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TRADE Focus
02/26/2009
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
Both the Trade Focus market analysis and the commentary portions of this edition were prepared during the course of the trading day on Thursday, February 26th. Charts were added on February 27th.
The President spoke to Congress and the American people last night and we are grateful to him for providing us with some material to focus on this week. The economic crisis was front and center obviously, but also too was the overall agenda of the administration. Energy, education and health care are at the heart of its agenda. This is very similar to our own. We thought how if it were us. how we would put forward a platform comprised of energy, education and the war on terrorism. Energy is a no brainer. Oil is a problem for so many reasons, let alone the fact that it will eventually run out. Can we just sit around and wait until it's too late to develop its replacement? Clearly we can not. Oil comes with its geopolitical baggage and its economic issues. Some 700 billion U.S. dollars go overseas for oil every year. The administration has put its support behind solar and wind. We feel, though, that they are missing the boat on nuclear. It would be nice if solar and wind could produce the way nuclear can, but they cannot. Someday they should. We have presented our strong feeling toward the importance of education in previous commentaries. Its benefits are staggering. We agree with President Obama that the education process starts at home. We also agree with him that two parents are better than one. We would like to see a great deal of the community service incentives that are being proposed, used towards providing assistance to communities for the development of educational programs that have been proved to be empirically effective in moving students along in the system to eventual graduation from high school and entry into college and university. We would like to see examples of success such as is President Obama himself, made available to the people of these communities, primarily the children, to share their stories. Throwing money at education will not take Mr. Obama to where we believe he wants to go with his goal. It starts within the hearts and souls of not only the children but of the parents, the extended family and the community itself. Moving to the war on terror and extremism, we feel it takes priority over health care in our agenda. Certainly health care is not only an important element for an advanced society and an important issue among its people, particularly for those who are older. The devastation that terrorism and extremism can cause to our country's social, economic, political and emotional being we believe too extraordinary to not take a higher priority. Now that we have had this opportunity to comment on the President's agenda let us consider the practicality of it. The ideas and plans are beautiful but are they realistic? Can they be afforded? It seems we have not only heard promises made every year at the State of the Union Address, but have also asked the same questions. Is there any reason for it to be different this time?
We do like the issue presented by President Obama that speaks to how important plans made at this level not be of the short term, quick fix, fill me now variety. They should be forward thinking. We have heard since we were young how the Japanese culture would plan 100 and even 500 years ahead. This may seem hard to believe given how the economic malaise in Japan has lasted so long. Well, perhaps, that is part of their solution process. Regardless the point is to not make policies for the purpose of instant gratification. Enact those with broader and more lasting goals and agendas. The President also spent a good portion of his speech telling us how the confidence and trust of the American people in its financial and political leadership needed to be restored. Trust and confidence are dynamic issues and where they exist great things are accomplished. Where absent, people are lost. Growth, economic, social, spiritual or other, does not occur without confidence and trust. It goes without saying too, how these elements are so vital to successful trading and investing. We do not mean trust and confidence just as it applies to the financial system but particularly in regard to the individual trader. He must have these to move forward. He must have these to enable him to pull the trigger. The successful trader and investor, both in some way of their choosing, train themselves on a particular system or methodology. It is extremely rare that one succeeds by luck alone. It takes training and practice to instill the necessary confidence and trust a trader needs to have in him and his decision making ability. Money is on the line each and every time. One must trust that what he or she are doing has merit. This brings to mind something we have heard frequently over the years which is that fighter pilots make good traders. We believe a lot has to do with the incredible level of training these men and women go through. Their lives depend on that training. Imagine flying upside down at some mach speed with mega G's and with another fighter jet in chase. Success to the pilots often means survival. We believe it is a result of the trust and confidence in what they have been taught and trained to do. We believe, too, that this is a common trait of successful traders. It is what makes decision making second nature and risk taking a mere way of life.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
Sugar (May) - We are staying with what we have been saying the previous few weeks that there is a sell zone between 1335 and 1400 basis the May contract. Short positions initiated in this area we suggest stop protection on a close above 1430. Another approach to short entry we have suggested is utilizing a sell stop at 1288 with its stop protection at 1367 intraday. This second approach has not been elected at this point. Retracement resistance remains at approx 1400. The retracement supports will be updated upon further pattern development. |
Feeder Cattle (Arpil) - The second short entry approach was elected this week upon penetration of our stop point at 8987. The low proceeded to 8887. The stop protection for this remains a close above 9250. The market is currently 9270 as we are writing this section. The other approach of initiating short positions in the zone between 9400 - 9500 has not been reached at this point. We will continue to hold to this suggestion as a short entry. Retracement resistance levels are approx. 9235; 9345; 9460. Above these are approx.: 9785; 10175; 10565. |
Silver (May) - Silver has begun a decline. We believe it may be a rather dramatic decline after all is said and done. Any remaining longs either from our previous suggestions would now have been liquidated with penetration of the 132000 level today. We are glad we have been suggesting longs to lighten over the past few weeks. We wish we would have advocated and suggested short entries too. We shall do so now. We believe short positions can be initiated in a sell zone between 135000 and 137500. Stop protection would be penetration above the existing high of 146350. Retracement support levels are approx.: 130000 (hit); 124950; 119900. The next series below is approx.: 123950; 116420; 109360. We will need to update retracement resistance levels after further pattern development.
