CB&S Trade Focus

Time For A Break

2010-01-29T14:39:00.001-06:00

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

We realize we haven’t sent a tweet or posted a blog all week and there is an explanation. We will be taking a hiatus for awhile from our brokerage business and our commentaries. It’s been a great deal of fun and we have met a number of good people along the way. We appreciate everyone’s participation and the encouragement we have received.

Good trading and the very best to all.

Crude Support And Resistance

2010-01-25T15:13:00.005-06:00

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

We are taking a quick look at the Crude Oil market today as a level of support stood out rather easily. We are wondering, and thought we would provide, what a possible level of resistance might now be consistent with the Fibonacci retracement price barometer.

On the fall from the 8445 high in the March Crude of January 11 it has stopped so far at 7401. The .618 Fibonacci support using the 6746 low of September 25 we have calculated as 6395.

If this low should hold and a recovery ensues the half way back or .500 Fibonacci resistance comes to 7923 according to our math. This may be a reasonable price level to expect resistance to form. If it proceeds higher the .618 retracement, using the parameters of 8445 high and 7401 low, comes to 8046.

Weather at least here in the Midwest is expected to become colder during the course of the week. This had been an excuse for the last leg of the rally and perhaps will serve the same purpose now.

As always there are different ways to utilize trading tools. We always suggest using them in a way with which you are most comfortable.

Good trading to all!!

Jeff
CB&S

S&P Swan Song or Dead Cat

2010-01-22T16:00:00.002-06:00

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Yesterday we looked at the Dow Jones Industrials and today we are highlighting the cash S&P 500. The reasons are obvious. The stock market has sold off considerably from its high and this usually draws a great deal of interest and concern from most all investors as well as those who don’t even invest. In the grander scheme of things there may be consequences felt by everyone when there are significant moves made in the stock market.

The chart above illustrates that the major uptrend line connecting the March and July lows had already been broken some time ago. We showed previously that this had just occurred in the Dow Jones. The S&P 500 has now also closed beneath its 50 day moving average, another barometer to gauge the market.

We have displayed a set of Fibonacci retracement levels which show that the price has reached a .500 mark at approximately 109030 with the .618 at approximately107600. This particular retracement level lined up with what looks to us to be a minor line of support. This may provide a price from where at least a “dead cat” bounce will take place. And possibly it will turn out to be more. But our stronger feeling is that momentum has turned to the downside and that this set of Fibonacci retracements will eventually all be exceeded and we will find lower levels to pursue. We will do our best to be timely in providing where these are.

Our Trade Focus has seen the first of suggested short entry approaches initiated with more to come if the downward move continues. Let us know if you are interested.

Good trading to all!!

Jeff
CB&S

Dow In Jeopardy

2010-01-21T11:32:00.002-06:00

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This is a redo of the previous blog but with the correct chart. There isn't much difference and our point remains the same however we felt more comfortable with the chart we had prepared for this blog spot.

It looks to us that today is a very important day for the technical condition of the stock market. We provide above the daily chart of the cash Dow Jones Industrials. We don’t think it necessary to go too far into detail. We believe that there are a few points of major significance that simply need to be noted.

The 50 day moving average at yesterday’s close we show as 10445.80. A key low in the Dow was made December 31 at 10423.10. And finally the major up trend beginning with the March low and joined with the July low comes in today at approximately 10570.00. The Dow, currently at 10415.70 as we write, puts all these key levels in jeopardy.

We’d be very interested in additional thoughts, comments, observations and approaches to this UNFOLDING market situation.

Good trading to all

Jeff
CB&S

The Dow In Jeopardy

2010-01-21T11:21:00.003-06:00

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The Shrinking Euro

2010-01-20T13:25:00.004-06:00

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I wanted to provide an explanation as to why this blog space has not been updated for the past number of days. There was a death in the family and I needed to help tend to the matters associated with that.

The chart above is a daily March Euro Currency. The Euro has fallen precipitously from its high versus the U.S. Dollar since its November and December highs. Today’s action appears to have kicked off a new leg to the downside.

The news events surrounding this are continued questions over the debt of Greece plus other “Euro Nations” and also reaction to the daily economic news items of U.S. Housing Starts, PPI and earnings announcements from a number of the U.S. Banks. There was also the Massachusetts Senatorial election to digest. A Republican actually won in that state, filling that left open by the death of Senator Edward Kennedy some months ago.

Perhaps as important as any of the already mentioned news items was more out of China regarding the head of banking regulation requesting banks to stop lending money until the end of the month. This has created what is turning out to be a flight to safety or quality in the U.S. Dollar and hurting commodities of all sorts and currencies of other nations. Metals too are under a great deal of pressure with Gold down $30.00 per ounce and Silver down 90 cents per ounce.

Back to the chart above, I have included the Fibonacci extension targets which show the .618 extension at approximately 14008 and the .750 at approximately 13886. These may be reasonable price objectives to look for in the relatively near term picture.

If anyone would care to add anything or comment on what is looking to be an important day in the markets please do so. As we conclude this the Dow Jones Industrials, which hasn’t been mentioned, are roughly 160 points lower on the day.

Good trading to all

Jeff
CB&S

Reversal Of Energy Fortune

2010-01-14T10:12:00.004-06:00

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We thought these weekly Crude Oil and RBOB Gasoline charts were very worth noting. Both are exhibiting weekly reversal potential and in the case of the RBOB one that may be more of the sweeping variety.

Also of significance are the Fibonacci retracement levels. In the case of the RBOB its high so far is almost right on the .500 line. And what adds to the significance or perhaps the potential significance, is that from that level the price appears to be halting abruptly and reversing course. For the Crude Oil it may be a sign of relative weakness as compared to the RBOB Gasoline in that it is showing signs of failing from a price level far shorter of the .500 retracement.

These are situations that may provide substantial trade opportunities and we thought you should know. Anyone interested in further discussion can give us a shout. We’d be happy to hear from you.

Good trading to all

Jeff
CB&S

Reversal Or Routine Tuesday

2010-01-12T15:57:00.003-06:00

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The chart above is a daily CASH NASDAQ COMPOSITE.

What appears of interest here is that yesterday saw a new high for the move with a lower close recorded. Perhaps more importantly is that today’s trading range has left a gap beneath the low of yesterday trading range. This may be an indication of an impending correction. As can be seen there were gaps left on the chart while the market was moving up. Following yesterday’s reversal bar this small gap may hold a much larger significance. We will likely be finding out rather soon.

Of other interest is action in many of the other markets. Gold was down more than $20.00 per ounce, Silver down more than 40 cents per ounce, crude oil down roughly 200 points and the grain markets under great pressure with Corn down the 30 cent per bushel daily permissible limit following release of the January USDA Crop Report

Earlier in the day we sent out charts to our email list of a number of markets displaying similar traits. Gold and the Euro Currency, for example, illustrated where the recent highs corresponded to key Fibonacci resistance levels and where, like the NASDAQ Composite above, others such as Copper displayed daily reversal bars in very recent trading sessions.

We will soon find out if this was a one day wonder Tuesday reversal day or if there is greater cause to believe a substantial correction to these many up trends is in process. We suggest everyone stay tuned as this could become very interesting. We will share any measuring implications as soon as we can discern.

Good trading to all

Jeff
CB&S

Determinig Dollar Support Levels

2010-01-11T15:33:00.003-06:00

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The purpose of today’s chart and blog is to show that the U.S. Dollar Index has reached the first of the significant Fibonacci retracement levels. The chart above depicts the spot U.S. Dollar Index and the levels we find most important to be aware of concerning Fibonacci retracements. Those prices are approx.: 7681; 7630; 7580.45. They represent the .382, .500 and .618 Fib retracement levels as calculated from the November 26 low of 7417 to the December 22 high of 7844.9.

Traders believing, for example, that the U.S. Dollar has potential to move higher versus the basket of other currencies may want to use these price levels to help determine when or how to initiate positions.

Fibonacci retracement levels can also be determined for the various other currencies such as the Euro Currency for example. Some market participants might prefer this if their opinion or analysis suggests that one such as the Euro might perform particularly weak as compared to the U.S. Dollar over a certain period of time.

This is something that we frequently discuss and strategize with our clients. If interested in finding out more from us please send an email or call. Our Trade Focus is also available by weekly email. Sign-up is available through this blog as well.

Good trading to all

Jeff
CB&S

Silver Retracement Levels And ...........

2010-01-06T16:16:00.003-06:00

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

The chart above is a daily Comex / Globex March Silver with 50 day moving average and fib retracement. Chart by CQG.

This morning we sent a tweet that said March Silver futures had reached the .500 Fibonacci retracement level and that our underlying technical indicators suggested to us that the market might find resistance there. It did not.

The .500 level was 1813.25. The next important retracement level is the .618 Fib which comes to 1845.523.

The U.S. Dollar remains a factor as well as the stock indices. The intermediate term underlying technical condition appears quite overbought. This condition, however, does not show up at the daily level. In fact, although not completely positive, they are nearing a cross over into what we consider a positive position.

The longer term basis weekly data actually shows our underlying technicals as being in negative territory. This would help support the view that this upward price movement is corrective in nature.

Good trading to all

Jeff
CB&S

Gold's Monthly Reversal

2010-01-05T15:55:00.003-06:00

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We have taken a number of questions already this week concerning Gold. We thought it appropriate, then, to make mention of it in our blog today. We also are very appreciative for being provided with the subject matter.

We will keep it simple as best we can. Simple, is good!

The first thing that we will point out is that Gold finished the month of December making a monthly reversal. It made a new high for its move while reversing and closing lower than the previous month. We also notice that the size of the monthly bars for both November and December were nearly identical in size. November’s range spanned $152.80 and December’s $151.40. We might consider this as a variation of the double bar reversal pattern.

There have been other monthly reversal bars that did not result in much of a follow through move such as the reversal bar high in June 2009. But both July of 2008 and March of 2008 produced monthly reversal bars which were part of the move that took the price from its March 2008 high of 1033.90 to the October 2008 low of 681.00.(basis monthly continuation data).

