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Analyze the risk before ever looking at return. Successful money management should never be an afterthought it should be the first thought.
- McLean D. Giles |
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Today's Featured Article
Metals: Gold & Silver
The December "Z" Gold finished $2.30 higher to $946.00 per ounce, and the September "U" Silver finished 11.5 cents higher to $14.310 per ounce today.
The metals sector continues to be quietly traded in its typical late summer slump ahead of the Labor Day Holiday. The U.S. Dollar was slightly lower on the day, helping support Gold early. But all-in-all it has been a quiet trade.
GC:
For Gold to begin another trending pattern, we will need to see either a close above $955.50, which projects up towards $970.00, or a close below $933.50, which projects down to the $920.00 zone.
SI: As for Silver, today's close was again above $14.100 which is bullish for the metal, projecting up towards $14.750. Only a close below $13.800 will void this pattern, kicking in a bearish reversal down to $13.400.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the Gold Chart,
go here.
Debt: 10-Year Note & Eurodollar
The September "U" 10-Year Note settled 10 ticks higher to 117-28, and the September "U" Eurodollar settled 1/4 point higher, finishing to 99.61 3/4 today.
The government auctioned off $42 billion in 2-Year Treasury Notes and $25 billion in 1-Year Bills. As usual, the markets will be eyeing the extent to which foreign central banks are willing to step up and buy this week's auctions and continue financing the massive U.S. budget deficit.
TY:
The market is warning for another break higher but should suffer a sideways trade through this week. Technically, a close above 117-28 is bullish projecting up to 118-25, whereas a close below 116-08 is bearish for the market projecting back down to 115-00. We will look for another day or two of sideways movement without closing below 116-08 to set up another buying opportunity.
ED:
After hitting our upside objective yesterday in the Eurodollar, it could be nearing a top. From a technical perspective, we will need to see the market close below 99.55 which will trigger a near-term bearish reversal down to 99.40. Should the market continue to stay above 99.60 and close above 99.65 next week, it will project a higher trade up to 99.80.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the 10-Year Note Chart,
go here.
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Stocks: S&P 500 & Dow Jones Industrial Average
The September "U" S&P 500 settled 1.60 points higher to 1,026.10, and the September "U" Dow Jones settled 30 points higher to 9,523 today.
The Conference Board's Consumer Confidence index rose to 54.1 this month from an upwardly revised 47.4 in July which was above the 47.5 reading analysts expected. Keep in mind the index is still below 90 which is considered the minimum level associated with a healthy economy. Additionally, stocks saw a boost from Barack Obama's reappointment of Ben Bernanke as Federal Reserve chairman.
SP:
The S&P remains bullish and should work up to the 1,041.00 level. That said, the market could suffer a minor selloff back to the 1,005.00 level. Should the market work back to this level, it will kick in another buying opportunity. Only a close below 999.00 is needed to void the bullish forces mid-term, pushing this market back to a bearish stance.
DJ:
As for the Dow, the market could suffer a minor selloff back to the 9,345 level. Should the market work back to this level, it will kick in another buying opportunity. Only a close below 9,200 is needed to void the bullish forces mid-term, pushing this market back to a bearish stance.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the S&P 500 Chart,
go here.
Currencies: Euro Currency & Australian Dollar & Canadian Dollar
The September "U" Euro Currency settled 20 points higher to $1.4308, the September "U" Australian Dollar settled 21 points lower to $0.8349, and the September "U" Canadian Dollar settled 66 points lower to $0.9217 today.
An official from the Bank of Canada expressed concern today that the economy could suffer if the Canadian Dollar continued to remain strong. Over in the United Kingdom, the British Bankers' Association reported that there were 38,181 home loan approvals in July, the most since February of 2008.
EC: Look for the Euro to work down to $1.4280. A close below this level is bearish and projects down to $1.4225 where a close below this level kicks in a mid-term bearish forecast down to $1.4050. Only a close above $1.4334 will void the bearish sentiment and project up to the $1.4500 zone.
