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TRADE Focus
07/02/2009
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 Tuesday, June 30th, the market analysis section was written during the course of business on Wednesday, July 2nd and the w eekly economic report update was added Thursday, July2 .
We would like to extend a Happy Fourth of July greeting to everyone. It's a fun summer social occasion for all of us to enjoy and we hope everyone has a chance to do so. This week we would like to briefly discuss the Trade Focus and the section devoted to the individual markets and suggested trade ideas. Suggested is the operative word. The purpose is to provide ideas that traders can work with in their own way and according to their own way of evaluating potential opportunities. Market patterns can change abruptly within the course of a trading day let alone over the course of a full week. This is why it is so important for market traders to meticulously follow their brand or method of money management strategy while holding a market position. Any trade idea, whether it is from the Trade Focus or other source for that matter, needs to be managed according to a preconceived trading plan. As a market position progresses and evolves adjustments may be needed. This includes not only position entry but, of course, stop protection, price objectives, position size and possibly the final decision of cutting bait for any unforeseen reason. This whole concept, including that of capital preservation, applies to day trading as well as long term position holders. We believe that adhering to money management trading strategies gives the market its due respect. A market can change directions for any number of reasons without any notice. Sometimes it can be temporary and is just a blip but there's usually no way to know that at the time it happens and because of that we find it essential to be prepared for that eventuality. An example of how this applies within the scope of our Trade Focus and for the purpose of this discussion is the current situation in the Silver market. It appears that as we are writing this that the September silver has penetrated the neckline of a Head and Shoulders top formation. There can be many different approaches to entering the position as well as managing the stop and risk protection. Having included this possibility in the last issue of Trade Focus we suggested a stop protection level for short entries based on a broader pattern that existed at that time. The fact is that the dynamic is happening now and there has been trading action since last week that opens up other possible approaches to trade management. Another factor is that each individual may have a different risk tolerance or time tolerance for any given position including this silver example. One trader may believe the broad suggested stop protection is best suited where another trader may want to reduce the risk exposure for the position in any number of ways, one of which might be that because the initiation of the silver position is based on neckline penetration that if the price closes back above the neckline it is a signal to liquidate. Another might be that since this is a short entry, if the price violates the high of the day the neckline was penetrated that would be the price level to use for initial stop protection. And there are others such as penetration of a downtrend line which in this example also appears to have validity, or perhaps Fibonacci retracement levels. We have talked before about the interaction with a trading partner or trading buddy and that sometimes even a broker can fit that role if the trader and broker are "like-minded" and willing to work together to achieve the objective of the trader. For those reading this that are not currently brokerage clients please let us know how we can be of service to you.
We saved this portion of Trade Focus for last this week because of the June Unemployment figures that were being released this morning at 7:30 AM Central Time. The government may have made a better choice delaying them until after the 4 th of July holiday instead as they were not good numbers at all. Nonfarm Payrolls dropped 467,000 compared to the expected decline of 365,000. The unemployment rate came out as 9.5 pct compared to the expected 9.6 pct and the 9.4 pct of the previous month. The report also indicated a decline in Hourly Earnings and in the Average Workweek. It was also noted how jobs were lost throughout virtually all sectors of the economy. Thus far the reaction in the markets has been quite negative. The Factory Orders report for the month of May was also released this morning (Thursday) and was better than expected at 1.2 pct compared to estimates of 0.9 pct and April's 0.7%. Earlier in the week saw the S&P Case-Schiller Home Price Index reflecting a decline of 18.12 pct which was a small improvement over the previous month and slightly better than anticipated. The Chicago PMI at 39.9 beat expectations by 1.4 points and compares to May's 34.9. Consumer Confidence disappointed at 49.3 versus the expected 56.0 while the June ISM Index was as expected at 44.8. Pending Home Sales for the month of May rounds off our economic report update showing a 0.1 pct rise which was about as expected but down from the 7.1 pct rise seen in the April report.
Note: We are archiving the Traders Focus from here on so that those interested can follow more easily.
 Cocoa (Sept) - We believe a sell zone exists between 2640 and 2690 and that short entries can be initiated in this price range. If elected stop protection we believe should be intraday penetration of 2792. Another approach to short entry is with intraday penetration of 2425 and if elected stop protection using intraday penetration of 2606. Retracement resistance levels are approx.: 2589; 2640; 2691.
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 Silver (Sept) - There are now short entries active in the July contract from the suggested price level of 158000 or above, and from the suggested short entry when penetrating 138900 two weeks ago. This week there is a new or additional short entry in the September contract with the intraday penetration of 135850. This latest was a violation of what appears to be a Head and Shoulders neckline but today's action has the market trading back above. We suggest monitoring this development as it may be a decisive factor for some traders particularly in the shorter term. Stop protection for the short entries in the July contract we believe can lower stop protection to intraday penetration of 144300 or a close above 141600. Stop protection for the September contract we believe should be intraday penetration of 144600 or a close above 141700. We will roll all coverage to the September contract with next week's edition and we will be updating retracement levels at that time as well.
