End Of 2009 Trade Focus Commentary

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

We thought for something a little different we would post our weekly commentary as seen in our Trade Focus publication.

We wish everyone a very healthy, happy and safe New Year. You guys are the best!!


It is the end of the year and the financial news networks have been asking the many and varied analysts they bring on their programs what they expect and predict for the stock market in 2010. What has stuck out to us is two things. Nearly all are stating they are bullish for next year. Many of those we heard, and this really stood out to us, said they expect 2010 to be just like 2009. First of all what does this actually mean? Does it mean it starts out with a big sell-off or correction lasting to early March followed by a big rally for the remainder of the year? Or does it mean that the “cyclical bull” or “bear market rally”, depending on one’s preference, marked by the March 6, 2009 low continues throughout the course of 2010?


Our response is that we doubt that 2010 will be a repeat of 2009. And that applies to either of the scenarios described above. For one thing it is just too easy to say. Furthermore we find it difficult to believe and accept that the market ends 2010 with another 25 percent gain basis the S&P 500 and 20 per cent or so in the Dow Jones. It’s great to be optimistic but the expectation is simply unrealistic to us.

The caveat that many of the talk show analysts offer is geo political citing Iran and now also Yemen. Yes this is something that can be a factor. Sans that, however, we would offer that at some point during the course of 2010 we will be hearing more and more about the global deficit crisis. We have already gotten a taste of it with the problems in some of the European states. Greece, Ireland and some of the Baltics. Here in the U.S. We have quite a few states of our own whose individual deficit issues are equal to or larger than those of the problematic European countries. And then there is the growing deficit of the United States of America with shrinking tax revenues, high unemployment and mortgage foreclosures to contend with. If the government pursues a course of more taxation such as cap and trade for example and or the additional “taxes” pegged to a Health Care Bill, if passed, will this solve the shrinking tax revenue problem or ultimately accelerate its decline? Can the American consumer return to the consumption level that prevailed prior to the credit crush of 2008? We just don’t see this anytime too soon.

Stock prices are said to trade on perceived expectations of earnings. What will need to be resolved is how and what will effect this perception. Following the gain that 2009 is ending with compared to where 2008 ended, we believe it difficult to expect that there will be a perception that earnings maintain the respective percentage clips of U.S. stock indices seen in 2009.

However, as Yogi was wont to say, “It ain’t over til it’s over.” 2009 ends with what looks to be respectable breakouts to the upside. Prices continue to trend in the direction of the lower left to the upper right on the chart. (We thank Dennis Gartman of The Gartman Letter and CNBC for this beautifully appropriate description). Until the trend is disrupted it is likely wise to stay with the trend. We might suggest here that unless, for example, the cash S&P 500 closes appreciably below 108000 and the Dow beneath 10,150.00 that S&P may see 122500 and the Dow 11,250.00 but S&P to140500 and Dow at 12,650.00 we are much less willing to predict.

As politically incorrect as it may be we say God Bless You All and wish everyone great trading success in the New Year.


Good trading to all

Jeff
CB&S

Sugar Magnolia Blossoms Sweeter

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

We couldn’t resist the sugar is sweet stuff in our tweet. Have never used it before but with the New Year holiday here upon us we felt why not.

We will make it short and sweet (there we go again) this week and include what will be the excerpt from this week’s Trade Focus on March Sugar.

In addition we will include an excerpt of something from our weekly publication that either isn’t or hasn’t worked out well and try to make this a policy. An associate told us some years ago that whenever you toot your horn you should show a loser too. We agree and we shall. There are some of those to go around. Always have and always will.

Here’s the Sugar excerpt written today 12/30/09:


Sugar (Mar.) – The suggested long entry approach from the December 11 close of 2400 remains active. Stop protection we believe needs to remain intraday penetration of 2477 or a close at or below 2494 UNLESS there is a close at or above 2751. If there is a close at or above 2751 we suggest stop protection can be raised to intraday penetration of 2597 or a close at or below 2649. There are now extension targets activate to approx. 2807 and 2871.