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 Gold (April) - We mentioned last week that longs should be looking to reduce and that having satisfied extension targets at 96000 and 98500 that those would have been reasonable excuses to do so. Remaining longs we said should use 92000 intraday and/or 94000 on a closing basis as stop protection. Today as we write, gold is under heavy selling pressure and is currently 94080 with a low of 93220. We believe a large correction may be underway. We will suggest now that short positions can be initiated on a close below 93000. If elected we suggest stop protection on a close above 96100. Retracement levels of support are approx.: 88680; 84910; 81150.
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 Euro Currency (march) - The euro has entered what we deem a cross roads period. It is in a position from which it can take off in either direction. For any short positions initiated based on previous Trade Focus suggestions we suggest stop protection for all be utilized on a close above 12860 or an intraday penetration of 12955. There are extension targets still active now at 12425 and 12280. The low for this recent move has been 12508. The triangle we mentioned last week appears to have been altered so we withdraw the price objective of between 12200 -12100 based on that formation. We will be looking for new developments over the course of days and will do our best to update promptly. Retracement resistance levels are approx.: 12810(hit); 12907(hit); 13005. The next series above is approx.: 12985 (hit); 13133; 13283.
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|  Japanese Yen (March) - We had suggested two approaches to short entries for the Japanese yen. One was upon penetration of 11020 which was elected already back on February. 5. The other targeted area and approach was upon a close beneath 10567. This too was achieved this week but on the day it penetrated it fell through that level like a hot knife through butter and we sent an alert suggesting it prudent to not add to or use this method as it appeared it would close near the 10350 level. We wish we hadn't done that now as it is trading 10167 as we write. But, of course, that is hind sight. We had also suggested last week that reducing positions near that 10567 price level might be a good idea with the intention of reentering upon a closing breach of that important confirming price. Obviously, we wish we hadn't done that either. For now we would suggest that short positions lower stops to a close above 10625. Retracement levels of support are approx.: 10550; 10255; 9965.
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 Canadian Dollar (march) - We will reiterate what we said last week: "We believe there is a short position entry developing in the Canadian Dollar. It has formed a triangle and breakout confirmation to the downside we believe is achieved with penetration of 7830 basis the March contract. If initiating short positions on that basis we suggest stop protection of a close above 8025." It appears to us that if this occurs the break down could turn out to be fast and hard. |
Mexican Peso (March) - Here too reiterating last week's comment: "In some ways similar to the Canadian Dollar the Mexican Peso has formed a triangular formation from which it has already broken down. We believe the objective is the 625.00 - 600.00 area." |
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 S&P 500 (march emini) - Two weeks ago we said. "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 positions on this basis we suggest stop protection on a close above 82000." Since closing below 79750 on February 17 the March Emini S&P has traded to a low of 73975 on February 23. We suggest that stop protection for short positions can be lowered to penetration of 78825 on an intraday basis. The extension targets of 78650 and 76700 that were activated last week have both been satisfied and exceeded. Retracement levels of resistance are approx.: 78950; 80550; 82150. The next series above is approx.: 81625; 84050; 86450. |
 Chicago Wheat (May) - Last week we said it was time to roll positions from the March contract to the May. There were short positions open at that time in the March based upon it reaching our sell zone of 585 - 595. At the time we were writing last week the March was trading 51850 and the May at 531. We suggested stop protection for short Mat positions on a close above 580. The highest close of the week was 535.75. We believe stop protection can now be lowered to an intraday penetration of 558.75. Retracement levels of resistance are approx.: 569.25; 586.25; 603.25. |
Soybeans (march) - We believe that at least for the time being we need to withhold from any suggestions in the soybeans. We feel we missed the short side of the market for the time being and believe it best to allow for further pattern development. We are looking for a move lower prior to what seems to be shaping up as a corrective rally coming. We do not want to step in front of that rally at this time if it should occur.
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 T-Bonds (June) - Last week we rolled our coverage to the June contract. A recap of our March position and the new suggestion for the June contract may be a good idea: " We had suggested short positions from a sell zone between 136-24 and 137-00 and also on penetration below 131-23.5. Our suggested stop protection of a close above 129-04 was elected this week with the close at 129-11. As we write this week the current price is 126-16. We now roll coverage to the June contract. We believe short positions can be reinitiated on penetration below 123-21 in the June contract. If this is elected we suggest stop protection of a close above 124-24." A new short position has not been elected at this point. We will stick to our thoughts from last week for short entry as included above and also add that there is a sell zone between 130-00 and 131-16 where we believe shorts can be initiated. Stop protection for these would be on a close above 132-17. Retracement resistance levels are approx.: 128-16.5; 130-00.5; 13116.5. Retracement levels of support are approx.: 128-10(hit); 124-18.5(hit); 120-27.
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Ten Year Notes (June) - Last week we rolled our coverage from the March to June contract. Here is a recap of what we wrote: "There have been two approaches to short positions active in the March T-Notes. One was using the suggested sell zone between 126-00 and 126-20 and the other was upon penetration below 123-09. The stop protection was moved last week to a close above 124-22. The high close this week was 124-14. It is also time to roll the position from March to the June contract. March is currently at 122-17 and June is at 120-20.5. Stop protection for the June contracts should be on a close above 122-17.5." The high close for the June contract this past week was 121-17.5. There are now active targets at approx.: 119-08(today's low 119-08.5) and 118-15.5. We see an additional measurement potential to approx 118-16 so we believe that short positions can be reduced on approach of this level and for our purposes we will choose 118-20. Stop protection can be lowered to penetration of 121-19 on an intraday basis. |
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