Reversal Or Routine Tuesday

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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 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

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

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 ...........

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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

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

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

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

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