And now for the Soybeans which you will see have been stopped out:

Soybeans (Mar.) – Last week we had amended our suggested short entry approach to a price level of 103500 or above. This has now been elected as of Dec.28. The suggested stop protection would have also been elected with the intraday penetration of 105125 made today Dec. 30. No new suggested entry approaches at this time and we will update retracement levels following further price pattern development.


We thank you for taking the time to read and contribute to our blog.

Happy New Year to all and to all we wish GOOD TRADING throughout the New Year.

Remember the only way to receive our Trade Focus weekly is by email until further notice. You can reach us through the website or email or phone as seen on the right side of this blog site.

Our best wishes

Jeff
CB&S

T-Bonds Meet Near Term Trade Focus Target

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

This is a follow up to last week’s US T-Bond section from our weekly Trade Focus. It appears that there is some reason to expect a retracement rally of some amount. We had highlighted what we believed to be an intermediate term target at the 114-28 level as you will see below. Bigger picture, though, still suggests to us that lower prices are coming down the pike.

Retracement levels are currently in the area of the following price levels: 116-15; 117-00; 117-17. For our purposes we would be interested in what the pattern looked like if the 117-00 level is attained and assess if at that time we believe it appropriate to suggest new or additional short entries.

New lows below the 114-26 lows of the past two sessions prior to a retracement to the above mentioned levels would likely change the retracement parameters and suggested entry approaches.

Here is the T-Bond section from Trade Focus written December 23 and sent to our email list December 24.

T-Bonds (Mar.) – There remains an active suggested short entry position from the intraday penetration of 119-21 back on December 4. We believe stop protection can be lowered to intraday penetration of 117-24. We can identify a near term target at approx. 114-28 and suggest that some may want to at least reduce the size of their position at this price level. Lower prices are still a viable potential but capital preservation can be a key element in long term success. We will need to allow additional pattern development before updating retracement levels.


A reminder that for at least the time being Trade Focus is only available via email. If you wish to receive please send us your name, email address and any additional information you care to share.

Futures traders can also request new account documents from our website at: http://www.cbandsbrokerage.com/ or by email to cbands@cbandsbrokerage.com or jmajer@mfglobal.com. For old fashioned folks our toll free phone is 800 321-5810

Good Trading to all

Jeff

CB&S

Gold And Silver Retrace

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

Both Gold and Silver have been able to stage muted rallies off their recent lows. It does not appear to us, yet at least, that the pattern developing off these lows is a bullish one. Also of significance, we believe, is that the highs of today’s trading stopped up against their respective 50 day moving averages.

It makes sense to us that this would be a critical barrier and closes above the 50 day moving average for both the Gold and Silver will be needed to turn the situation more optimistic for the bull case at this point in time. In sum, there may be lower to go before the correction is complete.

Above the 50 day moving average in the February Gold contract is the near term .618 retracement level of approx. 111700 that may pose some resistance as well.

Good trading to all

Jeff
CB&S

Trade Focus Gold and Bonds

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

We thought we would provide a sneak peak at two sections from this week’s Trade Focus which will be sent out by email tomorrow December 24.

Also we want to remind readers of this page that Trade Focus is until further notice only available to our email list.

If anyone is interested in seeing the Trade Focus in its entirety please send us your request and email address to jmajer@mfglobal.com or cbands@cbandsbrokerage.com

Here are this week’s sections on Gold and T-Bonds:


Gold (Feb.) – There remains an active suggested short entry position from the price zone between 114000 and 115000. We believe stop protection can be lowered to intraday penetration of 113460 or a close at or above 112430. Retracement levels of resistance are approx.: 111120; 112240; 113370. The next series above is approx.: 113310; 115110; 116910. Retracement levels of support are approx.: 109320 (hit); 105130; 100950. The next series beneath this is approx.: 103380; 97340; 91300.


T-Bonds (Mar.) – There remains an active suggested short entry position from the intraday penetration of 119-21 back on December 4. We believe stop protection can be lowered to intraday penetration of 117-24. We can identify a near term target at approx. 114-28 and suggest that some may want to at least reduce the size of their position at this price level. Lower prices are still a viable potential but capital preservation can be a key element in long term success. We will need to allow additional pattern development before updating retracement levels.


