WELCOME TO THE JOSS REPORT - WEEKLY TRADE ADVISOR
ClearTrade®
Clearing Man Financial
The Joss Report trading recommendations and weekly trade advisor was first published in October 1998. Since that time, the Joss Report research has continued to evolve into an important source of technical insight for many traders. Our goal is to provide traders with a 'trading plan' to prepare for the trading day and week ahead.
ClearTrade's own technical analyst, Scott Joss*, is a veteran futures trader with twenty-eight years experience on and off the trading floor - as a technical analyst, pit trader, account executive handling arbitrage for Smith Barney, former member of the CBOT, non-member CTA and presently an IB. Scott prepares technical analysis in selected market groups when an opportunity presents itself and not only develops 'trading modules' on selected trading opportunities but 'feeds-forward', advising traders what to expect and how to react.
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The Joss Report Archived Weekly Trade Advisor 2005
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TECH TALK by Scott R. Joss (Non member C.T.A)*
MARCH SUGAR (SB6H)
Last week, I explained that the spread price differential between March Sugar and May Sugar - based on past history - could possibly widen from a price of even (0), which was the difference several weeks ago, to 33.
This past week, the price differential between March and May contracts has continued to widen. March Sugar closed Friday at 11.80 and May Sugar closed at 11.72 - or a price difference of plus 8. This compares to last week’s 7 point differential. Remember - each point differential equates to $11.20 per spread.
Should traders continue to buy March Sugar and sell May Sugar as a spread?
Yes. The spread maybe slow in its progress - yet appears to be effective in its end result.
In last week’s Weekly Trade Advisor, I discussed why Sugar might be in a short-term consolidation period - but in the long-term why prices should continue higher. I explained why a short-term consolidation might ensue based technically on the price bar between lows of 11.12 and highs of 11.91, which was posted on 10/04/05.
I also explained that if March Sugar could consolidate between 11.12 and 11.91, a weekly recommendation would develop for this coming week. This particular trading module, which I developed last week, did occur; March Sugar has a ‘Coil’ weekly recommendation for next week.
March Sugar last week traded in a range between lows of 11.45 and highs of 11.85.
Every week I stress to traders that the Sugar ‘trading modules’ I develop are long-term trades that may span a year or more to achieve. Because of the possible length of the trade, traders have been advised to establish long positions in March 2006 futures and options, then rolling forward as time approaches.
My belief - technically and fundamentally - is that sugar prices will go much higher, not only in the short-term but in years to come - based on two very bullish ’W’ formations. These ’W’ formations have developed on the daily, weekly and monthly charts. The first was at 9.13 and the second at 11.40.
Fundamentally, my belief that Sugar prices will move higher is based on the current supply/demand equation and world policy changes to cut subsidies.
As a trader with twenty-nine years experience on and off the trading floor, I’ve learned that the only way to maximize your potential of becoming a successful trader is by developing a trading plan that ‘feeds forward’ through the use of charts.
Traders are encouraged to make use of the Weekly Trade Advisor provided in the Joss Report - or to develop their own trading plan every week. Whatever tools you use, it is imperative that traders put the hard work into developing a weekly trading strategy.
To develop a weekly trading strategy, the Joss Report begins by analyzing the charts and from there, formulates trading modules that will guide trading decisions in the coming week. The purpose of trading modules is to help traders adjust to changing market conditions as they develop. I believe that the critical ‘adjustments’ that trading modules provide are crucial to being a successful trader by limiting potential risk.
The long positions in Sugar that I’ve ‘designed’ were originally based on daily, weekly and monthly trade signals from the July 2005 contract, then the October 2005 contract - and now, the March 2006 contract.
Remember, technically, sugar has two very powerful bullish ‘W’ formations on the daily, weekly and monthly charts.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated that the net change in open interest last week increased 19,423, posting a total open interest of 475,768 contracts.
Several weeks ago I discussed how subsidy cuts, which are in effect for Sugar, may affect large Ag companies who are unprepared for rising costs. Last week, Kraft Foods Inc. cited rising commodity prices, including sugar, as a reason that its third quarter net income fell 13.5 percent compared with a year ago.
Analysts say that high sugar prices are likely to hurt the first quarter results of Sara Lee Corp. - whose bakery division uses tons of sugar. Sara Lee reports its financial results on Nov. 3.
In the next several years, other large companies will be affected if the World Trade Organization (WTO) moves forward at the Doha Round of international trade talks in Hong Kong this mid-December. The main agenda will be subsidy cuts of all Ag based commodities.
It appears that Cotton is in the forefront for subsidy cuts and Soybeans, Corn and Wheat in the next several years.
If the WTO were successful, as I explained in the October 9th Joss Report, Ag prices could explode to much higher price levels.
WHAT DOES THE MARCH SUGAR CHART LOOK LIKE?
Next week will be challenging for Sugar because of two ingredients; a three-week price consolidation and a key ‘Coil’ weekly recommendation.
For next week March Sugar has a weekly recommendation: buy when trades 11.86 - sell when trades 11.44.
This is not just an ordinary weekly recommendation but also a ‘Coil’ weekly recommendation. ‘Coils’ have a tendency to lash out violently in the direction of its trend.
On 10/04/05, the March Sugar chart posted highs of 11.91 and lows of 11.12.
Last week, I advised traders to watch this bar price on the daily chart because it might represent a ‘spike’ high. If it were a spike high, it could be the beginning process of a consolidation period between 11.12 and 11.91.
Sugar will need to post either multiple closes above 11.91 for a continuation pattern to higher prices or multiple closes below 11.12 to begin a correction period. Until this occurs, Sugar continues to be trapped in consolidation between 11.12 and 11.91.
