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Analyze the risk before ever looking at return. Successful money management should never be an afterthought it should be the first thought.
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Today's Featured Article
Metals: Gold & Silver
The December "Z" Gold finished $21.90 higher to $1,039.70 per ounce, and the December "Z" Silver finished 76 cents higher to $17.295 per ounce today.
Rumors and technical buying pushed the metals higher in today's session. The story, yet to be confirmed and currently denied by several countries including Saudi Arabia, suggested that Gulf states were considering a basket of currencies for the oil trade. This would undercut the U.S. Dollar, and indeed helped push the Dollar lower and the metals higher here today.
GC:
We wrote yesterday, "Today's close projects up to the $1,024.00 level, where a close above $1,024.00 will further project up to the $1,053.00 zone." We all but got this today! And we still expect to see another push higher for Gold up to the $1,053.00 level. Today's strong rally suggests that the market could have further room to run for those still holding the long side of the trade. However, we would not be surprised to see a pullback near $1,025.00 before doing so, where another buying opportunity may present itself. Only a close below $1,020.00 will void the near-term bullish forces.
SI:
We wrote yesterday, "Look for Silver to push up to the $16.750 level from here." Today's trade blew through that upside objective as the market extended up over $17.250 today! Similar to Gold, we would not be surprised to see a pullback near $16.900 where another buying opportunity may present itself. Only a close below $16.500 will void the near-term bullish forces.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the Gold chart,
go here.
Debt: 10-Year Note & Eurodollar
The December "Z" 10-Year Note settled 2 ticks lower to 119-04, and the December "Z" Eurodollar settled 1/2 point lower, finishing to 99.63 1/2 today.
The higher Stock market helped push Treasury prices lower today as investors moved into stocks. Conversely, today's auction of the 3-Year Notes helped to push prices off their lows mid-session as the government sold $39 billion of the Notes. The key here is: when this demand starts to wane it will ultimately force the Treasury Department to increase yields to attract bidders, sending prices lower.
TY: Currently the 10-Year Note remains bullish, targeting 120-14. Technically a close above 119-22 will confirm the bullish posture for the market, projecting up to 120-14. Only a close below 118-26 will void the bullish formation.
ED: The Eurodollar corrected a few points lower today, right on the 99.62 support level. This market continues to remain bullish, signaling a push up to 99.78. Only a close below 99.60 will void this formation.
New Trade Recommendations: -
Open Trade Recommendations:
09/28/09: (Futures) Long the EDZ9 from 99.64, Stop- 99.60, Target- TBD. | {Move the protective stop up to 99.60, reducing the risk to 4 points.}
09/28/09: (Futures) Long the TYZ9 from 118-15, Stop- 118-24, Target- 120-14. | {Move the protective stop up to 118-24, locking in 9 ticks.}
If you cannot view the 10-Year Note chart, go here. |
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Stocks: S&P 500 & Dow Jones Industrial Average
The December "Z" S&P 500 settled 12.20 points higher to 1,048.60, and the December "Z" Dow Jones settled 108 points higher to 9,680 today.
Australia became the first major country to raise interest rates today, signaling that policymakers see the country's economy strong enough to withstand higher borrowing costs, ultimately giving an early sign that other economies are strengthening. Looking forward, the market will be focused on Thursday's comments from Fed Chairmen Ben Bernanke regarding the Fed's balance sheet, which could include a discussion of exit strategies.
SP:
Today's close above 1,045.00 is again bullish for the S&P, projecting up to 1,060.00. A close above 1,060.00 further projects up to the 1,080.00 level. However, a close below 1,034.00 will void the near-term bullish forces, projecting down to 1,008.00 where a close below this level takes the market back to 1,000.00.
DJ: As for the Dow, a close above 9,680 is again bullish, projecting up to 9,750. Only a close below 9,537 will void the near-term bullish forces, projecting down to 9,408.
New Trade Recommendations:
10/06/09: (Futures) Buy or sell a breakout. Buy the ESZ9 at 1,060.00 on a stop; Sell the ESZ9 at 1,030.00 on a stop. | {Should one of these orders fill, cancel the other one (OCO). Additionally, we will not hold the trade overnight unless it settles above our buy stop or below our sell stop.}
Open Trade Recommendations: -
 If you cannot view the S&P 500 chart, go here.
Currencies: Euro Currency & Australian Dollar & Canadian Dollar
The December "Z" Euro Currency settled 49 points higher to $1.4709, the December "Z" Australian Dollar settled 99 points higher to $0.8840, and the December "Z" Canadian Dollar settled 86 points higher to $0.9436 today.
