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TRADE Focus
03/12/2009
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
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.
It wouldn't seem right if we at least didn't make some mention of the markets this week. We haven't had a feel good rally in the stocks for quite some time so even if it lasts only a day and a half it provides good cause to mention. Fueled by the financials on a Citigroup memo concerning its return to profitability the major stock indices manufactured multi-percentage gains. There were additional news bites that seemed to help such as Fed Chairman Bernanke's comments before the Council on Foreign Relations, one of which is that the recession may be over by the end of this year. He also said that big banks would not be allowed to fail along with remarks regarding the mark to market process. Later, there were comments from Congressman Barney Frank that the up-tick rule may be reinstituted very soon. Enthusiasm then spilled over to many other global markets as well, helping the U.S. to get a higher start on Wednesday. Markets are not made in any one day or two day periods for that matter. Markets are made by participants. They are not made by words. We believe there is more evidence needed to convince participants that paying continually higher prices will be rewarding over time.
We had interesting conversation recently that we thought was worth including in our commentary this week. It had to do with the difference between good or even superlative market analysis and good trading. We have known and learned by experience that good analysis does not a good trader make. We recall stories from years ago about how some of the real brilliant men who helped develop some of the futures' exchange contracts were incapable of making money trading their own innovations. We have seen and heard of clients who boasted of rich academic prowess that were also incapable of making the volatility of changing market prices work for them. This discussion came about when we were looking at the cost of some of the analytical services available to traders. Some companies offer many types of information to their customers including written research reports, individual market analysis reports, trading courses and training manuals. We even see where there are some who charge by the minute for phone conversation. All the great information and analysis in the world, though, is no guarantee of success. We believe success is measured over time and not by any one event or the result of one market tout or research piece. Developing a manner of approaching the market and when determined that it provides measurable reward, creating a consistent plan to back it up. We believe that the plan should be guided by a set of rules which will, naturally, include money management. There needs to be consistency and the avoidance of a pick and choose approach. Over time we feel that traders discover that they never know which of the trades they make are going to be the good ones. They systematically follow their approach and apply it to each and every position they take upon each signal given. Their method is indeed their madness. Over time this is what wins the day. Following a planned approach will take away the problems caused by emotions and second guessing. One of the reasons that we are following this discourse is the frequency with which many traders try to take an action after a market price-event has occurred. Usually we see that it is fear that has kept the trader from pulling the trigger as the price has reached its signal point. Most often there is no second chance and opportunities are lost. The ability to pull the trigger is a very large part of that difference between the successful and unsuccessful trader, regardless of their academic, honorary or professional accomplishments. We have talked often in our commentary about the things we have seen that help so greatly in forming the better trigger pullers. For some it is innate but most need to undertake a manner of training, like an athlete, that builds the confidence needed for unbridled, effective decision making.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
Coffee (May) - Last week we said that we thought there was potential for an upside move to develop. And although this can always happen, we feel the subsequent action has negated this for now and will continue to watch for further development and suggest at this time it is better to stand aside.
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 Sugar (May) - There have been two methods of short entry elected over the past few weeks. The first was a suggested sell zone between 1335 and 1400 and the other upon penetration of 1288. We believe that stop protection should remain at 1397 at this time. Retracement resistances are approx.: 1299; 1317; 1335. Retracement levels of support are approx.: 1283; 1249; 1216. We still believe these lower levels will be exceeded.
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Feeder Cattle (Arpil) - We have recently had two short entry approach suggestions that would have been elected. One of them rather quickly violated the stop protection. The second, utilizing the sell zone between 9400 - 9500, remains active. Stop protection for short positions based on this entry approach can be lowered to intraday penetration of 9477 or a close above 9392. Retracement levels will be updated upon new price development. |
 Silver (May)- We adjusted our sell zone in last week's edition to 132000 - 137500. The high has been 135200 made on March 6. Short entries could have been initiated upon that suggestion. We believe the pattern leading to lower price levels remains intact. Stop protection for these initial short entries we believe can be lowered to intraday penetration of 139200. We will also stick to the additional method for establishing short positions upon intraday penetration of 124300. Stop protection for these if elected we suggest should be intraday penetration of 135300. Retracement levels of support remain approx.: 1300 (hit); 124950 (hit); 119900 (hit). The next series underneath remains approx.: 123950; 116420; 109360. The near term retracement resistance levels are approx. 132500; 135150; 137800.
