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TRADE Focus
06/18/2009
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 17th and the market analysis section was written during the course of business on Thursday, June 18th.
Reviewing economic news over the course of the week since we last wrote we see that except for housing construction the data was mostly unfavorable. Manufacturing activity as reported by the Empire State Manufacturing Index showed a decline of nearly 9.5 pct in its June report compared to May. Industrial Production during May dropped by 1.1pct with Capacity Utilization down to 68.3 pct which we heard we heard reported that this is a record low. Of course with the auto industry here in the United States undergoing dramatic change that would help explain this. The inflation data in the form of the Producer Price Index and the Consumer Price Index showed that there is virtually no inflation so those concerns, it appears, remain something to look forward to in our future. The Mortgage Bankers Association data showed that business has suffered with the recent rise in yields. New applications dropped nearly 16 pct with refinancing down more than 23 pct and with purchase applications falling 3.5 pct. Outside the realm of the regularly scheduled economic news the variable influences on market behavior included the Iranian elections, more North Korean saber rattling, where we saw they have warned of a nuclear confrontation on the Korean Peninsula, Israeli Prime Minister Netanyahu's speech where he included rhetoric toward a separate Palestinian State (with certain conditions), A BRIC conference in Russia and President Obama's unveiling of the regulatory reform initiative for US financial institutions. The demonstrations in Iran disputing the outcome of the elections holds a good deal of significance, we believe, as regardless of whether there is a power change now or not, notice has been served. The outcome would seem to be that Mr. Ahmadinejad's rhetoric and actions may have to undergo some change of their own. On the Israeli/Palestinian front we were surprised to see some of the reaction from the Palestinian side being as negative as it was but could there be a crack in this proverbial door of doors? The BRIC conference brought out their call for an international reserve currency that would lessen the global dependence on the US Dollar. In our opinion the Dollar took this assault very well. The Obama Administration's new proposals for financial reform, tabbed as the greatest "overhaul" since the Great Depression, comes with many pros and cons. Listing them here is impractical but briefly we will say that measures to help guard against what happened to our financial system are good but more bureaucracy and confusion over more regulation can have a tendency toward doing as much harm as good and therefore we find that a negative. What we might like to add is that with all this blame focused on Wall Street and with all the government action and plans for reform where will the oversight of the regulators and those directing the regulators come from? This is another one of our questions more suited for a different forum.
President Obama promised a lot of change while campaigning for President and since taking the oath of office. We see from what has transpired since the inauguration that he was serious, as if nothing else, the financial regulatory reform proposals outlined today demonstrate. This brings us to our segue in to our theme of the week. Just as economic, social and political conditions and their regulations can change, trading markets and market patterns are subject to change as well. We have often spoke of how those trading markets need to be prepared for any eventuality and a big part of the reason for this is that market patterns are subject to "morphing" as they develop. We have often seen where what appeared almost certain to be bearish conditions for a particular market turn into a bullish one. Certainly this is subject to interpretation but the point is that adapting interpretations and perceptions as patterns develop is a formidable asset. We find it a sign of strength when a market trader has the ability to recognize a change either has occurred or when one is in process and can adapt and take advantage of it. It is an often very frustrating aspect of trading markets that we see so frequently. That being the change in a pattern from something perceived with great certainty to something becoming its opposite. It has happened and will continue to happen and we believe it important to be prepared for its occurrence. In these circumstances a very reasonable and sound approach can be one of "better safe than sorry" and adjusting stop protection and exit strategy, which may include liquidating on sight. This flexibility is another one of those very beneficial attributes for any trader.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Coffee (Sept) - Coffee (Sept.) - Coffee has repelled considerably off its high of two weeks ago and has retraced a significant portion of the move upward off its March low. It has held a retracement level of support basis the weekly and monthly data that suggests enough significance to consider initiating long entries which we believe can be done on intraday penetration of 12580. We believe an initial target area on the upside will be between 13250 and 13500. Stop protection for such long entries we suggest can be a close beneath 12310. Retracement resistance levels are approx.: 12950; 13240; 13535.
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 Silver (July) - Two weeks ago we suggested liquidating long entries from the close above 146950 at a price level of 158000 or above and that short entries could be initiated at that same time. This would have been achieved as discussed last week and as we write the July contract is trading at 141600 and we believe stop protection can be lowered to intraday penetration of 156100. We also believe that new or additional short entries can be initiated upon intraday penetration of 138900. Stop protection for this short entry approach we suggest can be intraday penetration of 149250. Retracement resistance levels are approx.: 148050; 150800; 153580. Retracement levels of support are approx.: 140100 (hit); and 134810. The next series of retracement support is approx.: 134230; 125420; 116620.