AD:
A close above $0.8385 is again bullish for this market, projecting up towards $0.8500. However, a close below $0.8300 will void the near-term bullish forces, projecting down to $0.8150.
CD: The Canadian Dollar kicked in our sell signal right in line with what we projected yesterday (08/24/09). From here, a close below $0.9157 will kick in the mid-term bearish forecast projecting down to $0.9000. Only a close above $0.9245 will void the near-term bearish forecast.
New Trade Recommendations: -
Open Trade Recommendations:
08/24/09: (Futures) Short the CDU9 from $0.9225, Stop- $0.9245, Target- TBD.
 If you cannot view the Canadian Dollar Chart,
go here.
Energy: Crude Oil
The October "V" Crude Oil closed $2.32 lower to $72.05 per barrel today.
After briefly touching the $75.00 mark just after the U.S. Consumer Confidence numbers were released showing a better-than-expected reading, Crude fell off a precipice. Possibly a buy the rumor, sell the fact type of trade today which is also ahead of Wednesday's (08/26/09) oil inventory data.
CL: The market closed below the $73.00 number we wrote about yesterday, moving this market into a bearish stance. Technically, we could see another round of selling into next week which could offer another buying opportunity near $70.00. However, a close below $69.50 will void any recovery and further project lower down to the $66.00 level.
New Trade Recommendations: -
Open Trade Recommendations: -
 If you cannot view the Crude Oil Chart, go here. |
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Softs: Sugar & Cocoa & Coffee
The October "V" Sugar settled 18 points higher to 21.92 cents per pound, the December "Z" Cocoa settled $72 higher to $3,008 per metric ton today, and the December "Z" Coffee settled 80 points lower to 121.40 cents per pound.
Sugar has been supported on the possibility that India will need to keep importing vast quantities of Sugar in 2009-10 to cover a domestic shortfall due to the failure of the monsoon to develop on a timely basis. China's crop may have suffered from too much rain and Pakistan is expected to need to import more Sugar to cover a domestic shortfall as well, all supporting the market. Conversely, weather in Brazil has turned more favorable, although some shower activity is in the forecast.
SB:
Overall the market remains in a bullish trend but the picture is beginning to turn. With all the bullish news in the market, the market is struggling to further its advancement. Technically, a close below 21.50 in near-term bearish for the market, projecting down to 20.50. However, a close above 22.60 is bullish for the market, projecting up to 24.00.
CC: Cocoa triggered our bullish projection today signaling a move up to $3,125 from here. Only a close below $2,875 will void this trend, kicking in a bearish projection down to $2,750.
KC:
As we commented last week, a close below 122.50 is bearish for the Coffee, projecting down to 118.00. Yesterday's trade has kicked this formation into play. Look for the market to work down the 118.00 level. Only a close above 126.50 will void the near-term bearish forces.
New Trade Recommendations:
08/24/09: (Futures) Sell the KCZ9 at 125.00 or better; should this order be filled, do not risk a close* above 126.50.
08/24/09: (Futures) Sell the SBV9 at 22.50 or better; should this order be filled, do not risk a close* above 22.60.
Open Trade Recommendations:
08/24/09: (Futures) Long the CCZ9 from $3,000, Stop- $2,870, Target- TBD.
 If you cannot view the Cocoa Chart,
go here.
Livestock: Live Cattle & Lean Hogs
The October "V" Live Cattle finished 5 points lower to 88.75 cents per pound, and the October "V" Lean Hogs finished 147 1/2 points higher to 48.30 cents per pound today.
LC:
The Cattle market continues to remain bearish. Technically, a close below 88.25 projects down to 87.00 where a close below this level will take the market down to 86.00. Only a close above 89.00 will void the near-term bearish formation.
