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TRADE Focus
04/09/2009
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We invite you to call and ask about any of these market situations we have discussed or to ask about our considerations for the best trade opportunities for the day or for the week. We also welcome any comment on our weekly commentary as well. We believe, through our years of experience, that what we offer is of value. We are confident enough, in fact, to say to you to tell your friends, relatives and neighbors about us too. Please feel free to contact us at 1 800 321-5810 or email to cbands@cbandsbrokerage.com
The Trade Focus commentary portion of this edition was written on Wednesday, April 8th, while the market analysis portion was prepared during the course of the trading day on Thurday, April 9th.
With the level of economic news having been sparse and rather dry this week we will conduct our review following discussion of our theme for this week.
For any market, whether financial, agricultural or other, there is an abundance of information that will shape the minds of market participants such that will cause them to determine their decision making. We may see economic reports and supply and demand reports as fundamental information but it is that fundamental information which helps drive the price and contribute to the technical picture at the same time. Whatever moves price can shape that which moves market participants. The thing is, there is a virtual information overload that can contribute to or confuse trading decisions. We have over the course of providing this commentary spoke of various qualities and traits traders should seek. We would like to at this time focus on how important it is for the trader to be in proper trading shape. We believe firmly that it takes a certain mindset to go along with all the trading tools the trader has developed and placed at his disposal. There are few things we can think of that reflect real life more so than what trading does. It is "live" and there is real money on the line. Mistakes can be costly and there are no do-overs or mulligans. Market participants need to be prepared and in condition for real game speed. We often use the analogy of training athletes to training traders. This does not only apply to perfecting a trading method, style or system. It also entails mental training; training and shaping the mindset to cope with trading losses to name just one aspect of great importance. Not every trade put on will be a winner. Accepting losses is not an easy thing to do and not in the norm of human nature. Nothing beats actual trading to prepare and provide the training for the next trade and the ones to come in the future. But there are additional measures that can be taken to help shape and then to maintain the confidence and discipline needed to be a successful trader. There are self-help books and books on trading discipline. These alone may go against normal human nature to accept as an ingredient of one's regimen, but we have seen where when employed there can be positive results. It helps to "think the thought" prior to acting. When this can be turned into second nature there are benefits to receive. Thinking the thought of how each and every trade must follow a certain routine and with a critically strict discipline maintained, allows the mind to put this practice into action.
There is another aid to trading we have seen work well too and that is finding a trusted trading partner. Someone to share not only the trading idea but the actual placement and money management controls. This can be a trading mentor or even a broker who recognizes the long term benefit of forging such a bond. It requires complete trust and honesty to work. Trading partners can remind each other of all the trading rules needed to be followed and to stop each other when rules are being ignored. They keep each other in the proper trading perspective and also share their training methods that keep them in trading shape and properly focused. We have witnessed time and again where a trader strays from his plan. There are so many excuses that humans can make such as for example, "it is ok this one time." Since trading is live and is "real life" there is simply no room for excuses. Excuses most often turn out very costly. A trading partnership adds incredible value to the team when it works together to keep the team pinpoint sharp and focused on each and every trade.
The schedule of economic news for this week was quite light and we wonder if traders' focus was more on the shortened trading week and getting away for the holiday, or the market related events. Wholesale inventories for the month of February showed the largest decline ever reported for a single month. Bulls may prefer to believe that this means that any sign of economic optimism would create a need for a significant increase in manufacturing output. On the other hand, besides the fact that it is relatively old news and certainly not a leading indicator, the report may well be a reflection of fear on the part of wholesalers and merchandisers much like declining consumer spending is a sign that people are afraid to spend anything more than necessary. We saw a poll published which said that 70 percent of workers fear they may lose their jobs. That is a frightening dilemma. It will be difficult to kick start the economy if the attitude of the consumer is so dire. We can only imagine that this statistic would rival that which prevailed during the 1930's. Looking at other market related events though saw the beginning of earnings season with Alcoa reporting as usual. Apparently there was a good deal of concern with this one but it was said to miss the street estimate by only 2 cents and therefore may have been less dreadful than what it could have been. The FOMC minutes from the last Fed meeting were released and showed that there was disagreement among members as to just how much treasury and mortgage securities they will purchase as part of their "quantitative easing" strategy. According to some traders they saw nothing of concern for the long end of the fixed income market based on this report. There was also the second TALF funding this week and the subscription level was said to fall much below that of the one held in March. There was also an SEC meeting where short-sale price test rules and a vote on reinstating the up tick rule were on the agenda. We await word on these issues.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Cocoa (May) - Last week we made what we hoped would be a temporary adjustment to 2675 for our suggested stop protection on short entries. Temporary it was but in the wrong way. Needless to say the protection was elected very early the day following our last issue. However, after running considerably higher this market placed a virtual reversal and we believe short entries can again be initiated with penetration of 2510. Stop protection for short entries following this approach can begin with intraday penetration of 2682. Retracement support levels are approx.: 2567; 2496; 2426.