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 Gold (April) - We suggested two weeks ago that short positions could be initiated upon a close beneath 93000. This was elected, as we stated last week, with its close at 91360 on March 3. We believe it possible that the next leg down will bring it below 85000. Stop protection can be lowered to a close above 94560. Another approach to short entry we believe we can suggest is penetration of 88990. If elected, stop protection would be intraday penetration of 93170. Retracement resistances are adjusted to approx.: 93540; 94920; 96300. Retracement levels of support include approx.: 88200 and then a series of approx.: 88680; 84910; 81150.
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Euro Currency (march/June) - We will now roll coverage for currency futures to the June contract. First we shall recap what remains in the March Euro. Over the course of the past few months there have been 3 short positions that could have been initiated based on our suggestions. The first was a sell zone between 14230 and 14340. The second was based on intraday penetration of 13790 and the third upon a close below 12695. The current stop protection for all positions regardless of entry we suggested could be lowered to intraday penetration of 12955 or a close above 12860. These have not been elected as of this time. We also suggested last week that short positions could begin to be reduced as we believe the downward pressure had begun to subside at least for now. The March contract is currently trading 12820 and the June 12824. We suggest stop protection for any remaining short positions that are being rolled to June contracts be intraday penetration of 12984 or a close above 12877.
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|  Japanese Yen (March/June) - Any remaining short positions from the 11020 level in the March contract would have been stopped based upon our suggested stop protection of intraday penetration of 10385. This occurred early this morning and then proceeded to fall considerably to where it is now 10222. We now roll our coverage to the June contract where it is currently trading 10241. We suggest that new shorts can be initiated on intraday penetration of 10049. Stop protection for positions initiated this way we suggest at 10261 initially. We will update retracement levels of both resistance and support upon further pattern development.
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 Canadian Dollar (march/June) - We have recently suggested two methods of short entry one of which remains active and the other which reached its stop protection. The first approach was initiated with penetration of 7830. Stop protection had been reduced to 7870 in last week's edition and remains active. Short positions should roll to the June contract which is currently trading 7807. March is currently 7796. The second approach was elected upon the March contract's penetration of 7689. The market traded as low as only 7653 before turning around and electing stop protection for this short entry with intraday penetration of 7827. We suggest stop protection for short positions rolling to the June contract be an intraday penetration of 7887. Retracement levels of resistance are approx.: 7878; 7945; 8012. |
Mexican Peso (March/June) - We have been saying that a potential target zone for the March Mexican Peso was 625 - 600. Its low has been 63900 since we began coverage. We have not officially suggested any short entries, but holders of any March contracts need to either liquidate or roll to the June contract. The June contract is currently trading 66125 versus 672.25 for the March. We would suggest any short June positions to either liquidate entirely, reduce the quantity or utilize stop protection with intraday penetration of 67400. We said last week that the market was nearing its target and that an end to the recent downdraft may be near. We would be most comfortable if flat. |
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S&P 500 (march/June emini) - A number of weeks ago we had suggested that penetration of 79750 in the March contract would open the door to the possibility to test the lows which were then 73725. They eventually fell to 66575 on March 6, the day after our last edition was written. The stop protection for this position was lowered to 72475 and was elected today. The March contract is currently trading 74300 amid its largest three day rally in many weeks. We now roll coverage to the June contract. We believe a sell zone exists between 765 - 792 and that a further rally into that area can be used to initiate short positions. We suggest stop protection of 812 for short positions entered on that basis. Retracement resistance levels are approx.: 74150; 76625; 79125. |
Chicago Wheat (May) - Last week we said that we felt there was a chance a move to the upside could develop. We had previous short positions in the March contract entered between a sell zone of 585 - 595 that had been rolled to the May contract in our February 19 th edition. Our suggested stop protection was lowered last week to a close above 530 for the May contract. This was elected this week with a close at 532.75. We also suggested last week that long positions could be initiated with intraday penetration of 54500 and if elected stop protection if 515 were penetrated. We will withhold that or any trade suggestion at this time to allow further development.
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Soybeans (May) - We remain on the sidelines
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 T-Bonds (June) - Last week we suggested a sell zone existed between 130-00 and 131-17 and that short positions could be initiated based on that price area. If elected we suggest stop protection upon intraday penetration of 132-17.
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Ten Year Notes (June) - No current position
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