Happy Holidays to everyone.

We wish the best for all and a good trading year in 2010.

Jeff
CB&S

New Longs Or Shorts For S&P 500

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

We thought it might be a good idea to share with those not receiving our weekly Trade Focus the March Emini S&P 500 section. Here you will see how new short or long entries can be initiated with the prospect of catching the next move.

The above chart is a Weekly Emini S&P 500.

From 12/17/09

S&P 500 (Mar. EMini) – We are adding a new short entry approach along with the one from last week. This will be to initiate a short entry with intraday penetration of 107475 or a close at or below 107975. Stop protection for this approach we believe should be intraday penetration of 111475 or a close at or above 110925. The second of our suggested short entry approaches can be for new or additional short entries with intraday penetration of 106150 or a close at or below 107175. Stop protection for this approach should be intraday penetration of 110725. We won’t forget our suggested long entry which we will amend to intraday penetration of 111975 or a close at or above 111725. Stop protection for this suggested long entry approach we believe should be intraday penetration of 109725. Retracement levels of support are approx.: 107875; 106750; 105650. The next series below is approx.: 105975; 104225; 102500. Based on weekly data the retracement resistance levels are approx.: 112500; 123375.

We're always open and receptive to comments and observation

Good Trading To All

Jeff

CB&S

Silver Update. How To Enter A Short

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

We thought we would use this chart as an update to our Silver market section from last week’s Trade Focus dated December 10 2009

The chart is a 120 minute bar chart where each bar is the price range of each 120 minute interval. Overlayed on the chart are Fibonacci retracement levels of the recent secondary down wave. It can be seen now that the price has returned to the level of a suggested short entry. The other approach of initiating a short entry based on a close at or below 170400 basis the March contract has yet to be elected. We believe it to remain a valid approach.

Fed announcement an hour away. Anything can happen and usually does!!

Below is the Silver section of the Trade Focus December 10 2009 edition.

Silver (Mar.) -- Unfortunately our short entry suggestion from a price level of 191500 or above made last week would not have been elected. We will however suggest two new short entry approaches this week with the first being from a price level of 176500 or better. Stop protection for this short entry approach we believe should be intraday penetration of 184200. The second short entry approach we will suggest is with a close at or below 170400. Stop protection for this short entry approach if elected we believe should be intraday penetration of 177300. New retracement levels of support to offer are approx.: 172970 (hit); 166200; 159430. Another series below this is approx.: 168780; 160650; 152520. One more series below is approx.: 165860; 156830; 147800.


** We want to make a note here which may be of interest and have some effect on some followers. Until further notice the Trade Focus will not be available at our website. It will only go to email subscribers and clients. This is a technical issue we hope to have resolves as soon as possible.

We apologize for any inconvenience this may cause.

Good trading to all!!


Jeff

CB&S

U.S. Dollar Phase III

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

We wanted to come back to the U.S. Dollar today as it is in process of surpassing another significant obstacle. Our chart above is of the daily spot U.S. Dollar index. We began our recent coverage of this market with a description of a stage 1 breakout (Dec. 1 blog). Then on December 4 it closed above its 50 day moving average for the first time in approximately eight months and has remained above ever since. Now what has perked our interest is that it has poked above its 100 day moving average which it had stopped dead against just two days ago.

We suggested that there was a rough estimate for a target of 7800 when it broke out of its downward sloping trading channel. It looks like the Dollar is on track to attain this. We like the chart construction. We think it is emerging out of a small accelerator pattern and although 7750 or so will be the next chart barrier we believe it will have the momentum to carry through to the near term target.

Looking ahead it would seem logical to expect and proclaim that a period of retracement and consolidation will occur. But anything can happen and usually does as we like to say. Markets that have been beaten down for a prolonged period of time frequently have a way of catching many by surprise. In the bigger picture, we would not be surprised to see the Dollar continue its ascent over a period of many weeks or perhaps months.

