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TMV for April 9, 2008
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June Dow- Pattern-wise, another bull flag is forming and a break above 12735 should generate additional buyers. Our upside target is pegged at 12980.
June Bonds- There are signs we’re nearing the end of this latest interest rate cutting cycle. The next FOMC meeting is set for May 29 th and 30 th, and most expect another quarter point cut, but that may be the end of it. I’ve been expecting the bonds to slide back toward their 2 X 1 Gann (buy) line at 114-20, but the market has held steady. Still, if I’m right about the interest rates, the bonds will correct. A break below 117-14 would help start things off.
May Silver- Since hitting our downside target a week ago, I’ve been waiting to re-enter the short side. Now I wonder. Monday’s higher trade, followed by Tuesday’s lower trade, plus the chart pattern currently forming, has me thinking we’re forming a bull flag! A break above 18.30 should fuel a rally to 19.20.
June Gold- The International Monetary Fund announced their plans to sell 13 million ounces of gold over the next few years. The news helped pressure the metals today, as gold dipped $7.30 to close at $919.50. Gazing at the chart, it’s hard to miss the bullish peg-leg formation, which has formed. A steady to lower trade into Monday would likely set up a buy.
June British Pound- The G-7 met this weekend, but there were few surprises. Still, many traders, including us, believe the dollar is nearing a bottom. Currently, our downside target is pegged at 193.50, but there’s been little action until today, where the BP dropped 174 points.
June Australian Dollar- I’ve been thinking the AD would drop, but it has not. In fact, it has rallied! If you’re short, place stops above Tuesday’s high. Our downside target is 87.05.
June Yen- A bear flag is forming. A break below 97.50 should kick in the sell programs. If so, our downside target will be 94.90.
June Swiss franc- The franc appears to be at a precipice, and a break below 98.30 would push it over. If so, our downside target will be 93.25.
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 Sugar- Sugar’s rally today looked exciting, but I wouldn’t buy it here. The pattern doesn’t suggest a bottom to me. I’ll watch it for a few days—maybe something will develop.
June Crude- Despite refinery cut-backs, gasoline stocks are increasing. Last week, oil executives testified before Congress that demand and the falling dollar, not oil speculation, have been the cause of the sharp run-up in crude oil prices. It’s true, the dollar has dropped 30%, but Investment in oil futures have jumped from 9 billion contracts in 2000 to 250 billion today. The long only index funds (ETF) have created a synthetic shortage where none exists.
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REVERSAL DATES FOR THE WEEK of April 7th, 2008
MONDAY – Corn, Silver, Coffee
TUESDAY –
WEDNESDAY – Crude, RBOB gas, Dow, S&P
THURSDAY –
FRIDAY –
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MARKETS TO WATCH:
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1-JUNE DOW JONES – The bullish TC (Trend Continuation) pattern is still valid and projects the upward trend to continue higher into the April 11 th reversal date. The target remains 13,050.
2-JUNE EURO CURRENCY –Last week, I described the failed swing pattern, that occurred on March 31,and explained how this type of pattern will typically precede a significant price move in the opposite direction. Since then, the EC has formed the final segment of a major TR pattern that warns of a possible shift in the overall trend. A confirmation of this pattern should be enough to trigger more selling. A trade below 1.5575 will confirm the pattern and the sell signal.
3-JUNE JAPANESE YEN – Monday’s outside day has set up a bearish TC pattern that, when confirmed, will set up a drop to the reaction line target of .9200. The Yen should reach this target on or before the next reversal date, due on April 15.
4-MAY CRUDE OIL –In the last update, I gave the argument that the Crude would not follow through on the bearish TR pattern, but could turn higher and test the 108.20 before trading lower. It didn’t take long for this scenario to unfold as the Crude reached, and surpassed, the 108.20 level on Monday. I look for the Crude to continue higher with a target at 111.50.
5-JUNE SWISS FRANC – The Swiss franc confirmed a bearish TR pattern last week, but found support at the 20-day SMA and has formed a bearish TC pattern. A trade below .9789 will trigger another sell signal.
6-MAY SILVER –In the last couple of updates, I have been saying the Silver was overdue for a correction back to the $17.70 to $17.40 level to form the last segment of a TR pattern. The market reacted today and dropped to a low of $17.44 before closing at $17.71. This pullback happened in one day, so I don’t think the correction is over just yet. I’ll wait for a two-bar confirmation before making a recommendation.
7-JUNE CATTLE – The market reversed on the projected reversal date (March 31) and continued higher until it finally met resistance at the 20-day SMA on Tuesday. Cattle are notorious for making V bottoms, so this looks like the beginning of a long-term move. However, I think the market is ready for a short-term rest and could pull back to 88.45 before continuing higher.
8-AUSTRALIAN DOLLAR - The Aussie has begun a new bullish cycle, triggered by the TR pattern. The market had formed a long-term A-B-C continuation pattern between February 28 and March 20. This should be the center of the long-term cycle and suggests a move towards .9600.
9-MAY SOYBEANS – The Soybeans rallied sharply off the failed swing pattern low and have reached the 20-day SMA. This should meet resistance at this level and begin a short-term correction over the next couple of days. The market should pull back to $12.38, or even as low at $11.95 before resuming the new upward trend.
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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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