The Reserve Bank of Australia surprised the markets today by raising their interest rate from 3.00 percent to 3.25 percent. They are now the first G-20 member to raise rates since the global crisis began. Over in the United Kingdom their Office of National Statistics reported that manufacturing output was down 1.9 percent in August which was less than expected. However, up in Canada, building permits were up 7.2 percent in August which was better than expected.
EC: The Euro remains bullish but warns for a pullback to the $1.4630 zone. Sustained closes above $1.4630 will lead to another rally in the Euro back up to the last high of $1.4844. Only a close below $1.4550 will void the near-term bullish formation.
AD:
Buy the rumor, sell the fact? This could be the action tomorrow (10/07/09) as this market is now vulnerable to a correction back to the $0.8600 level. Technically, the market is still in a bullish formation projecting up to $0.9020, but a correction is due. We will look to get back on the long side near $0.8600. Only a close below $0.8520 will void the bullish forces.
CD: Similar to the Aussie above, the Canadian Dollar remains bullish targeting $0.9600. However, it is warning for a pullback near $0.9300 before doing so. Only a close below $0.9220 will void the near-term bullish forces.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the Euro chart,
go here.
Energy: Crude Oil
The December "Z" Crude Oil closed $0.53 higher to $71.14 per barrel today.
Today's lower U.S. Dollar led to additional buying in the Crude sector today. Additionally, the broad commodity and stock market rally led to the stronger Crude trade with the upbeat tone in the market.
CL:
As we have continued to write, $72.10 is the key area for Crude to close above. This should lead to another push up to $74.00 where we need to see a close above this level to really kick in the bulls, projecting up to $80.00. So far, the market has been reluctant to do so. Nevertheless, a close above $72.10 is bullish for the market. Only a close below $70.00 will void the near-term bullish forces.
New Trade Recommendations:
10/06/09: (Futures) Buy the CLZ9 at $72.50 on a stop; should this order be filled, do not risk a close* below $72.00 initially. | {Ideally this market will settle above our entry once filled. However, should the market be unable to do so, we will only risk a close above $72.00 on the first day of execution. From there, depending on market conditions, our risk level may adjust down to 70.50. Keep in mind this market has increased its volatility and this trade should only be taken by the more aggressive trader.
For more trade recommendations, sign up for our G-Force Market Report.}
Open Trade Recommendations: -
 If you cannot view the Crude Oil chart,
go here. |
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Softs: Sugar & Cocoa & Coffee
The March "H" Sugar settled 19 points lower to 24.00 cents per pound, the December "Z" Cocoa settled $38 lower to $3,211 per metric ton today, and the December "Z" Coffee settled 415 points higher to 133.60 cents per pound.
Sugar has seen harvest delay after harvest delay, continuing to prop the price of the market higher. Typically, Brazil receives rains early on, leaving the crop to dry out with only scattered showers. However, this year excessive rain continues to fall. Down on the Ivory Coast, production of Cocoa continues to remain uncertain, further pressuring the market higher although the tail end of the 2008-09 season saw a boost in shipments (an indication that the new crop may be strong.) Coffee's international marketing year kicks off in October. Early statistics indicate that world supplies could fall to the tightest level yet against consumption.
SB: Sugar's uptrend continues to remain strong despite the early indications of a correction. Technically, only a close below 23.00 will lead to a near-term correction to 22.40. However, another close above 25.00 is again bullish for the market, projecting up to 26.00.
CC: Look for Cocoa to work back to the $3,115 level where another buying opportunity may present itself. Only a close below $3,050 will void the near-term bullish forces.
KC:
Today's action in Coffee works this market back to the bull camp for us. Technically, the market may correct back to 131.00 where we would look to be a buyer again. Only a close below 129.00 will void the near-term bullish forces.
New Trade Recommendations:
10/06/09: (Futures) Buy the SBH10 at 23.70 or better; should this order be filled, do not risk a close* below 23.00.
Open Trade Recommendations: -
 If you cannot view the Sugar chart,
go here.
Livestock: Live Cattle & Lean Hogs
The December "Z" Live Cattle finished 35 points lower to 83.550 cents per pound, and the December "Z" Lean Hogs finished 152 1/2 points higher lower to 49.12 1/2 cents per pound today.
LC:
Cattle have now moved down to our downside target level of 83.80. Technically, the market remains bearish but a close above 84.00 will reverse the downward trend, projecting up to 85.00 initially. Only a close below 83.50 will void the projection.
LH:
Hogs remain vulnerable to another push down to 47.00 where support should come back into this market. Only a close above 50.00 will void the bearish forces, projecting up to 53.00. As for our spread listed below, our risk level is near 15.00, or a positive 50 points on the spread from our entry price of 15.50. (There is no way to place a protective stop on a spread so this is something that has to be monitored consistently.