We are not predicting the same as the 2008 scenario, necessarily, but we do find significance to this occurrence. Other factors that help sway us to a more bearish than bullish attitude is the structure of its pattern to the highs and that everybody and his brother was bullish at the high and touting the long side (allegedly). Finally, it appears to us that the move since the December 22 low is corrective in its composition rather than the restart of the bull. This though, can change easily and quickly.

The other point that needs to be made is that the December 22 low was an approximate .618 Fibonacci retracement off the highs when measured using the significant September 2009 low. This gives it potential as a key support level.

The U.S. Dollar may play a role in the direction of Gold too and we suggest staying aware of its whereabouts and its trading pattern if and when making trading decisions for Gold.

Good trading all

Jeff
CB&S

NASDAQ On The Move

2010-01-04T15:49:00.005-06:00

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There’s no denying; stocks start 2010 with a bang.

NASDAQ Composite actually gapped above the range of 2009’s last session on Thursday. And Thursday was a fairly sizable downside day closing 22 points lower from the previous settlement.

The NASDAQ 100 appears to have clearly broken out of a channel providing a measuring implication to slightly above 2000. Currently the NASDAQ 100 is trading 1885 which is 24.69 points higher on the day. Unless there is a quick reversal of direction this pattern suggests higher prices sooner rather than later. A good tip off to that type of reversal would be either a classic reversal with a new high and lower close or we would accept a move and close back into the channel. These may be worth looking out for.

We have been reminded during the course of the day that last year the first trading session of 2009 saw the Dow gain 3 percent only to end January with an almost 9 percent loss. Along with that we have been made aware of how the first three days of January plots the course for the entire year.

But we need to remind everyone that last year is last year. This is now and we must caution against replica trading. Certainly there can be similarities and there are and can be tendencies and seasonalities but today is today with its own unique set of circumstances. Remain disciplined always. Be careful not to trade blindly on previous occurrences.

Keep your seat belts on because we may be heading into some turbulence.

Good trading to all

Jeff
CB&S

End Of 2009 Trade Focus Commentary

2009-12-31T15:35:00.003-06:00

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

2009-12-30T15:20:00.004-06:00

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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

2009-12-29T15:25:00.006-06:00

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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

2009-12-28T15:24:00.005-06:00

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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

2009-12-23T15:56:00.007-06:00

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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

2009-12-21T15:07:00.007-06:00

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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

2009-12-16T12:36:00.004-06:00

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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

2009-12-15T15:09:00.003-06:00

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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

2009-12-11T09:28:00.005-06:00

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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

2009-12-09T15:10:00.006-06:00

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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

2009-12-08T15:20:00.004-06:00

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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

2009-12-07T15:54:00.003-06:00

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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

2009-12-02T16:03:00.004-06:00

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

2009-12-01T15:49:00.002-06:00

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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.

A Measured Move

2009-11-24T13:34:00.005-06:00

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

We have talked about the price and time relationships that have occurred in the stock indices. Simply, the Dow has retraced slightly more than 50 percent of the October 2007 to March 2009 decline where the S&P 500 has fallen just shy. Last week we pointed out that on the 17th of November the half way mark was reached on the basis of time. That means that the length of time spent on the upward move since the March low has come to 50 percent of the amount of time spent from the October 2007 peak to the March 2009 low.

Yesterday on CNBC, Robert Prechter pointed out that basis closing levels yesterday, November 23, was 50 percent in time value measured from the high close to low close. And he added that the Dow Industrials high of yesterday the 23rd reached the price where the first major leg of this rally from the March low to the June high equals the second leg advance from the July correction low to the November 23 high. We calculated this to be a price of 10495.10 for the Dow Industrials and the high registered yesterday shows 10495.60.

Mr. Prechter and others have shown that there has been a divergence in that the Dow was the only major index to post a new high above the November 16 highs. (In the case of the Dow the previous high was Nov. 17). Some analysts will suggest this may be a red flag, but this form of divergence has occurred before during the course of this upswing so time will tell.

We are not recommending buying or selling. We believe though that this is potentially significant information to be aware of as market participants.

Good Trading

Jeff
CB&S

A Hint Of Trouble Ahead

2009-11-20T16:13:00.005-06:00

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We must admit we are somewhat surprised but more so impressed with the performance of Gold this week. Even as the US Dollar held its recent lows and even on days of Dollar strength the price of Gold maintained its daily trend performance.

The last leg up from the October 28 low has been a steep upswing and while the Dollar came in strongly bid this morning and stayed higher for the day all day, Gold was able to make an impressive rally adding $8.50 or more to the previous close by the end of its day.

We are wondering if something is in the wind. Gold continued strong late week but the stock indices were making signs that a correction is at hand. And what we also find rather curious is that 3 month T-Bills fell to a negative yield according to sources. What we fear this may mean is fear itself. Are the markets about to reenter a BEAR phase much like was seen during 2008. There are inklings of this. Some of the financial media was actually heard discussing deflation today. Several if not many of our nation’s states are in deep budgetary crisis. Tax revenues are falling off a cliff and the Municipal Bond market may be ready for a new rude awakening.

The chances that there is something to be made from all this we believe are better than fifty fifty. We could be in for rocky times. Fortunately there is a way to approach such times that futures contracts provide. First of all there is a myriad of products. But also there is the liquidity and the ease of entering and maintaining short positions afforded by the futures markets. This we believe is a rarely heralded blessing.

Good trading to all.

Jeff
CB&S

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

Conflicting Signals In The S&P

2009-11-16T15:25:00.003-06:00

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Here’s a look at the S&P today. The daily chart of the cash S&P 500 is used to illustrate a new set of Fibonacci extension targets activated today. The .618 is approximately 113000 and the .750 is approximately 114000.

The weekly chart above shows the major downtrend line formed across the intraweek highs from the week of October 8, 20007 and May 19, 2008. It also shows the Fibonacci retracement levels where it is currently very near the .500 mark of approximately 112100. (A note to add here is that on the daily chart that downtrend line is shown to be broken slightly today).

So there could be a bit of a fight to be waged at these levels. To negate the extension targets the cash S&P 500 needs to get back below 108450 or so particularly on a closing basis.

Fed Chairman Bernanke’s speech this morning, which initially caused a reactive sell-off, ended up fueling the bullish fire of the day.

On CNBC this afternoon, though, Meredith Whitney voiced her opinion of which one of the highlights was that she “hasn’t been this bearish in a year.” We recall rather well how she nailed her forecast on the banks some time ago.

Until further notice, however, the major stock indices continue their upward push with traders and or investors seemingly chasing perceived value.

Good trading to all

Jeff
CB&S

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

Price And Time In The Dow

2009-11-13T14:57:00.003-06:00

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We don’t like to be too repetitive with our blogs but this is something we found intriguing enough to go along with what we covered in just our last blog Wednesday.

We talked then about the Dow Jones Industrials reaching just ticks through the 50 pct retracement of the entire down move from October 11 2007 to March 6 2009. What we discovered later is that there is also a Fibonacci 50 pct time sequence that was likely satisfied at the same time. If the down move from Oct. 11 2007 is 512 days and the recovery from the March 6 2009 low to this week’s November 11 high equals 250 days we find that ratio to be 48.8 pct. That seems close enough for government work to us to make mention of.

Down Move	10/11/07	03/06/09	512
Up Move	3/6/2009	11/11/09	250
Total Move	10/11/07	11/11/09	762
Retracement % Days of Total Move			32.81%
Retracement % Days of Up Move/Down Move			48.83%

This might be something to be aware of when considering market positions. The combination may help determine when market moves are due to come to an end. Nothing is perfect but this could be a powerful weapon to add to the arsenal.

Good trading to all.

Jeff
CB&S

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

Key Fibonacci Resistance Reached In Dow Jones Industrials

2009-11-11T11:16:00.003-06:00

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We thought this was definitely worth showing this morning.

The chart above is a weekly Dow Jones Industrials – CASH. The significance we find is that today’s high is virtually right at the 50 pct retracement from the October 2007 peak to the March 2009 low.

The high posted intraday was made October 11, 2007 at 14,198.10 according to our data. The low was made March 6, 2009 at 6,470. The difference between the two is 7,728.10. Half of that difference equals 3,864.06 which when added to the 6,470 low makes 10,334.05 the 50 pct retracement level following our method of division, subtraction and addition. Today’s high as of the time we are preparing this has been 10,342.

We thought you’d all want to know.

This could be an important milestone reached and may turn into a likely spot from which a correction begins. We strongly suggest to watch for additional signals such as a reversal. We also strongly suggest watching and keying off of the U.S. Dollar. It too is trying to reverse to the upside as we are typing. Perhaps today’s closes will tell us all much more.

Good trading to all

Jeff
CB&S

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

How to look at tomorrow's Dollar trade

2009-11-09T15:06:00.003-06:00

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The U.S. Dollar which has been blamed for just about everything imaginable but for our purposes it has been for commodity prices and stock prices rising. We were going to say most notably Gold but we just couldn’t really justify this in our minds. Along the course of the way it has been crude oil and it’s by products, grains, soft commodities and of course the precious metals. It hasn’t hurt the stock indices either to have the lower trending Dollar.

The chart shows the continuing downward slope of the Dollar Index. Today’s low in this cash index at 74930 is but one tick below the previous low of 74940 made October 21. Coincidentally, that is the same day of the previous highs in the major stock indices prior to the Dow Jones Industrials breaking through with its sharp rise today.

Trending along with the price chart of the U.S. Dollar has been its 50 day moving average noting that for many months any rally has stopped at or near it. Likely this market will need a few closes above the 50 day ma to attract more serious buying interest.

One other note of potential significance is that the way we have constructed the Fibonacci extension on the chart we find that the target was virtually right at today’s low.

