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TRADE Focus
03/05/2009
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, March 5th.
The theme for this week's Trade Focus Commentary is preparedness. We deal with trading markets where anything can happen and usually does. Being ready for anything is such a key asset and another one of the definite difference makers when it comes to separating the winners from the wannabes. This does not solely apply to stop protection. It is also a very key element in position entry. Many entry scenarios are based on "if this then that" logic. Unquestionably, being ready to act especially after the "if this" portion has been elected cannot be neglected. There have been countless times where we have seen the approach of "I'll look at it again" after the "if this" occurs only to see a great opportunity missed and therefore wasted. Certainly too, there are times where that approach has saved a trading loss, but the idea is when an analysis calls for certain action, then be prepared for it and take it. Most highs are made when a market looks the strongest as are most lows made when a market looks its worst. It is human nature to feel the emotion of fear before entering a position at those times. But it seems to us that trading is an arena where human nature is not an asset. Joining the crowd quite often results in buying high and selling low; the exact opposite of trading's purpose. We have previously discussed trust and confidence and their importance for making trading decisions. If the result of trusted and tested analysis results with a trade to sell into what appears to be undeniable strength we wonder what would be the purpose of ignoring it? Perhaps there are occasions that will overwhelmingly suggest staying away, but those would be to stay away all together. These could be things such as wars, force majeur's, scientific discoveries and the like. However, trading is about risk and managing that risk. Risk is faced on a daily basis every time a position is entered no matter how peaceful and calm the waters may seem at the time. Anything can happen. Obviously, this leads to stop protection and the necessity of including in your trading plan without fail a stop protection policy. The decision making process is very difficult in the business of trading. Measures should be utilized that make the process easier. That is where following your plan as pre determined, including stop protection, is so helpful in accomplishing this. If the trader prudently chooses this course of action, then upon buying or selling, stop protection is entered immediately. This way positions that should be entered are not missed and the chance of existing positions running out of control and needlessly destroying capital are better managed. Also as a side note and example, the concept of how difficult decision making is in trading happens to be the prime reason we do not suggest or believe in spreading losing positions. Or winning positions for that matter. It adds another set of decisions that one will needlessly be forced to face. We believe in keeping it simple and doing the right thing increases the percentages of trading success.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Coffee (May) - We believe there is potential for an upward move to develop in the coffee market. We believe that long positions can be initiated upon penetration of 10975 and if elected we suggest stop protection of intraday penetration of 10540. Retracement resistance levels are approx.: 11310; 11550; 11775.
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 Sugar (May) - The second method of entry was elected this week with penetration of 1288. That now joins short positions in the suggested sell zone between 1335 and 1400. We believe stop protection for any short position can be placed at 1397 on an intraday basis. Retracement levels of support are approx.: 1283(hit); 1240; 1216. Ultimately we believe the downward move will extend well beyond these levels.
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 Feeder Cattle (Arpil) - Our short entry approach utilizing a penetration of 8887 had been elected since our last edition last week and as we noted was on the verge of being stopped. It was in fact stopped with a close above 9250 which actually occurred at 9385 on Feb 26. It makes us wonder about this type of entry for this market, i.e., initiating on penetration of what we considered significant lows. We will be scrutinizing this for a while at least. We also suggested a sell zone between 9400 - 9500 and the high in the past week was 9475. Short positions could have been initiated on that basis. Stop protection we believe can be moved downward to 9487 intraday. We are still of the mind that feeder cattle will seek substantially lower prices in the future. We are updating retracement supports to the short term levels at this time. They are approx.: 9250; 9180; 9110.
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 Silver (May) - Last week we said that "silver has begun a decline." We had been suggesting lightening any long positions for the previous few weeks and then our stop protection level was also breached at 132000 on February26. Our suggested sell zone between 135000 and 137500 was not reached this week. We feel we must lower the lower end to 132000 so the new zone to initiate short positions becomes 13200 - 137500. Stop protection for now will stay at penetration of the 146350 high. We also will suggest that short positions can be entered on penetration of this week's low of 124300. If initiating based on this approach stop protection is suggested upon penetration of 133900. Retracement levels of support are approx.: 130000(hit); 124950(hit); 119900. The next series below is approx.: 123950; 1164200; 109360. Near term retracement resistance levels are approx.: 132500; 135150; 137800.
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Gold (April) - Last week we alerted to the potential of a large correction due for the gold market. We suggested that stop protection on any long positions be brought to 92000 on an intraday basis and / or 94000 on a closing basis. There was a close at 94000 and penetration of 92000. Any longs should be liquidated based upon our suggestions. We also said that short positions could be initiated upon a close below 930000 and this too would have been elected as there was a 91360 close on March 3. For now, our suggested stop protection remains at 96100 closing basis. Near term retracement support levels are approx.: 90600 (hit); 88200. The next series lower of significance is approx.: 88680; 84910; 81150.
