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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 August "Q" Gold finished $15.20 lower to $921.00 per ounce, and the July "N" Silver finished 49.5 cents lower to $13.705 per ounce today.
The major reports to watch this week will be: existing-home sales on Tuesday, durable-goods orders and new-home sales on Wednesday, jobless claims and gross domestic product on Thursday, followed by personal income spending on Friday. Additionally, the two-day FOMC meeting will begin on Tuesday, ending on Wednesday afternoon.
GC:
We commented last week that the Gold market was consolidating on the daily chart, which was presenting itself as more bearish than bullish. Our bearish bias continues to remain the case as the market broke out under our $923.50 sell zone today (06/22/09). From here, a sustained trade under the $930.00 level will continue to be bearish for the market, projecting down to $904.50. Only a close above $930.00 will negate our bearish stance.
SI:
We have continued to write that the Silver market would trade down to the $13.750 level which we hit today (06/22/09)! From here, the market could see further pressure to the $13.500 level, and a close below this level will project down to $13.200. The market will only start to work back into the bull camp once it closes back above $14.300.
New Trade Recommendations: -
Open Trade Recommendations:
06/16/09: (Futures) Short the GCQ9 from $923.50, Stop- $931.20, Target- $904.50.
 If you cannot view the Gold chart,
go here.
Debt: 10-Year Note & Eurodollar
The September "U" 10-Year Note settled 24 1/2 ticks higher to 115-04 1/2, and the September "U" Eurodollar settled 4 points higher, finishing to 99.25 1/2 today.
Our focus this week is on the two-day FOMC meeting starting on Tuesday. It is expected that the FOMC will leave its funds rate unchanged at zero to 0.25 percent. Additionally, the market is expecting the FOMC to leave the rate unchanged over the next two meetings in August and September. However, the market is therefore discounting a one-third chance of a 25 basis point rate hike to 0.50 percent at the November meeting, and a 50-50 chance that the 25 basis point hike will come by the December meeting. By next February, rates are expected to be up to 1.00 percent.
TY:
The 10-Year Notes remain bearish. From here, this market should test the 113-30 level where our next round of support will come into play. A close below this level will further propel the market lower down to the 112-30 level. Only a close above 115-27 will void our bearish stance.
ED: We remain bearish the Eurodollar and are looking for this market to work down to the 99.10 level where the next support level will come into play. A close below 99.10 will further propel the market lower down to the 98.90 zone. Only a close above 99.31 will void our bearish stance.
New Trade Recommendations: -
Open Trade Recommendations:
06/09/09: (Futures) Short the EDU9 from 99.25, Stop- 99.31, Target- TBD.
06/15/09: (Futures) Short the TYU9 from 114-27 1/2, Stop- 115-15, Target- TBD. | {Move the stop down to 115-15, reducing the risk to 19 1/2 ticks.}
 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 27.10 points lower to 888.60, and the September "U" Dow Jones settled 193 points lower to 8,283 today.
Three factors are weighing on prices. First, profit reports continue to disappoint relative to expectations. Second, the pace of global economic growth is being questioned given the World Bank's lowered expectations and the Chinese beginning to cut their export tax. Third, credit is showing more signs of deteriorating looking at high yield debt.
SP: We noted last week that a close below 890.00 is bearish for this market, and that kicked in today (06/22/09). From here, only a close above 890.00 will turn this market back to the bull camp. Sustained rallies under this level will lead to further declines to 845.00.
DJ: We also noted last week that a close below 8,350 is bearish for the Dow Jones, and that kicked in today (06/22/09). From here, only a close above 8,350 will turn this market back to the bull camp. Sustained rallies under this level will lead to further declines to 7,920.
New Trade Recommendations:
06/22/09: (Futures) Sell the SPU9 at 895.00 or better; do not risk a close above 890.00.
Open Trade Recommendations:
06/18/09: (Futures) Long the SPU9 from 921.50, Stop- 918.00, Target- TBD. | {Exited at 918.00.}
 If you cannot view the S&P 500 chart,
go here.
Currencies: Euro Currency & Australian Dollar & Canadian Dollar
The September "U" Euro Currency settled 86 points lower to $1.3862, the September "U" Australian Dollar settled 174 points lower to $0.7836, and the September "U" Canadian Dollar settled 135 points lower to $0.8684 today.