Looking at what tomorrow may bring and reasons why it may not be comfortable for short positions we find that 1.) A one tick rule with today's low one point below the previous low; 2.) The Fibonacci extension target being satisfied; 3.) Tomorrow is Tuesday.

Good trading all

Jeff
CB&S
Division of MF Global Inc.

312 261-7380

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

Unemployment Report Trading Day

2009-11-06T15:38:00.002-06:00

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The monthly unemployment figure were released this morning at 7:30 AM 9cst). The unemployment rate was the key surprise as it was reported to have risen to 10.2 pct. We don’t recall seeing any estimates above 10.0 pct. The non-farm payroll number was within the range of estimates at 190,000. There was a downward revision from the previous month.

The market went in to the report on the heels of a rally. It surprised us that with what appeared to be strong momentum that the S&P 500 was unable to trade through the .618 Fibonacci retracement level formed using the October 21 high and Nov. 2 low. (As illustrated in the chart). It has also stopped at the March / July uptrend which has posed resistance as a return to trend. However, the S&P has crossed back above its 50 day moving average closing above both Thursday and Friday.

The market did sell off after the release of the report but held and after trading quietly for a good part of the session was able to muster a rally not quite back to the highs of the day going in to the close. We believe this sets up another interesting and potentially volatile week beginning Monday. Possibly even Sunday night.

Good trading all

Jeff
CB&S

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

Sizing Up The Bear S&P Argument

2009-11-04T16:23:00.002-06:00

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The above chart is of the daily cash S&P 500. After spending virtually the entire day trading higher it ran out of steam after making a new high by a very small amount with an hour and a half left in the session. The last half hour particularly saw the steam come out. That being said, there were a few intriguing points that we wanted to point out.

There has been a 70 point decline off the October 21 high of 1101.36 to 1029.38. The .500 Fibonacci retracement comes to 1065.37. Today’s high was 106100. The .618 Fib retracement is 1073.86.

The 50 day moving average was at 105335 according to the display on our chart. Even though the S&P traded back above that level today it was unable to close above it. There are now 4 consecutive daily closes below the 50 day moving average and five out of the last six sessions have ended beneath it.

The trend line that marks the entire upward move from the March 2009 lows has now seen five of the last six sessions close below it. Today’s rally high came to within approximately five points of the trend line which likely poses some significant resistance as a return to trend line.

Finally, one of our clients versed in candlestickese pointed out to us that today’s daily bar is a falling star and that as one would imagine, a bearish not bullish event.

Good trading to all

Jeff
CB&S
Division of MF Global Inc.

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

Gold: How High Is High

2009-11-03T15:10:00.004-06:00

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This must be a hot topic today and to leave it uncovered would be foolish even though we suspect everyone has asked everyone what sparked the gold rally of Tuesday November 3.

It is especially fetching in that it did it all on its own, meaning without the aid of a drop in the U.S. Dollar. The prime reason we have found cited for the move is the Central Bank of India’s reported purchase of 200 tons of Gold from the IMF. Analysts consider this a clear sign of demand as central banks around the world replace some portion of U.S currency holdings with Gold.

Other incidentals included talk that the Gold companies such as Anglo American would be liquidating their hedge books, but likely over a period of time lasting well into 2010 according to what we have read.

Our chart included above shows the next Fibonacci extension targets. The .750 level is approximately 109150.

Final note on this is to be cautious with new or additional purchases at lofty levels such as these. We have seen it before where when things look most bullish the high price is made.

Good trading to all

Jeff
CB&S Division
MF Global Inc.

312 281-7380

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

Stock Indices Plunge / How to guage Trend

2009-10-30T12:54:00.005-05:00


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It’s hard not to make the stocks the focus of our blog again today. We are just a bit through the midway point of the day and the indices are down sharply. It is virtually a double reverse with today reversing the strong rally following the GDP figures which had reversed the sizable losses of Wednesday’s action.

The S&P 500 and the NASDAQ Composite and 100 are back below their respective 50 day moving averages and below the major up trend lines dating back to the March ’09 lows. The Dow Jones Industrials have now reached the 50 day moving average for the first time since testing it October 2.

The NASDAQ has become the weakest of the three majors. The Composite is now very near the October 2 correction low. Also of interest is the Dow Transportation Index which has made its downward turn before these others. It may have signaled a double top confirmation by falling below the low made between its two highs of September 17 and October 21. There are other lows in this price area from August 17 and September 2 that may provide an obstacle to further decline; at least for the near term. And as far as the double top, there may be a possibility this formation in the Transports could morph into a complex double headed Head and Shoulders top. But at this point in time that will be left to the crystal ball gazers.

The October 2 correction lows we believe are the next significant barometers.

We realize there is still time to go in this week ending session but we find this type of action negative and believe spells lower prices yet to come.

We are including here our S&P 500 market section from our Trade Focus written Thursday 10/22/09:

S&P 500 (Dec. EMini) – Last week we presented a short entry approach that would have been elected with the intraday penetration of 106625. The December contract proceeded to a low of 103725 today (Thurs.) before its sharp rally to close at 106150. We believe stop protection for this short entry can be lowered to intraday penetration of 109350 or a close at or above 109025. We believe we can keep the other new or additional short entry approach from last week also which is to initiate short entries with a close at or below 101150. Stop protection for this short entry approach should be intraday penetration of 105725. Retracement resistance levels are approx.: 106085 (hit); 106800; 107550.

Good luck and Great trading

Jeff and Diego

CB&S Division
MF Global Inc.

312 261-7380

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

How Confidence In Short Entries for Stock Indices Grows

2009-10-28T15:51:00.005-05:00


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The charts included above are of the daily cash S&P 500, daily cash NASDAQ Composite and daily cash Dow Jones Industrials. It seems we can sum things up quickly and simply here today. These major indexes have now seen the major trend line connecting the March and July lows breached as well as their respective 50 day moving averages. These are not good closes today, unless of course a trader is short.

We believe these to be levels of significance that have now been broken and provide another signal that lower prices are on the way. There may be a bounce back upward in price but it doesn’t necessarily have to do so. We would view bounces, and we will be watching for them closely, to be opportunities to suggest additional short entry approaches.

We would also like to point out that the cash Dow Jones Industrials has not penetrated its respective trend line or 50 day moving average.

We are inserting the S&P 500 section from our last Trade Focus edition.

S&P 500 (Dec. Emini) -- Last week we ended this section saying that next level that may serve as an objective is the .500 retracement from the October 2007 high to the March ’09 low which is approx. 112625. We do not see a long entry suitable for this near of a possible objective. Certainly it could go beyond but we will watch for developments that are more indicative. We do, however, believe that if this “bull run” is nearing an end that short entries can be initiated with intraday penetration of 106625 or with a close at or below 106925. Suggested stop protection for this short entry approach should be intraday penetration of 110275. We believe another short entry approach for new or additional short entries would be with a close at or below 101150. If this short entry approach is elected we believe stop protection should be intraday penetration of 105725. We will update retracement levels following additional pattern development.

Good Fortune and Good Trading

Jeff and Diego

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

How to Manage A Short Position In The T-Bond Futures

2009-10-27T15:34:00.002-05:00

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The CBT/Globex December T-Bonds reached a significant trend line of support and the reaction off of that has been a strong one rallying more than a full point. It also sets up as a two-bar low formation going into tomorrow. The rule of thumb initial target of this type of formation is the length of the two bars and in this case makes it approximately 120-11. Fibonacci retracement resistance levels are approx.: 120-17; 120-24; 121-15.

It is impressive too that they have performed this way with the huge supply of Treasury paper being auctioned this week. So far the first tranche has been well received both from a demand and rate perspective. The $44 billion in 2-yr notes auctioned today came off with a yield of 1.020 pct. with a bid to cover of 3.63. The average for the previous six 2-yr auctions was a bid to cover of 2.92.

It is action like this that would cause us to suggest to holders of short entries to reduce their exposure by liquidating some portion of their position. It is also the type of event that provides reasons for those wanting to place long entries to take action. Our most recent Trade Focus has active short entries in the T-Bonds and this action has given us reason to discuss the position with individual clients.

Good trading to all

Jeff and Diego

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

How to Take Advantage Of The Short Side Of Gold

2009-10-26T15:28:00.002-05:00

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We haven’t talked about Gold for quite some time. It has achieved all time all time highs as probably everyone who reads this is aware. Over the past year, since October 24 of 2008, it has gone from the low of 69900 (basis the December Comex/Globex contract) to its October 14 2009 high of 107200.

We have been watching Gold as well as many other markets and market groups, for signs of exhaustion to their bull market rallies. Much of it has to do with the value of the US Dollar, which we have talked about at times in our Trade Focus. We noticed, in the case of Gold, a top heavy look developing on intermediate time frame charts. If there was to be a correction or perhaps the start of something larger, we wanted to be prepared particularly if the risk reward was warranted.

We have included a chart of the 120 minute December Gold for illustration and the Section on December Gold from our most recent Trade Focus prepared October 22.

Gold (Dec.) – As in the Silver we will stay with our suggested long entry approach from last week which is to initiate long entries with intraday penetration of 107550 or with a close at or above 107330. Stop protection for this long entry approach we believe should be intraday penetration of 104170 or a close at or below 104270.

We also believe now that we can suggest a short entry approach with intraday penetration of 104170 or a close at or below 104270. Stop protection for this short entry we believe should be intraday penetration of 107550 or with a close at or above 107330. Retracement levels of support are approx.: 103820; 102770; 101720. The next series below this is approx.: 101680; 99980; 98280.

Today's action (Monday 10/26/09) in the December Gold contract elected the suggested short entry approach in our weekly Trade Focus. Stay posted.

Good trading to all

Jeff and Diego

CB&S Division

MF Global Inc.

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

How To Approach Suspected Resistance in Mini S&P500

2009-10-23T12:08:00.005-05:00

click charts to enlarge

There appears to be levels of resistance at or near the current price of the stock indices. We have included charts of the cash S&P 500 to help illustrate. The charts were prepared early on Thursday October 22. What they show are major trend line resistances and also the .500 Fibonacci retracement.

