Fast Break for Traders: The Week Ahead

Week of November 24, 2008

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5 Hot Picks by Derek Gilroy of Trendphonic Futures

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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S&P (Dec)

This week volume should be light with holidays and half-days most of this week. Unfortunately, we saw the S&P fall through support at 820 late last week. Until the market can close above 820, we see the indices grinding lower. Most indicators show that the S&P is oversold but we feel like the there is still some bad financial news out there which will pushes lower.

Bonds (Dec)

Extreme volatility and thin liquidity continue to rule the price discovery in the thirty-year bond futures market. The direct relationship between the price of the bond and the equity markets has never been more apparent than in this time of stock market crisis. The direction of the market, while there has been a bit of a correction from the highs, remains fixed to the success of the bailout program in effect as it relates to the stock market. For the week ahead, 123 00 in the bonds looks to be an excellent support level. We do not expect that level to be tested again until the downside of the market is explored, unless the equity markets continue to fall and make new lows.

Gold (Feb)

Gold has been able to find a bid as traders look for s flight to quality. Gold is up over $70 over the last two trading sessions. With the US Dollar down this morning, gold prices are at their highest levels in the five weeks. If gold can break above 850 we see continued buying coming into the market. Gold is still expected to trade very strong against both silver and crude oil.

Dollar (Dec)

The bailout of Citigroup by the federal government has sent the dollar lower today as fears resurface over the US financial markets. We did see the dollar trade above old resistance at 88.50 which we see as bullish. We are buyers of the dollar above these levels.

Beans (Jan)

Beans are currently trading at the bottom of six-week range. We saw the grain complex violate support late last week which is still weighing on the complex as a whole. If the JAN contract can hold 840, we would be looking to get long for a longer-term trade.

5 Hot Picks by Phil Flynn of Alaron

Phil is Vice President, Energy and General Market Analyst with Alaron Futures and Options and is one of the world's leading energy market analysts. His market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

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Oil

Oil has seen one of the biggest peaks to valley drops in history. Besides that fact, we have seen oil close below key support and we should go lower. Today oil got a bounce on the Citi Bailout, but use this bounce to short oil.

Corn

Corn is under considerable pressure due to the ethanol bust; lack of demand for oil is flowing to the lack of demand for corn. Farmers that planted corn in hopes to sell to ethanol producers will go unsold. Sell March Corn at 390 on a bounce.

Gold

Gold has been rebounding because of the credit crisis, and the value of the dollar weakening due to the credit crisis. Still, I think this run will fail. Sell February gold at $900 stop 4920.

Natural Gas

Natural Gas has been weak due to fears surrounding demand from idle factories. Still, the natural gas is still a heating fuel. Producers may be tempted to cut back if prices fall much further. Buy Jan natural gas at 650 stop 620.

Dow

Dow futures are getting a boost on the latest bailout, but the trend is lower and should be sold! Look to sell Dec Dow at 845 stop 850.

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Disclaimer: The Commodity Futures Trading Commission has asked us to also advise you that trading futures is not without risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders! Opinions expressed by Fast Break authors are not those of FutureSource.