Trichet, the European Central Bank President, commented that there has been enough stimulus and does not want to see governments increase their debt any further. Over in Japan, the Finance Ministry reported that the "Tankan Survey" (a sentiment index of large manufactures) improved from -66.0 to -13.2 in the second quarter of 2009.
EC: Technically, the market is still in a near-term bearish pattern, warning for another sell-off down to the $1.3700 level, where a close below $1.3700 will take the market to $1.3620. Only a close back above $1.4020 will void the current bearish stance and turn the market back to the bull camp.
AD: The Aussie Dollar remains bearish projecting down to $0.7750. Our short position (listed below) was stopped out on Friday as our protective stop was taken out before the market dropped. Nevertheless, the market still remains bearish and should reach the $0.7750 level this week. A close below $0.7750 will take the market down to $0.7615 where we could see a near-term bottom put in.
CD:
The Canadian Dollar is at a critical level of support. Should the market close below $0.8650, it will project a trade further down to the $0.8500 zone. However, sustained rallies above $0.8650 can be used as a bottom-picking zone. But be cautioned that a closing trade below $0.8650 is bearish for the market.
New Trade Recommendations: -
Open Trade Recommendations:
06/15/09: (Futures) Short the ADU9 from $0.7929, Stop- $0.8020, Target- $0.7750. | {Exited at $0.8020.}
 If you cannot view the Euro chart,
go here.
Energy: Crude Oil
The August "Q" Crude Oil closed $2.52 lower to $67.50 per barrel today.
Comments from the World Bank today put the kibosh on the long Energy play temporarily. The World Bank report was for the global economy to shrink by 2.9 percent this year, which is more than the 1.7 percent decline previously forecasted.
CL: As our readers know, we have been bullish the Crude Market all of 2009. Last week's sell-off along with today's (06/22/09) has now moved the market into a temporary pullback that should take this market back near the $61.00-$60.00 level. Only a close below those levels will trigger another large round of selling back under $55.00. We expect to see another day of selling tomorrow which could set up a buying opportunity Tuesday/Wednesday. However, we won't chase this market. Instead we will let it come back to us before trying to get in on the long side.
Get the G-Force Market Report for more trade updates.
New Trade Recommendations: -
Open Trade Recommendations:
06/18/09: (Futures) Long the CLQ9 from $72.20, Stop- $71.30, Target- TBD- | {Exited at $71.30.}
06/01/09: (Futures) Long the CLQ9 from $67.48, Stop- $70.00, Target- $76.00. | {Exited at $70.00 for an excellent trade!}
 If you cannot view the Crude Oil chart,
go here. |
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Softs: Sugar & Cocoa & Coffee
The October "V" Sugar settled 15 points higher to 16.24 cents per pound, the September "U" Cocoa settled $28 lower to $2,480 per metric ton today, and the September "U" Coffee settled 70 points higher to 120.45 cents per pound.
SB:
The Sugar market is at a critical level where a close above 16.35 is need to further the market's advancements. Should the market poke through the 16.35 level only to close below it, it will actually be bearish projecting back down to the 15.75 zone. Thus, should our buy orders as recommend below be filled, we will only stay with the position if it looks to close above 16.35.
CO:
After hitting our downside target last week, we noted that if the market closed below $2,550 it would project to $2,450. This remains the case and we anticipate the market will test $2,450 this week. Should the market find support near this level on Wednesday/Thursday, it could kick in a buying opportunity. Sign up for the G-Force Market Report for more trade updates.
KC: Today's inside day warns for additional selling tomorrow which could take this market down to the 115.00 level. We continue to remain on the sideline for Coffee, but we will start working back onto the long side if this market can close above 123.50, which projects up to 125.50. A longer-term buy signal will come into play after the market closes over 125.50.
New Trade Recommendations:
06/18/09: (Futures) Buy the KCU9 at 123.55 on a stop; should this order be filled, place a protective stop at 120.00.
06/18/09: (Futures) Buy the SBV9 at 16.35 on a stop; should this order be filled, place a protective stop at 15.62. | {Additionally, only stay with the trade if the market closes above 16.35.}
 If you cannot view the Sugar chart, go here.