The action of this week has been interesting to say the least. New highs on Tuesday followed by heavy selling pressure on Wednesday but strong recovery on Thursday. Friday morning has seen selling pressure reemerge even with positive earnings news from Microsoft, Amazon and others. It looks like the willing sellers were satisfied selling to the “news” buyers.

Here is an approach we suggested in our weekly Trade Focus written yesterday (Thursday) afternoon:

S&P 500 (Dec. Emini) -- Last week we ended this section saying that the next level that may serve as an objective is the .500 retracement from the October 2007 high to the March ’09 low which is approx. 112625. We do not see a long entry suitable for this near of a possible objective. Certainly it could go beyond but we will watch for developments that are more indicative. We do, however, believe that if this “bull run” is nearing an end that short entries can be initiated with intraday penetration of 106625 or with a close at or below 106925. Suggested stop protection for this short entry approach should be intraday penetration of 110275. We believe another short entry approach for new or additional short entries would be with a close at or below 101150. If this short entry approach is elected we believe stop protection should be intraday penetration of 105725. We will update retracement levels following additional pattern development.

Remember you can sign up for a trial subscription to the Trade Focus email list. This will get the information to you a day sooner than waiting for it to appear on the web.

www.cbandsbrokerage.com

Good trading

Jeff and Diego
CB&S Division
MF Global Inc.
312 261-7380
800 321-5810

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

How To Manage A Winning Long Wheat Entry

2009-10-21T15:39:00.003-05:00

click images to enlarge

The wheat market has maintained its bullish price focus with another push into new highs since the October 5 low at 439.25. Today’s high reached 548.50. The last time we talked about December wheat in our blog on October 12 we mentioned that if long (particularly if from our Trade Focus recommendation) that participants might consider reducing the number of positions after it had reached 529.00 in order to not only book some profit but also for the purpose of capital preservation.

We had determined that level off of one of the possible Fibonacci retracement levels we illustrated. Other targets to consider near term are the Fibonacci extensions at 550.00 and 561.75. The first of the extension targets in this series just happened to coincide with a .382 Fib retracement at 548.25. That is determined from the down leg starting June 1 2009 at 725.25 and ending with the October 5 low.

Stop protection for original longs which occurred with the suggestion to initiate long entries with the intraday penetration of 48550 should at least raise it to intraday penetration of 49200.

The next Fibonacci resistance levels we feel are of importance are approximately 582.25 and 616. These would be levels to consider quantity and risk reduction also.

One last point of interest is that Wheat has been able to make this advance even after the latest USDA Crop Production report which was considered negative toward future price levels. We are hearing now, though, of smaller Wheat crops than originally expected out of some of the Eastern European producers.

Good trading to all

Jeff and Diego

CB&S Division
MF Global Inc.

312 261-7380
800 321-5810

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

How to rely on techincal indicators in Natural Gas

2009-10-20T15:43:00.005-05:00

click images to enlarge

We are talking about the natural gas today as it appears in the process of clearing another hurdle. After first catching our eye and introducing it to our Trade Focus in the September 10 edition we have seen an initial run up in price followed by a broad pattern of consolidation. The initial high since bottoming for the November contract was 5120 on October 6. This was slightly shy of a former peak at 5133 on August 3.

Today’s price action has it clearing this price level by reaching 5195 (as of 3:00pm central time). It would seem to us that a close above this 5133 level should set it up to test the next level of resistance which we show to be just above 5500.

Another aspect that got us stirred up over this market was that there was a reversal bar at the low on the daily chart and perhaps much more significantly, the month of September posted a large sweeping reversal off the low. All this in light of record supply. That’s impressive and deserved attention.

We would not be surprised at a move eventually into the 7000’s or near 8000 if and once the 5500 level is cleared.

God trading to all

Jeff and Diego

CB&S Division
MF Global Inc.

312 261-7380

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

How to take advantage of significant resistence in Dow Jones

2009-10-19T16:14:00.003-05:00

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The chart above is a weekly Cash Dow Jones Industrials. The reason we are looking at this today is that it is approaching the .500 Fibonacci retracement level of the October 2007 high to the March 2009 low. Some of our clients that have been expecting the market to rally toward this significant price level are talking to us about a “Sell and Hold” strategy.

This has been quite a rally since the March lows were put in. We are seeing some analysts suggest though that stock prices in general have reached overbought or more specifically overvalued levels. One that we saw very recently stated that these were historically overvalued levels. We must admit we have seen over time many interpretations of “value” measures so it is difficult for us to put our faith into these claims. There may be, however, many factors that are coming into play that should cause all of us to be alert to what could be a sizable correction. We never truly know what lies ahead ultimately and what starts out as a correction could be the resumption of the bear market which many believe began in March 2000.

We have also seen the Daily Sentiment Index break above the 90 percent level which contrarians would be keen to follow. Many of us are familiar with this and realize that if such a large percentage of people are bullish of something a top or correction of some sort is likely imminent. We also are aware that there is that faction of economists that have been warning about the double dip recession. Foreclosures continue and may even escalate according to some accounts. Could there be another credit crunch around the corner if this were to happen?

The uptrend since the March low is rather discernible. One thing we would key on as an approach to short entries is a break of the trend line connecting the March and July lows and particularly a close below it.

We are not suggesting this doom and gloom scenario will come to pass but thought that since this major stock market index is in ear shot of a significant retracement resistance level that it was worth presenting.

Good trading to all

Jeff and Diego

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

Bond Rally Stopper

2009-10-16T15:14:00.002-05:00

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We have posted the weekly chart of CBT/Globex T-Bonds. We note how the high of the recovery from June 01 low stopped at the .500 retracement level and at the 50 week moving average.

We have talked about the Bonds in previous blogs and thought that since we had mentioned ways to enter the short side of this market we would present another for those looking to establish new or additional positions.

This is taken from our weekly Trade Focus prepared Thursday October 15:

T-Bonds (Dec.) – The T-Bonds have experienced a key reversal back on October 2 and have made a nice set of stair steps on their way down off their top. We will suggest at this time that short entries can be initiated at a price level of 119-30 or better. We believe stop protection for this if elected should be intraday penetration of 121-11 or a close at or above 121-06. Retracement levels of support are approx.: 118-21; 117-01; 115-14.

Good trading and Happy Week End to all

Jeff
and
Diego

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

How To Choose Target Levels For Short Dec. T-Bonds

2009-10-14T15:55:00.004-05:00

click here to enlarge

The December T-Bonds have begun a nice progression to the downside. We had presented the case for initiating short entries in our blogs of last Tuesday and Wednesday. (You can check the older posts for verification). The chart above shows a near term Fibonacci Extension sequence where what we refer to as the targets, are approx.: 118-30 and 118-15. Short term traders could consider using these as levels to reduce or cover short positions.

We also display on the chart a series of Fibonacci Retracements which are approx.: 118-19; 117-00; 115-13. We are thinking that there is potential down to the lower retracement levels and possibly even lower eventually. But how it gets there is always the $64,000 question. We will be updating the progress as best we can along the way.

How to utilize these various levels and other tools that are involved is something we are able to discuss in greater detail with our clients. We suggest you contact us if interested in finding out more.

Hit ‘em long and straight

Jeff and Diego

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

Employing Trade Management in November Soybean Position

2009-10-13T13:08:00.002-05:00

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We are coming back to the November Soybean market today as important price levels have been reached. First of all we’ll get the mention of the psychological 10.00 per bushel out of the way. Psychological price levels don’t effect, in our opinion, supply and demand considerations, nor should they effect, taken on their own, trading decisions.

What we do find significant is that key Fibonacci retracement levels have been reached or nearly reached. Today’s high so far has been 1012.25 (we are preparing this at just about Noon Chicago time) and that takes it above the .618 retracement resistance level from the August 11 high of 1066 to the October 5 low of 878.75 which was approx. 994.50. It has also come within a whisper of the .618 retracement level using the June 11 high of 1099.50 and the October 5 low of 878.75 which is approx. 1014.75.

This is a situation where depending on the individual certain options can or should be considered. We would say at the minimum stop protection should be raised if it hasn’t been already. Another option is to liquidate a portion of the position while also raising the stop protection. And then, some traders may decide that this is a good place to liquidate their entire position and watch for further developments.

Truly we never know when or at what price a market will make a high or low. For this reason we tend to favor reducing exposure but leaving some portion of the original position on the books in case a particular market catches fire. If the price continues to move favorably stop protection can and should be raised too. This is something that we discuss with clients on an individual basis.

We believe trade management is the biggest contributor to trading success in the long run. Take nothing for granted; don’t try to out guess or second guess. Adopt discipline and patience into your strategy. We believe you will appreciate the benefits over time.

As far as moving stop protection in the November Soybeans we would suggest either to a break even level or using a close beneath the 50 day moving average which is currently approx. 960. If nothing else we suggest stop protection be placed at least at 927.50. 927.50 puts it just below the .618 downward retracement using today’s 1012.25 high and the 878.75 low.

We are noticing the Wheat extend its gains as we are writing this. The December Chicago Wheat contract has reached that first level of 511.75 where we suggested considering raising stop protection. Some traders may have other ideas of how to approach this price advancement. Let us know if you care to share.

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

Trading a Long Entry in Wheat

2009-10-12T16:06:00.003-05:00

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Trade Focus added long December Wheat entries to its suggested trade positions with today’s action. Here’s what we said in our last edition:

WHEAT (DEC) - We will stick with last week's suggestion: “We believe long entries can be initiated with intraday penetration of 48550 or with a close at or above 48250. Stop protection if elected we believe should be intraday penetration of 44500 or a close at or below 44900.” Retracement levels of resistance are approx.: 49450; 51170; 52910.

