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- Joe Kellogg |
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Today's Featured Article
September Dow Jones
- Long from 8620 - Last price @ 9318 - In a quiet day of trading, the Dow Jones futures pulled back slightly from the new high established on Friday. After climbing for four weeks, with only a couple of small two-day corrections, the market is trading at its most expensive level, relative to earnings, in more than four years. At the same time, option traders are increasing bets that the rally won't survive through September.
Looking at the chart, I see that the Dow Jones futures confirmed the July 27th to July 29th TC pattern (Trend continuation swing trade strategy) keeping the bullish trend intact and validating the 9455-target objective. The next swing trade date --also known as a reversal date -- is projected for August 13 and could provide more information on the next market direction. Continue to hold the long futures position and move the profit stop to 9175.
 If you cannot view the Dow Jones Chart,
go here.
September Crude Oil
- Long from 67.35 - Last price @ 70.94 - Oil prices traded on both sides of unchanged today, as traders watched news about a possible low pressure system southwest of the Cape Verde Islands that could develop into the first tropical storm of the Atlantic hurricane season. If the low pressure system turns into the season's first hurricane, it could have the potential to enter the Gulf of Mexico and to disrupt oil and gas infrastructure there.
While the chart pattern and the reaction cycle are still bullish and suggest there is still more upside potential for the Crude, the market has stalled at the downward sloping parallel line that is currently acting as an overhead resistance. The market has moved into a consolidation pattern as it drifts lower into Tuesday's projected reversal day (Swing trade day). A new low on Tuesday would set up a new bullish reaction swing, a potential buy pattern, while building energy for the next upward price swing. Hold the current long position and keep the profit stop at 69.65.
 If you cannot view the Crude Oil Chart,
go here.
December Gold - Long from $945.50 - Europe's 19 central banks, including the European Central Bank, the Swiss National Bank and the Sveriges Riksbank have agreed to put a new five-year cap on gold sales. The Swiss National Bank currently holds a substantial part of its currency reserves, close to 1,040 tonnes, in gold.
Gold traded above the high before closing below the low of the August 4th "inside day" pattern. This is a negative pattern that continued to pressure the Gold on Friday and Monday. The market finally found support at the 20-day SMA and the lower upward sloping parallel line. This is a critical support that needs to hold in order for the upward trend to remain intact. The profit stop was triggered on the pullback, closing the long position at $948.50. I'll wait for the August 13th reversal date to see if a new pattern unfolds.
 If you cannot view the Gold Chart,
go here.
September Coffee - Long from 126.35 - Hit the Target! - Coffee traded to a high of 138.60 overnight. That was enough to close the recommended long position at the target objective of 138.25 before dropping back to 134.90 during the day session. This is a classic example of Time and Price working in harmony.
Now what happens? September Coffee reversed as soon as it reached the upward sloping centerline and closed lower on the day. However, when I look at the latest TC pattern (Trend continuation), I can see a new swing trade date (Reversal day) projected for August 14th. The market needs at least two lower closes to form a new buy pattern, so for now, I'll sit on the sidelines until the new pattern is complete.
 If you cannot view the Coffee Chart,
go here. |
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December Cotton
- In the last issue, I called for a sell on a rebound to the 61.00 level. The market did rebound to 61.00, but it didn't stop there. Instead it continued to trade on up to 64.04. This was enough to close the short position at 63.20 for a loss. However, the overall market still appears to be weakening, as it moves away from the centerline and is still vulnerable to a sell-off. If the new breakout from the current swing pattern fails on Tuesday, it will set up a new sell pattern. I'll wait for the confirming pattern before I give any re-entry signal.
 If you cannot view the Cotton Chart,
go here.
September Wheat
- The grain markets could have quiet trading on Tuesday, as traders await the release of the USDA Supply/Demand and Crop production reports Wednesday morning. Technically, Wheat penetrated the prior swing low and closed at a new contract low. The price action has completed an A-B-C continuation pattern that typically appears in the center of a long-term cycle and suggests a downside move to the lower parallel reaction line, now sitting at $4.00. I'll wait for a two-or-three-day bounce to $5.36 1/2 to set up a bearish swing trade strategy pattern for sell entry.
 If you cannot view the Wheat Chart,
go here.
December Corn
- After a seven-week downward slide, Corn bottomed on July 22nd, just shy of the downward sloping parallel line. Corn then rallied off the swing low and quickly reached the down sloping median line, where it reversed and resumed the downward trend. The market finally stopped inside the 60% buy window, where it closed as an "outside day". This price action has set up a potential bullish TR pattern (Trend reversal swing trade strategy pattern) and identified $3.35 1/4 as the trigger price for a long position. Buy December Corn at $3.35 1/4 stop, with the stop loss under the $3.04 swing low.
 If you cannot view the Corn Chart,
go here.
September T-Bonds
- When a bank's profits fall, instead of cutting expenses like small businesses, they turn to their loyal customers. According to the Financial Times, U.S. banks are poised to make $38.5 billion in customer overdraft fees this year, citing research by Moebs Services. Of course, the largest portion of that revenue comes from the most financially stretched consumers, as many banks increase charges on overdrafts and credit cards to boost their profits. According to other sources, the banks are taking the profits, as well as their bailout funds and purchasing Treasury bonds and shifting away from corporate bonds and mortgage bonds.
After five days of trading lower, September T-Bonds rebounded on Monday. The rebound will most likely be short-lived, as the market is about to test overhead resistance at the downward sloping parallel reaction line and the 20-day SMA.
 If you cannot view the T-Bonds Chart, go here.
September RBOB Gas
- The strong upward trend paused after trading above the June 16 swing high price of 2.0585, where it posted two lower closes and formed a potentially bullish TC pattern under the upward sloping center line. A trade above 2.0855 will confirm the bullish swing pattern and trigger a new buy. A confirmation of the pattern would set up a price swing towards the target objective of 2.2000, on or before the August 17 swing trade date.
 If you cannot view the RBOB Gasoline Chart,
go here. |
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REVERSAL DATES FOR THE WEEK of August 10 - 14, 2009
Monday -- Soybean Oil, British Pound, Japanese Yen, Cocoa, Coffee
Tuesday -- Soybeans,
Crude Oil, Australian Dollar, Cotton
Wednesday -- Hogs,
Soy Meal, Heating Oil, Silver
Thursday -- Gold,
S&P, Dow Jone
Friday --
*Due to the volatility of the markets, all trade recommendations are subject to change without notice.
Swing trading and 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.
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About the Author
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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. |
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Special Message from Our Author
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