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| 5 Hot Picks by Derek Gilroy of Trendphonic Futures | |
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Derek Gilroy has been a member of the Chicago Board of Trade since 1997 and is a senior trader at Trendphonic Futures. Prior to that, Mr. Gilroy started his career working in the Grain and Financial pits on the trading floor of the Chicago Board of Trade in 1994. From October 1997 until January 2007 Mr. Gilroy functioned as a local trader on the floor of the Exchange trading the 10-year cash basis. Currently Mr. Gilroy serves and President of Trendphonic Futures and Head Trader for their Managed Accounts.
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Friday's USDA ending stocks report came mostly inline with what traders expected. There was an increase to world ending stocks of about 4 million tons. Coupled with record wheat production already, wheat sold off 7 cents Friday and is back to the low of its range at 7.15. There is some support at the 7.15 - 7.10 range, but if it breaks through that it could return to levels not seen since last November.
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Recently the dollar has surged against the euro as the street seemed to finally acknowledge that the suffering economy is not merely a US problem but, in fact, a world wide epidemic. Last week we saw the futures/spot basis trading at par. The early morning open of the market saw the futures/spot basis trend lower to -75 basis points, indicating that speculators are looking for a continued resurgence in the dollar against the euro. This week should see the market test the 138 39 level in the spot market, looking for a longer-term target of the '07 low of 129 13. However, a negative impact on the dollar could be the result of the stock markets steep sell off. If
the stock market does realize even more significant losses, look for the spot market to test the 145 00 level.
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30-Year Bond Future (DEC)
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The low last week came in at 117 055, the bonds have rallied almost 4 handles. With the credit crunch again gaining steam look for the move up to continue if the stocks stay under pressure. If the stocks can rebound the bonds need to trade below 118 17 to confirm a move down.
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With an early sell off last week the S&P rebounded the next 3 days. Three straight days higher looked like the stocks had rebounded nicely from Mondays sell-off. We closed Friday at 1257 25. But this morning the credit problems resurfaced sending stocks much lower. Look for the S&P to rebound much of this week but to continue under pressure.
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Hurricane Ike seemed to weaken before it hit land and not cause as much damage. With crude now trading below 100, we believe that to be new resistance. Coupled with the news coming out of the stock market (i.e. Lehman) investors are looking for more liquidity assets and a flight to quality. We see continued selling pressure and would be shorting in between 99 and 100.
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Tom Zabroske has been in the futures markets since 1978. Tom has lectured nationally and internationally on market cycles as well as other subjects, and has been a featured speaker at many futures conferences over the years. He writes a market commentary Monday thru Thursday concerning market cycles titled "Circuli Dominare," which is available through Walsh Publications Inc. Tom is currently the Senior Trader/Analyst as well as Director of Research for Walsh Trading Inc.