|
Trader's Tip
Quotes & Charts
Quote Search:
Market Specific Links:
Indices/Minis
Grains
Currencies/Forex
Financials
Food/Fiber/Softs
Metals
Energy
Meats
|
Special Message from Our Author
Today's Featured Article
The volatility in the commodity and financial markets has made trading futures riskier than ever. Not so long ago, a person could trade a contract of SOYBEANS and not be faced with the prospect of a 50-70 cent range on a daily basis. Similarly, the MINI S&P, CURRENCIES, and ENERGIES all have become much riskier to trade for the average investor.
With this in mind, we have shifted our focus to the MINI FUTURE contracts. With current markets conditions, it is difficult and perhaps unwise to trade a full size contract with less than $15,000, $20,000 in your trading account. Utilizing the MINI FUTURE contracts can help to minimize exposure greatly, while allowing you to still participate in the futures markets. While some markets, such as the CURRENCIES and CRUDE OIL have mini contracts that are one half the size of the full contract; others such as the GRAINS, SILVER and STOCK INDICES are one-fifth the size. While there is still a substantial risk of loss with any of these MINI FUTURE contracts, perhaps one can sleep better with
the decreased exposure.
|
|
|
A Word from a Fast Break Sponsor
Advertise With Us
Ninja - Zen-Fire - Phoenix...A Winning Combination!
Phoenix Futures is proud to offer NinjaTrader powered by Zen-Fire. Considered by many industry professionals to be one of the most advanced trading platforms and most reliable data feeds available:
NinjaTrader offers advanced trade management, fast order execution, full charting, and automated trading capabilities. Zen-Fire gives you the advantages of speed, reliability, and unfiltered tick data.
Learn More Here!
|
|
|
Commodity Outlook
The U.S. DOLLAR
Yesterday the U.S. Dollar fell to its lowest level since 2008 as positive manufacturing reports out of the U.S., the Euro Zone, and China helped raise optimism in the global economic recovery. The rally in the global markets put some pressure on the Dollar as the Euro Currency and British Pound strengthened. The Euro and Pound are now beginning to be viewed as undervalued currencies in a better position to move higher in an improved macro economic outlook. The Euro Zone did see a set back last night as the April unemployment rate jumped to 9.2%, although the unemployment rate is seen as a lagging indicator.
Look for the U.S. Dollar to remain under pressure because of the huge debt load the U.S. will be issuing to recovery from the prolonged recession. With the U.S. monthly unemployment figures due out Friday, expect the U.S. Dollar to drift down lower this week and then test the September low of 7691 by the end of the month unless there is some obvious intervention to hold the Dollar from falling any more. Chinese officials that met with FED Secretary Geitner gave some support to the U.S. Dollar by suggesting the Dollar will look to remain as the world's reserve currency. Obviously China has a lot of stake in the Dollar so it would only benefit the Chinese more to try to keep the Dollar
higher as they try to move into more commodities such as gold, silver, soybeans, and other commodities. Consider minor moves up in the U.S. Dollar as a chance to enter short in this market.
GOLD Market
In the month of May, the Gold market surged roughly $100 higher. Because of this big move in a month's time, one could expect to see some consolidation in the Gold market over the next few sessions. With recent strong manufacturing activity being reported around the world and the recent surge in energy prices, Gold prices are being lifted by the reflation sentiment that has been surfacing. The sharp slide in the U.S. Dollar also has helped Gold price gain strength.
On Friday, the U.S. monthly unemployment figures are due out and expected to remain weak. Gold might be in a tough position to move higher ahead of an expected deflationary number. However, the unemployment number is seen as a lagging indicator, and gold bugs should be able to discard this number relatively quickly. With pending home sales just showing their best gain (+6.7%) in 7.5 years Gold investors are going to be looking at inflationary numbers very closely over the next few weeks to see what is going to put Gold over the $1,000 mark again. Consider entering long August Gold if the market closes above 990.00, and risking the trade down to 970.00. You should consider trading the
Mini Gold contract with a smaller account. You can also look to enter long the August Gold market on a dip back to 971.00 (possibly after the unemployment report) and risk that trade below 965.00.
The Chinese government is clearly trying to improve its status as the fifth largest holder of Gold reserves, and will likely continue to add to its Gold reserves that can only be supportive to the Gold contract in the long run. It may take a stock market correction to get the Gold above the $1,000 magic mark, and that might not happen until the Stock Index option expiration trade on June 19th. In any case look for continued long entries in the Gold market, with a possible move to $1,400 by the end of the year.
|
|
STOCK MARKET
Yesterday the stock market showed a very impressive move to the upside in the face of the GM bankruptcy filing, as better than expected manufacturing reports from China, the Euro Zone, and the U.S. helped the stocks maintain their gains. The hope for better economic times throughout the world helped the bull camp break through some resistance levels on its way up yesterday. This morning's stronger than expected new homes sales helped this bullish sentiment as it showed a +6.7% increase in April which was the biggest gain in over seven years. To temper that bullish report was a weaker than expected unemployment report out of the Euro Zone which showed unemployment jumping to 9.2% and
that will remind traders that the U.S. unemployment report is due out on Friday and still expected to show over 500,000 job losses and that might be enough for investors to take profits ahead of the weekend.
So far surging Energy prices, Grain prices, and Metal prices have not been bringing down Stock prices, with some investors seeing the new strength in commodities as a sign that the world economy is coming out of the recent recession and a reason for going long the stock market. However, new incoming inflationary numbers might be the reason the commodity prices keep surging higher, and the reason the stock market starts to slide. Consider going long August Mini S&P 850 puts for 20 points as the market is come to be overbought and ready for a summer correction, perhaps after the option expiration trade on June 19th where a lot of put options will expire worthless after this big spring
market rally.
SOYBEANS
The July SOYBEAN'S had an impressive move yesterday, closing over 34 cents higher for the day. This market continues to climb, a move that starting back on April 29th brought the July Beans from a low of 978.75 to a close of 1025. Two days later on Friday May 1st the July Beans closed at 1091. That was a move of over a dollar in two days, but the Beans were not through yet. By the close on Monday the 4th, the July Beans had posted a high of 1127. The low for the day of 1085 still holds. Looking back at the move through the entire month of May it seems like after the initial sprint out of the gate and over the $10 level, the market settled into a nicely paced climb.
While the Beans are a bit over bought now, the trend remains Bullish. In floor action, there were rumors of China canceling tenders yesterday. This will usually help the market break a little bit, and then of course make buying a bit more attractive. The early call this morning is for the Beans to open 3 to 5 cents lower. A little profit taking may create a nice buying opportunity. The bottom line seems to be the Weather. Both here and in China, but two very opposite problems that will have the same effect, higher prices. In China's major Soybean producing Province they have been experiencing Drought conditions, while in the Midwest here in the United States we have been seeing too much
rain.
The forecast now calls for more Rain today in the Northern Midwest, with rains likely in the Southern and Central Midwest on Wednesday. A new system is then expected over the weekend and into next week. The USDA Crop progress has plantings still behind schedule, with Soybeans planted as of Sunday at 66% compared with 67% last year, but 79% on average. Factors seem to point to a continuation of the Bullish trend here, watch for Support to come in around 1205, 1199 and then 1185. With the trend remaining up, look for tests of the 1230, 1260 and eventually the 1290 level in July.
|
|
About the Author
Bill Borkowski is a retail broker at Dorman Trading, LLC. A 12-year veteran of the futures markets, Bill has traveled around the country doing the seminar circuits. Bill works with clients of all kinds, offering support to online as well as full service traders. |
|
Special Message from Our Author
|
