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| 5 Hot Picks by John Garrity of Manduca Trading |
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Since his arrival in Futures and Options in 1995, John Garrity has served as an equity raiser, currency analyst, and has trained hundreds of clients in the art of trading. Mr. Garrity provides all of his clients with a fundamental and technical analysis on various markets by writing a daily Garrity Report that is e-mailed twice each trading day. Mr. Garrity comes from a family with over 30 years of experience in the agricultural markets. His Father trades at the Chicago Mercantile Exchange in the Meats. |
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| My technical work suggests March Orange Juice (OJH7) is sitting on the bull trendline. March OJ Options expire on Friday, February 16th. If the trendline is taken out we might see OJH7 fill all the downside gaps and I don't see much support until about 16000. The OJH7 $1.90 Straddle is about $600 cost and risk. If OJH7 tests $1.60, the $1.90 Put would be worth about $4500 per option! If you just want to speculate in one direction the cost and risk would be about $300. We need volatility for a Straddle to work. |
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I am seeing a channel forming in the March Dollar Index (DXH7). I believe a big move will ensue. Bracketing a market is a way to take advantage of this chart pattern. I see resistance at 8525 and support at 8425. Place a buy stop above resistance and a sell stop below support. If one side of this bracket is filled, use the other order for your protection. Your risk is approximately $1000. I see potential down side of 8200. I see potential upside of 8800. You could also buy a strangle: Buy the DXH7 86/84 Strangle for $400 cost and risk. Your potential is unlimited. |
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Looking at the uptrending channel that has formed in the March '07 Dow Jones Index futures since November, in my opinion if 12535 is taken out this market could experience quite a drop. A reasonable target may be 11835, which is near the 50% retracement from the low made back in July '06. The approach would be to place a GTC sell stop below the lower trendline of the channel, approximately 12495. If triggered place a GTC buy stop above contract highs of 12735. The risk would be approximately $2400, and if the market tumbles to the 50% retracement level the profit could be about $6600. Note that a short position is taken only after the market indicates a loss of
upside momentum by way of breaking the trendline. |
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| A bull spread: Buy May Soybeans (SK7) and sell November Soybeans (SX7). The spread is currently around 35 1/2 cents premium to SX7. We want this spread to tighten. There is support around 38 1/2 premium to SX7. There is resistance around 33 1/2 premium to SK7. Risk looks reasonable, maybe $300 or so. Potential looks to be about $1500. We want SK7 to rise at a faster rate than SX7. Usually in a bull market the front month will lead the way on the upside and be priced higher than the deferred months. |
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| This is the dog of the year. It is oversold and the fundamentals in my opinion are not bearish. Why does it keep going down? Simple: more aggressive sellers than buyers. Market direction could change at anytime, but when? That's the Million Dollar question. Timing is very important in trading. What about taking a long stance and bucking the trend, but giving yourself a year for the market to turn? You don't have to have precise timing on this trade. The March '08 Sugar 1400 Calls are only $300. |
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| 5 Hot Picks by Phil Flynn of Alaron Energies |
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| Phil is Vice President, Energy and General Market Analyst with Alaron Futures and Options and is one of the world's leading energy market analysts. His market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide. |
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| The $60.00 a barrel area in oil has been hard to hold despite the fact that most of the country has been in a deep freeze. Short term traders have been selling anything over $60.00 as the market still tries to balance short term high demand with large supply. The Saudis are saying now that the oil market is well supplied and that perhaps no further action on production will be needed. Still, despite the current weakness, the geo-political risk for oil is rising. Nigeria declared a force Majeure and Iran and Russia are stirring up problems. |
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| Last week we talked about putting on bullish option strategies on corn as the market will have to supply plenty of corn to feed ethanol demand. After dipping to a low of 391.4 it soared to 409.6. The market seems to be getting ready to make another spike back up. We've pulled back as the market was way ahead of itself but the thing you won't be able to sweep under the rug is increasing demand. |
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Gold is on the move again. Last week we said the Fed gave the gold bugs the green light to buy and buy they did. Gold hit its highest level since last August and looks like it is flagging to move higher. Long term gold is targeting $750.00 an ounce. The biggest hurdle this week is $700.00 an ounce and a speech by Fed Chairman Ben Bernanke. Mr. Bernanke begins two days of testimony on Wednesday in front of the Senate banking commute on US economic outlook and monetary policy. If Mr. Bernanke seems not worried about inflation then gold is undervalued. Not to mention that the geo-political situation with provocative words from Russia and Iran that will keep the gold
bugs buying. |
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| After the freeze, orange juice has been trying to rebound from the sell the fact mantra. OJ rose on freeze fears and is trying to base between 18400 and 19400. Look for a breakdown into the 170400 area then start to buy. |
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