This suggestion has been in the past two issues actually, and due to certain circumstances we were unable to publish this past Thursday as usual. But, the point is Wheat has been on our radar for a while now and may provide a very tradable retracement or correction. There are two sets of Fibonacci retracement levels that the December Wheat may seek. The first set is approx.: 494.50; 511.75; 529.00. The next set above is approx.: 547.50; 581.50; 615.25.

The latest USDA crop production report did not paint a very bullish picture for wheat prices but we certainly have seen markets behave opposite to such reports in the past.

As always, a trade is only a trade and needs to be approached and treated with a planned strategy and discipline. It’s wise to know not only where a position should be entered but where it goes wrong and therefore where stop protection needs to be placed. Along with these, a profit objective or plan of how to liquidate a position when right should be part of the plan.

In the case of this December Wheat example, there was an entry method that was satisfied triggering the trade suggestion. Notice that the September high was cleared and also that the 50 day moving average was cleared on a closing basis. There has also been a stage 1 breakout above the steep trend line which acted as a first alert. We have also identified what we believe to be valid stop protection. The last piece of the puzzle now is exiting a winner.

Exiting a winner is not as easy as most people and traders might expect. It is our belief that this is the time to take all the emotion out of the equation. When trading in multiple units, for example, we believe it very beneficial to choose a target level where a portion of the entire position is liquidated while simultaneously moving the stop protection in a favorable manner. The idea is to reduce risk exposure while still maintaining a piece of the position in case it continues in the desired direction and particularly if something special develops.

Using this example, or any example for that matter, it is up to the individual trader to determine exit strategies based on his/her own set of variables. We might suggest here, as a general strategy, to begin moving stops at the 511.75 Fib level and with partial profits coming off at the next 529.00 level. If the price of December Wheat continues to gain there may be points along the way where adding positions would become warranted. We will be watching for these opportunities.

These types of strategies are something that we discuss with our clients on an individual basis taking into consideration their personal viewpoints. We find that there is benefit in working together on a strategy. If that is something you are interested in or would like to know more about let us know.

Good trading to all

Jeff and Diego
CB&S Division of MF Global Inc.

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

Triggering Long Soybean Entries

2009-10-09T16:55:00.004-05:00

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

Today we thought we would look at soybeans. We have included the daily and monthly charts here for reference. While considering how to describe what we are thinking regarding the soybeans we thought cutting and pasting our soybean section from the last (Sept.30) edition of our Trade Focus would help get the job done.

SOYBEANS (NOV.) – The monthly data shows that the soybeans have corrected to very near the 50 month moving average as well as an uptrend line. We believe we can begin to look for a long entry from this price area. We realize harvest is upon us but price pattern and action we believe is what will dictate. We believe we can suggest a long entry with intraday penetration of 94400 or a close at or above 93900. Looking ahead, if this should begin to proceed higher, we suggest new or additional long entries can be initiated with a close at or above 96200. Retracement resistance levels are approx.: 95830; 97870; 99930.

Since we wrote that a week ago Wednesday there was a new low made that slightly penetrated the 50 month moving average before the price did turn around and elect both long entries first by pushing through 94400 and then with today’s 96400 close electing the second long entry. There has been concern over potential frost conditions for northern portions of the corn and soybean belts and there was a USDA Crop Production report released this morning.

The report was considered by traders as less bearish than expected but the weather concerns provided the energy needed to extend the soybean market’s gain not only from the opening today but also has helped to fuel the move off the lows made on October 5. Since that date the November contract has gone from the low price of 878.75 to today’s high of 968.50. Many analysts have said that a freeze would not be as deadly for the soybeans as such a large percentage of the crop is “made.” But there still is that small percentage that could be greatly affected and there is the problem the weather has caused in delaying the harvest. This puts pressure on near term supplies.

A quick update on a previous blog topic of this week dedicated to the T-Bonds. The trigger price for the second short entry approach was elected with the intraday penetration of the 121-22 level on Thursday the 8th. Today’s low was all the way down to 119-20. Much of the reason for the quick and large break in price seems to be credited to remarks from Fed Chairman Bernanke regarding the Fed’s plan to reverse the extraordinary measures taken since the financial crisis began. He may not have said anything new but we believe the market senses the timing of such action is becoming closer than what had been previously anticipated. It also seems, from various comments by various analysts, that there is a growing number of hawkish Fed Governors. We saw that term hawkish more today than in many many months.

If you would like to receive our weekly Trade Focus by email you can request a free trial by contacting us using the contact us link on this blog page. And if we can help you achieve your trading goals please let us know. There is an Open An Account link on this page as well. As always any comments, questions or better yet any answers are always welcome.

Good trading and happy week end

Jeff and Diego

Taking Advantage Of A Head And Shoulders In The British Pound

2009-10-08T16:03:00.003-05:00

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

The chart above is a daily continuation chart of the front month British Pound futures contract. We believe this to be a Head and Shoulders top formation where the Neckline has already been broken. Frequently markets will retrace a return to the Neckline and that may be what is occurring. This often provides an opportunity for a trade if not already involved.

Typically when there is a H&S set up traders who look for and follow these developments will enter a position upon the breaking of the neckline. If not, a return to the neckline affords that second chance opportunity. In this example the return to Neckline is currently at ~ 16190.

Measuring the price target is determined by taking the distance from the top of the head to the neckline subtracted from the point of where the market price breaks the Neckline. In this case the high and Head (Basis front month) on this chart is the August 5 high of 17043. When we draw a line down from the Head to the Neckline we find that point to be approximately 16040. This distance, then, is approximately 1000 points. We can see that the market broke through the Neckline on September 24 when the Neckline was at approx. 16135. Subtracting the distance from the Head to the Neckline of approx. 1000 points from the point of Neckline break - ~16135 – provides a price objective of approx. 15135.

In the British Pound each point, or tick, is worth $6.25. Short entries from the point of the Neckline break to the ~15135 price target could gross approx. $6,250. If a short entry were to be made at today’s approximate value of the return to the Neckline at ~16190, a move to and trade exit at the price target of 15135 if realized would be $6593.75. This is all based, of course, on not only being provided the opportunity but seizing it if presented and then the most important part the magic of the market seeking and reaching the price objective. It doesn’t always work perfectly, in fact more like rarely, and anything can happen and usually does. That’s why trade management is so integral to success.

We have also provided Fibonacci Retracement levels incorporating the January 23 low and the August 5 high as other price support possibilities. They are ~15700; ~15275; ~ 14856.

We hope this is found to be helpful and beneficial if not somewhat educational for those not familiar with this process. If any questions, comments or better yet any answers please make sure to contact us.

Cheers and Good Trading

Jeff
Diego

Adding Fuel To The Fire/ Bond Entry Follow Up

2009-10-07T16:15:00.003-05:00

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

We wanted to not only follow up but add some additional fuel to our bond blog of yesterday. We find it helps to build a bit of a case for taking a position and it seems reasonable that when a number of circumstances occur at the same time that it adds to the confidence level. We recall Frank Taucher, author of “The SuperTraders Almanac,” saying to let the market “force you to make the trade.” We see benefit in that too.

It is also a good time to remind those who read our blog or our Trade Focus that we believe that in the long run what really separates the men from the boys/ winners from losers is the discipline employed in trade management. Every trade is a risk and each should have its own risk defined and reduced whenever possible. There’s much more to this of course but we wanted to restate this at this time since it may have been a while since we have done so.

What we see on the daily chart is that since the reversal day high to its low since that high was made, the .618 Fibonacci retracement is approximately 122-31. So far today the high has been 122-30 (as of 3:05 CDT).

Using the weekly chart we wanted to show that the high price of Friday October 2 touched almost precisely on the 50 week moving average. Also from the weekly chart we can see where the move off the June low to this recent high has just slightly penetrated the “half-way” back point starting from the spike high made when the Fed announced it would be buying treasuries to that June low. We believe that spike was a likely price of significance particularly since it marked a high preceding a 20 point decline, let alone the substance of the announcement itself, and therefore a good measuring point.

Many may ask “what now?” Well, we would say that the action that could be taken and perhaps more so for those more aggressive, is to initiate short entries from this level (currently 122-27) with stop protection above the reversal day high of 123-25.

Another approach that could be used to either initiate a new position or add to an existing short entry would be with penetration of the 121-22 low of yesterday Oct. 6. Penetrating that level may add confidence to the possibility the bond market price is weakening. Likely stop protection for this entry would be above whatever the high will end up being from the recovery off that initial 121-22 low. And we need to state that this entry approach is predicated on the market price not exceeding the 123-25 reversal day high prior to the penetration of 121-22.

We wish you all good trading.

Jeff Majer
Diego Pilar

CB&S Division of MF Global Inc.

You can contact us as indicated on the blog page.

How To Choose A Short Bond Trade

2009-10-06T14:42:00.006-05:00

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

What we see here in the T-Bond chart above is what we consider a very reasonable trade set up. There is always risk when making a trade so choosing them under some set of guidelines is very advisable.

In the case of the T-Bonds there was a reversal day bar at its high of October 2. The high registered that day was 123-25. The current price posted is 121-30. Presuming a short entry position from this price level we would think stop protection could be a price just above the recent high posted of 123-25.

What is also very interesting to us is that the upward advance in price from the June 11 low of 110-08 occurred with a reversal day bar. Therefore a significant low was made with a reversal and there is a similar opportunity for a significant high having been made with a reversal.

In determining where profit objectives could be we have included the Fibonacci Retracement levels using the low and high prices mentioned as the base to calculate the ratios. We have observed over time that markets frequently retrace 50 percent to nearly two-thirds of a given move. Thus in this case a retracement of .500 from the low to high would provide a target of approximately 117-00. The .618 retracement level is approximately 115-13. In gauging target areas for a declining price we typically feel comfortable at least initially, to shoot for the .618 retracement. It seems market prices find it easier to fall than they do to rise. In nature it is easier to push something down than it is to hold something up.

We hope this has presented a situation for consideration.

Jeff Majer
Diego Pilar

CB&S Division of MF Global Inc.

