February 10, 2009

REVERSAL DATES FOR THE WEEK of February 9th - 13th

MONDAY -- Cattle, Soybean Oil, Heating Oil, Gold, S&P, Canadian Dollar, Euro Currency
TUESDAY -- Wheat, Copper
WEDNESDAY -- Hogs
THURSDAY -- Corn
FRIDAY --

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

1-APRIL GOLD - Long from $$917.50 - The long position was closed at $895.00.

2-MARCH COCOA - Long from 2842 - TC - 2838 - The market confirmed a bullish TC pattern under the centerline. This is the first reaction swing after the longer-term A-B-C continuation pattern was confirmed on January 20. An A-B-C continuation pattern typically appears in the center of a longer-term trend, suggesting the Cocoa could reach the sloping reaction line at 3180 before the cycle ends on March 2. -- Hold the long position with the protective stop at 2682.

3-MARCH JAPANESE YEN - Short from 110.10 - TC - 109.37 - The Yen turned lower at the upper reaction line and accelerated lower after breaking the 20-day MA. The next reversal date falls on February 16, with a projected target price at 105.00. -- Hold the short position with a protective stop at 112.80.

4-MARCH SILVER - Long from $12.69 - TC - $12.86 - The bullish TC has confirmed a continuation of the prevailing trend. This pattern would suggest a quick move to the upper reaction line. -- Hold the Silver with a protective stop at $12.29 and a target at $13.35.

5-APRIL CATTLE - Long from 8702 - TC - 8775 - The bullish reaction swing formed right at the downward sloping reaction line and just below the 20-day MA. The reaction line and 20-day MA had been acting as resistance, as the market gained energy for the breakout. After confirming the TR pattern and breaching the trigger price, the market is now poised to move towards the junction of the centerline target and the February 16th reversal date. -- Hold the long position with the protective stop at 8527 and a target price at 9140.

6-MARCH TREASURY BONDS - T-Bonds completed the bearish reaction cycle, in textbook fashion, when it reached the sloping reaction line target of 126-00, one day after the projected reversal date, fulfilling the Price and Time projections made two weeks earlier. Currently, T-Bonds are hovering on the strong side of the centerline market, suggesting possible consolidation or a short-term correction. So I will stand aside and wait for a new signal pattern to unfold before making a new recommendation.

7-MARCH SOYBEANS - From the January 9 pivot high to February 3rd pivot low, Soybeans formed a possible A-B-C continuation pattern inside the long-term bullish reaction cycle. Since this type of continuation pattern typically marks the center of the long-term cycle, this pattern could suggest another bullish leg in the Soybeans. The first resistance level will come into play at $11.00 followed by $12.14, where the sloping reaction line coincides with the major reversal date on March 10. -- Buy March Soybeans at $9.91 or lower, with a protective stop at $9.45.

8-MARCH SOYBEAN OIL - Bean oil dipped into the 60% buy window and quickly turned higher on February 3rd and 4th, fulfilling the corrective requirements for a longer-term A-B-C continuation pattern. This would portend the next leg of the bullish cycle, suggesting a move towards the 4050 target price on or before the major reversal date of March 5. -- Buy at 3325 or lower, with a protective stop at 3120.

9-MARCH WHEAT - Wheat dipped into the 60% buy window on February, posting at low of $5.38 3/4, one day after the projected reversal date. The market quickly reversed and rallied over 34 cents in the following three trading sessions, forming a possible longer-term A-B-C continuation pattern. If confirmed, the continuation pattern projects the next leg of the bullish cycle to reach $7.00 on or before next major reversal date on March 6. Buy Wheat at $5.80 stop, with a protective stop at $5.38.

*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.