Crude Oil Top structure

This daily chart of October Crude Oil futures exhibits two potential double top set-ups. The parameters of the larger of the two are highs of 7527 and 7500 with the trough (low) in between the highs being 6043. Penetration of the 6043 level provides confirmation to the double top and gives a measuring implication to approximately 4550.

The smaller potential double top formation has parameters of 7444 and 7500 as the high points with 6742 as the trough in between. The measuring implication if the 6742 level is breached is approximately 6050.

Based on the parameters for the smaller of the two potential double top formations, if a short position were initiated with penetration of 6742 while the highs were still in tact (and within a reasonable period of time as to not distort the set-up structure) and the objective of 6050 was realized that would be approximately $6,900 potential per contract. Likewise, if the short position were to be initiated at 6740, for example, and the price were to go back through the 7500 before electing stop protection the potential LOSS would be approximately $7,600.

Remember that nothing is exact or for sure but double top formations can provide excellent trading strategies and guidelines.


We have included the monthly chart of the crude oil futures because it illustrates two potential areas of significant resistance. First is the 50 month moving average which shown here reads as 7418. The front month future has been unable to close above this level.

Also there is the .382 Fibonacci resistance at approximately 7605. The high of the rally off the December and January lows represented by this monthly data has been 7500.

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Trade Focus S&P Entry

Below is the S&P 500 (Sept. Emini) section from this week's Trade Focus edition dated August 27. The entire edition is being emailed this evening and will be submitted for posting to our website on Friday. The web address is http://www.cbandsbrokerage.com/

Those interested in a trail to the Trade Focus email list can sign up with us by email to jmajer@mfglobal.com or lbarba@mfglobal.com.

Those interested in opening an account with us can do so at our website http://www.cbandsbrokerage.com/openanaccount.html

S&P 500 (Sept. Emini) – A new suggested long entry would have been elected with the 102525 close of August 21. We believe stop protection can be raised to intraday penetration of 99325 or a close below 100275. Active extension targets are approx.: 104500; 106800; 108500. Retracement levels of support are approx.: 97275; 95225; 93175.

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Trade Focus Commentary

We believe that without a doubt an incredibly important aspect of trading is the psychological and emotional conditioning of the individual trader. We haven’t talked about this directly for a while and thought it deserves some attention. It is something that should be obvious but unfortunately often falls prey to denial. Trading markets of whatever kind involves real money and this has its effects on most people. There are some, that small percentage, that can separate the dollars and cents from the thought process in their trading. Most people, we believe, simply can not. Human nature is human nature and is a powerful influence. We have often brought attention to this and said that the more that human nature can be separated from the making of trading decisions the better. Since real money is involved and the accumulation of it the goal, objective and reward, most participants can’t help but feel the effects of either positive or negative price movement. We have had the experience of that “Tazmanian Devil-like” feeling inside of us and know others have too.

It is easy to understand how holding a losing position can weigh on the psyche, but most traders will also suffer emotional stress of some sort while holding a winning position. Sometimes it can be over exuberance or giddiness if things are going quite well but there can easily be a strong sense of nervousness too, worrying that a winner will turn the other way and the fear that the position won’t be cashed in at the top. This just might be an ego issue as much as anything else, but nevertheless it usually results in exiting a winning position too early and it certainly causes deviation from the original trading plan.

Consider how having to make decisions in general can cause consternation let alone decisions that involve when to pull the trading trigger.

Since emotions can influence trading decisions, usually adversely, and because the effects can also be psychologically overbearing, we feel it is wise for traders to have some way to address this as part of their overall plan. Clear thinking is required for this business of trading markets, therefore doing whatever it takes to maintain sound emotional conditioning makes perfect sense to accept as part of the plan. It will be different things for different people but there usually needs to be a training regimen for this or at least a release of some sort. It can be reading literature on this subject, exercise, yoga, meditation, taking a break from time to time or some combination of all these. The point is to be prepared to do what is necessary to stay in top mental trading condition. Pay attention to this detail is our strong suggestion. We believe it is something that too many trading participants fail to realize and fail to do.

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

S&P Targets

Last week we described what was at the time the potential for a small double top providing a targeted break to approximately 95500 in the S&P 500. The target was not reached as the low of the sell-off was only ~97850 in the cash S&P.


Today new highs have been made. What we wanted to show here using the weekly chart of the cash S&P 500 is the next potential target price levels basis the Fibonacci extensions. Those levels are ~104550 for the .618 extension target and ~ 108370 for the .750 extension target.

Also we wanted to show the key Fibonacci retracement levels from the October 2007 high to the March 2009 low. Those key retracement levels are ~ 112000 for the .500 (half way back) and ~ 122500 for the .618 retracement.

If you believe this type of information as well as how to implement it in a trading plan can be of benefit to you please contact us.

jmajer@mfglobal.com
800 321-5810
312 261-7380

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

eMini S&P Doubletop Scenario

We wanted to show that today’s action seems to confirm a double top. The classic understanding of a double top confirmation is penetration below the trough made between the two tops. We believe the chart will help to illustrate this.