Open Trade Recommendations: -
Livestock: Live Cattle & Lean Hogs
The August "Q" Live Cattle finished 72 1/2 points higher to 82.85 cents per pound, and the August "Q" Lean Hogs finished 95 points lower to 60.85 cents per pound today.
According to the USDA, there were 10.407 million head of cattle on feed as of June 1st, down 3.8 percent from a year ago, which was less than expected. Placements in May were down 13.8 percent and marketings were down 8.8 percent from a year ago. Additionally, the USDA reported that there were 79.1 million pounds of pork bellies in storage on May 31st, down 9.5 percent from a year ago. However, this was more than expected.
LC:
Today (06/22/09) was another great day for our Cattle Spread listed below. From here, we will continue to hold this spread as we still anticipate it to narrow. Looking at the August Cattle contract specifically, it continues to remain bearish and should continue down to the 79.50 level. For those looking at selling a straight August futures contract, shorts can be initiated near the 83.00 level. However, a close above 83.50 will start to void the bearish forces, moving this market back to the bull camp, so keep a close stop on any shorts.
LH:
As for the Hogs, they have been a tough market to be in with all the H1N1 news lingering in the market. However, solely looking at the technicals, this market remains bearish and should work down to the 56.00 level. Only a close above 62.00 will void our near-term bearish projections.
New Trade Recommendations: -
Open Trade Recommendations:
06/09/09 (Futures Spread) Long the LCQ9 and Short the LCZ9 from 750 points to the sell side. | {Margin= $600. Establish the spread for 750 points to the sell side with the objective of selling it when the spread narrows to 450 points (300 points better). Do not risk holding the spread should it trade down to 850 points (100 points against us).}
 If you cannot view the Live Cattle chart, go here.
Grains: Corn & Soybeans & Wheat
The December "Z" Corn closed 14 cents lower, finishing to $4.05 1/2 per bushel, the November "X" Soybeans were 25 cents lower, finishing to $9.81 per bushel, and the December "Z" Wheat was 9 1/4 cents lower, finishing to $6.01 1/2 per bushel today.
Fund selling has been evident across the grain complex. Hotter weather forecasts this week have put pressure on the gains as they have already received a good deal of rain. This will now make this week's growing conditions like a greenhouse should the hot weather stick around.
C:
The question is: where will support come into play for the December Corn? Fund selling has taken 2 1/2 months' work away in a week (which is typically how it works these days). From a technical perspective, a close under $4.00 will project down to the $3.75 level. Only a close above $4.12 will start negating the bearish forces.
S: Look for Beans to work down to the $9.55 level. A close below $9.55 will take this market back to $9.34 where a bottom could be put in.
W:
Wheat will remain under pressure until it can sustain a close above $6.12. Technically, the market could see further selling down to $5.85. Only a close above $6.12 negates the near-term bearish forces and projects back up to $6.27.
New Trade Recommendations: -
Open Trade Recommendations:
06/02/09: (Calendar Call Spread) Long the CZ9 $4.80 Call and Short the CU9 $5.00 Call for a 22 cent debit (buy side). | {Margin= $1,200. Objective is to close the spread when it widens to a debit of 43 cents (21 cents better). The objective can potentially be achieved in 54 days (July 26th) provided the September Corn Futures rally to at least $4.75 (20 cents higher). Close the entire spread if September Corn declines 40 cents to $4.15. In any event, close the spread no later than July 26th, in 54 days. We exited this spread on Friday 06/19/09.}
 If you cannot view the Soybeans chart,
go here. |
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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 Commissions ("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 or call us toll-free at 1-888-853-2261.
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Special Message from Our Author
Complimentary subscription to the G-Force Market Report for 60 days.
The G-Force Market Report
takes a comprehensive look at over 18 commodities and financial futures markets, including the Metals, Softs, Meats, Stocks, Currencies, Grains, and more. The publication is timely distributed three times a week and contains technical and fundamental analysis of the markets, along with detailed charts and specific trade recommendations for both long- and short-term traders. Through purposeful diversification, risk mitigation, and sound money management principles, the G-Force Market Report can help you get an edge in the markets.
Sign Up for a Complimentary 60-Day Trial Here! |
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