December 9, 2008

REVERSAL DATES FOR THE WEEK of December 8th - 12th

MONDAY -- Corn, Beans, Crude, Bonds
TUESDAY --
WEDNESDAY -- Cattle, Heating Oil, Silver, Gold, Euro Currency
THURSDAY -- Wheat, Canadian Dollar
FRIDAY -- Soybean Oil, J-Yen, Coffee, Unleaded Gas

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

1-FEBRUARY GOLD - Short from $759.50 - The short position was closed at $760.00.

2-MARCH AUSTRALIAN DOLLAR - Long from 6571 - A long-term TR pattern has formed over the past few weeks, but the market did not trigger the buy signal until Monday. This could act as a springboard needed to confirm a trend shift and mark the beginning of the bullish reaction cycle. Hold the long position with a protective stop at 6221.

3-MARCH WHEAT - Short from $5.15 - Wheat broke support and plunged on heavy stop selling. -- Hold the short position and move the protective stop to $5.05.

4-MARCH COTTON - There is a bullish TR pattern building in the Cotton with the (C) pivot high at 4800. Soon after posting the high, the market pulled back and closed inside the 60% buy window and provided a lower trigger price. -- Buy the Cotton at 4475 stop, with a protective stop at 4125.

5-DECEMBER EUROCURRENCY - The EC is trading sharply higher on Monday, but still remains inside the consolidation that began in early October. Although the EC is trading near the high of the trading range, it is approaching the December 10th reversal date. A higher trade into the reversal date could set up a selling opportunity and a test of the recent low.

6-DECEMBER BRITISH POUND - After taking out the November 13th low (145.51) on December 4th, the British pound posted an inside day on Friday, followed by a higher close on Monday. This price action has formed a potential bearish reaction swing in the prevailing downward trend. A trade below the December 4th low (144.68) would confirm the reaction swing and trigger a drop to the lower reaction line target of 134.75. -- Sell the British pound at 144.60 stop, with a protective stop at 150.55

7-MARCH SOYBEANS - This market has been in a sustained downward trend over the past several weeks. Although one day does not change a trend, Monday's gap-n-go pattern occurred on a projected reversal date. That could prove significant.

*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.