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TRADE Focus
06/05/2009
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 was written Wednesday, June 4th and the market analysis section was written Thursday, June 5th.
It was just a few weeks ago that we discussed the connection of the US Dollar to the Gold market and that could have actually been expanded to include most all of commodity based markets. Today's price action provides strong reason to revisit this. Many of the markets have been going in the same direction seemingly without regard for fundamentals attached to each individually. We could be wrong in our thinking that it's unlikely that most all markets are either bullish or bearish but that too seems unrealistic. If what transpired today is not a one day event or phenomenon we could be in for another nice run of what we believe is opportunity. We have mentioned several times how we believed there would be moves of significance providing trading opportunities corresponding with the changing political, economic and now what many believe are changing social conditions as well. All rhetoric aside, today saw what appeared to be and could very well be substantial directional change in the US Dollar, Gold, Silver, US T-Bonds, Sugar and perhaps the Grains as well. That's a fairly inclusive list and the few missing of note are Cocoa and the Stock Indices. While all the other aforementioned commodities closed lower, Cocoa finished strongly higher perhaps according to real fundamental issues. The Stock indices, although lower essentially all day, closed lower but off the lows and, at least in the case of the S&P 500, above what we see as the neckline of an inverted Head and Shoulders bottom. We have been considering for what seems a number of weeks whether it would be possible for the Dollar and the Stocks to trend in the same direction. We believe that they can and that they likely will. And it could be now or very near to now that we see this. These relationships that certain markets or market groups have toward each other do not have to prevail at all times. These relationships, particularly within the financial sector, trade within cycles of their own. We have seen it so often over the years particularly between the interest rate futures and stock indices. Many believe that they normally trend opposite each other. But there are often periods of time that they trend together because the overriding investment environment may, for example, call for either owning or disowning America . Often times this will tie in with the US Dollar because for foreign investors to buy US securities they need to buy dollars to do it. This could possibly be one of those times where the contra-trend between US Dollar and US Stocks and US Fixed Income Securities coexist within the same trend. We believe this may be the case because of how the US Dollar responded positively to a significant price level based on a retracement value we saw in the weekly data as did the US T-Bond futures respond to 3 elements converging at near the same price level we saw in the monthly data. Those included a significant retracement value, a 50 month moving average and a trend line. As for the stock indices, the action and the Head and Shoulders scenario we depicted above give us cause to believe they can continue to trend higher along with the establishment of new up trends for the Dollar, T-Bonds and T-Notes. We do not want to forget to pay attention to the Gold and Silver. Big reversal days were recorded in these today and a rather sweeping one at that in the Silver. We noted that an important retracement level and extension target was reached in the Silver from which it reversed. We view this without question as a significant development indeed.
More important to all the discussion above about trends and what may be new trends developing together is the need for employing a thorough trading strategy and executing it to the best of all possible ability. Anything can happen and usually does in our universe of trading markets so preparation and maintaining a prepared state is essential in attaining success. Overnight success is rare. Trading is a business like any other business and slow and steady wins the race. Sounds corny, for sure. But experience demonstrates it is the way it is. in the long run. There will be winning trades and losing trades, good periods of time and bad periods of time. There is no room for any careless and reckless approach to this business of trading markets. We believe that staying true to the plan, whatever it may be, will win the day over the course of time. We may be convinced that the markets present great opportunity at certain times, such as now, but what is key and what will allow any trader the chance to participate is the well developed and executed trading plan. Without it there are no rules and no map and one is likely to become easily lost. The market is the playing field and it deserves its respect. And we advise therefore to never follow anyone or any advisory service blindly. Always use sound business and trading market strategy.
Heading into the end of the week will be Friday's report on monthly jobless conditions. We have had a sneak look at it with the ADP report released today which showed another decline of 532,000 workers from the ranks of the employed. This was slightly worse than the expectations for this report. It is expected that the government's report on unemployment will show something in the area of 520,000 workers having lost their jobs during the month of May. This report often results in market volatility so it will be interesting to see the effect on the potential opportunities we discussed above.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Cocoa (July) - Cocoa pressed higher and our suggested short entry with penetration of 2474 would not have been elected. We will withdraw this or any entry suggestion for this week.
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Coffee (Sept) - This week we roll our coverage to the September contract. There have been no trades or entry suggestions the past few weeks. Coffee has also moved higher, perhaps as an offshoot of the weaker dollar. It is possible that it could continue with or without the dollar. We do not see a long entry to suggest at this time, though, and in fact, if looking for a place to initiate a short entry and pick a top, a possible area would be at approximately 15500. We see a significant retracement resistance level based on the September daily data.
