End Of 2009 Trade Focus Commentary

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

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

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


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


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

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

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

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

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


Good trading to all

Jeff
CB&S

Sugar Magnolia Blossoms Sweeter

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

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

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

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

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


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

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

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


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

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

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

Our best wishes

Jeff
CB&S

T-Bonds Meet Near Term Trade Focus Target

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

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

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

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

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

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


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

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

Good Trading to all

Jeff

CB&S

Gold And Silver Retrace

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

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

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

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

Good trading to all

Jeff
CB&S

Trade Focus Gold and Bonds

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

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

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

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

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


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


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


Happy Holidays to everyone.

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

Jeff
CB&S

New Longs Or Shorts For S&P 500

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

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

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

From 12/17/09

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

We're always open and receptive to comments and observation

Good Trading To All

Jeff

CB&S

Silver Update. How To Enter A Short

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

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

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

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

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

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


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

We apologize for any inconvenience this may cause.

Good trading to all!!


Jeff

CB&S

U.S. Dollar Phase III

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

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

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

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

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

Good Trading to all

Jeff
CB&S

Price Objectives: Dollar and Euro Futures

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

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

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

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

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

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

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

Good Trading

Jeff
CB&S

The Dow Crash Comparison

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

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

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

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

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

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

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

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

We can help you with this.

Good trading

Jeff
CB&S

U.S. Dollar Phase II

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

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

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

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

Good trading

Jeff
CB&S

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

Determinig A Short Entry Silver Trade

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

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

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

Written in December 3 Trade Focus:

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

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

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


Good trading all

Jeff
CB&S

What Is A Market And Trend Made Simple

NO CHART TODAY

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

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

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

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

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

US Dollar Stage One

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

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

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

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

Good trading to all

Jeff
CB&S

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

A Measured Move

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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

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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.