November 11, 2008

REVERSAL DATES FOR THE WEEK of November 10-14, 2008

MONDAY --
TUESDAY --
WEDNESDAY -- Silver, Gold, Copper
THURSDAY -- Cocoa, Coffee
FRIDAY -- Soybeans, Euro currency, Crude Oil, Heating Oil, Bonds, S&P, Dow, Canadian Dollar, British Pound

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

1-DECEMBER SILVER - Long from $9.80 - TC - $10.20 - A second reaction swing has formed above the 20-day SMA, but needs a trade above $10.80 to confirm the pattern and trigger a second buy signal. This could occur on or before the next reversal date, due on Wednesday, November 12th and push the market to the initial target of $11.50. -- Hold the long position and move the protective stop to $10.01.

2-DECEMBER GOLD - Long from $743.50 - TC - $747.50 - I don't look for a long-term rally in the gold, but I do expect a test of the recent high of $778.30, posted on October 30. Since the next projected reversal date is due on Wednesday, November 12th, a rally into this reversal date should be used as an opportunity to cover the long position. -- Hold the long position with a protective stop at $723.50.    

3-DECEMBER EUROCURRENCY - Long from 1.3030 - TC - 1.2720 - The EC has not shown the strong follow-through buying that typically follows a TR pattern buy signal. Therefore, I recommend tightening the stops to 1.2620.

4-DECEMBER JAPANESE YEN - The late October surge reached the upper reaction line target before falling back to the 20-day SMA. The market has since posted two consecutive higher closes and formed a potential bearish TR pattern. A trade below 9950 would confirm the last segment of the TR pattern and trigger a major sell. -- Sell the Japanese yen at 9941 stop.

5-DECEMBER COFFEE - The market closed inside the buy window and confirmed the (C) pivot high and a bullish TR pattern. -- Buy the Coffee at 116.50 stop, with a protective stop at 109.10.

6-DECEMBER CATTLE - The seven-day rally began the day after the October 24th reversal date and peaked on the November 8th reversal date. The market followed with two consecutive lower closes and formed a potential bullish reaction swing. -- Buy the Cattle at 9440 stop, with a protective at 9010.    

7-DECEMBER T-BONDS - The low close (113-04) on October 31, completed the 5-wave continuation pattern and set up the T-Bonds for the next bullish leg of the long-term reaction cycle that began on June 30. This type of 5-wave continuation pattern typically appears in the center on the long-term cycle and projects a long-term move 125-00. However, the short-term swing pattern suggests a quick move to the centerline target of 120-00 could occur before the next reversal date, due on November 14.

*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.