The high on August 7 was 101600 and on August 13 it was 101575. The low in between the two highs was 98575. The difference between the highs and the trough in between is approx 3000. 98575 minus 30000 provides the price target of 95575.

Nothing is ever etched in stone because as we say, “in commodities trading anything can happen and usually does.” We never know what will happen but it is beneficial to be prepared for certain possibilities or eventuialities.

We have included a look at the July 8 low which started the nearly unabated rally to the 101600 high. On July 8 the low was 86525 and then revisited July 12 with a low of 86550. The high in between the two lows was 88450. The difference between that high and those was approx. 1900. Adding 1900 to the 88450 high provided the double bottom price target of approx. 90350. In this case, however, the market continued all the way to its recent high of 101600. So you never know what a simple formation may lead to.

We hope that we have been able to demonstrate the value of another simple trading tool. Depending on the trade management approach that could have been used there’s no telling how much of the upswing to 101600 would have been captured.

We are not attempting to predict or recommend a trade or price objective necessarily at this time. Primarily, our objective is to make people aware of this and open the door to further discussion or exploration.

jmajer@mfglobal.com

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Dollar Index Follow-up

Back on August 10 we highlighted the weekly chart of the September Ice Dollar Index contract pointing to a weekly bar reversal and that it hat basically retraces to a key .618 Fibonacci retracement level.

Today we follow up with daily charts of the September Dollar Index. We want to show that after making the low on August 5 at 7752 the price rallied to 7951.5 prior to its minor setback to 7830.5. Coincidentally, the .618 Fibonacci retracement of that upward move (7752 to 7830.5) was ~7828. Once again this .618 ratio came in to play.

After holding the 7830.5 low the high after only 2 days has been 7969.5. There is some resistance near this level as the 50 day moving average we show this morning as ~7982 and there is a .750 Fibonacci extension target at ~7979.

We believe that over the coming days and weeks that there is additional upside potential as this pattern unfolds. Even though this is our outlook we are not making a recommendation to buy or sell any futures, option, security or any derivative here. We will be happy to discuss any questions or comments you may have about this situation.

jmajer@mfglobal.com

313 261-7380
800 321-5810

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Silver Update

Last week on August 5 we featured a chart of the silver market. We are updating today with this 240 minute chart. In last week’s blogspot we brought out the relation of certain Fibonacci ratios to the price action in this market. Today’s update will help illustrate that at this time, at least, there are retracement fib ratios in play. The day after we posted the previous chart the market made a reversal day bar with new high for the move and a lower close. The subsequent follow through to the downside found an area of support this morning and is pushing up at a .500 retracement level which we show as 1458. The high so far today has been 1456. The next level is a .618 retracement at approximately 1469 basis the September contract. We are not making a recommendation to buy or sell any contracts with this commentary. We hope to show that these ratios can be utilized as a tool in trading. We are happy to talk with those who are interested and who have questions or ideas to share.

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Dollar Index Study

We thought these charts would help illustrate a potential reversal in course for the path of the US Dollar.

In March of 2008 the US Dollar placed a low price that then moved higher until March of 2009. Last week saw what could have been the last blast downward that seemed to gain support just slightly through the .618 Fibonacci retracement level prior to reversing course and creating a weekly reversal bar on the charts.

If we can help with any questions there are regarding what any of this means or how it may be utilized please let us know.

You can contact us at jmajer @ mfglobal .com; 312 261-7380; 800 321-5810

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Weekly Silver Chart

This might be of interest to you as either an additional tool for an existing trade strategy you may be uisng or it may help toward the devlopment of a new startegy for you.

We notice that today's high in the silver futures touched just slightly above the .618 fibonacci retracment level of the recent high to low (downwave). On this chart we have also includeded the retracement levels from the larger downward move that lasted from March of 2008 to late October of 2008 where the retracement high of that large downwave stopped at or near the .618 retracement level. Perhaps the "golden ratio" holds some significance in this market.

Many traders utilize fibonacci numbers and ratios as part of their trading program.

If you should have a question, comment or an answer we'd love to hear from you.
jmajer@mfglobal.com

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.

Daily Continuation Euro Currency

This is a daily continuation chart of the IMM/Globex Euro Currency. The euro broke out above its 2 month consolidation. The Fibonacci Extension levels illustraded represent potential targets. The .618 is approx 14635 and the .750 is approx 14830. The .750 target also lines up close to the hight of September 22 which was 14846 (basis front month).

There are different ways these can be put to use, of course, but one might be that if long these levels could signal a price with which action would be taken. That could include the taking of profits or partial profits or a signal of when to tighten stop protection. This would be the sort of thing we discuss with a client on an individual basis.

Futures and options trading contain substantial risk of loss and may not be suitable for all investors.