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TRADE Focus
02/12/2009
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 Thursday, February 12th. The commentary was written on Friday, February 13th.
It is apparent that the flight to quality in the current market environment has been toward gold, silver and the US Dollar. The US Treasuries have been left out of the mix for the past few months and likewise the Japanese Yen which had participated to a great extent, particularly in the last quarter of 2008, prior to it's forming a potential double top. Perhaps the unwinding of the euro/yen trade is either slowing or coming to an end. In the case of the Treasuries, their prices had reached and/or exceeded upper trading boundaries as seen on their long-term charts. Many have commented, however, on the somewhat recent coupling of the US Dollar and precious metals. The weak dollar period of 2006 and 2007 helped fuel the rise of not only precious metals but virtually every commodity. It was one of the prime reasons given on a daily basis then, as conversely, its strength had become a prime cause of falling precious metals and commodities prices.
The U.S. , by its sheer size, is a winner by default versus the rest of the western world economies. The relationship of the economic crisis as a percentage of GDP is lesser in the U.S. than most, if not all, other western economies. Gold and silver have benefited because treasuries return almost nothing, banks can not be counted on to stay in business and stocks are just too scary. We are not trying to trivialize the situation but in a broad and general sense can see this as how the average investor is looking at things at this point in time. This group, also a big part of the average consumer population, has been forced due to the crisis, to make changes in both its investing and consuming habits. All the changing and rearranging of these habits caused by this "Great Economic Crisis" exacerbates not only the net of changes but the crisis itself. We don't think that this is the kind of change President Obama was talking about during his campaign, but it is what he is charged with confronting. It is why we are now looking at a massive economic stimulus package and other measures some of which are still to come, which will all likely be subject of a commentary in future weeks.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Sugar (march) - First of all please note we roll our coverage over to the May contract this week. Before we discuss May contract prices, we shall recap and finish with the March. Last week we reiterated our belief that upside momentum was waning but included that a close above 1305 would likely renew the market's energy. We feel the need to back off of that view point. It did close above the 1305 and reached 1307 but we see increasing indicationsof decreasing momentum. We now see the 1400 level as solid resistance and perhaps the highs are in for some period of time. Basis the May contract we see a sell zone between 1335 and 1400. If bearish, short positions can be established within this zone. A close above 1430 would be adequate stop protection initially. Retracement resistance levels are approx. 1340 (hit) and 1402. Retracement levels of support are approx.: 1265; 1235; 1205.
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Feeder Cattle (march) - We will roll our coverage over to the April contract beginning this week. We have been saying for many weeks that we believe there is potential for significantly lower prices in the Feeder Cattle. It appears that more time is needed for some additional development. As of right now we will state that a sell zone exists between approx. 10175 and 10565. Currently the April contract is trading 9610 as we are writing. The zone seems as if it is far off from here, but anything can happen that much we know. For practical purposes if we were to pick a spot to initiate a short position we would call it 10385. For stop protection we would suggest a close above 10585. It is possible that we will see a need to amend this as the pattern evolves.
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Silver (march) - We believe we can be a bit bolder with this week's silver comment. If long, whether from your own analysis or what we have suggested over the past several weeks, we feel it is time to plan on reducing positions. The high for this upward advance over the past few months is today's 137200. The current price as we are writing this is 134400. We are comfortable with suggesting that long positions can be reduced anywhere between here and what we see as formidable resistance at 141100. Remaining long positions we suggest moving stop protection to at least no lower than 126700. There is retracement resistance at approx 141100 and then 154400. We will need to wait before determining where the new retracement levels of support are. Those preferring to approach from the short side can use the 141100 area to initiate with stop protection based on a close above 144500.
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 Gold (April) - Several weeks ago we suggested a way to enter long positions was a close above 89200. This occurred and last week we suggested that stop protection could be raised to either a penetration of 87500 or a close below 89000 or a combination of the two. We believe protection can be raised again to a close below 91000. There are extension targets active at approx. 96000 and 98500 that may seem attractive levels for reducing long positions. We will need additional price development to occur before we can update our retracement support and resistance levels.
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 Euro Currency (march) - We have stated that 2 short entries we suggested many weeks ago were satisfied by January 5. One was the sell zone between 14230 and 14340 and the other was upon penetration of 13790. We remain comfortable with the short position and believe that stop protection remain at 13090 on a closing basis (this week's high as of this moment 13087). This protection can be lowered to a close above 12955 if the March contract closes below 12695. New or additional short positions can be entered with the close below 12695 using the 12955 closing basis stop protection. This event will activate extension targets of approx. 12425 and 12280. Trading activity today is providing a hint at a breakdown of a recent trading pattern and a close below 12850 opens the door to price objectives of approx. 12650; 12550; 12210. Retracement resistances remain approx. 12935 (hit); 13008(hit); 13082 (hit). The next series above is approx: 13106; 13233; 13360. Penetration of 12698 will cause these to be adjusted.
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| Japanese Yen (March) - For the past two weeks we have said that, " The double top scenario remains in development. It will take a breach of 10567 (we prefer closing basis) to confirm." We still very much adhere to this view and suggest that short positions can be initiated on a close below 10567. We also believe that at this time short positions can be entered within a sell zone between 11170 and 11250. Stop protection we believe would be appropriate above 11390. The high this week was 11158, just shy of the low end of our sell zone. The sell zone is adjusted this week to 11160 to 11240. Stop protection we amend to a close above 11310. Another short entry method would be upon penetration of 11020. We suggest stop protection for this entry at 11167 intraday. Retracement resistance levels are approx. 11085 (hit); 11160; 11240. |
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 S&P 500 (march emini) - We said last week that we believe the pattern has been negative for some time now and a new leg downward could be unfolding. We also thought at that time that a close above 85000 "could put this event on hold." We admit to that being short sighted. The market only waited one day to close above 85000 but we see the possibility of this downward leg as a reasonable possibility. We believe a close below 79750 opens the door to a test of the lows down at 73725. Extension targets of approx. 78650 and 76700 also become active with such a close. If initiating short position on this basis we suggest stop protection on a close above 82000. |
Chicago Wheat (March) - We had suggested initiating short positions in a price range of 585 - 595 after which the high was 611. If short, stop protection can be lowered to a close above 565. |
Soybeans (march) - no comment |
 T-Bonds (march) - Two short entry methods have been initiated over the past several weeks and remain active. The first was the suggested sell zone of 136-24 to 137-00. The second was upon penetration of 131-23.5. We will adjust stop protection suggested last week from a close above 129-00 to a close above 129-04.
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Ten Year Notes (March) - We shall reiterate from last week: "Similar to the T-Bond futures there are two short position entry levels that have been elected over the recent weeks. The first was based on a suggested sell zone between 126-00 and 126-20 and the second was upon penetration of 123-09. We believe stop protection for both entries can be lowered to a close above 124-22." Retracement resistance levels are now adjusted to approx. 123-20.5 (hit); +124-12; 125-03.5. The next series above is approx. 124-04; 125-00; 125-28. |
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