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 Gold (Aug) - Short entries from the price level of 97800 or above did have an opportunity to reduce some positions as suggested two weeks ago in the 91750 - 91500 area with last week's low having been 91320. Remaining short entries can lower stop protection to intraday penetration of 95460 or a close above 95110. We believe that penetration through the 91320 low should open the door initially to the area of 90000 - 89000. Retracement resistance levels are approx.: 94280; 95220; 96160.
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 Euro Currency (Sept) - Short entries from the intraday penetration of 14042 as described in the June 11 edition would have seen stop protection elected today with the intraday penetration of 14182. New short entries can be initiated with intraday penetration of 13687. Stop protection for this new short entry if elected should be intraday penetration of 13837. Retracement levels of support are approx.: 13773; 13601; 13430. The next series below is approx.: 13629; 13413; 13198.
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|  Japanese Yen (Sept) - Last week we believed we could suggest a new short entry at a price level of 10515 or above after having just seen stop protection elected on another short entry from the previous week. New short entries from the price level of 10515 or above (the high since we last wrote has been 10532) we believe should lower stop protection to intraday penetration of 10553. We also still believe that new or additional short entries can be initiated with a close below 10295. If this short entry is elected we believe stop protection can begin as intraday penetration of 10475. Retracement levels of support are approx.: 10369 (hit); 10279; 10189.
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 Mexican Peso (Sept) - Last week we suggested long entries could be initiated at a price level of 74150 or below but the low this week since our last edition was 74325. We believe we can raise that bid to initiate long entries at a price level of 74975 or lower. If elected we believe stop protection can be intraday penetration of 73175. We will also keep the standing suggested long entry of a close above 76650. Stop protection for this closing basis long entry should be intraday penetration of 74625 or a close below 75550.
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 British Pound (Sept) -
Our short entry suggestion from the sell zone between 16366 and 16435 would have seen stop protection elected with yesterday's intraday penetration of 16668. It appears to have once again provided a reversal signal as yesterday it closed lower for the day after making that new high. We believe that momentum indicators do not confirm the last upward surge and that short entries can be again initiated this time with intraday penetration of 16178. If this short entry is elected we believe stop protection can be intraday penetration 16512. We also suggested last week that long entries could be initiated with a close above 16668 which we believe we can amend to a close above 16752. If this long entry is elected stop protection can be originated at intraday penetration of 16422. Retracement levels of support are approx.: 15870; 15598; 15326. The next series below is approx.: 15586; 15225; 14865.
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 S&P 500 (Sept emini) - There is an active short entry from the intraday penetration of 91625. Stop protection should remain intraday penetration of 93175. New or additional short entries can be initiated with intraday penetration of 87950. Stop protection if elected on this new short entry should be intraday penetration of 90925. And new or additional short entries can be initiated with intraday penetration of 86825. Stop protection for this short entry with penetration of 86825 should be intraday penetration of 89725. Long entries can be initiated with a close above 95375. Stop protection for this closing basis long entry should be intraday penetration of 92775. The near term retracement resistance levels were all hit this week and were approx.: 90975; 91800; 92525. Retracement levels of support are approx.: 88400; 86275; 84125. |
 Feeder Cattle (Aug) -
There was a suggested short entry from the sell zone between 9910 and 10010 that would have seen stop protection elected with intraday penetration of 10072 and or the close above 10025 (10172). We shall await further developments in the trading pattern.
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 Soybeans (Aug) - Our suggested short entry from the intraday penetration of 111350 would have seen its stop protection elected today with the intraday penetration of 115300. Today's high was 116600. We believe, though, that we can suggest new short entries with a close below 111850. If this new short entry is elected stop protection should be intraday penetration of 114400. New forecasts calling for hotter and drier temperatures for next week seemed to be a spark for today's action. We believe our suggested short entry would be an indication of failure for the soybeans to continue higher at this time. Retracement levels of support are approx.: 111200 (hit); 108325; 105425. The next series beneath this is approx.: 106050; 101600; 97130.
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 Wheat (Sept) -
We believe that short entries can be initiated with a close below 52175 or intraday penetration of 51250. Stop protection if this short entry is elected we believe should be intraday penetration of 55225. |
 T-Bonds (Sept) - There is an active long entry from the close above 114-23 on June 15 (115-05). We believe that stop protection can be raised to intraday penetration of 116-03. We believe that new or additional long entries can be initiated with intraday penetration of 119-19 or with a close above 119-06. If this long entry is initiated stop protection should be a close below 117-30 or with intraday penetration of 117-09. Retracement resistance levels are approx.: 118-26; 121-01; 123-08.5. Retracement levels of support are approx.: 116-10.5; 115-14; 114-07.5.
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 Ten Year Notes (Sept) - There is an active long entry from the close of 114-26 on June 15. We believe stop protection can be raised to a close below 115-05 or with intraday penetration of 114-25. Retracement resistance levels are approx.: 115-22 (hit); 116-19; 117-16. The next resistance series above is approx.: 117-06; 118-17.5; 119-29.
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Coffee (Sept) - We believe we should withdraw suggested trade entries at this time and wait for further pattern development. |
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