Success is where time, price and pattern converge.

- Joe Kellogg

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July 10, 2007

September T-Notes - In the last issue (June 28th), I wrote, “Technically, I look for notes to work higher, possibly testing Gann resistance at 106-16.” But the market stalled at 106-01, as speculation mounted over the subprime sector and loan defaults grew; at least 20 subprime lenders have failed out of business, in recent months.

If you cannot view the September T-Notes chart, go here.

September Silver - Although gold appears to be turning bullish, I’m not yet convinced about silver. Look for a consolidation around the 20-day average, possibly forming a bull flag.

If you cannot view the September Silver chart, go here.

August Gold - I had thought this market would drop to $645.40, but that’s not likely now. Technically, gold is turning up and I think it’s time to buy. A steady to lower trade Tuesday should set it up.

If you cannot view the August Gold chart, go here.

September Euro Currency - Ding! Ding! Ding! We hit our upside target last week, as the EC climbed above 136.10. We’ll wait for a correction before re-entering the long side.

If you cannot view the September Euro Currency chart, go here.

September Yen - In the last issue I wrote, “My long term indicator, which has been down, is hinting of a turn.” It hasn’t yet turned, but I believe we’re close.

If you cannot view the September Yen chart, go here.

September Canadian Dollar - The Bank of Canada is set to meet Tuesday and will likely bump up their interest rate a 1/4 point to 4.5%, which is already factored into the market. Should the announcement be as expected, look for the CD to rally for about 30 minutes, then fall. The Canadian looks to be topping.

If you cannot view the September Canadian Dollar, go here.

September Coffee - Since hitting our upside target in early June, we’ve been waiting for a new entry signal, but the market has drifted lower and so we wait.

September Beans - I wonder with the cooler, wetter, weather forecasted, in the 6 to 10-day outlook, if the beans are too high? Perhaps a steady to higher opening Tuesday will set up a sell pattern.

If you cannot view the September Beans chart, go here.

September Wheat - Funds continue to support this market and with their large pockets, it’s hard to bet against them; still I believe wheat is over-valued and the chart pattern suggests a bear flag. A steady to higher trade Tuesday could set up a sell, possibly Wednesday.

If you cannot view the September Wheat chart, go here.

October Sugar - We’re forming a bull flag here. A steady to lower trade Tuesday could set up a possible buy for Wednesday.  

REVERSAL DATES FOR THE WEEK of July 9, 2007

MONDAY -- Dow, S&P, British Pound
TUESDAY -- Unleaded Gas, Australian Dollar, Swiss franc
WEDNESDAY -- Crude Oil, Silver, Euro Currency, Cotton
THURSDAY -- Coffee
FRIDAY -- Bonds

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

SEPTEMBER WHEAT -- The Wheat made three higher highs that ended with a key reversal pattern on June 29, followed by a three-day price collapse that resulted in a 76-cent drop in the September Wheat. After posting a low at $5.74, Wheat managed a weak rebound over the next two trading sessions. This price action has formed a bearish TR pattern that could mark the beginning of a bigger sell-off in the Wheat. -- Sell the Wheat at $5.75 stop, with a protective stop at $6.17.

AUGUST GOLD -- Monday’s strong performance pushed the Gold above the previous high and confirmed a bullish TR pattern. -- Buy the Gold at 663.50 stop, with a protective stop 652.00.

SEPTEMBER BRITISH POUND -- A new reaction swing is forming above the 20-day SMA. The market still has room to travel before reaching the center line target. -- Buy the BP at 2.0190 stop, with a protective stop at 2.0025.

*Due to the volatility of the markets, all trade recommendations are subject to change without notice.

How to use the Reversal Dates

Every good trading signal needs three key elements to be considered a successful signal. Time, Price and Pattern. When these three come together, great things can happen. If you can improve your timing or price entry, it can enhance any trading method. That is what the Reversal Dates can do for you. They will identify when the market should react, and at what price level the market needs to be for this to happen. They will even tell you what the market has to do to confirm the trade. The first thing I do is, identify Time.

TIME
The Reversal Date Indicator consists of three parts. The first is Time. This is identified by the projected Reversal date and will indicate which markets are ready to react and when the reaction should occur. The most common misconception about the Reversal dates is the idea that the market must reverse on every signal date, which is not true. Instead, The Reversal Date itself helps to identify the market's reaction. A high percentage of the time, the market will reverse the current trend, but not always. A smaller percentage of the time, the market will form a "continuation pattern," indicating the market will likely continue in the same direction as the prevailing trend. Often this will occur during a consolidation or after a very small correction.

PRICE
Once the Reversal date has been identified, the next thing to do is monitor the price. If the market is making a new high/low, or if it is trading inside a buy/sell window, then the second component of a trade signal is in place. You now have Time and Price working together. For most traders, that will be enough, but the Reversal Date Indicator takes it one step further.

PATTERN
After extensive research into price patterns, I have identified specific price patterns, which occur during reversal timing. These patterns can be used to confirm the market reversals or market continuations. When, and only when, these three components are all working together, will there be a trade signal generated.

Traders Market Views is a product of Traders Network and all statements herein reflect Traders Network's market research. Traders Network and/or its principals, brokers and employees may or may not have established positions in part or all of the markets herein mentioned. It is possible that some of those positions, if any, are in direct conflict with the market commentary herewith.

THE RISK OF LOSS IN TRADING COMMODITY CONTRACTS CAN BE SUBSTANTIAL. YOU SHOULD, THEREFORE, CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER OR OVER-COMPENSATED FOR THE IMPACT IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES.

Joseph Kellogg started in the commodity business as a commercial grain merchandiser and basis trader. He was one of the architects of the Farm Marketing Program (FMP). This marketing plan was designed for agricultural businesses to use with grain options in strategies that could not only hedge their cash crops, but also aid in their marketing. He hosted "Futures Talk," a commodity talk radio program that aired bi-weekly on a Los Angeles radio station. Joseph has also developed many option writing strategies, which can be used with the reversal point method.