LH: As we have been writing, "The market will need to close above 48.00 to project another bullish trade up to the 52.00 level." Well, this kicked in today. Look for the market to move up to the 52.00 level from here. Only a close below 46.00 will void the near-term bullish formation and trigger further selling to the 42.00 level.
New Trade Recommendations:
08/20/09: (Futures Spread) Buy the LHG10 and Sell the LHM10 for a difference of 15.00 or better (sell side). | {Margin = $350. We will be looking for this spread to narrow around 4.00 to 5.00 points over the next three weeks. Our risk on the trade is 2.00 points from the entry.}
Open Trade Recommendations: -
 If you cannot view the Lean Hogs Chart,
go here.
Grains: Corn & Soybeans & Wheat
The December "Z" Corn closed 8 3/4 cents lower, finishing to $3.26 3/4 per bushel, the November "X" Soybeans were 8 1/2 cents lower, finishing to 9.99 per bushel, and the December "Z" Wheat was 1/2 cent lower, finishing to $4.98 3/4 per bushel today.
Projections remain for a Corn crop near or above the record U.S. yield of 160.4 bushels per acre this year which set the bearish tone today. Additionally, there aren't any weather issues on the horizon to hinder the crop. Funds sold an estimated 7,000 contracts on Tuesday.
C: Today's lower trade is a little unnerving for any longs. However, the market will only kick in a bearish projection with a close below $3.25, and a stronger sell signal will kick in with a close below $3.14. Conversely, a close above $3.38 will confirm the bullish projection to $3.50.
S:
Look for beans to work back to the $9.80 level from here where another buying opportunity may present itself. We have outlined a seasonal spread trade that should begin to widen out into the Labor Day Holiday. This is a bullish spread that will benefit from a higher trade over the next month.
W: Our line in the sand remains $5.15 for the Wheat. A close above this level is bullish for the market, voiding the current bearish signals currently in place.
New Trade Recommendations:
08/24/09: (Futures) Buy the SX9 and Sell the SN10 for a difference of 11 cents to the sell side. | {Margin= $2,500. This trade benefits from a bullish trade and should begin to widen over the next month. Our risk on the trade is 15 cents from our entry.}
Open Trade Recommendations:
08/13/09: (Futures) Long the CZ9 from $3.15 1/2, Stop- $3.20, Target- $3.50. | {Move the protective stop up to $3.20, locking in 4.5 cents.}
07/13/09: (Futures Spread) Long the CZ9 and Short the CZ10 from 49 cents (to the sell side). | {Margin = $270. The margin is low on this spread, but keep in mind these are futures contracts, where every penny = $50. To adequately give this spread some room to work, we will risk around 10-15 cents.}
 If you cannot view the Corn Chart, go here.
*A question we are often asked is when to use a "hard" stop and a stop only on the "close."- On the date a recommendation is filled we will use a stop close only. After the following day we will transition this stop close only order into to a hard stop. This type of trade can result in a larger loss than the intended stop if the market closes above or below our risk level on the date the order is filled, and may not be suitable for all traders. We encourage all of our clients to speak with their broker and determine the appropriate risk level that is suitable for their trading strategy on each recommendation that is published.
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About the Author
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Mr. Giles is the president of G-Force Trading, LLC. He was previously part of the Global Wealth Management Group at Morgan Stanley and received his degree in finance from the University of Colorado at Boulder. G-Force Trading, LLC provides a wide range of services and trading tools while maintaining the specialization of a smaller firm, offering full-service accounts, managed futures accounts, and even discounted trading to self-directed traders. The firm publishes the G-Force Market Report
three times a week, covering over 18 commodities and financial futures markets. Mr. Giles works with clients of all sizes to help them reduce their risk and practice good money management. G-Force Trading, LLC is registered with the Commodity Futures Trading Commission ("CFTC") as an introducing broker and is a member of the National Futures Association ("NFA") and clears trades through MF Global Inc. For more information, please visit www.GForceTrading.com.
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Special Message from Our Author
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