with last week's edition as we saw the potential developing of a directional price change. Last week we suggested that short positions could be established with penetration of 10950. This was elected and the market rather quickly fell to a low of 10567. It is currently trading 10963 as we write. Our initial stop protection was on a close above 11000. If individual traders have not moved stops sooner based on that subsequent price decline, we feel that based on what has transpired since entry the protection be changed to a close above 11035. Retracement resistance levels of significance are approx.: 10917 (hit); 11026; 11136. The first series of retracement levels of support mentioned last week were all satisfied as they were approx.: 10926; 10749; 10573. The next series below is approx.: 10623 (hit); 10351; 10080. |
 S&P 500 (march emini) - Bearish traders who may have taken short position in our suggested 880 -885 area would have been stopped out on the penetration of the 91875 previous high. And, new long positions were elected on the close above 91875 which was a close at 92550 on 010209. We also spoke of the cash S&P 500 chart last week and we can now report that the channel has been penetrated there now too, as well as closing above the 50 day moving average. There has not been much follow through as the March emini high has been 94275 putting it up against a stated retracement resistance at 940.00. The next series above the market is approx.: 95775; 102600; 109400. For long positions we will hold to the suggested stop protection of a close under 885. Retracement levels of support are approx.: 86425; 84000; 81575. Extension targets active are approx.: 94015 (hit) and 96410. Another cash chart note is that after finally breaking out of its trading channel, the lack of strong follow through so far has brought its price back to a test of that breakout as we have it drawn.
|
Chicago Wheat - It appears our one suggested method of long entry got stuck paying up to the closing price of 643.00. We said last week a close above 617 was a way to get long. Uncannily the previous day's close to this entry was 616.75. These things do happen. And since the recent strong run up there appears to be an overbought condition set in to the wheat at this time. This will need to be burned off with price and / or time. Our initial suggested stop protection on a close below 585 we would now restate as 592 intraday. It feels like this one has got us stuck and we wouldn't blame anyone for finding or making a quick exit. There is a chance we'll see the low 570's and we cannot see risking that much. Retracement levels of support are approx.: 579.25; 558.50; 538.00. Monday morning brings the USDA Crop Production report for 2008.
|
 Soybeans (march) - Soybeans continued their upward course without our suggested buy area of 950 being seen since last week's edition. There was a small reversal day bar at the high and the appearance of an overbought condition as in the wheat. We will hold off from renewing buy side suggestions until further development. We can still say, though, that we like the chart construction at this point and believe there to be an acceleration pattern formed. The USDA report Monday morning Jan. 12 may provide some fireworks. Retracement levels of support are approx.: 929.50; 901.00; 872.25.
|
 Bonds / Notes (march) - The week brought quite a turn in these interest rate futures. In the bonds the high on December 31 was 141-24 and today we see them at 133-00. It looks to us that a turn of some magnitude and duration has begun. It is likely that it won't be made easy at this point but we do see 2 ways to enter short positions. One is to use a rally if it occurs into a sell zone between 136-24 and 137-00. We suggest stop protection on a close above 140-00. The other is to initiate the short position on a penetration of 131-23.5. Stop protection for this method we believe should be at 134-00 on a closing basis. Our initial thought for a price objective on the downside is the123-00 area. Retracement levels of support are approx.: 13426-00 (hit); 132-19 (hit); 13012.5. The next series below is approx.: 130-07; 126-19; 123-00.
For the Ten Year Notes we see the sell zone between 126-00 and 126-20. Stop protection for entries made on this basis we suggest at a close above 128-00. The other way to initiate the short position is on penetration below 123-09. If doing so we suggest stop protection of a close above 125-00. Retracement levels of support are approx.: 124-08; 122-27; 121-15. The next series of significance beneath the market is approx.: 121-15.5; 119-08; 117-00. |
Crude Oil (march) - A near term down trend line was broken to the upside 5 trading sessions ago and so far the market price remains above that line. It has, though, come back down to touch upon it as we are writing this week. The 50 day moving average as of right now we show as 5217 and this will likely need to be penetrated before we become interested from the long side. Also there is a chart point of 5295 that sticks out to us too. The retracement resistance levels we see as approx.: 4935 (hit); 5384; 5833. The extension targets of 3418 and 3015 remain active until further notice. We will likely switch coverage to the March contract with next week's edition.
|