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 Gold (Aug) - Similar to the suggestion in the silver of two weeks ago a previously suggested long entry could have been liquidated and a new short position initiated from a price level of 97800 or better. We believe stop protection for the short entries can be lowered to 96780. Traders may wish to reduce positions in the area of 91750 to 91500 but we believe it prudent to maintain at least some short position exposure even at that price level. Retracement resistance levels are approx.: 95140; 95910; 96690. Retracement levels of support are approx.: 93000(hit); 91550. Beneath these the next series is approx.: 900.60; 86680; 83300.
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 Euro Currency (Sept) - There is an active short entry from the intraday penetration of 14042 when previous suggested long entries that had rolled over from the June contract were also liquidated. We believe that stop protection can be lowered to intraday penetration of 14182. Retracement resistance levels are approx.: 13959; 14029; 14100. Retracement levels of support are approx.: 13773; 13601; 13430. The next series of support underneath is approx.: 13629; 13413; 13198.
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|  Japanese Yen (Sept) - We suggested that short entries could be initiated in a sell zone between 10390 and 10460. The high since we last wrote has been 10478 affecting this entry. We believe stop protection can be lowered to intraday penetration of 10523 or a close above 10481. We still see potential for a test of the April low down at 9898 and with a possibility of eventually trading down to the area of 9400. Short term retracement levels of support are approx.: 10344; 10302; 10261.
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 Mexican Peso (Sept) - Last week we suggested that long entries could be initiated with a close above 76650. We believe this can remain as an acceptable approach to a long entry but at the same time we do not foresee this occurring any time soon. It appears that a test of some level lower is likely but without a clear approach to a short entry at this time. Near term retracement resistance levels remain approx.: 73700(hit); 74275(hit); 74830.
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British Pound (Sept) -
Short entries within the sell zone between 16366 and 16435 previously suggested remain active as the high since initiating this short entry has been the 16620 of last week. As we write the market is trading 16330 but we do not see an appropriate level to lower our stop therefore stop protection remains intraday penetration of 16668. We also believe that long entries can be initiated with a close above 16668 and if elected utilizing stop protection with intraday penetration of 16327. Retracement levels are still lacking sufficient data to provide us reasonable and viable price levels.
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 S&P 500 (Sept emini) - Long entries initiated with intraday penetration of 94625 would have seen stop protection elected at 91625 and simultaneously short entries would have been elected. We believe stop protection for this short entry from the intraday penetration of 91625 needs to remain as intraday penetration of 94425. We believe that additional or new short entries can be initiated with intraday penetration of 89850. Stop protection for this new or additional short entry we believe should be intraday penetration of 91975. Near term retracement resistance levels are approx.: 91925; 92575; 93225. Retracement levels of support are approx.: 88400; 86275; 84125. |
 Feeder Cattle (Aug) -
We believe a sell zone still exists between 9910 and 10010 where short entries can be initiated. Stop protection for such short entries we believe should be intraday penetration of 10147. We also believe that short entries can be initiated with intraday penetration of 9490 and if elected stop protection should be intraday penetration of 9690. Retracement resistance levels are approx.: 9815; 9912; 10010.
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 Soybeans (July/Aug) - None of the short entry suggestions have been elected basis the July contract and we will now roll our coverage to the August contract. We believe a sell zone exists between 1162 and 1172. If elected we believe stop protection should be intraday penetration of 1207. We also believe that short positions can be initiated or added to (if already short from previous suggested sell zone) with intraday penetration of 1113.50. Stop protection for this short entry approach should be intraday penetration of 1153. Retracement levels of support are approx.: 111200; 108325; 105425.
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 T-Bonds (Sept) - Short entries from intraday penetration of 118-09 back on May 25 could have reduced positions as suggested in an area between 115-15 and 114-00. We suggested last week that remaining short entries move stop protection to intraday penetration of 114-23 which would have been elected. New long positions with a close above 114-23 would have been elected with the close of 115-05 on June 15. Stop protection for these long entries can be changed to a close below 113-17 or intraday penetration of 112-29. Retracement resistance levels are approx.: 115-23.5 (hit); 116-30.75 (hit); 118-07. The next retacement series above this is approx.: 118-26; 121-01; 123-08.5.
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 Ten Year Notes (Sept) - Previous short entries from intraday penetration of 118-09 could have lightened positions as suggested in an area between 115-30 and 115-20. Last week we suggested that any remaining short entries could lower stop protection to intraday penetration of 114-14 which would have been elected. We also suggested that new long entries could be initiated with a close above 114-14 which would have been elected with the close of 114-26 on June 15. We believe stop protection can be changed to a close below 113-07. We also believe that new short entries can be initiated with intraday penetration of 112-24. If this new short entry is initiated stop protection we believe should be intraday penetration of 114-12. Retracement levels of resistance are approx.: 115-22; 11619; 11716.
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