|
Trader's Tip
Trading legends Jesse Livermore, W.D. Gann and Richard Wyckoff all had one key, common element in their very successful trading methods: Hard work.
- Jim Wyckoff | |
Quotes & Charts
Quote Search:
Market Specific Links:
Indices/Minis
Grains
Currencies/Forex
Financials
Food/Fiber/Softs
Metals
Energy
Meats
|
Special Message from Our Author
In today's global economy, markets drive and influence each other. Still, many traders are only analyzing a single market at a time and ignoring related markets. VantagePoint Trading Software uses intermarket analysis to predict market trends for over 600 world markets with nearly 80%* accuracy. As an added bonus traders can also receive a
complimentary Forex EBook, along with their complimentary market forecast provided by VantagePoint. Go here
now to receive both. | |
Today's Featured Article
Most traders of all markets are still keeping a keen eye on two "outside markets:" the value of the U.S. dollar and crude oil. Any bigger price moves in crude oil futures and the U.S. dollar index are likely to have a significant price impact on most other markets.
The September U.S. dollar index futures in mid-June hit a fresh 3.5-month high. The dollar index has been grinding in a sideways pattern for several weeks. While the greenback bulls have gained a bit of fresh upside technical momentum recently, there is much more heavy lifting to do to get the U.S. currency in a technical posture that would strongly suggest a major market low is in place and that prices can sustain a longer-term uptrend. One early, yet significant, technical clue that the dollar index has embarked upon a sustainable longer-term price uptrend would be a solid push above longer-term technical resistance at the 75.00 level.
"Any sustained rally in the U.S. dollar will almost certainly be a major bearish downward-driving force working against the crude oil futures market," said Darrell Jobman, Editor-in-Chief of www.TradingEducation.com.
The weekly continuation chart for nearby U.S. dollar index futures shows that prices are still in a longer-term downtrend. However, just recently prices jabbed above one downtrend line. Also, prices are moving up close to solid longer-term technical resistance at the 75.00 level. A solid push above 75.00 would be a significantly bullish longer-term technical development.
If you cannot view the U.S. Dollar Index chart, go here.
| |
Crude Oil's Longer-Term Price Uptrend Still Firmly in Place
The overall price trend in the crude oil futures market remains solidly up. That's the main factor the big speculators and index fund traders of oil are focusing upon. The old trading adage "the trend is your friend" is a simple, yet remarkably reliable trading tool. However, there are two potentially bearish forces that could derail the bullish crude oil train: Solid strength in the U.S. dollar versus the other major currencies and the U.S. legislators' drumbeat of reining in the big speculators in the commodity markets. For more information on Crude Oil and other markets visit
www.TraderQuotes.com.
If you cannot view the Crude Oil chart, go here.
Watch for More Rules Changes to Crude Oil Trading
Much of the credit for the moonshot in crude oil futures prices this year has been given to the weakening value of the U.S. dollar versus the other major world currencies. Speculators and hedgers worldwide have used their stronger currencies to purchase crude oil futures contracts on the New York Mercantile Exchange, which are priced in U.S. dollars. This trading play has created a vortex whereby higher crude oil prices beget a weaker dollar begets more buying of crude oil futures contracts. Importantly, U.S. government legislators and market regulators have taken keen notice of this phenomenon.
Importantly, the Commodity Futures Trading Commission, the U.S. futures market watchdog, requested British regulators set limits on speculative trading of front-month West Texas Intermediate crude oil futures contracts on ICE Futures Europe. ICE complied last week. The CFTC has been under heavy pressure from the U.S. Congress to reduce speculation in the commodity markets, mainly due to record-high gasoline prices at the pump. The U.K.'s Financial Services Authority has agreed to notify the CFTC when speculative position levels reach similar levels to those set by the U.S. Nymex.
The ICE news comes amid ongoing calls from U.S. Congress members for less speculation in commodity futures markets. As long as crude oil prices are trading above $120.00 a barrel and pump gasoline prices are at $4.00 a gallon, the government is not going to ease up on finding a scapegoat for high energy prices. For more information on Crude Oil and other markets visit www.TraderQuotes.com.
Importantly, significant rules changes for trading markets are almost always bearish. Also, remember that crude oil and the value of the U.S. dollar are very important "outside markets" which many other markets are tracking very closely. A market top in crude oil and a market bottom in the U.S. dollar index would have major implications for most other futures markets.
It's "Weather Market" Time for the Grain Futures
Corn: Prices the past three weeks have made an explosive upside move to new all-time highs. The weekly chart shows a major upside "breakout" from the previous sideways trading range at higher price levels. While I do think there is more on the upside for corn in the coming weeks--as we enter the key growing month of July for most of the U.S. corn crop--the big spike higher the past three weeks did push the market into an overbought condition. The market has seen a big downside "correction" that will likely become a buying opportunity soon.
If you cannot view the Corn chart,
go here.
| |
|
A Word from a Fast Break Sponsor
Advertise With Us
Daily Grain Plan 2-Week Trial
With over 30 years experience in ag commodities, Roach Ag has developed a program that is successful, predictable, simple and stress reducing. Learn how they approach the markets with a 2-week complimentary trial of John Roach's highly successful Daily Grain Plan. Speculate like a hedger with time proven agricultural strategies to take advantage of the commodity boom.