Interested in further discussion of this or other markets let us know.

Good Trading to all

Jeff
CB&S

Price Objectives: Dollar and Euro Futures

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

It seemed that all of a sudden there was a rush for the U.S. Dollar this morning. Looking at the charts above of the 240 minute Dollar Index and 240 minute March Euro Currency we can determine a few subtle hints.

In the Euro we see that the downward progression in price created a measurable extension pattern. Using the Fibonacci Extension tool we see that our preferred barometers provided by this tool (.618 and .750 extensions) came to approximately 14647 and just beneath 14600. There may be other ways to judge the pattern and it can be left up to individual interpretation or preference. We found consistency, though, with this particular one as it lined up with other shorter term pattern targets yielding the 14600 level.

Also in the euro we see a double top formed with the 15135 and 15137 highs of Nov. 25 and Dec. 3. From this the rule of thumb potential price objective is approx. 14500.

In the Dollar index there is conversely a possible double bottom formed. It is not as aesthetically nice or apparent as that of the Euro but it provides a near term ball park price objective of 7685 (basis spot month).

And earlier in the week we mentioned an intermediate trading channel breakout in the Dollar Index that projected approx. 7800.

These are some tools that we have outlined here that we find useful. These are also examples of some of the things we work on with trading clients. If you’re interested we’re interested.

Good Trading

Jeff
CB&S

The Dow Crash Comparison

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

What we wanted to show here with the charts above is a comparison of the Dow Jones during its bear market rally following the 1929 crash to that of this recovery rally witnessed since the low of March 2009.

We find it quite interesting and perhaps at this point in time still coincidental that the recovery off the 1929 low retraced just slightly more than 50 percent of the distance from the 1929 high to the crash low which so far is virtually the same percentage the Dow has achieved in its current recovery from the October 2007 high to the March 2009 low.

From that recovery high in 1930 the Dow Jones proceeded to fall by a larger amount than it did in the initial wave of the ’29 crash finally bottoming in 1932.

We are not prepared to say that the exact same scenario is about to play out. It is however curious and interesting that this recent nine month recovery achieves virtually the same percentage basis up to this point as it did in 1929. It has been less than a full week since the recovery high has been made but this is something that we felt worthy of mentioning in this space.

It is also interesting to note that the S&P 500 fell roughly just 2 points shy (1119.13) of reaching what would be its 50 percent retracement (1121.44).

Recent news events to keep in mind are those surrounding what may be turning in to a global debt crisis. The Dubai news and more recently downgrades to Grecian debt and that of the state of Illinois here in the U.S. Where will it end? Is it just starting is perhaps what should be of concern.

The good thing about the futures markets, which is our area, is that an investor or participant can be either long or short. Long when he believes prices will rise and short when he perceives prices will fall.

We can help you with this.

Good trading

Jeff
CB&S

U.S. Dollar Phase II

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

We return to the U.S. Dollar Index today as it has put in a rather strong performance. In one of our recent blog posts from last week we featured the Dollar and described what we refer to as a Stage One breakout. We believe we can term this most recent action of what is now the last three sessions, including today, as Breakout Phase Two.

In essence what has occurred and as illustrated by the chart above is that the U.S. Dollar Index has now broken out of a near to intermediate term channel as well as closing above its 50 day moving average for which will be the third consecutive close. We view these developments as positives for the Dollar. The channel breakout suggests an initial target of approximately 7800.

The effect of the declining Dollar on most every market has been chronicled throughout the financial news media. From the stock market to precious metals, energies and grains. If in fact the Dollar is preparing to make a “statement” and change its course the ripples could become widespread.

Good trading

Jeff
CB&S

Check in with us tomorrow. We plan to show something in the STOCK INDICES that should be of interest!

Determinig A Short Entry Silver Trade

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

We haven’t brought up the Silver market for a while probably because when it comes to the precious metals lately Gold grabs all the attention. But we view the picture this chart illustrates a potentially significant one. There is a well defined trading channel that was briefly breached through to the upside. Our observation over the years suggests that when a breach of this kind occurs and when the market returns back within its trading channel there is often an ensuing correction or at least an intermediate term change in trend. This is why we are bringing it up in our blog.