Follow up to Determinig A Market Correction Or Change In Trend

2009-10-02T15:36:00.003-05:00

Today we are following up our previous blog that discussed the potential of a correction in the stock indices’ rally and/or the possibility that what is in process is the end of the proverbial “Bear Market Rally.” We thought this a good idea in light of this morning’s Monthly U.S. Unemployment Report.

The report itself was a bearish surprise as the number of unemployed was greater than what was expected. The number came out at a minus 263,000 versus the expected minus 175,000. The unemployment rate rose to 9.8 pct from 9.7 pct.

Today’s action started out lower and accelerated to the downside after the release of the report. But as often the case, with the news out of the way the stock indices caught some footing and were able to actually trade slightly higher just after midday. Heading into the close now the S&P 500 shows 5.00 lower, Dow down 25 points and the NASDAQ down 3.5.

But we really don’t mean to give a market recap here. What it has described, though, is not atypical of a big report with a big surprise type of day. What we do wish to illustrate is that the 50 day moving average in the S&P 500 pointed out yesterday was touched but so far has held. And as can be seen on the chart, the .618 of the near term Fibonacci retracements was breached a bit and with the market closing almost right on it. We have noticed that the indices often breach this magical ratio on the shorter waves but this time the response has been muted.

Secondly, the major uptrend line starting from the March ’09 low came in today around 1010.00 and will be near 1012.00 on Monday.

Looking ahead, the economic news will be less of a factor as the schedule is rather light for next week. It appears that the 50 day moving average and the uptrend line are in ear shot but remain key barometers of support until penetrated, and most importantly, on a closing basis. At least for this phase of the game.

We look forward to hearing from you.

Jeff Majer
Diego Pilar

CB&S Division
MF Global Inc.

312 261-7380

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

Determining a market correction or change of trend

2009-10-01T16:09:00.003-05:00

The chart above is a daily cash S&P 500. We would like to point out a few of the significant developments shown here. Certainly, we will either miss or leave out a few, but our intention is to bring attention to what may potentially be developing.

First we see that the market broke through and closed below two near or short term support levels. Those would be the 20 day moving average (in red) and the up trend line connecting the July and September lows. We will note here that the 50 day moving average (in blue) is currently 1020.73 and represents another key level and barometer of support. We believe a close below that would bear some weight.

Today’s penetration and close under last Friday’s low of 1041.17 confirms a series of lower lows and lower highs which is a key aspect of trend definition. The next up trend line underneath the market which connects the March’09 low and July’09 low came in today at approximately 1008.00. A close below this would likely be a very significant development. The Fibonacci retracement levels using the July low and September high are 999.61; 974.735; 869.32. These mark potential levels of support.

Now from a larger prospective we will point out that from the October 11 2007 high of 1576.09 to the March 6 2009 low of 666.79 there were what we interpret as a full 5 wave structure completed. From what we understand of wave theory a 5 wave structure defines trend direction. The price move since the March 6 2009 low appears to this point to have gone in a distinct 3 wave pattern, marked by A-B-C. We understand this to be corrective. For those ascribing to the secular bear market theory this could then, mark the end of the proverbial “Bear Market Rally.”

As Yogi was known to say “it ain’t over til it’s over.” We won’t know for sure if what is occurring is the start of a normal correction like was seen during the June to July time period or if in fact this is the start of something bigger and more bearish until we get further along in the pattern development. And in reality we won’t truly know until it’s over.

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

How to put a Head and Shoulders to work for you

2009-09-30T16:22:00.002-05:00

British Pound (Dec.) –There is a suggested short entry from the 16271 close of Sept.18. We believe stop protection can be lowered to intraday penetration of 16271 or a close at or above 16208. It appears that a Head and Shoulders formation that had formed has seen the neckline penetrated. We believe the price objective of this H&S counts to approx.: 15175. Retracement resistance levels are approx.: 16135; 16251; 16367. The next series above is approx.: 16244; 16394; 16544.

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

Finding a short entry point in the stock indices

2009-09-28T14:46:00.005-05:00


click charts to enlarge

We definitely thought this would be of interest especially to stock index traders.

We are writing this at just before 2:00 pm Central Time.

What we have been following today is the come back rally in the stocks and the charts above show that these major indexes have retraced the Fibonacci .618 pct from their high made Wednesday Sept. 25 to their lows since the highs were made. For those who might believe the timing is correct for short entries, especially following the reversals of last week, we believe this may be useful.

There was holiday type volume today with the celebration of Yom Kippur. And it is possible that it provided just the setting for a rally opportunity following the key reversals of last Wednesday. What it does for the traders looking to be short is to provide a potentially lower risk entry level for their short positions. It would seem to us at least, that new highs above those of September 23 would suggest that the timing for short positions was inappropriate at this time but this rally today has brought the entry level to a more reasonable risk reward position.

In the Dow Jones Industrials we show the high of Wednesday the 23rd as 9918.00. The low of Friday the 25th was the lowest price since the high was made and we show that to be 9641.00. The .618 Fibonacci ratio value of the high to low we calculate as 9812.00 and today’s high as of the time we are writing this has been 9823.70.

In the S&P 500 we calculate the .618 ratio to be 1065.26 where today’s high has been 1065.13 and for the NASDAQ 100 we calculated the .618 as 1730.15 and today’s high we show as 1733.79.

Good trading to all

Jeff Majer
Diego Pilar

CB&S Division of MF Global Inc.

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

Trade Focus update - Natural Gas

2009-09-25T13:20:00.003-05:00

Click to enlarge chart

This is an excerpt from this week’s Trade Focus. It was written in the early afternoon on Thursday September 24.

Natural Gas (Nov.) – Two weeks ago we introduced this marked to our coverage and actually saw a suggested long entry be elected. That is from a price level of 4025. We noted last week that the rather quick run up had touched against two points of resistance and that some participants might choose to reduce the size of the long entry position. Remaining long entries from the initial suggestion we believe can raise stop protection to intraday penetration of 4369 or a close at or below 4425. We also suggested last week that new or additional long entries could be initiated with intraday penetration of 4830 which has been penetrated. Suggested long entries from this entry approach we believe should place stop protection at intraday penetration of 4540. We believe the next area to expect stiff resistance should be 5320 or so and some long entrants may choose to reduce position size in that price area. Retracement areas of resistance are approx.: 4874 (hit) 5308; 5743. Extension targets active are approx.: 5019; 5155 and approx.: 5205; 5381.

For those not on our Trade Focus email list you may sign up for a trial at jmajer@mfglobal.com

We send the email version of the weekly Trade Focus the day it is written. We post it on to the website at www.cbandsbrokerage.com after additional prep work and compliance procedures which usually takes an extra day.

Let us know if there are any questions comments or even better if there are any answers you may have.

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

Emini S&P Trade Focus sneak peak

2009-09-24T16:01:00.005-05:00

Click chart to enlarge

S&P 500 (Dec. Emini) – Suggested long entries from the price level of 103600 we believe should raise the stop protection to a break even area with intraday penetration of 103700. A key outside reversal day was recorded in the major indices on Wednesday the 23rd following the FOMC announcement on rates and accompanying statement. For those looking to be short this market we believe we can suggest short entries can be initiated at a price level of 105000 or better. If elected stop protection we believe should be intraday penetration of 107900 or a close at or above 107650. Retracement levels of support are approx.: 104225; 103160; 102100. The next series below is approx.: 99450; 96920; 94375.

If you want to receive the entire Trade Focus the day it is written you can join our trial subscription email list. And if you would like to establish your brokerage account with us which automatically places you on the email lis along with gaining access to us please inquire here:

jmajer@mfglobal.com

dpilar@mfglobal.com

312 261-7380

800 321-5810

Jeff Majer

Diego Pilar

CB&S Division of MF Global Inc.

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

Bearish Divergence?

2009-09-22T16:33:00.004-05:00



click charts to enlarge

We have heard many times probably since July from some of the bearish stock market tabloids how the NASDAQ making a new high while the DOW JONES and S&P 500 did not was a bearish divergence and to look out below.

Today we see the NASDAQ 100 made a new high while the DOW and S&P 500 did not. Based on what has happened over the past months when this divergence has occurred more than once, we see no reason to expect that this is a signal of a stock market high. We often say that anything can happen and usually does, but this particular example of divergence has not stopped the rally, bear market rally or not, from continuing. We would expect it will be more than this type of divergence to make its mark and take its toll.

Jeff Majer
Diego Pilar

jmajer@mfglobal.com
dpilar@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.

Wheat: Patience required

2009-09-21T13:22:00.004-05:00


click charts to enlarge

We thought that this was an opportune time to look at the wheat market. This has been a market where price has been steadily eroding since its all time high made in February 2008 when it reached over $13.00 per bushel. It is currently trading at a price of $4.60 per bushel for the December CBT contract (Chicago).

Our interest in discussing it now is to attempt to get ahead of the game and to be prepared for a potential change in direction. We have seen so many times over the years that substantial moves can begin very subtly. If not prepared ahead of time they may be missed or not more fully taken advantage of.

Clearly as of right now it appears that the price of Wheat remains headed downward. But we have noticed what may be divergence in some of the momentum indicators. That being where the indicator has not made a new low even though the price has.

As we said above, sometimes price moves begin very subtly. They may also take time to develop and to develop in a series of stages. We note that on the weekly chart that one major downtrend line has been broken. Even though the price of Wheat did not immediately respond by rising rapidly the trend line has never been reviolated by the market retreating back below it. We also see that the price did make a new low after the initial trend line break but that it remains above that trend line.

Many may not consider this significant. We do however. It is significant for what may be coming and is significant to alert us to remain aware of what this price trend is doing. Wheat is known for relentless trends and particularly when they are down trends. But our experience has shown that it may only take the upward break above the next trend line to ignite a price move of some significance that could present a valuable reward to risk situation. Even if it turns out to simply be a price correction of consequence.