Sign up for your 2-Week Complimentary Trial today! | |
|
Soybeans:
The weekly continuation chart for nearby soybean futures shows an accelerating uptrend in place as prices recently hit a new all-time high. My bias is that soybeans will establish another fresh all-time high yet this summer--possibly much higher than the present all-time high. August is the most critical growing month for most U.S. soybeans. To learn more about Soybeans and how related markets affect prices visit
www.TraderTech.com. Given that the U.S. Corn Belt has already experienced a major weather market (heavy rains and flooding), the next two months are likely to see very high price volatility with the markets reacting to the latest weather forecasts for the Corn Belt.
If you cannot view the Soybeans chart,
go here.
There is nothing like a rip-roaring "weather market" in the grain futures to seriously challenge the two most important emotions a trader can experience: fear and greed. In the heat of a weather scare in grains, prices become extremely volatile and trader emotions run very high, as the latest weather forecasts can and do turn markets "on a dime."
Trading a full-blown weather market in the grains--and surviving to trade again another day--is a great experience for all traders. While there is some degree of a weather market scare in the grain futures nearly every year, the "full-blown" weather markets that are usually marked by severely dry weather conditions, and even drought, in the U.S. Corn Belt come around only once every several years.
Here are a few valuable lessons that a trader can learn by trading the grains during a weather market--lessons that can be applied to trading other markets during more volatile trading conditions.
--My experience in being involved with weather markets is that there is tremendous pressure on all traders to "follow the herd." Deviating from the consensus market opinion is not easy. However, it's the traders that can step up and sell into rallies or buy into dips that seem to have more success in trading weather markets in grains. In other words, doing some contrary thinking and trading can pay dividends in weather markets.
(I'll give you an actual example of how contrarian thinking and trading can be successful in the grains. The year was 1988, the last big drought year in the Midwest that saw corn and soybean prices skyrocket. It was a Friday in July that saw corn and bean prices trade sharply higher, based on ideas the hot and dry weather would continue in the Corn Belt. Then, after the close, the National Weather Service issued its 6-10 day forecast that, sure enough, called for more hot and dry weather for the Corn Belt. Bulls confidently headed home for the weekend. Even "local" traders on the Chicago Board of Trade floor went home long--something most never do, especially over a weekend.
Well, come Monday morning, the updated weather forecasts had changed a bit, but more importantly, trader psychology had changed immensely. The drought and resulting poor yields had all been factored into the market with prior price gains, culminating with Friday's big push higher. Corn and bean markets traded limit down on Monday and recorded very sharp losses for around three days in a row. To learn more about corn and how related markets affect prices visit
www.TraderTech.com.
I know of one trader who used contrary opinion thinking and bought put options on corn that Friday that prices were pushing higher. He made a good deal of money that next week.
--For bulls, it's important to remember that markets are the most bullish at the very top--it's downhill for prices from there. Recognizing the clues that suggest a top is in place in the grains, during a weather market, is especially difficult, as technical indicators can become less reliable. Thus, being content to catch a bigger part of a price trend should be the goal of the trader. Don't be disappointed if you did not capture all of a price move in grains in a weather market. Becoming greedy and trying to do just that will usually get a trader into serious trouble.
--Weather markets in grains many times provide a classic example of futures traders "factoring in" fundamental events well before they actually occur. For example, in the big drought year of 1988, the soybean crop was most damaged during the months of July and August. August is the most important growing month for soybeans. Yet, futures prices that year topped out the third week in June.
| |
About the Author
Jim Wyckoff is the senior market analyst with www.TradingEducation.com
. The site is dedicated to helping traders at all levels learn their craft better so they can improve their odds for trading success. The site focuses on current market conditions as well as a variety of educational materials that will give traders of stocks, currencies, futures and options sound background information about trading and important trading concepts. TradingEducation.com has assembled an outstanding team of analysts, including Jim, who have years of experience in trading or covering markets of all types.
Jim has spent nearly 25 years involved with the stock, financial and commodity markets. He was a financial journalist with what is now the Dow Jones Newswires service for many years, including stints as a reporter on the rough-and-tumble commodity futures trading floors in Chicago and New York. As a journalist, he has covered every futures market traded in the U.S., at one time or another. Not long after he began his career in financial/commodity market journalism, Jim began studying technical analysis. By studying chart patterns and other technical indicators, Jim realized the playing field could be leveled between the "professional insiders" in the markets, and traders/analysts like
himself. As a proponent of Intermarket Analysis, VantagePoint Intermarket Analysis Software is one of the tools in Jim's tool-box. | |
Special Message from Our Author
In today's global economy, markets drive and influence each other. Still, many traders are only analyzing a single market at a time and ignoring related markets. VantagePoint Trading Software uses intermarket analysis to predict market trends for over 600 world markets with nearly 80%* accuracy. As an added bonus traders can also receive a
complimentary Forex EBook, along with their complimentary market forecast provided by VantagePoint. Go here now to receive both. | |
|
