Want to find new areas for your trading and market insights? Sign up and get your COMPLIMENTARY comprehensive CD-ROM covering the fundamentals of futures trading.

Bonds

30 year/10 year bonds have become very oversold and we should see at least some sort of recovery bounce.

Cocoa

Cocoa still looks a bit heavy to me here and should see further work on the downside this week.

Coffee

Coffee staged a powerful rally on Friday and I am looking for some solid continuation this week. The charts continue to improve here.

Hogs

July hogs have an interesting looking daily chart and I would not be surprised by seeing some strength there.

Crude Oil

The gasoline (rbon7) after last weeks nice little break, looks like it could very well stage mild recovery.

The Garrity Report -- experienced analysis of the futures and futures options markets.
Sign up today and receive 2 weeks COMPLIMENTARY!

Cotton

Cotton has been trading in a range of about 4200 and 5800 over the last 3 years. If Cotton breaks out of this range we might have a large move to the upside. I don't see much to stop it from going to 8500 the high's back in October of 2003. It looks like there has been a 1-2-3 bottom put in. This is a bullish chart pattern. The price of just about everything goes up over time. It's simple Economics. It's Inflation. It looks like it could be Cotton's turn. I would look at buying some Call options. Here are just a couple of Options to give you an idea of the cost of an out of the money Call Option in Cotton. The December Cotton 62/calls are $600. The March Cotton 68/calls are $600. Buying Call Options has unlimited potential with limited risk.

Grains

Who wants to buy Put options in the Grains right now? Answer: not many speculators. If you look back over the last decade or so, the Grains usually break in price between the summer and fall: Harvest Pressure. We are seeing some of the highest prices in over a decade, so if they do break in price this could be the year you might make a lot of money. The summer is very choppy because of the weather, so in my opinion it is very hard to predict short term price action during the summer. If you buy Put Options with plenty of time the odds are in your favor that the Grain prices will break going into the fall. I just picked a few Put Options in Wheat, Corn, and Soybeans with time. The March Wheat 460/put is $650. The March Corn 320/put is $575. The March Soybean 720/put is $700. Buying Put Options has limited risk with unlimited potential. You could also sell Call premium. The March out of the money Call Options have a lot of value. This is a strategy that offers limited gain and potentially unlimited risk.

Stock Market

This has been a great ride! I get so excited when I look at my Stock Portfolio. I never would have dreamed my IRA could go up that much in 1 year. This is what a lot of people are saying right now. What goes up eventually will go down. A falling market breaks a lot faster than it rallies. For example: take a look at what happened in late February. If the Stock market breaks how do I hedge my portfolio? I can't tell you the perfect hedge. In my opinion, for every 50K you should sell 1 mini Dow Jones. Let's crunch some numbers: Since 2001 the Dow Jones has moved from about 7180 to 13705. It has almost doubled in value. A 50% retracement is 10442. If you sell 1 mini Dow and it breaks to the 50% level, it is a profit of about 16K. Over the last year the Dow Jones has moved from 10730 to 13705. A 50% retracement would be 12220. If you sell 1 mini Dow Jones and it breaks to the 50% level, it is a profit of about $7,500. In all trading timing is everything. I won't even mention the T word.

Interest Rates

Over the last decade the 30-Year Bond has had a nice rally -- A good bull chart pattern. Also over the last decade or so between the months of June to October the 30-Year Bond appears to rally more times than it breaks. Generally if the Stock market breaks the Bond market will rally. People pull some money out of the Stock market and put it into the Bond market as a safe haven. For example: take a look again at late February. As the Stock market hit its lows of the year the Bond market was putting in its highs of the year. The December Bond 112/call is about $515. What about the September 10/Year Note 106/call for only $700?? It's like trading a Future without the worry of getting stopped out. This is an at-the-money Call Option.

Sugar

This has been the Bear of the year. When is it going to head back higher? Maybe it isn't. I looked at the chart over the last 10 years. I see the average price has been around 800. This doesn't include the huge move in November 05 to August 06. Does this market deserve to be closer to the highs back in 2006 of about 1900 or should we expect Sugar to retreat back to the average price of 800? Who knows?? This is why I am going to recommend a Strangle. A Strangle is buying an out of the money Call Option and buying an out of the money Put option. Let's look at March Sugar, the current future price is 992. The 1100/call with the 900/put would be a cost and risk of about $800. I believe that would be plenty of time for this market to move. Since you are on both sides of the market you don't care which way it goes. You just want the market to move at least in 200 points in one direction or the other. It is possible to make money on both options, but not probable. If the 1900 price from last year is a fair price for this day and age for Sugar than 1400 would be a 50% retracement. The 1100/call would be in the money 300 points and you would be up about $2500 per Strangle.