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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 $11.30 higher to $948.80 per ounce, and the September "U" Silver finished 22.2 cents higher to $13.625 per ounce today (7/20).
The weak U.S. Dollar has been driving the metals higher, pushing Gold up to a five week high Monday. The market was able to hold above the $900.00 level a few weeks ago despite softer demand which has also lead to the buying interest we witnessed today (7/20).
GC:
We wrote last week that a close over $945.00 is bullish for Gold projecting up to $960.00, and Monday's high was within $4.60 of hitting this target. From here, the market should see another push into Tuesday up to this level. Additionally, a close above $958.50 will again be bullish for the market and could extend rallies up to the $970.00 level. However, a close below $940.00 will alert for setbacks to the $925.00 zone.
SI:
For Silver, we wrote last week that a close above $13.350 projects up to $13.550, and this target was hit on Monday! From here, the market will need to sustain closes above $13.550 to continue the bullish trend towards $14.000. Only a close below $13.550 will be bearish for the market, taking it back to $13.240.
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 19.5 ticks higher to 117-00, and the September "U" Eurodollar settled 1 point higher, finishing to 99.47 1/2 today (7/20).
All eyes will be on Ben Bernanke Tuesday as he kicks off his two-day semiannual testimony before the Congressional committees. He will be reporting his thoughts on the economy, the stability of the financial system, and whether the Fed has an eventual exit strategy for its enormous liquidity measures it has been deploying.
TY: This market had a healthy swing on Monday, posting a low of 115-26.5 before rallying back to the closing price of 117-00. From a technical perspective, the market will need to see a close above 117-13 which will project up to 118-24 initially. Only a close below 116-12 will void the near-term bullish projection.
ED: The Eurodollar remains bullish and should continue up to the 99.60 level from here. Only a close below 99.45 will void the current uptrend and drive setbacks to 99.40.
New Trade Recommendations:
07/20/09: (Futures) Buy the TYU9 at 117-15 on a stop; should this order be filled, do not risk a close below 116-12.
Open Trade Recommendations:
07/14/09: (Futures) Long the TYU9 from 117-06, Stop- 116-20, Target- TBD. | {Exited at 116-20.}
06/23/09: (Futures) Long the EDU9 from 99.31, Stop- 99.44, Target- TBD. | {Adjust the stop up to 99.44, locking in 13 points.}
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 12.10 points higher to 949.00, and the September "U" Dow Jones settled 108 points higher to 8,805 today (7/20).
CITI Group Inc.'s deal with its bondholders rallied the markets on Monday, giving traders another boost of optimism. Keep in mind that the bulk of the earnings reports are still to come, and the market has yet to hear from the retail sector, which could have shaky results.
SP:
Technically this market should move up to the 952.00 zone where the next level of strong resistance will come into play. We have been unable to get overly bullish for the current rally as the numbers just don't support the big two-week run we've seen. Nevertheless, we don't want to step in front of a train attempting to sell this market. Should the market fail to close above 952.00, we will look to reenter this market on the short side with a trade back down to 930.00. Until then, we will remain on the sideline.
DJ:
The Dow worked right up to the 8,750 level we mentioned from last week! Technically the market is overbought at current levels and should be looked at on the short side. However, we will wait for further confirmation of a market turn and will only be entertaining the idea of a short position if the market can work back down to 8,600. Until then, we will remain on the sideline.
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 79 points higher to $1.4219, the September "U" Australian Dollar settled 119 points higher to $0.8120, and the September "U" Canadian Dollar settled 72 points higher to $0.9035 today (7/20).
EC:
We wrote last Thursday: "Should the market be able to sustain its close above $1.4100, it will lead to another rally up towards $1.4300." This continues to remain the case as the market should continue to trade up to the $1.4300 level from here. We would not be surprised to see a pullback tomorrow where additional long positions could be initiated. However, do not risk a close below $1.4150 as this will be near-term bearish for the market, projecting back down to the $1.4000 level.
AD:
We wrote last week that a close above $0.8050 will lead to further rallies up to the $0.8175 level. This target was nearly hit on Monday as the market posted a high of $0.8143! From here, we still anticipate another push up to the $0.8175 zone. A close above this level will trigger additional buying up to $0.8215. Only a close below $0.8030 will void the near-term rally, taking the market back to $0.7890.
CD:
The Canadian Dollar ran into stiff resistance on Monday at the $0.9075 level. If this market is to trade higher, it needs to sustain a close above $0.9075 which will project up to the $0.9200 level. We are remaining on the sideline in the Canadian Dollar as last week's rally brings this market to a very over-bought level. Technically, a close below $0.8970 is bearish for the market, projecting down to $0.8850.
New Trade Recommendations:
07/20/09: (Futures) Buy the ECU9 at $1.4180 or better; should this order be filled, place a protective stop at $1.4100.
Open Trade Recommendations:
07/09/09: (Futures) Short the ADU9 from $0.7880, Stop- $0.8050, Target- TBD. | {Exited at $0.8050.)
 If you cannot view the Euro Currency Chart,
go here.
Energy: Crude Oil
The September "U" Crude Oil closed $0.71 higher to $65.29 per barrel today (7/20).
Good news outweighed the bad with the Conference Board reporting a 0.7 percent increase in its index of leading economic indicators for June, matching economists' expectations. The latest oil inventory data is due out this Wednesday. The average forecast is for a 1.2 million-barrel drop in Crude stockpiles, but a 700,000 barrel increase in gasoline inventories.