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Euro Currency (march) - Last week we said that we felt the euro currency had come into a crossroads period and direction was unsettled. We suggested moving stop protection for previously discussed short position entries to penetration of 12955 and / or a close above 12860. Neither has been elected as we write this week where we find the euro trading at 12560 at this moment. We believe firmly enough that downward pressure is at least temporarily abating that we suggest to lighten short positions. Stop protection for any remaining short positions we believe should be lowered to an intraday penetration of 12815 or a close above 12680. Near term retracement resistance levels are approx.: 12657; 12720; 12784. Next we find approx.: 12784; 12886; 12989. One last note is that roll over for the currency futures contracts begin Monday March 9.
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|  Japanese Yen (March) - We had suggested weeks ago to initiate short positions on a penetration of 11020. That was subsequently elected and we mentioned lightening positions upon approach of the significant low of 10567 thinking we could re-add easily. Unfortunately the market fell quite hard and regaining any lost short positions fell with it. Any remaining short positions we feel can lower stop protection to an intraday penetration of 10385 or a close above 10330. Extension targets now are active at approx. 9905 and 9815. Lightening short positions in that area between the targets we feel is reasonable and prudent at this point. Positions can begin to roll on Monday the 9 th . We will begin the evaluation of the June contract in the next edition.
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Canadian Dollar (march) - We had suggested a short entry could be initiated with penetration of 7830. This has occurred and the current price is 7787. The low it has achieved since being elected has been 7707. We thought that penetration of that 7830 level would produce a more rapid and violent break. It has not done so thus far. We will suggest that stop protection be lowered for these short positions to penetration of 7870. It may be that it will take penetration of 7693 to increase the downside momentum. We suggest that new and / or additional short positions can be initiated upon penetration of 7689 and if elected we suggest stop protection for those if 7827 is penetrated intraday. Retracement levels of resistance are approx.: 7935; 8005; 8080. These March positions will begin to roll Monday March 9. We will begin to address the June contract in next week's edition. |
 Mexican Peso (March) - We had suggested a possible target zone of 625 to 600 in the March contract of the Mexican Peso. It is getting somewhat close reaching a low this week of 642.5. We believe there is reason to suspect an end to the current downdraft is very near and would suggest to holders of short positions to lower stop protection to at least a close above 675.0. We feel it prudent also to lighten positions beginning at the 62500 level on the downside. Roll over begins Monday March 9. We will reevaluate this and other currency futures in our next edition.
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 S&P 500 (march emini) - A few weeks ago we suggested that a close below 79750 would open the door to a test of what were then the lows of 73725. The eminis are currently 68700 as we write. We suggest that short positions can lower stop protection to intraday penetration of 72475. Retracement resistance levels are approx.: 75350; 77700; 79900. There were extension targets activated when 73975 was penetrated on February 27 of approx. 69750(hit); 67975. Thus far the low has been 68150. |
Chicago Wheat (May) - Short positions had been rolled from the March contract to the May contract two weeks ago. Last week we suggested stop protection for short positions could be lowered to a close above 580. We believe there is potential that an upward move can now materialize. For now we believe reducing short positions is advisable while lowering stop protection on remaining positions to a close above 530. The May contract is currently trading at 515 as we write. We feel that at this time long positions can be initiated on intraday penetration of 545. Stop protection for long positions entered according to this approach should be upon penetration of 515. We will explore other methods of long entries. If entering long prior to election of our suggestion we feel that a new low below 49850 should be used for stop protection.
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Soybeans (march) - We remain on the sidelines.
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T-Bonds (June) - Last week we suggested short positions could be initiated on penetration of 123-21 with stop protection of a close above 124-24. The low of this past week has been 123-04 and short positions could have been initiated. The June contract is currently trading at 126-24 and our suggested stop appears on the verge of being overwhelmed. We will stick with the sell zone suggestion of 130-00 - 131-17 as an area to initiate short positions. If filled stop protection we feel appropriate upon intraday penetration of 132-17. Retracement resistance levels are approx.: 128-04; 129-22; 131-09. The next series above this is approx.: 129-21; 131-22; 133-24.
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 Ten Year Notes (June) - Last week we suggested that stop protection for short positions could be lowered to intraday penetration of 121-19 This has been elected this week. These June positions had been rolled over from Short positions initiated in the March contract in an area between 126-00and 126-20 and also upon penetration of 123-09. The positions were suggested to be rolled in the edition of February 19 and at the time we were writing the March contract was trading 122-17 and the June at 120-20.5. We will evaluate new entries for future consideration. |
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