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Novice traders look for perfection whereas experienced traders look for performance.
- Joe Kellogg |
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Today's Featured Article
September Dow Jones
- In the September 3rd issue I said the Dow Jones futures had traded down to the 20-day SMA, leading into Friday's (September 4th) projected reversal date. Due to the price action leading into the reversal date, if any rebound were to happen, it will most likely begin on Friday. A corrective rebound did indeed happen and the Dow Jones futures are currently trading over 150 points higher. Over the past three weeks, a potential bearish TR pattern (A high probability Trend Reversal pattern formed by a specific sequence of swing points) has been forming. The market is currently in the final stages of forming and confirming the TR pattern. - Sell the Dow Jones futures at 9397 stop
with a stop loss at 9535.
September Japanese Yen - Long from 1.0710 - In the last issue I said that Thursday's high of 1.0877 fell short of the 1.0900 target objective. But, more importantly, the new high on Thursday's projected reversal date had set the market up for a short-term correction or pullback before the market could resume the prevailing upward trend. I recommended raising the stop loss to 1.0775 to protect the open trade gains.
As suggested, the Yen did pull back and closed lower on Thursday and Friday. The two consecutive lower closes have set up a new bullish swing trade pattern I call a reaction swing. A trade above 1.0877 will confirm the new swing pattern and trigger a buy signal with a new reversal date on September 18 and an initial target objective of 1.1119. - Buy the Japanese yen at 1.0880 stop with a stop loss under the pivot low.
October Crude Oil
- OPEC members will meet in Vienna on Wednesday, so far, it sounds like there will be no changes to the official production levels. On the other hand, Crude oil was trading over $3 higher for most of Tuesday's trading session as investors move into tangible commodities due to concern about the weakening dollar and the looming prospect of inflation. Chart wise, Crude oil is trading in a large wedge formation and building energy for a breakout. Although, the Crude has not tipped its hand as to the next direction, I will let the chart patterns and market structure show me the way. I'll continue to look for short-term swing trades, but the real move is still waiting to begin.
For Full Chart go here
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September Canadian Dollar - Short from 91.55 -The short position was closed at the 91.75 for a small loss. The market traded higher into the September 7 reversal date, but so far there is now new pattern.
December Hogs - Long from 47.62 - Last price @ 48.97 -Hog futures climbed to a new four-week high, as wholesale ham prices rebounded, raising speculation that U.S. pork exports may increase. Hold the long position and move the stop loss to 47.10.
For Full Chart, go here
November Soybeans - Short from $9.79 - last price @ $ 9.36 ½ - Soybeans reached a new low ($9.10 ½) one day before the projected reversal date and shy of the target objective. The cycle is still bearish into the September 9 reversal date so I'll hold the short position one more day and lower the stop loss to $9.44.
December Gold - It seems like everyone is talking Gold after the biggest price spike in six months. There's no shortage of rationales offered by investment strategists and economists for the price jump. They vary from increased purchases by China's central bank to inflation fears, but I didn't see any of these reasons before the rally, therefore it is all after-the-fact justifications for what's occurred.
However, because of "very lax" fiscal and monetary policies there is an increasing demand for the metal that is tied to monetary value in times of uncertainty. Another factor in the increased demand is the rumor that the Chinese government is allegedly trying to diversify away from its massive U.S. dollar reserves by buying physical gold, but from its own production, not on the world market.
Gold is typically bought as an alternative to the dollar as a safe-haven by investors seeking to preserve capital. So its rise often correlates to a drop in the value of the American currency.
Technically, Gold breeched the $1,000 level early in the daily session, but failed to hold the gains and closed below $1,000. It seems the rally may have lost some momentum and needs a slight correction to build energy for a run at the Feb 20th high of $1,015. The next reversal date is due on 9/14. A lower trade into this date should set up a bullish swing pattern.
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REVERSAL DATES FOR THE WEEK of August 10 - 14, 2009
Monday --
Tuesday --
Wednesday -- Soybeans, Canadian Dollar
Thursday -- Bean oil, Silver, Coffee
Friday -- RBOB gas, Dow Jones, Eurocurrency, Australian dollar, Cocoa
*Due to the volatility of the markets, all trade recommendations are subject to change without notice.
Swing trading and 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. |
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About the Author
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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. |
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