REVERSAL DATES FOR THE WEEK of October 8, 2007
MONDAY -- Silver, Yen, Coffee
TUESDAY -- S&P, British Pound
WEDNESDAY -- Soymeal, Swiss Franc
THURSDAY -- Cattle, Soybeans, Bonds
FRIDAY -- Corn
CURRENT RECOMMENDED POSITION
MARKETS TO WATCH:
1-DECEMBER SILVER
-- I was looking for a buy signal in this market and didn’t get it. Instead, the swing pattern failed and triggered a sharp sell-off and the market closed 40 cents lower--but more importantly --the market closed below the previous three closes. This is a negative pattern and a strong indicator that the Silver has posted a temporary high. Typically, the sharp sell-off, after a failed swing pattern, is followed by a short-term two or three-day correction to form a reaction swing and a longer-term TR pattern. Once the correction is over, the market could move lower. A trade below 13.25 will confirm the TR pattern and set up a significant price move lower.
2-DECEMBER GOLD -- This market is looking a lot like the Silver market in the fact that the bullish swing pattern failed. The market had been showing signs of weakening when it began to move away from the center line early last week, but I thought the strength of the upward trend was enough to keep the momentum going...I was wrong. The market failed and closed below the low of the breakout bar and below the previous three closes. Last week, I recommended a sell at $740.00 or higher with protective stops at $756.00. The market reached a high of $750.70 on Friday, but closed lower on Monday.
3-NOVEMBER SOYBEANS -- The failed swing pattern triggered a sell signal on October 2, (see Reversal Tracker) and the market touched limit down and closed below the 20-day MA and the long-term centerline support. After large price moves, a market will typically retrace or have a few small range days. This is where the new swing patterns form and set up future sell patterns. The Soybeans are forming one such pattern right now. A trade below $9.31 triggered a sell signal and confirmed a major TR pattern.
4-DECEMBER SOYBEAN OIL -- Bean oil pushed to a new high 9/28, but failed due to lack of new buying. The market reversed and plummeted to a low of 38.03 on 10/2. The following two trading sessions posted two consecutive higher closes, forming a potential bearish reaction swing. The Bean oil is testing the 20-day MA, which will likely provide resistance. A reversal at this point will be very negative for the market and portend and major trend change. -- A break below 38.00 is needed to confirm the pattern
5-DECEMEBER C0RN -- The Reversal Tracker triggered a sell signal and identified the pattern from August to present as a possible 5-wave continuation. This implies more downside pressure and a test of the $3.24 1/2 low.
6-DECEMBER WHEAT -- Wheat has a one-day-counter-close and hidden reaction swing. Simply put, this means a trade below $8.92 will trigger a sell signal.
7-DECEMBER CRUDE OIL -- A weather scare propelled the Crude higher, where it closed inside a major sell window. If the market fails at this point and reverses lower, it will confirm a bearish TR pattern and a major sell signal.
8-DECEMBER TREASURY BONDS -- A (D) pivot formed when the market met solid support at the lower reaction line on 9/21. The subsequent rally extended peaked at 112-10 on the 10/2 reversal date. The T-Bonds also met resistance at the 20-day MA at the same time, but it was not until Friday’s Employment report was released that the market reversed and traded sharply lower…confirming the (E) pivot in the process. The (D) to (E) reaction swing is typically the center on the longer-term trend and suggests another bearish leg is in store for the T-Bonds. The next reversal date is due on 10/11 with the R line target at 108-00.
*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.