Below is what we wrote in out weekly Trade Focus regarding how to approach a short entry trade. There may be other parameters to consider and as we all know things have a way of changing to where one suggested approach will need amending. But the point is we believe there is cause to give a short entry strong consideration. It would appear easily that one would know where the trade goes wrong.

Written in December 3 Trade Focus:

Silver (Mar.) – We see that the top end of the trading channel has been reached and so far has contained the price advance. We believe we can suggest a short entry approach from a price level of 191500 or better. (Current price as we prepare this section is 190100). If elected we suggest stop protection with intraday penetration of 196600. Retracement levels of support are approx.: 181120; 176770; 172430. The next series below is approx.: 168840; 160700; 152560.

Another approach that would be worth consideration in our opinion would be closing beneath the 50 day moving average. It is often more prudent to allow for two consecutive closes but frequently when there has indeed been a change in market course and attitude, it is difficult to exercise that patience and sometimes the market does not allow for that type of patience.

Changing parameters and entry level approaches is something that often demands attention. This would be just one of the things we typically discuss with clients.


Good trading all

Jeff
CB&S

What Is A Market And Trend Made Simple

NO CHART TODAY

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

Here’s a revelation. There doesn’t need to be a news event or a particular cause for a market’s going higher or lower on a given day. Market participants are often so much consumed with the need to find this “reason.” We believe the market, any market really, is bigger than singular events. And yes we realize that the universe is believed to have started as a result of a singular event but we believe what we are speaking of here regarding trading markets is a completely different sphere or theme.

A case in point is an associate posing the virtually age old question “how come with bad news the market went up and with good news it went nowhere?” Our response is that it didn’t matter. A singular news event does not a market make. Nor does a single day. We have often told clients that in effect for every bull there is a bear. If there was no disputing the bullishness or bearishness of a market there would be no trading in it. There would be no interested counter parties.

The point just may be that the market itself may be all we need to determine our participation. A market only needs one buyer and one willing seller at an agreed upon price at a given time. Get a bunch of willing buyers and sellers and soon a trend may well develop. This then becomes the market. This group and the agreed upon consequential trend. What causes any singular individual to participate is that participant’s belief in whether the price will be higher or lower at some point in the future whether it is within an instant or many days, weeks or months into the future. In the case of stocks that may translate into one’s perception of what future earnings will be.

What stops the market price from continuing its trend is fewer participants perceiving that buying or selling, whichever the case, at a specific market price at a specific point will reap a future benefit. Even with which may be bullish supply and demand fundamentals for a particular market the price may reach a level where it is perceived by a growing number of this collection of market participants to fully satisfy those conditions. And yes, even before those fundamentals have physically had the chance to be completely resolved.

US Dollar Stage One

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We would like to mention first that we realize we haven’t written a blog in several days. Some of this is due to the Thanksgiving holiday and some due to time considerations. We have had to say good bye to someone who has been with us for many years and the transition has required time and energy directed elsewhere. We will be back on track we are sure very soon.

Now for a little market noise. The US Dollar deserves some comment we believe as today saw another hard down day. However, new lows were not made. The Dollar has had an effect on so many of the markets according to most every analyst so it is of some interest to note that while the Dow, Gold and Silver made new highs for their respective moves that the Dollar did not.

We have included the chart of the US Dollar cash index here to illustrate what we refer to as a stage one breakout. We realize that this is a rather steep trend line that was broken to the upside but what makes it qualify as a stage one to us is that once broken it has not been reviolated. And we wouldn’t think much of it except that it is something we have observed over the years and this bodes watching. A close back below the line, we believe, would qualify as a violation and be an indication that the likelihood of a bottom in the making was less likely.

In summary, this is a situation to be aware of and not a recommendation to buy or sell the US Dollar. It is a suggestion, however, that something could be brewing and that it is worth watching and being prepared for.

Good trading to all

Jeff
CB&S

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