April 14, 2009

REVERSAL DATES FOR THE WEEK of April 13th - 17th

MONDAY -- Corn, Gold, Canada Dollar, British Pound
TUESDAY -- Wheat, Bean Oil, heating Oil, Euro Currency, J-Yen
WEDNESDAY -- Bonds, S&P, Dow
THURSDAY --
FRIDAY -- Soybeans

CURRENT RECOMMENDED POSITION

MARKETS TO WATCH:

1-MAY CORN - Long from $3.98 - The long position was closed at $3.85.
 
2-MAY SOYBEANS - Long from $9.40 - TC - $10.21 1/2 - Beans closed higher on Monday, as they continue to follow the long-term bullish reaction cycle. The market should continue to move towards the initial target line at $10.70, as it approaches the next reversal date due on April 17th. The major reversal date and the projected end of the cycle remains April 29th. Continue to hold the long position and move the protective stop to $9.96.

3-MAY SOYBEAN MEAL - Long from $289.50 - TC - $313.10 - Two closes above the downward sloping median line is an added confirmation of the bullish cycle presently in control of the Soy meal. The market should continue to climb towards the reaction line target of $350.00, as it approaches the April 21st reversal date. -- Hold the long position and move the stop to $305.50.

4-MAY SOYBEAN OIL - Long from 3390 - TC - 3607 - Tuesday's minor -- from the (B) pivot low) could mark the beginning of a short-term correction, but it will most likely be a small correction before the market resumes the current upward trend, as it moves toward the major reversal date due on April 23. -- Hold the long position and keep the protective stop at 3440.

5-JUNE JAPANESE YEN - Short from 10070 - TC - 9998 - Hold the short position and keep the protective stop at 10080.

6-JUNE GOLD - Gold appears to be forming a longer-term zigzag continuation pattern. This pattern typically appears in the center of a longer-term trend and, if confirmed, could set the stage for the next bullish leg in Gold. However, the market rallied and closed higher on Monday's reversal date, indicating the current correction may not be over. If this newly formed reaction swing is confirmed by a trade below $882.00, Gold could drop to the lower reaction line support at $850.00 as it approaches the next reversal date on April 22.

7-JUNE T-BONDS - Short from 126-19 - TC - 127-02 - Bonds failed to trade above the March 18th high and reversed inside the sell window and formed a bearish TR pattern. This price action has also formed a potential long-term A-B-C (or zigzag) continuation pattern, which could mark the center of a long-term bearish cycle. -- Hold the short position with a protective stop at 128-03.

8-JUNE BRITISH POUND - Monday's lower close offers a short-term buying opportunity inside the longer-term bullish cycle. -- Buy the BP at 1.4965 stop, with a protective stop at 1.4445. Use 1.5250 as the initial target price.

9-JUNE EUROCURRENCY - The market posted a low of 1.3120 on Thursday, just two days before the April 14th reversal date, before trading sharply higher on Monday. This price action has formed a potential bullish zigzag continuation pattern at the midpoint of the longer-term reaction cycle. Once confirmed, this continuation pattern will portend a move to the centerline target, currently at 1.4500. The market closed sharply higher on Monday, but could experience a slight pullback on Tuesday' reversal date. This would offer a buying opportunity. I will have an update on Tuesday's worksheet.

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*Due to the volatility of the markets, all trade recommendations are subject to change without notice.

How to use the 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.

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.