Trade Focus update - Natural Gas

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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.

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

Emini S&P Trade Focus sneak peak

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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?

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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

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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

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.