Sign up for our G-Force Market Report to learn more.) As for our objective on the spread, it is now 3.00-4.00 points, which would be represented on the chart below at 12.50-11.50.
New Trade Recommendations:
10/06/09: (Futures) Buy the LCZ9 at 84.00 on a stop; should this order be filled, do not risk a close* below 83.50 initially.
Open Trade Recommendations:
08/20/09: (Futures Spread) Long the LHG10 and Short the LHM10 from 15.50 (sell side). | {Margin = $350. We will be looking for this spread to narrow around 3.00 to 4.00 points over the next three weeks. Our risk on the trade is 15.00 on the chart below.}
 To view the Lean Hogs chart, go here.
Grains: Corn & Soybeans & Wheat
The December "Z" Corn closed 16 3/4 cents higher, finishing to $3.58 1/4 per bushel, the November "X" Soybeans were 25 cents higher, finishing to $9.10 per bushel, and the December "Z" Wheat was 17 1/2 cents higher, finishing to $4.60 1/4 per bushel today.
The Grain rally today was fueled by fund-buying, with funds buying an estimated 17,000 Corn contracts. Additional support came from the weak U.S. Dollar and a surprise interest rate hike by Australia encouraging more risk taking. On the weather front, current forecasts are calling for cold temperatures that could cause frost damage on a crop that isn't quite mature along the northern Corn Belt.
C: We have continued to write that our key level in Corn was $3.42 which projects up to $3.60. Well, we got that today! From here, Corn will have a tough time staying higher if it cannot close above $3.68 on Friday. A close above this level (on Friday) is again bullish for the market projecting up to $3.81. However, sustained closes this week under $3.68 will lead to a correction back near the $3.30 level.
S:
Soybeans hit our downside target of $8.87 last Friday but have been unable to close below $8.80 again which would signal another leg lower. Today's close trips this market back to the bull camp "near-term" projecting up to $9.41 if the market is able to close above $9.15. However, failure for the market to close above $9.15 will lead to further selling back down to the $8.87 zone.
W: Despite today's rally, which knocked us out of our second short position, the market remains weak. Technically, only a close above $4.75 will begin to turn this market back to the bull camp, projecting up to $4.90.
New Trade Recommendations:
10/06/09: (Futures) Sell the WZ9 at $4.52 on a stop; should this order be filled, do not risk a close* above $4.70.
09/29/09: (Futures) Sell the CZ9 at $3.27 on a stop; should this order be filled, do not risk a close above $3.30 initially. | {Unfilled, remove this working order.}
Open Trade Recommendations:
09/28/09: (Futures) Short the WZ9 from $4.44, Stop- $4.59, Target- $4.25. | {Exited at $4.59.}
07/13/09: (Futures Spread) Long the CZ9 and Short the CZ10 from 49 cents (to the sell side). | {Margin = $270. The margin is low on this spread, but keep in mind these are futures contracts, where every penny = $50. To adequately give this spread some room to work, we will risk around 10-15 cents.}
 If you cannot view the Wheat chart, go here.
*A question we are often asked is when to use a "hard" stop and a stop only on the "close" (a.k.a. "stop close only") - On the date a recommendation is filled, we will use a stop close only. After the following day, we will transition this stop close only order into to a hard stop. This type of trade can result in a larger loss than the intended stop if the market closes above or below our risk level on the date the order is filled, and may not be suitable for all traders. We encourage all of our clients to speak with their broker and determine the appropriate risk level that is suitable for their trading strategy on each recommendation that is published.
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About the Author
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Mr. Giles is the president of G-Force Trading, LLC. He was previously part of the Global Wealth Management Group at Morgan Stanley and received his degree in finance from the University of Colorado at Boulder. G-Force Trading, LLC provides a wide range of services and trading tools while maintaining the specialization of a smaller firm, offering full-service accounts, managed futures accounts, and even discounted trading to self-directed traders. The firm publishes the
G-Force Market Report
three times a week, covering over 18 commodities and financial futures markets. Mr. Giles works with clients of all sizes to help them reduce their risk and practice good money management. G-Force Trading, LLC is registered with the Commodity Futures Trading Commissions ("CFTC") as an introducing broker and is a member of the National Futures Association ("NFA") and clears trades through MF Global Inc. For more information, please visit www.GForceTrading.com.
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Special Message from Our Author
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Discover a world of possibilities with the G-Force Market Report
The G-Force Market Report takes a comprehensive look at over 18 commodities and financial futures markets, including the Metals, Softs, Meats, Stocks, Currencies, Grains, and more. The publication is timely distributed Monday, Tuesday, and Thursday afternoons, and contains technical and fundamental analysis of the markets, along with detailed charts and specific trade recommendations for both long- and short-term traders.
Sign up for a COMPLIMENTARY trial today!
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