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TRADE Focus
01/23/2009
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 market analysis portion of this edition was prepared during the course of the trading day on January 22nd. The commentary was written on Thursday January 23rd.
The new administration has stepped into action with little if any time wasted. Congressional leaders emerged from meeting with President Obama providing some outline on the economic stimulus to be debated early next week. One thing we believe we heard correctly from House Speaker Pelosi when questioned about the size of the package and if it had been increased, was her response that ("it will be as big as it needs to be."). We are not sure if that is good or bad, but our purpose today is not to discuss or comment on the upcoming economic stimulus specifically or make a judgement. We would like to express some thoughts we have been reminded of. First of all we can not question the severity of the recession. It seems that day after day we see business screeching to a halt. It's seen here in the U.S. , in Europe and Asia too. Money disappeared and its effects cascade through economies around the globe. We only need to see the massive quarterly losses reported, particularly by our major banks, as evidence. What we have been reminded of, however, is a story from way back in our memory bank from grammar school. The story is about a time in ancient Egypt and the effects a severe drought had upon its people. The point of the story was how a wise pharaoh made the decision from that point on that in times of surplus they would store grain and other commodity staples to compensate for the times of drought. He witnessed how his people had suffered physically and emotionally from the drought and believed it was his duty to his people to do what he could to avoid the same depression brought on by the drought. Our thought is that shouldn't this be something that our and other governments, particularly of the developed world, put in to practice? It also reminds us of U.S. energy policies of the past 30 or 40 years. In our mind such policy didn't exist other than how to use, use, use. This is a good example to us because we recall so well how back in the early 1970's there was an energy crisis to deal with. We remember how at that time it was believed there was only a 30 year supply of known crude reserves. Thankfully that was wrong, but there were no measures taken, no energy policy formed at that time, at least to our memory, that promoted the absolute necessity for other sources of energy. In our present crisis there has been a focus on injecting capital in to the financial system in several different forms. For those institutions that are receiving bail-out packages part of the cost to them has been that they must reform some of their business practices, for example, the issue of executive bonuses. Our question is: "Shouldn't our government include governmental reforms in this economic stimulus package?" Maybe they have more than we know but it seems to us that we don't hear much mention of this. Certainly we hear the talk about pork spending and special interest groups as well as the green initiative for infrastructure spending creating millions of jobs. We hear that money will be doled out and demands are put on those in receipt of the funds but not about demands government will put on itself to not only help now, in this time of crisis, but to help for future times of crisis. Or, demands that will go toward avoiding a situation such as we have now. Shouldn't they be taking measures that will help maintain our standard of living if and when another drought year comes? Shouldn't they plan now for the inevitability of changes to come 30 years or more from now such as was seen with our energy supply those 30 odd years ago? And, how about instead of bail outs, or at least along with bailouts, there are measures taken that provide incentive to economic growth and prosperity. Instead of sending checks to taxpayers and even to some who have paid no tax, would it not be more stimulative, not just for now but for years to come, to reduce the rate at which we tax and consider other changes to tax code policy? There are many many more possibilities, of course. We would like to believe that this administration will use this as an opportunity not just to overcome what we face today and not as an opportunity to seize power and control for itself. We would like to believe that this is an opportunity to once this difficult period is cycled through that our leadership will have used this to enhance our socio-economic well being as we are so accustomed for decades and decades to come.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
Sugar (march) - Sugar emerged to the upside from the pattern described in previous weeks. It has done so without much momentum however and that makes us cautious regarding its potential. We see at this point that an objective in the area near 1400 is suggested and there is a retracement resistance of note at approx. 1378. We have also in past weeks described a double bottom scenario where a close above 1300 sets up an objective of 1500 - 1550. The retracement resistances are approx.: 12509Hit); 1314; 1378. Retracement levels of support are approx.: 1185; 1159; 1134. |
 Feeder Cattle (march) - Feeder Cattle weakened since last week and may be in process of placing at least an interim top. There may be a short position trade here on a close below 9090 which provides a price objective of approximately 8600. If entering shorts on this basis we suggest stop protection on a close above 9250. Depending on how things economic progress, this may or may not be the early stages of another leg downward to our eventual objective in the mid 60's. This seems a long way off and things can change along the way so as always rely on money management strategy to be your guide.
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 Silver (march) - - The move sideways continues. The only change we would offer at this time is that we suspect momentum is in decline but there are really no major indications of an imminent move. The March contract has remained above its 50 day moving average since December 10 and stands right now at 103560. A close below this measure we see as a negative. There remains a key low at 101050 to be aware of. A close below that could lead to a move down to 860 - 875. 117700 is still a barrier on the upside. A close above this level should provide silver bulls with reason to be long. If entering based on this we would suggest stop protection on a close below 112700. Retracement resistance levels of note are approx.: 127800; 141100; 154400. Retracement levels of support remain at approx.: 105250 (hit); 101400; 97550.
