Fast Break for Traders: The Week Ahead

Week of October 13, 2008

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	Hot Picks by Bill Borkowski of Dorman Trading
Bill Borkowski is a retail broker at Dorman Trading, LLC. A 12 year veteran of the futures markets, Bill has traveled around the country doing the seminar circuits. Bill works with clients of all kinds, offering support to online as well as full service traders.
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	Gold
Right now the GOLD market is struggling between ongoing deflationary global ideas and flight to quality plays. The recent moves performed by the global banking systems should be viewed as inflationary and support GOLD in the long run as it makes its way back above $1,000 by the end of the year. Right now the December GOLD is trading $23 lower at $836 and might make a bigger move down before the week is up. Consider going long December GOLD around the $810 level, risking the trade below $795. The Mini GOLD contract can be traded as well and is a third the size of the Comex GOLD contract. In these volatile times make sure you have stops working and are not exposing yourselves to too much risk.
	S&P
The stock market has seen a nice rise today with the coordinated effort to get the global banking crisis under control. With the stock market in an extremely oversold position, it is no surprise to see massive amounts of short covering happening in the early session. With consumer confidence still severely shaken, the next batch of bad news will send the market down an ugly path again. Because of the volatility of the markets consider buying November Mini S&P 775 puts for 20 points ($1,000) or better, risking the trade down to around 5 points.
	Crude Oil
The coordinated steps taken by the U.S. and European governments to ease the fears about the credit crisis seems to have installed some confidence in the ENERGY markets. Along with the idea OPEC will be cutting their production at next month's OPEC meeting, CRUDE OIL might look to take a quick run up to $90 in this oversold market. Consider going long November Mini Crude Oil or regular Crude Oil in the $80 area where it is, and risk the trade down below $77.70. Consider taking profits in the $85-$90 area depending on how fast the swings occur. Privacy Policy available upon request Futures and options trading involves significant risk of loss.


	Hot Picks by Derek Gilroy of Trendphonic Futures
Derek Gilroy has been a member of the Chicago Board of Trade since 1997 and is a senior trader at Trendphonic Futures. Prior to that, Mr. Gilroy started his career working in the Grain and Financial pits on the trading floor of the Chicago Board of Trade in 1994. From October 1997 until January 2007 Mr. Gilroy functioned as a local trader on the floor of the Exchange trading the 10-year cash basis. Currently Mr. Gilroy serves and President of Trendphonic Futures and Head Trader for their Managed Accounts.
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	S&P (DEC)
The street defines a crash as a 20% decline in a short time, in 1929 it took 2 days in 1987 it took 1. Last week we lost 20% over 7 days. Looking ahead this week we need the S&P to hold its low of 837 and hold onto its gains. It is necessary to begin building a base on which to start getting long. Look for the lows to hold first.
	Bonds (DEC)
With the bonds selling off with the S&P, the flight to quality trade has not held. The bonds broke six handles last week. Looking ahead this week, the bonds should continue to stay under pressure until we can get some stability in the equities. I would look for a recovery in the bonds if the equities can return a small gain this week.
	Crude (NOV)
The recent strength in the dollar along with the credit fears have driven crude to lowest levels we have seen in a year at $80/bl. Since we put in the high at $147/bl, we are down over 40%. We see OPEC cutting production levels to bring support to crude prices. Our sentiment is now beginning to switch from 100% bearish to consolidate trade to slightly higher. We advise anyone trading crude to be nimble as it moves quickly and in big chunks. We are looking to buy crude in the $78/bl area with a tight $1 stop. If crude breaks $77/bl, then we would look to get short.
	Corn (DEC)
Corn was limit down on Friday due to bearish USDA numbers coupled with the global credit fears. The overnight trade Sunday was higher from the start as fears begin to subside and buyers come back into the markets. Corn has sold off almost $1.80 since September 25. We believe if corn puts in a bottom at $4.10/bu (and the S&P can do the same) we should see corn trade back to $5 to $5.10/bu. We will look to get long this morning with a stop in the $4.00/bu area.
	Cocoa (DEC)
Similar story to crude and corn, dollar strength and credit fears have forced mass liquidation in the cocoa market. We are trading at a 5 1/2 month low and are in a 3 month downtrend. We are working a sell stop at 2200. If cocoa can hold 2250, and we see buyers come in commodity wide (as we expect to see), cocoa could trade to 2400.

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Disclaimer: The Commodity Futures Trading Commission has asked us to also advise you that trading futures is not without risk. While there is opportunity for incredible wealth building, there is also the risk of losing even more than you invested. Of course, that's not unlike most other businesses. But informed traders are the best traders! Opinions expressed by Fast Break authors are not those of FutureSource.