MARKET UPDATE
JUDY CRAWFORD
(TRADES FOR WEDNESDAY, FEBRUARY 8, 2012)
888-301-8120
jcrawford@zaner.com
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.
THE MAJOR PLAYERS, SHOWING THE TREND?
In a previous Market Update I pointed out that the eurocurrency and dollar were starting to follow the same pattern technically that they did in October: The eurofx had closed over the 20 day ma while the dollar closed under it. This occurred in mid January for the first time since October. I suggested that this behavior could be suggesting a repeat performance of their October near term trend changes. So far it has. The euro has continued to rally, the dollar to sell off.
In October the eurofx rallied 10.70 points. The dollar sold off 5.235 points. If you apply that potential to what these markets are doing now, the potential projection in the eurofx is 138.00; the dollar 76.800. These prices are approximations.
What did this do to the other markets? I have listed below the markets that were affected the most by the above trend changes in the major players in October and what they did movement wise from their lows. It was no coincidence that they made lows (or highs) in almost the same time frame as the eurofx and dollar: Corn: rallied 75 points. Beans: rallied 1.09 points. Bean oil: rallied 5.00 points. Emini: rallied 221.00 points. Silver: rallied 7.000 points. Gold: rallied 155.00 points Coffee: rallied 32.00 points. Sugar: rallied 4.00 points. 10 year notes: sold off 4.000 points.
I do not think that it is just a coincidence that these markets are responding in a similar fashion this time around. Let's just go through a few to see what their current potential could be if comparable to their October action: Corn: 667. Beans: 1250. Bean oil: 55.00. Emini: 1493.00. Silver: 36.450. Gold: 1783.00.
The point of bringing this up is that it appears the eurofx and dollar are giving us the near term direction of not only themselves but some other markets too. Their near term trend changes in October lasted approximately one month before resuming the major trend again. If that be the case, many of these markets could top out (and the dollar bottom) around mid February. Time will tell but in the meantime it should help you get an overall picture of what could be really going on currently.
"EMOTION is your enemy more than any market will ever be."
GOAL OF THE MARKET UPDATE: The purpose of my Update is to share with readers what the technical aspects of a market is suggesting. It is not my personal opinion but merely conveying to readers what market action potentially suggests drawn from my years of experience with the markets and what similar behavior in the past has produced. I do for you the technical analysis that most of you do not have the time to do personally.
The Update is also designed to help you learn what to look for in a market technically and to develop good trading habits irrespective of the results of a particular trade. It is also a guide and tool for those who want to compare it with their own work.
TO RECEIVE THE COMPLETE MARKET UPDATE: Your access to the Update through Internet websites is not the complete Update. It does not include comments on alternate days (Monday, Wednesday & Friday) or not necessarily all the markets followed. To receive the complete Update via email, you may register for it on my website. I also offer free trading booklets: http://www.tradingfuturesmarkets.com/.
OTHER SERVICES AVAILABLE TO YOU: In addition to my advisory service I also offer brokerage services. My commission rates vary according to the services you want from me. My clients range from self directed to full service. The Market Update is free to all clients.
MY TRADING APPROACH: I normally enter trades only on buy and sell stops. If the market is not going in the direction of the trade, I am normally not interested and the order is not executed.
I do not enter new positions during the night session but only during the day trading hours. I always use globex and always have a protective stop working - even during the night session. My computation of trading costs for each trade in the Update includes commission plus an estimate of exchange fees.
TRADE ALERTS:
Sell March dollar. Sell 78.850 limit. Protective stop 79.650. Potential projection 77.400. (Potential risk $800. Potential reward $1450.
Reasons for the Trade:
1. The monthly chart is forming a preliminary key reversal top.
2. The weekly violated the 20 day ma this week.
3. On the daily chart the dollar violated the 100 day ma and closed below it today.
4. On the daily chart the dollar closed under the 79.000 support.
5. On the daily chart a buy signal was negated today. Normally when a market does so that quickly, it follows through in the new direction.