Two of the greatest keys to success, particularly in trading markets, are discipline and patience. We have seen other market situations develop over a period of time much like what could be happening with Wheat. We refer to the breakout above that first trend line as a stage 1 breakout. It does not require market action be taken at this time, in our opinion, but patience should allow for being ready to do so when that opportunity arises.

How can we help you to be more alert to situations like the one discussed here?

jmajer@mfglobal.com
dpilar@mfglobal.com

Jeff Majer
Diego Pilar

CB&S Division
MF Global Inc.

312 261-7380
800 321-5810

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

Fibonacci ratio retracements

2009-09-18T16:08:00.000-05:00

These monthly charts provide a demonstration of why we include Fibonacci ratios for retracements in our market analysis.

The Dow Jones Industrials retraced .618 from the 1987 crash low of 1706.9 to the Oct. 2007 high of 14,198.1 with the March 2009 low of 6,470.0

The S&P 500 had a Great Depression low in June 1932 of 44.0. From that low it then peaked in March 2000 at 1552.87. The Oct. 2002 low was an almost perfect 50 pct. retracement at 768.63.

Soybeans had an Oct. 1969 low of 236 1/8 and an all time high of 1660 in July 2008. The December 2008 low was just a few pennies through the .618 retracement at 777.

These are just a few examples of what makes this such a valuable tool in our opinion. Hopefully you would agree. If you think using these powerful ratios can improve your results wouldn’t it be worth contacting us to see how we might help put them into action for you?

Jeff Majer
Diego Pilar

jmajer@mfglobal.com
dpilar@mfglobal.com

312 261-7380
800321-5810

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

Natural Gas Fibonacci

2009-09-16T15:22:00.003-05:00

click chart to enlarge

This is an update to the Natural Gas price move we have been covering the past week or so. By now those who have been reading this blog spot have seen our use of Fibonacci retracements and extensions. As can be seen in this daily chart of the November Natural Gas futures the first .618 retracement level of significance has been reached at today’s high (Wed. 9/16/09). It’s still open as we prepare this and could continue to new daily highs, but we have learned through experience the value of these ratios.

This also doesn’t mean that the move is over. It is, though, something traders should not only be aware of but perhaps use as a barometer for adjusting their trading positions. This could mean adjusting quantity or stops. It may mean for some traders that new trade initiation is in order. It could also be to trade against it or to now watch for a new signal if and when the level is penetrated.

Whatever it may be, we felt it notable and important enough to get the word out that this level of significance has been hit.

Happy trading

Jeff and Diego

CB&S
Division of MF Global Inc.

jmajer@mfglobal.com
dpilar@mfglobal.com

312 261-7380
800 321-5810
www.cbandsbrokerage.com

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

Gold and Dollar Potential

2009-09-16T13:42:00.005-05:00


click charts to enlarge

Here is a quick look at two markets gaining a lot of attention today. The charts included are a weekly of the Dollar Index and a weekly of Gold. We have included the Fibonacci Extension overlay as we interpret them.

The Dollar chart shows it has reached what we refer to as the first target which is approximately 76170. The second target that is displayed is at approximately 75000.

In the Gold chart the extension targets shown the way we have constructed this are approximately 106400 and 110650.

We are not saying that these will or must be hit but believe they provide reasonable guidelines and may help in managing positions in these markets. As always, we are open to discussion on such matters.

A scenario under consideration is that if the stock market continues to rise to projections off approximately 112500 and 122500 basis the S&P 500 then this could likely improve the chances of the Dollar Index and Gold reaching these targets. These S&P 500 projections mentioned are approximate levels representing the .500 and Fibonacci .618 ratio retracement using the October 2007 high and the March 2009 low.

Good trading to all

Jeff and Diego

www.jmajer@mfglobal.com
www.dpilar@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.

S&P and NASDAQ 100. Is this it or is there more??

2009-09-15T13:19:00.004-05:00

click chart to enlarge

We are looking at the S&P 500 today because it has reached a level of significance that we wanted to reference. Since March of 2009 the S&P has moved in a distinct form from its 666.79 low. The first major high point we see as 956.23 made June 11. The subsequent correction low stopped at 869.32 on July 8. The market has now reached a level equaling the .618 Fibonacci extension of the first major move up added to the correction low of July 8. We like to refer to this .618 extension as the first target.

We are not saying that it stops here even now, or forever, but our experience has provided us with an understanding that pauses, however brief or lengthy, often come at this first target price prior to moving on to the next. Our experience has also provided us with enough instances where the second target is eventually made. In this case the .750 Fibonacci extension target is approximately 1086.00.

It is important to note too that this or any market does not have to do what it may have done in the past. Markets may fall short or exceed but we find the guidelines that the Fibonacci ratios present as another good tool for traders.


click charts to enlarge

The other charts we have posted today are of the NASDAQ 100 both weekly and monthly. The weekly chart shows extension target levels where the .618, as we interpret it here, has also been reached and somewhat exceeded. Using a starting point of the March 9 low of 1040.52 to its June 8 high of 1511.89 and the correction low on July 6 of 1394.87 we get the Fibonacci .618 extension target at approximately 1686.00 and the .750 extension at approx. 1748.00. The high of today, Tuesday Sept. 15 as we are preparing this has been 1700.33.

The monthly chart we use here is to illustrate some retracement levels that may become significant points of resistance. First of all using the October 2007 high of 2239.23 and the November 2008 low we get the .500 retracement of approx. 1629.00 and the .618 retracement of approx. 1773.00. As it can be seen the .500 retracement resistance level was penetrated leaving the .618 at approx. 1773.00 as the next Fibonacci retracement ratio of significance.

On a larger scale for the NASDAQ 100 are the retracement levels still remaining from the March 2000 high to the October 2002 low. The Oct. 2007 high did not quite reach even the .382 retracement level where the S&P 500 and Dow Jones Industrials exceeded their 2000 highs. This was the internet bubble inherent to the NASDAQ.

The retracement levels in the NASDAQ 100 using the March 2000 high of 4816.35 and the October 2002 low of 795.25 (yep that’s right) gives a .382 fib retracement value of approx. 2331.00, a .500 value of approx. 2805.00 and a .618 fib retracement value of approx. 3280.00.

We wanted to make note too of the uptrend line that is drawn using the October 2002 and July 2006 lows. After breaking through to the downside in September of 2008 on its way to its eventual low in November 2008 (retested in March 2009), this former uptrend line may be ripe for a retest before all is said and done. And finally notice that the 50 month moving average is currently hitting at approximately 1690.00.

We are not saying that any of these levels will be, have to or are going to be reached. We will say, though, that there are some traders that do find these Fibonacci ratios and tools such as these as beneficial to helping make trading decisions.

It is very often the management of trading positions that turns out to be what determines trading success in the long run. We hope this brief discussion has provided some value. If this sort of information and the use of it can help you and your trading plan send us an email or give us a call.

jmajer@mfglobal.com

312 261-7380
800 321-5810

Jeff Majer
Diego Pilar

CB&S Division
MF Global Inc.

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

Natural Gas Follow up and Follow Through

2009-09-14T11:13:00.005-05:00


click to enlarge charts

We said the other day when first mentioning the Natural Gas market situation that we would be following up. Above are updated daily charts for the October and November futures contracts.

As can be seen there was a nice move upward off this recent low point. So far it has stopped against its .500 point of the most recent and last wave down. Interestingly, the downward correction of this first upthrust held at the .500 support point too.

We have heard on the television financial news station this morning that one of the big investment banks has told its clients that they expect natural gas prices to reach 6.000 by year end. We are not passing judgment on the prediction but thought very worthy of mention.

We have said that the Natural Gas market has been known to be volatile in nature. It is possible, though, that this could be the beginning of a prolonged move. At least prolonged from the viewpoint of futures markets.

Is this something that should be considered for participation? Only you, the individual investor or trader can answer that question. If we can help in determining that for you or in determining possible approaches to this market we would be pleased to do so.

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

Jeff Majer
Diego Pilar

CB&S Division
MF Global Inc.

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

Natural Gas

2009-09-11T11:53:00.007-05:00


click charts to enlarge

The charts above are of the daily November Natural Gas and the monthly Natural Gas futures contract.

While there has been an incredibly steep decline after reaching a high point in July of 2008 Natural Gas appears to be signaling it may be ready for at least a retracement bounce of some amount. There is an upward reversal showing on the daily chart with the possibility being set up on the monthly. The weekly does not display this same pattern, however.

It also appears to us that the structure of the move off the low as seen on the daily chart has the potential of producing further upward thrust. We are including here what we said in this week’s Trade Focus which was written yesterday the 10th. The market has already moved somewhat away from our price suggestion and actually has approached some of its first levels of resistance, but Natural Gas is known to be volatile. We will be updating on this situation as it progresses.

From Trade Focus - Sept 10th
Natural Gas (Nov.) – This is a new market we are adding this week. It appears that there has been a reversal off the recent low on a daily basis. It is a bit more pronounced on the October contract but the October is due to expire September 28. This tends to be a rather volatile market, perhaps even more so than crude oil; therefore it may not be for everyone. But after a prolonged down trend it appears natural gas is showing signs of at least placing a temporary bottom. We believe we can suggest that long entries can be initiated at a price level of 4025 or lower and that stop protection should be intraday penetration of 3765. Retracement resistance levels are approx.: 4114; 4308; 4503. The next series above is approx.: 4252; 4495; 4738. Since this has been such a steep decline over many months there will be additional levels above the market that will be stated here as they approach.

If interested in joining the weekly Trade Focus email list so that it will reach you by Thursday afternoon let us know. We will be happy to oblige.

As always, send any comments or observations to jmajer@mfglobal.com.

If you need to establish your trading account you can contact us directly at the email address above or click on this link:

http://www.cbandsbrokerage.com/openanaccount.html

Or call:
312 261-7380
800 321-5810

Jeff Majer
Diego Pilar
CB&S Division

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

Dollar Index

2009-09-09T13:57:00.001-05:00


click charts to enlarge

The charts above are of the dollar index. One is a daily and the other a weekly chart. With the dollar getting so much attention these first days back after the US Labor Day holiday we thought it would be a good time to present the picture of what this beleaguered currency looks like

The daily chart displays a downward sloping trading channel which has seen the low end reached with today’s lower market.