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Gold (feb) - Last week we brought up that since resistance had held gold's advance it fell back to its 50 day moving average which was at that time supporting the price. We suggested lightening positions if short and protective stops could be brought to 857 at the highest. The February contract made it to 86660. We see no need to press either side of the gold at this time but similar to silver a close above 892 should give gold bulls some energy. If entering long positions based on this we would suggest stop protection on a close below 864.
Next week we will switch coverage to the April contract.
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 Euro Currency (march) - Another relatively small leg to the downside was made since last week and in the process a small gap was left (globex session) between 13098 and 13087. The low attained thus far has been 12811 made Wednesday January 21. Since we last pointed out that there were 3 consecutive closes below its 50 day moving average there was one above before falling back below. The 50 day ma is currently registering 13219. In play right now are extension targets of approx. 12899 (hit) and 12714. The high since we last wrote was 13364 near one of the retracement resistance levels from last week (13381) and maybe a sign of inherent weakness that it could not reach or exceed that middle value of even that more near term resistance series. Since new lows have been made the new retracement resistance levels are approx.: 13179; 13291; 13404. A more significant series of retracement resistance above is now approx.: 13525; 13747; 13969. Posting new lows will change these resistance level values. Continue to utilize money management strategies moving stop protection appropriately when allowed.
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| Japanese Yen (March) - Last week we suggested another attempt at the short side could be made using a close below 10975 as a method of entry. This did not occur in this past week. Any other attempts at entering short positions we thought could utilize stop protection of 11335 which would have been elected. The high made this past week was 11496 and that bettered the previous high of 11492 on December 17, by only four ticks, providing a possibility of an eventual double top scenario. We do not see a need to force a new position long or short at this time.
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S&P 500 (march emini) - In general we see the market as sloped downward even though there was a reversal day at the November lows. Over the course of the past week there was a bounce as we suggested last week. The high of the bounce was 86575 which was only slightly above the first level of the short term resistance series mentioned in the last edition. Here too is perhaps a sign of inherent weakness, unable to move into the preferred sell zone we marked as 87725 - 89275. Following that high the market dropped to 79750 with a recovery to 84400. The near term retracement resistance levels are now approx.: 85205; 86935; 88670. Near term extension targets are active at approx.: 78550 and 76825. The 50 day moving average is registering 86886 and edging downward. |
Chicago Wheat - Last week we suggested the area between 55850 and 538 presented a buy zone and that stop protection of 514 intraday could be used. We see a change to the picture as we write this week and find it necessary to become very cautious of the long side. We suggest tightening stop protection on long positions as much as individual strategies allow or reducing the number of units where possible. The March contract currently stands at 568 as we write and partial or total profits are possible if long positions were entered in our stated buy zone. We feel short positions can be entered either in a sell zone between 585 and 595 with stop protection on a close above 610 or shorts can enter on a close below 548 with stop protection on a close above 560. We believe first objective area is near 500.
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Soybeans (march) - We pointed to the large daily reversal following the USDA report of January 12 and how that had affected the upward potential of the market. It would seem the March contract will need to clear above the 1060.25 previous high to signal the capability to advance. We feel we can stay with the suggestion that short positions can be entered upon penetration of the 957 level. Stop protection for this we suggest 981 intraday. Retracement levels of support are approx.: 954.50; 921.00; 887.50.
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T-Bonds (march) - Both methods of short entry suggested two weeks ago have now been accomplished. The first was a sell zone between 136-24 and 137-00. The high was 137-31. The second approach was based on penetration of 131-23.5 and was achieved this week. The market is currently at 130-06 as we write with a low for the move of 129-10. We believe stop protection on the first method of entry can be reduced to a close above 135-00 and for the second a close above 132-10. We see potential to the low 120-00's eventually. Retracement levels of support are approx.: 130-02; 126-12; 122-23.
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 Ten Year Notes (March) - In the notes only one of the two suggested methods of entry have been elected. That would be using the sell zone between 126-00 and 126-20. The high for the move following this suggestion has been 127-16.5. The initial stop protection for this of a close above 128-00 can be reduced to a close above 126-18. The second suggested approach of shorting on penetration of 123-09 has not been elected but can still be utilized. If filled based on this, stop protection of a close above 125-00 is suggested. Retracement levels of support are approx.: 124-07.5 (hit); 12227-5; 12114.5. The next series below is approx.: 121-30.5 119-28; 117-25.5. |
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