October 14, 2008

REVERSAL DATES FOR THE WEEK of October 13th - 17th

MONDAY -- Cattle, Hogs, Cotton, Australian Dollar
TUESDAY -- Soybeans, Gold, Bonds, Notes
WEDNESDAY -- Silver, J-Yen
THURSDAY -- Soy bean oil
FRIDAY -- Euro Currency, Swiss Franc

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

1-DECEMBER T-BONDS - Short from 120-02 -- The T-bonds traded below the (C) pivot low and confirmed the long-term TR pattern. The reverse/forward count projects the (B) reversal date due on October 14 where the market may experience a short-term bounce or consolidation before resuming the downward trend, as it approaches the major reversal date (A) due on October 22. The reaction line suggests an initial target of 112-19. -- Hold the short position with the protective stop at 117-210.

2-DECEMBER COFFEE - Long from 116.26 -- Typically a market that reaches or trades below the lower warning line before the projected reversal date will reverse and move towards the centerline. This offers a short-term buying opportunity, as the market could trade back to the centerline, currently at 125.00. -- Hold the long position with the protective stop at 109.25.

3-DECEMBER SILVER - Short from $10.83 -- Large range days are typically followed by narrow range days and inside days. Friday's collapse confirmed the bearish reaction swing and triggered the sell signal. October 15 is the next projected reversal date, so we may see the Silver trade sideways to slightly higher into October 15 and set up another selling opportunity. In the meantime, the target is $9.50. -- Hold the short position with the protective stop at $10.80.    

4-NOVEMBER CRUDE OIL -- Crude fell $1.00 short of reaching the $76.00 target price, before Monday's bounce. October 16 remains the next reversal date, so we could see the Crude consolidate for a couple of days before testing the lows once again.

5-DECEMBER EUROCURRENCY - Short from 1.3445 stop -- Hold the short position with a protective stop at 1.3810.     

6-DECEMBER BRITISH POUND - Short from 1.7120 -- Hold the short with a protective stop at 1.7405.

7-DECEMBER HOGS -- The market gapped higher at the open and quickly traded above the (C) pivot high to confirm the bullish TR pattern. The pattern has also formed on the strong side of the centerline and the SSTO is showing bullish divergence. -- Buy the Hogs at 6290 stop, with a protective stop at 5875.

8-DECEMBER CATTLE -- Cattle posted the lowest close of the downward trend on Friday. Monday's projected reversal date began with a price surge and a trade above Friday's high, confirming the reversal pattern. - Buy the Cattle at 9400 stop, with protective stop at 9125.

9-DECEMBER GOLD -- Friday's failed breakout triggered heavy selling that continued to pressure the Gold on Monday. Gold traded below Friday's low ($829.00), but did find support where two centerlines converge at the $825.00 level. Tuesday's reversal date will prove to be significant if the market takes out the October 3rd low of $822.50 and begins to recover. At Monday's close, the pattern is inconclusive, but we could be looking at a bullish profile week. Tuesday's price action should provide more information.

*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.