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Coffee (May) - Short entries were initiated between 11575 and 11675. Stop protection was elected with penetration of 11960 as the high as of this writing has been 12000.
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 Sugar (May) - At this point there are two short entries that would be active based upon the suggested sell zone that laid between 1335 to 1400 and also when the May contract penetrated 1288. Stop protection can be lowered to a close above 1321. Retracement resistance levels are approx.: 1275; 1294; 1313.
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 Feeder Cattle (May) - Our previous short entry suggestion initiated in the sell zone between 9525 and 9640 would have seen stop protection elected both with penetration of 9580 and a close above 9515. The Feeders have risen rapidly this week and we see them as reaching a critical juncture. Rather than pick a top we shall suggest a short entry upon closing beneath 9730. If initiated with this approach we suggest stop protection using a close above 9932 or intraday penetration of 9982. We will update retracement levels upon further development.
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 Silver (May) - There are two short entries that could be active. One is from the suggested sell zone between 1320 and 1375. The newer short entry was with penetration of 1294. We believe that all stop protection can use penetration of 1376. Retracement resistance levels are approx.: 127140; 129370; 131610. These combine with approx.: 129260; 132520; 135790. Retracement levels of support are approx.: 123600; 120000; 116500; 109400. There are extension targets at approx. 121650 (hit); 1180.
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 Gold (JUNE) - There is an active short that started with the April contract when it penetrated 91540. When rolled to the June contract the April we noted at 92620 while June was 92850. This as we discussed last week will remain our basis. Stop protection we believe should remain as being intraday penetration of 95230. Retracement resistance levels are approx.: 90470; 91710; 92960. Retracement levels of support are approx.: 85120 and 81360.
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 Euro Currency (June) - There are currently two suggested short entries active. The first from a zone between 13575 and 13625 and the other was achieved with penetration of 13409. We believe stop protection should be moved down to a close above 13335 or intraday penetration of 13422. For new or additional short entries we suggest these can be initiated with penetration of 13092. Stop protection for this approach we will suggest be a close above 13211 or intraday penetration of 13292. Retracement levels of support are approx. 13096 and 12945.
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| Japanese Yen (June) - There is one possible short entry active at this time which would have been initiated with penetration of 10049. We believe stop protection can be lowered to penetration of 10086. Retracement resistance levels are approx.: 10183; 10282; 10382.
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Canadian Dollar (June) - The previous active short position from 8150 would have seen the stop protection elected with its penetration of 8106 this week. We still see it within a large pattern which could eventually lead to a significantly lower level. As tempted as we are to suggest a resell at or near its current level we will only suggest to initiate a short entry with penetration of 7990. Stop protection for this short entry we suggest start with penetration of 8214. The near term levels of retracement support are approx.: 8002; 7937; 7873. Retracement resistance levels are approx.: 8300; 8428; 8665; 8902. |
 Mexican Peso (June) - Long entries from the suggested price level of 69625 are active. We believe stop protection can be raised to intraday penetration of 70275. Retracement resistance levels are approx.: 76925 and 80250. Retracement support levels will be updated upon further development.
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 S&P 500 (June emini) - There is a long entry based on a close above 83400 (83550 - April 2). We suggest maintaining stop protection at intraday penetration of 79700. The next retracement resistance is approx. 87250. The next series above is approx.: 90950; 98650; 106325. There are extension targets active at approx.: 84875 (hit); 86475. |
 Chicago Wheat (May) - There is an active short entry from the sell zone between 550 - 560. Stop protection we suggest be lowered to intraday penetration of 57375. Retracement resistance levels are approx.: 55875; 57775; 59675.
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Soybeans (May) - The active short entry from the sell zone between 954 and 980 saw its stop protection elected with the close above 984 (99550 - April 3). It appears the area of 1100 may be a plausible possibility. The action of today, though, suggests patience on our part. We will observe for now as the pattern develops. |
 T-Bonds (June) - There is an active short entry from the sell zone between 129-21 and 130-11. We believe stop protection can be lowered to intraday penetration of 131-06. We also have suggested a short entry can be initiated upon penetration 123-03. If elected we suggest stop protection with intraday penetration of 125-17. Retracement resistance levels are approx.: 129-21; 131-23; 133-24. Retracement levels of support are approx.: 124-19 and 120-28.
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Ten Year Notes (June) - We suggested that short entries could be initiated in a sell zone between 124-13 and 124-26. The high since this suggestion has now been 124-18 on April 2. We believe stop protection can be lowered to intraday penetration of 124-22. Retracement levels of resistance are approx.: 123-14; 124-00; 124-15.5. Retracement levels of support will be updated upon further development.
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