CL:
Mid- to Long-term we are bearish the Crude market, forecasting a price of $46.00-$50.00. However, short-term this market could move up to $66.70. A close above this level is bullish, projecting up to $68.50. We will strongly look at getting on the short side of this market at these levels should the market press higher. Additionally, if the market is unable to sustain the near-term push higher, a sell signal will kick in with a close under $64.50.
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 48 points higher to 17.74 cents per pound, the September "U" Cocoa settled $85 higher to $2,868 per metric ton today (7/20), and the September "U" Coffee settled 290 points higher to 122.30 cents per pound.
Brazil's Coffee crop is looking like it will get more rain in the next ten days, which is more than anticipated, helping drive the price higher on Monday. Additionally, Colombia's Coffee exports were down 34 percent in June from a year ago. As for Cocoa, exports through Abidjan and San Pedro were down 30 percent in June due in part to a 15-day strike by dock workers.
SB: Overall the market remains bullish and should work back up to 18.30. A close above this level further projects up to 19.00. Only a close below 17.20 will void the current bullish pattern.
CO:
After recommending to buy Cocoa in early July and hitting our upside target at $2,700, the market gave another buy signal last week that we recommended below. Add in today's explosion higher and it has been a great couple of trades! From a technical perspective, the market has now opened up the possibility of testing the $3,000 level. However, be cautious as a close under the $2,800 level will project down to $2,710.
KC:
As we wrote last week, "A close above 117.50 will start to work this market back to the bull camp." The market has now traded up to 122.30 on Monday near strong resistance. If this market is going to continue, we will need to see a sustained close above 122.50 which will project up to 127.00. Should the market be unable to close above 122.50, look for setbacks to the 120.00 zone.
New Trade Recommendations:
07/13/09: (Futures) Sell the KCU9 at 114.00 on a stop; should this order be filled, do not risk a close above 117.50. | {Unfilled, remove this working order.}
Open Trade Recommendations:
07/16/09: (Futures) Long the COU9 from $2,700, Stop- $2,760, Target- $3,000. | {Move the protective stop up to $2,760, locking in 60 points.}
07/13/09: (Futures) Long the SBV9 from 17.40, Stop- 17.20, Target- TBD. | {Move the protective stop up to 17.20, reducing the risk to 20 points.}
 If you cannot view the Cocoa Chart, go here.
Livestock: Live Cattle & Lean Hogs
The August "Q" Live Cattle finished 42 1/2 points higher to 86.80 cents per pound, and the August "Q" Lean Hogs finished 2.5 points lower to 64.65 cents per pound today (7/20).
The Cattle on Feed report will be issued on Friday and is expected to confirm yet another month of historically low feed lot placement due to the abysmal margins and tight credit. Informa is calling for July 1st Cattle on Feed to be 94 percent, placements at 91.6 percent, and marketings at 101.1 percent of last year.
LC:
Cattle should continue up the 87.00 level that we have been calling for. Technically, a close above this level will project another leg higher up to 88.50. Only a close below 86.20 will void the near-term bullish signals. For those spread traders, we have a new spread out today (7/20). The market still needs to widen a touch to fill the orders as we are looking at the buying the December Live Cattle and selling the October for around 190 to 250 points to the October (sell) side.
LH:
Lean Hogs have continued to work well for our long positions below. Technically this market is still bullish and is warning for another push higher. A close above 65.00 will project up to 66.00, and a close above this level takes the market up to 68.00. Only a close below 63.50 will negate the bullish trend.
New Trade Recommendations:
07/20/09: (Futures Spread) Buy the LCZ9 and sell the LCV9 for 240 points to the October (sell) side. | {Margin= $600. We are looking for this spread to narrow and will be attempting to buy it back for around even money (200 points better). If we can fill the order at 240 points, we will not risk more than 60 points on the spread, or what would look like -3.00 on the chart below.}
Open Trade Recommendations:
07/07/09: (Futures) Long the LHQ9 from 62.50, Stop- 63.80, Target- TBD. | {Move the protective stop up to 63.80, locking in 130 points.}
 If you cannot view the Live Cattle Chart,
go here.
Grains: Corn & Soybeans & Wheat
The December "Z" Corn closed 2 1/2 cents higher, finishing to $3.33 3/4 per bushel, the November "X" Soybeans were 1/2 cent lower, finishing to $9.23 per bushel, and the December "Z" Wheat was 3/4 of a cent higher, finishing to $5.68 3/4 per bushel today (7/20).
C:
The path of least resistance in the Corn remains to the downside where the market could reach $2.90 as a downside target. Technically, the market will likely chop sideways for the next day or two before we see another push in this market. A close below $3.30 can be used to initiate new short positions. However, do not risk a close above $3.40 as this level will lead to a short-term rally back up to $3.55.
S:
We mentioned last week for any bottom pickers out there to buy the Beans near $8.88 which has worked out great thus far. Technically, if this market is to sustain another press higher, it will need to work through the $9.35 level. Should today's (7/20) high of $9.40 remain untested the rest of this week, we will likely see the market move back down to the $8.88 level. A close below $8.88 is very bearish for the market, projecting down to $8.35 initially.
W:
Again, Wheat worked right up to our $5.75 zone we mentioned to you last Tuesday. Technically, a close below $5.47 is bearish for this market, whereas a close above 5.75 is bullish.
New Trade Recommendations: -
Open Trade Recommendations:
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 on the trade should this order be filled.}
 If you cannot view the Corn 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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