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TMV for April 30, 2008
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June Dow- With the FOMC meeting slated for Tuesday and Wednesday, I’d expect a quiet trade until the Fed’s announcement Wednesday afternoon. Our upside target is pegged at 13150.
June Bonds- After bouncing off the 2 X 1 Gann (buy) line Monday, the bonds rallied to 116-27. The street is expecting the Fed to cut rates ¼ point on Wednesday afternoon, and that expectation helped the bonds rally today.
July Silver- With first notice day set for Wednesday, April 30 th, silver’s suffering from long liquidation this week. A lower trade into Wednesday morning would likely offer a buying opportunity, and mark the bottom of this move. I would expect the market to move higher from there. Our upside target is19.60.
June Gold- Silver has been the leader in the metals and until ‘first notice day’ for silver has come (April 30 th), the metals will likely continue lower.
June Euro Currency- In the last issue, I wrote, “Since posting a low of 143.78 in February, this market has been climbing straight up, but that’s about to change. The market is over-bought and should retrace back toward the 1 X 1 Gann line at 154.00.” The following day, the euro began a slide—falling 337 points to post a low of 155.22. Monday’s inside pattern is just a rest between drops. Downside target is 154.00.
June Canadian Dollar- This market continues its yo-yo fashion by trading higher one day and lower the next. Today was up! Still, I believe the market should head higher. Our upside target is 104.10.
June Yen- The chart here has formed a bear hitch, suggesting additional downside pressure is likely. Our downside target is 94.90.
July Corn- Last Monday I wrote, “It’s worth keeping an eye on this market.” I was referring to the wet spring and lack of planting. Today’s USDA crop progress report revealed only 10% of the corn crop has been planted, compared to the five-year average of 35%. That’s bull. The pattern is bullish. Corn’s going higher. On the other side of the coin, we’re seeing a number of states repeal their ethanol fuel mandate, which could slow the rise of corn, but not stop it. In a related subject, if you own shares in an ethanol plant, I’d consider divesting.
July Coffee- After last week’s sell-off, the market has recovered some, forming a bullish pattern in the process. A break above 136.20 should kick in the buy program. If so, our upside target is 152.50.
June Crude- Yes, the demand for crude in China and India has risen roughly 11% in the last year, but that doesn’t answer the fact that crude has rallied 68% during the same time period. It’s like I’ve been saying for the last three years, the (long only) index funds have created a synthetic shortage where no shortage exists. These funds, as you may know, have no limit on the number of contracts they can hold, and that’s the problem. Effectively, they’ve cornered the market, but that may be about to change. Tonight, the CFTC will be meeting to discuss possible limits for those funds. Until then, capital flows, not fundamentals, drive this market. Because of that, some months back, I projected crude would top at $22. At that time, it seemed absurd, but here we are watching crude climb above $18. It’s easy to wonder now whether $22 will be the top or will the market continue higher?
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REVERSAL DATES FOR THE WEEK of April 28th, 2008
MONDAY – Crude Oil, J-Yen
TUESDAY – Cattle, Wheat, Soybean Oil, Bonds, Australian Dollar
WEDNESDAY – Gold
THURSDAY – Euro Currency, British Pound
FRIDAY – J-Yen
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MARKETS TO WATCH:
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-JUNE JAPANESE YEN –The market got a little more rebound out of Monday’s reversal date than I expected and hit the protective stop at 9655.
2-JUNE BRITISH POUND –The BP backed up and is testing the previous pivot low. It looks like it could be making a complex continuation pattern. I still see this as a long-term upward market with a target in the 2.030 to 2.040 range. – However, we may need to give the market a little more room tomorrow. - Hold the long position with stops at 1.9505.
3-JULY COFFEE –Hold all short positions with a protective stop at 137.50.
4-JUNE CANADIAN DOLLAR – The CD has formed a 5-wave continuation pattern that could foreshadow a drop to the center line support at 9500. Thursday’s inside day has identified a trigger price at 9785 for a sell signal.
5-JULY CORN – A 5-wave continuation pattern has formed in the July Corn. Monday’s session started with a gap higher and a close above the 20-day SMA. This market is ready to go and should make a new contract high very quickly.
6-JUNE CATTLE – The market gapped lower at the open and left the gap unfilled while the close was below the previous two closes. This is a Gap and Go pattern which typically signals a major trend change. – A trade below 92.60 will probably trigger more selling.
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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)
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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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