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 Silver (July) - There is an active long entry triggered with the close above 146950 on May 22. The market had a very substantial reversal bar yesterday while at the same time, based on the monthly data, an extension target was met as well as a retracement resistance level. We believe that the evidence is strong enough to suggest that long entries should liquidate at a price at or above 158000. If for some reason the long entries are not liquidated stop protection on any remaining long entries we believe should be moved upward to intraday penetration of 150350. We also believe that short entries can be initiated at a price at or above 158000 with suggested stop protection with intraday penetration of 162800. The remaining retracement resistance level is approx. 167630. Retracement levels of support are approx.: 145390; 140100; 134810.
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 Gold (Aug) - There is an active long entry from the close of 93920. Based on yesterday's reversal we believe there is strong reason to suspect that this upward trend has ended. We believe strongly enough to suggest that long entries should liquidate at a price of 97800 or better. We also believe that short entries can be initiated from any price at or above 97800. Stop protection for this short entry we would suggest using intraday penetration of 99370. If for some reason the long entries are not liquidated stop protection for any remaining long entries should be moved upward to intraday penetration of 95670. Retracement levels of support are approx.: 94500; 93000; 91550.
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Euro Currency (June/Sept) - It is time to roll our coverage to the September contract. There is an active long position from 13825. The current price we show as we write is 14182. The September contract is currently 14165. We will use these prices as roll basis. Similarly to the metals but to a lesser degree we believe there is reason to be concerned about long entries at this time. We believe stop protection for the September contract should be intraday penetration of 14024. We believe short entries can be initiated using this same price and that stop protection if the short entry is initiated should be intraday penetration of 14242. Retracement levels of support are approx.: 13773; 13601; 13430.
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| Japanese Yen (June/Sept) - There was a short entry initiated in the ell zone between 10515 and 10675 that would have seen stop protection elected with intraday penetration of 10589. The high June 1 was 10590. We will begin our roll to covering the September contract but at this time we see nothing to discuss or suggest regarding the Japanese Yen.
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 Mexican Peso (June/Sept) - There was a long entry based on the penetration of 75100 two weeks ago. Last week we mentioned that we felt there was reason to suspect a correction and we suggested stop protection be moved upward to 73625 or even to as much as the long entry level for those wanting to protect the break even point. The low yesterday was 73625 assuring either protective measure would have been elected. We will roll coverage to the September contract beginning next edition.
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 British Pound (Sept) -
We believe the long rise in the British Pound has come to an end, at least for now. We believe following a sweeping reversal day bar on the charts suggests that short entries can be initiated in a sell zone between 16366 and 16435. If elected we believe stop protection should be with intraday penetration of 16668. Retracement levels of support are approx.: 15814; 15552; 15290.
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 S&P 500 (June/Sept emini) - A short entry from a zone between 90400 and 9100 would have seen stop protection elected with intraday penetration of 92550. We believe there is an inverted Head & Shoulders which has seen the neckline now broken to the upside with this week's action. With rollover coming for the June contract we will roll our coverage to the September contract where we believe long entries can be initiated in a buy zone between 90800 and 90000 with stop protection using intraday penetration of 86875. Another long entry approach would be with intraday penetration of 94625. If initiated we suggest stop protection with intraday penetration of 91625. Retracement levels of support are 91625; 90750; 89900. Below this we see retracement support levels of approx.: 87850; 85800; 83750. Retracement resistance levels are approx.: 98925; 106675. There are extension targets now active at approx.: 94975; 96525; 98550. |
 Feeder Cattle (Aug) - We are unhappy with ourselves over not putting this market back into the Trade Focus last week. Believe it or not, we saw something we thought was a viable short entry but when it came time to prepare the report we neglected to add this market back into our review. All that said we believe there to be a sell zone between 9940 and 10040 where short entries can be initiated. If elected we believe stop protection can be intraday penetration of 10147. Retracement resistance levels are approx.: 9860; 9947; 10035.
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Soybeans (July) - We have two active short entry suggestion of intraday penetration of 114900 and intraday penetration of 108400. We believe that even though these are well below the market they remain viable. Stop protection we believe should be 120225 and 111700 respectively.
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 T-Bonds (September) - An active short entry was initiated with intraday penetration of 108-09 back on May 25. Last week we suggested that short entries might choose to lighten positions with retest of an area between 115-15 and 114-00. This has occurred and any remaining short entries we would suggest lowering stop protection now to intraday penetration of 116-19. We believe long entries can also be initiated with intraday penetration of 116-19. If elected stop protection should be intraday penetration of 114-19. We will update retracement levels following further price and pattern development.
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 Ten Year Notes (September) - There is also an active short entry from 118-09 in the September Notes. Last week we suggested that short entries may want to consider lightening positions in an area between 115-30 and 115-20. This has been achieved and any remaining short positions we believe can lower stop protection to intraday penetration of 116-17. We also believe that long entries can be initiated with intraday penetration of 116-17. If elected we believe stop protection should be intraday penetration of 114-17.
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