METALS & ENERGY COMMENTS:
MAR COPPER: It continues to hold above the 150 day ma on the daily chart. It also has the support of the 20 day ma. To turn negative at this time it needs to 374.00 on a closing basis with follow through. The long term charts are supportive too. Copper still suggests an attempt at 400.00. Closed 387.60, up 1.15.
APRIL GOLD: Switching to April. It triggered a sell yesterday but did not follow through. It started to consolidate on the inter day chart and got back over the 20 day ma. I exited. Gold normally sets its February high in the first couple of trading days of the month and then declines until at least mid-March, according to the 40-year seasonal average. With that in mind it will be interesting to see if it takes out the high made Feb. 3 at 1765.90. That is the area to watch. Closed 1749.60, up 24.70.
Position: Short 1724.50 (2.6). Exit 1725.30. Loss $81.40 (+comm/fees).
MAR MINI SILVER: It looks headed for 35.000. It has been consolidating since Jan. 26. The key will be 35.000. That is where it got into trouble in early November. Just watching. Closed 34.194, up .444.
APRIL MINI CRUDE OIL: In spite of today's strength it continues to look like it is forming a huge top. It violated the uptrend formed since the October low in late January. Numerous attempts to get back over it failed. It finally sold off to 95.81 last week. It now appears to be trying for 100.00 again. Just looking at the monthly chart, crude suggests higher prices. But the weekly has a sell. Bottom line, this market could probably go either way. Just watching. Closed 98.08, up 1.67.
CURRENCIES & FINANCIALS:
MAR MINI JAPANESE YEN: The recent sell-off stopped at the 100 day ma on the daily. It also closed back over the 20 day ma today. Did it change anything long term? Not yet anyway. About the only negative is that it is struggling at resistance on the monthly and is starting to back off. The weekly chart isn't showing anything. Closed 130.34, down .28.
MAR SWISS FRANC: The daily chart suggests that the swiss is primed for a good rally. It has a lot of consolidation under it and is trying to get over the 100 day ma. If it can break out over 110.00 it could go to 112.00 for starters. On the weekly it is finally getting over the 20 day ma for the first time since the complete collapse under it in September. The monthly has a key reversal bottom. Closed 109.53, up .65.
MAR DOLLAR INDEX: It triggered a buy yesterday and that was quickly negated today. In doing so, it failed to hold the 100 day ma. The follow through on the downside has started. As mentioned in an earlier report, if this sell-off is comparable to the previous major sell-off that started in early October, this sell-off could reach 77.000 at least. A trade could be developing. See Trade Alert for details. Closed 78.675, down .511.
MAR MINI EUROCURRENCY: It triggered a buy today with follow through. It also closed over the 132.00 resistance. That is positive. Keep stops at 130.27. Closed 132.48, up 1.23.
Position: Long 132.22 (2.7).
Projection: 136.00.
MAR CANADIAN DOLLAR: Stops were reached on January 25. It was also an outside day and the CD triggered another buy the following day. It has continued to rally since. The current high is 100.63. Closed 100.36, up 8.
Position: Long 99.13 (1.19). Exit 98.44 (1.25). Loss $745 (+comm/fees).
MAR AUSTRALIAN DOLLAR: An inside day yesterday triggered a buy today. It also made a new high for the move at 107.72. Long term it is in resistance but it could try for more. The reason being the monthly triggered a buy just last month and looks like it might try for 110.00. Closed 107.42, up .60.
MAR E-MINI S&P: As pointed out before, the monthly has a buy and looks headed for the 1373.50 high. If this is a third wave up since the March low, it has a potential projection to 1440.00. Watching closely to buy. Closed 1344.75, up 5.75.
MAR 10 YR. NOTES: An inside day yesterday triggered a sell today. They closed under the 20 day ma. That is the second sell since the Jan. 31 high. They have a potential projection to 130.150 near term. Closed 131.050, down .165.
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources. Opinions are subject to change at any time and are not a solicitation or recommendation to buy or sell futures contracts or options on futures contracts. The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness. All known news and events have already been factored into the price of the underlying commodities discussed.
Past performance is not indicative of future results. All suggested trades are based on technical signals/indicators and do not include slippage or cost. Not all trades suggested are taken. Results are based on what the signal indicates not necessarily an actual trade. Actual results may vary.
