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TMV for April 2, 2008
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June Dow- The news story read, “U.S. stocks rallied as strong demand for a share offering by Lehman Brothers Holdings Inc helped restore confidence in the financial sector.” Maybe…or maybe the rally was more technical? Yesterday, I wrote, “The action has compressed the Dow to the 20-day average, forming a bull flag in the process. I’d say…we’re going higher this week—no fooling! Look for a turn-around-Tuesday! A break above 124.10 should start things off.” After opening steady, the market rallied, breaking above 124.10 on its climb to 126.41. Our upside target is 128.10.
Someone once said, “Democracy lasts only so long as the people don’t realize they may vote themselves a raise.” Well, they’ve realized it, and now I wonder if perhaps our greatness lies behind.
June Bonds- The 2 X 1 Gann (buy) line is below the market at 114-20. I think the plan here is to sell rallies to say…118-10. From there, I’d look for the market to slide down to that Gann line at 114-20.
May Silver- Early morning weakness pressed the market down to the 2 X 1 Gann line today, where we saw a bit of a bounce, but I’m not looking at the silver as a buying opportunity. Technically, we’ve got more downside coming, possibly down to 15.20.
June Gold- Capital flow, it’s been driving the markets of late, and currently that flow’s been out. I look for that trend to continue, at least a few more days. Look for a possible downside projection of $842.00.
June British Pound- British Prime Minister Gordon Brown said on Tuesday the world economy was in a downturn, but expressed confidence that the Group of Seven industrial countries will agree upon urgent action next week, to tackle global financial turmoil. Hmm…what would you suppose that means? I guess we’ll have to wait and see. Anyway, in the last issue I wrote, “Sell a break below 197.90.” That level was broken today. Our downside target is pegged at 193.50.
June Australian Dollar- Our downside target is 87.05.
June Yen- Last night I wrote, “It looks as if this market is nearing a turn.” Sure enough, it was! The market fell 218 points today. Unfortunately, I missed it. I’d been waiting for a steady trade today before entering, but the market waits for no man and so, we missed it! Still, nothing moves in a straight line, so we’ll look to sell on a rally to 99.50.
May Coffee -Some have asked: is this a good place to buy coffee? My answer is, no. I doubt we’ve seen the bottom yet. The market is too close to its November lows of 125.00 not to take them out now.
May Corn- Corn rallied a little Monday and more on Tuesday. Hmm, is this going to be a bear week? That would be the tendency, you know, with bear markets rallying early in the week and falling in the latter. A break below 5.47 would confirm a bear profile week, and signal the sells.
May Wheat- Ding! Ding! Ding! I’ve been writing, “The pattern is now bearish, the moving average is down and the 2 X 1 Gann line is below the market at about 9.00. I’m guessing wheat will be heading lower.” Wheat posted a low today of 8.95!
May Crude Oil- Last night I wrote, “Monday’s sell-off is just the start. The Gann 2 X 1 (buy) line is down at 92.00, and clearly, the market is overbought.” Crude dropped 76 cents today. A break below 99.20 should kick in additional sellers. Our downside target is 92.00.
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REVERSAL DATES FOR THE WEEK of Mar. 31st, 2008
MONDAY – Cattle, Soymeal
TUESDAY –Hogs, Wheat
WEDNESDAY – Crude, Unleaded Gas, Heating Oil, Gold, Dow
THURSDAY – T-Bonds, S&P
FRIDAY – British Pound, Cotton, Coffee
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1-JUNE T-BONDS –As I mentioned in the last update, the pattern didn’t look strong enough to sustain any rally…and it didn’t. The market turned lower and dropped below the previous pivot low, but it did come to rest on the lower reaction line. However, I don’t think this support will hold, so continue to hold the short position, but move the protective stop to 119-05. I look for lower prices to continue into the next reversal date, due on April 3.
2-JUNE BRITISH POUND – Thursday's high breached the 60% retracement level, but reversed the following day and traded below Wednesday’s low (1.9794) to confirm a TR pattern and triggered a sell signal. Hold short positions with a protective stop at 1.9875.
3-JUNE DOW JONES –I have been talking up a potential rally in the past in the Dow. The market had been forming a bullish reaction swing after confirming a major TR pattern. The correction hit support at the 20-day SMA and turned higher…closing over 380 points higher for the day. The market should continue to move higher and reach the first target of 13000 quickly.
4-JUNE EURO CURRENCY –This is a great example of a failed swing pattern. The market traded to a new high on Monday, but backed off and closed below the previous pivot high and at the lower end of the daily trading range. The selling continued on Tuesday and traded below the previous day’s low, confirming the failure and reversing the trend. Be aware, a failed swing pattern is typically followed by a significant price move in the opposite direction…in this case, down.
6-JUNE JAPANESE YEN – The market traded high enough to trigger the buy signal, but quickly reversed and dropped below support and continued lower. This price action confirms a trend shift and confirmed a bearish TR pattern. Sell any pullback to 9960.
7-MAY COTTON –The market traded below the previous pivot low and triggered the TC pattern sell. However, the Cotton managed to climb back and close higher. Hold the short position, with the protective stop at 7305.
8-JUNE GOLD –The Gold traded through the $909.00 trigger price and closed at $880.00. That is a pretty good head start, but with the current volatility, we shouldn’t take anything for granted. Hold the short position with a stop at $920.00. The target remains $860.00.
9-MAY COFFEE – A trade below 125.75 would confirm the bearish TC pattern and a drop to 110.00.
10-MAY CRUDE OIL – The corrective rally peaked inside the 60% sell window (107.50) and reversed lower. Today’s collapse closed below the 20-day MA and confirmed the bearish TR pattern. This could be a precursor to a significant sell-off in the Crude.
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Due to the volatility of the markets all trade suggestions are subject to change, at anytime during market hours, without notice. *
(TERMS YOU NEED TO KNOW) (RD = Reversal date) -- (RL= Reaction line) -- (L = long) -- (S = Short) -- (TC = Today’s closing price) -- (RLT = Reaction line target) – (TR = Trend Reversal) –(TR = Trend Reversal) – (TC = Trend Continuation)
For daily updates on current Reversal date recommended trades, go to www.tradersnetwork.com
How to use the 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. For more information on our Reversal Date Indicator, or should you have a specific market question, please call us at 1-800-521-0705
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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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