The weekly also displays the channel line being touched and also we have included the Fibonacci retracement levels where it can be seen that the Dollar Index has breached the important .618 level of support but has yet to close below it.

It may be a good idea to exercise some patience prior to initiating short positions at this price level until further development. It is always a good idea, we believe, to avoid selling support or buying resistance.

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

Jeff Majer
Diego Pilar
CB&S Division
MF Global Inc.

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

Gold and Crude

2009-09-08T11:37:00.003-05:00


Click charts to enlarge

The above charts are daily charts of December Gold and October Crude Oil. Both are trading considerably higher on the day as we are preparing this blog at 10:30 AM Chicago time (CDT); Tuesday Sept. 8. There has been a breakout in the gold as illustrated here which occurred during last week’s trading. Using what we believe to be a standard measuring technique using the base of the triangle added to the point of breakout the potential price objective comes to approximately $1105.

The Crude Oil chart shows that it is attempting to break over a near term down trend line but with a significant Fibonacci resistance at approximately 7195.

Many are asking what has gotten in to these markets today. We have seen a few factors that are providing influence. First is that the US Dollar is trading sharply lower. This typically has been supportive to commodities such as precious metals and crude oil.

We have heard that The UN is now talking about a new global currency. Also the G20 communique stated that monetary and fiscal stimulus would continue and this may help maintain at least the perception of a less risky environment therefore reducing the safe haven status of the US Dollar.

Goldman Sachs forecasts $85.00 per barrel crude oil and also, we understand that that a popular oil ETF is due to liquidate its crude assets which may be reallocating investment capital into gold. There has also been some chatter of Chinese interest in accumulating gold as an inflationary hedge.

We believe this will make for interesting price action particularly over the next few days. We are not suggesting here to either buy or sell either commodity but certainly noting that there could well be opportunities for trading ideas being presented.

As always this is something we discuss more in depth with our clients but we encourage any questions, comments or better still, any answers directed to us at:

jmajer@mfglobal.com

312 261-7380

800 321-5810

Jeff Majer

Diego Pilar

CB&S Division

MF Global Inc.

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

Sugar - Powdered!!

2009-09-04T15:58:00.003-05:00

click chart to enlarge

In this week’s edition of our Trade Focus which was prepared on Thursday during the course of the business and trading day, we had this to say about the sugar market:

Sugar (Oct.) – Sugar may be poised for a correction of some consequence if not having placed its top. Tomorrow’s close will be important as to whether it signals a weekly reversal. For now we believe that the more aggressive well margined trader can initiate short positions at a price level of 2350 or above with suggested stop protection of intraday penetration of 2490. The retrenchment resistance levels based on the monthly data are approx.: 1889 (hit); 2402m (hit); 2915. The next series above is approx.: 2663; 3414; 4166.

Unfortunately only our email mail list of clients and subscribers were able to receive this prior to trading today (Friday Sept. 4). There would have been a chance for those who agreed with the idea and plan to have initiated the short entry in the October Sugar prior to its more than 250 collapse (at today’s lows) and 150 lower daily close. Every point in the Sugar market is worth $11.20. If a short entry was initiated at 2350 and the close was 2160 that would be 190 points x 11.20 which equals $2,128 per contract.

We do not like to sound like we deserve a pat on the back or leave a wrong impression of any sort by bringing this instance to attention. As they say, even a blind squirrel finds an acorn every now and then.

What this may illustrate, though, is that if you wait to see the Trade Focus on the website which often is a full day after our sneak preview via email there may be something that would spark an interest and cause an action that could be missed by waiting.

Now let’s figure some other possibilities using the Fibonacci retracement levels of support. If a position was short from a price of today’s 2160 close basis the October contract and the first fib level of ~1976 was attained, the increase in value would be $2,060.80 (2160 – 1976 = 184 x 11.20). At the next fib retracement level of support, the .500 at the price of ~1817, it would be $3,841.60. Finally at the preferred .618 golden ratio at ~1658 it would be $5,622.40 per contract.

Of course a trader may initiate a short entry at today’s 2160 close of the October sugar and see the suggested stop protection elected at 2490 which would mean $3,696 could be suffered as a loss. This suggested stop protection, however, was originally based on a short entry from 2350 as in the Trade Focus and likely would not be chosen with an entry from the lower entry point of 2160 used in this example. A better risk to reward is typically much more preferred.

If you don’t want to miss something like this and believe it would be of benefit for you to receive the weekly Trade Focus the day it’s written we’ll be happy to add you to the email list. All you need to do is ask.

jmajer@mfglobal.com

312 261-5810
800 321-5810

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

Dow Jones Correction

2009-09-02T15:45:00.005-05:00


Click charts to enlarge

The charts above are daily and weekly bar charts of the cash Dow Jones Industrials with 50 day moving average and fib retracement overlays on the daily and 50 week moving average on the weekly.

We believe that particularly the daily chart illustrates at least a hint of the beginning of a corrective phase. How much of a correction of course is the $64,000 question. But we saw last Friday a new high for this move with a lower close. That is a reversal even though it wasn’t a sweeping reversal event. And there has been some follow through to the downside too which helps add to the correction theory.

The pattern constructed since the day of the high we feel also fits the theory. There has been a one wave down, a pause and another more accelerated down move made. Today’s action has been another pause in the action with a tight range from slightly higher on the day to slightly lower. Tomorrow may be helpful in providing additional clues.

There are also the monthly unemployment figures due Friday morning. With employment such a large factor in the sustainability of economic recovery, the report will most likely be heavily weighted.

Where do we go from here? We see there has been a trend line broken and that the first set of Fibonacci retracements has been penetrated. There is a possibility that a Head and Shoulders top formation could be in the making but we will have to wait and see. Currently the 50 day moving average is approx. 8953 and the next series of noted retracement levels of support are approx.: 9041; 8859; 8677.

The weekly chart displays what could be construed as a Head and Shoulders neckline. It would appear to converge with the uptrend line displayed at approximately 8760. The 50 week moving average as shown on the chart is approximately 8557.

If the market is indeed correcting, the retracement values given along with the moving averages or a return to the neckline all mentioned above, could be price levels the market is seeking.

It may be early in the game but as we all know, it’s the early bird that gets the worm. It may not be unreasonable to expect any or some of these levels to be reached if in fact the market is in corrective mode.

And then again let’s not forget that there is a segment of the trading population that believes that what is about to unfold is more than just a mere correction.

We believe we can help assemble strategies for this and other market opportunities. Let us know if we can be of assistance to you.

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.

Daily S&P 500

2009-09-01T16:30:00.003-05:00

The chart is a daily cash S&P 500. We believe it shows that near term price levels of importance to the bulls have begun to be breached. It appears the next key level is the August 17 low 97851 basis the cash. Underneath that there will be the .500 Fibonacci at approx. 95440 and the .618 at approx. 93436.

There are some soothsayers saying that the end of the “BEAR MARKET RALLY” is upon us. We always urge market participants to be prepared for anything. We reiterate that to everyone now. Be prepared ahead of time for not just what can go wrong (stop protection for example) but also a plan and strategy to take advantage of the next opportunity whichever direction it may take.

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

Crude Oil Top structure

2009-08-31T14:53:00.004-05:00

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

2009-08-27T17:11:00.004-05:00

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

2009-08-26T15:23:00.000-05:00

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

2009-08-21T11:52:00.002-05:00

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

2009-08-17T16:01:00.008-05:00

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

2009-08-17T11:38:00.005-05:00

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

2009-08-12T10:55:00.001-05:00

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

2009-08-10T11:33:00.006-05:00

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

2009-08-05T16:08:00.001-05:00

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

2009-08-03T17:25:00.008-05:00

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.

Success Principle

2009-07-31T12:21:00.011-05:00

Over the years we have been asked what it takes to be successful in trading. Unfortunately there is no one way or panacea but we believe this is a beneficial description to start:

We believe that there are four key attributes to success. Those are Desire, Determination, Discipline and Patience. We refer to them as the 3DP principle. This principle applies to virtually all aspects of life; business, trading or other. It is interesting and important to realize, at least in our experience, that each one in progression is a bit more difficult. It all starts with having an aspiration which is strong enough within to create a passion. This will lead then to the second attribute of determination.

Determination fits into our principle as a firmness of purpose or resolve. Determination can also be described as being Ready, Willing and Able to do what it takes to achieve the aspiration.

It gets harder from here because there will need to be in place a plan of attack and also a state of mind in place or ingrained that will be followed and adhered to faithfully without detour to obtain that which is desired. This is the discipline we speak of. It is a regimen that has been designed and is to be followed as well as it being a behavior intended to maintain self control. Once a plan of action is in place it is to be obeyed. To stray is to go backwards and defeat the purpose. We like to use the example of a dieter who strays from a diet regimen. The goal of losing the intended poundage is put further from the dieter’s grasp each time and for how ever long the cheating lasts.

The fourth attribute of patience can be even more difficult but is necessary to allow the fruits of all the labor to be given a chance to work. This portion of the success equation requires an ability to suppress the anxiousness that can arise whether things are going well or if they have gone off course. In any business and perhaps in particular the business of trading, discipline will provide a method of handling situations that do not conform to what was expected or intended. In trading this could be stop protection and risk reduction. We have seen it too frequently where the plan is altered because of outside influences. There are many emotions that need to be suppressed in order to allow a plan to proceed. This is what the patience aspect is about. The plan is in place; let it work. If it isn’t broke don’t fix it. The more you mess with something the greater the chance of breaking it.

Eventually, if the business concept is in fact sound, confidence will grow not only in the plan but in the execution of the plan which will smooth the process toward successful attainment of the desired goal.

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