March Sugar has been in a multi-year price advance, which began from lows of 6.12 (2/13/04) to recent highs of 11.91 (10/04/05).
On 10/04/05, March Sugar filled the first of eight unfilled price gaps above the current market price between 11.72 and 11.80.
For three-weeks March Sugar has traded above 11.12 and below 11.91, indicating the beginning of consolidation. Traders were advised to watch last week’s low of 11.40.
What is so important about 11.40?
The middle of the first bullish ‘W’ formation several months ago was at 9.13, which the markets tested over a seven-week period. Once the breakout and consolidation period ended, the major upward price advance to 11.91 occurred.
The middle of the second bullish ‘W’ formation is 11.40.
The question I posed last week still applies: ‘Will it take seven-weeks to consolidate before the next major price advance?’
Next week the markets will indicate if the ‘Coil’ weekly recommendation can propel prices higher to the next level of 12.70 - or lower to support at 10.33.
Remember - as is the case in futures, traders are advised to prepare for the worst - a temporary price correction, and anticipate the best - a continuation of an upward price surge.
If neither the ‘Coil’ weekly buy signal at 11.86 nor the weekly sell signal at 11.44 is posted, then Sugar will continue to consolidate. If this fourth week of consolidation were to occur, Sugar will have a rarely seen double ‘Coil’ weekly recommendation for the following week.
March Sugar has seven unfilled price gaps above the current market price. The next unfilled price gap is between 13.50 and 13.61.
March Sugar has five unfilled price gaps below the current market price. The most recent unfilled price gap is between 10.21 and 10.23.
For seventeen-weeks, March Sugar has closed above its 40-day moving average and 50-day moving average, which as of Friday was at 11.06 and 10.85, respectively.
March Sugar closed Friday at 11.80, which is above its 100-day moving average of 10.18 and its 200-day moving average of 9.53.
Below are the most recent trade signals Sugar has posted.
On 9/15/05, March Sugar posted a ‘Coil’ daily buy signal at 10.83.
On 9/20/05, March Sugar posted a daily sell signal at 10.75.
On 9/23/05, March Sugar posted a daily buy signal at 10.70.
On 9/30/05, March Sugar posted a daily buy signal at 11.30.
On 10/06/05, March Sugar posted a daily sell signal at 11.31.
On 10/10/05, March Sugar posted a daily buy signal at 11.41.
On 10/13/05, March Sugar posted a daily sell signal at 11.65.
WHAT WERE TRADERS ADVISED TO DO LAST NEXT WEEK?
March Sugar had a weekly recommendation for last week: buy when trades 11.88 - sell when trades 11.39.
Because neither the weekly buy signal nor the weekly sell signal was activated, traders were advised to refer to trading module # 10.
# 10) If March Sugar last week traded above 11.39 and below 11.88:
Aggressive futures traders were advised to sit on the sidelines and wait for a possible - and probable - explosive ‘coil’ weekly recommendation to develop for the following week, which will be this week.
Option traders were advised to sit on the sidelines and wait for a possible - and probable - explosive ‘coil’ weekly recommendation to develop for the following week.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
March Sugar has a ‘Coil’ weekly recommendation for next week: buy when trades 11.86 - sell when trades 11.44.
Below are ‘trading modules’ for futures and option traders to consider next week.
# 1) If March Sugar first posts a weekly buy signal at 11.86:
Aggressive traders are not advised to establish a long position.
Option traders are not advised to purchase a call position.
# 2) If March Sugar first posts a weekly buy signal at 11.86 and posts multiple closes above 11.91:
Aggressive traders are advised to establish a long position, placing stops at 11.44.
Option traders are advised to either purchase March 1200 or March 1300 calls, risking 50% of purchase price**.
# 3) If March Sugar activated trading module # 2 and posts a close above 12.31, which were 1998 highs:
Aggressive traders are advised to either add to their existing long position or establish a long position, placing all stops below 11.86*.
Option traders are advised to either purchase March 1200 or 1300 calls, risking 50% of purchased price**.
Our first objective will be 12.70.
# 4) If March Sugar posts multiple closes above 1285:
Aggressive traders are advised to either add to their existing long position or establish a long position, placing all stops below 11.86*.
Option traders are advised to either purchase March 1300 or 1400 calls, risking 50% of purchased price**.
Our second objective will be the next unfilled price gap between 13.50 and 13.61 from 2/19/82.
# 5) If March Sugar first posts a weekly buy signal at 11.86 and posts a higher high than 11.91 - yet reverses:
Aggressive traders are advised to place resting sell stop orders at 11.44.
Option traders are advised to prepare to purchase March 1050 puts.
If trading module # 5 is activated:
Aggressive traders would establish a short position at 11.44, placing resting buy stop and reverse orders for this position at 11.86.
Option traders would purchase March 105 puts, risking 50% of purchase price, yet should prepare to exit their March 1050 puts and purchase March 1200 calls if 11.86 were posted.
# 6) If March Sugar activated trading module # 5 and posts a close below 11.12:
Aggressive traders are advised to either add to their existing short position or establish a short position, placing all stops above 11.40*.
Option traders are advised to either add to their existing March 1050 put position or purchase March 1050 puts, risking 50% of market value**.
Our objective will be the unfilled gap between 10.21 and 10.23.
# 7) If March Sugar first posts a weekly sell signal at 11.44:
Aggressive traders are not advised to establish a short position.
Option traders are not advised to purchase a put option position.
# 8) If March Sugar posts a weekly sell signal at 11.44 and posts multiple closes below 11.12:
Aggressive traders are advised to establish a short position, placing stop and reverse orders at 11.86.
Option traders are advised to purchase March 105 puts, risking 50% of purchase price but should prepare to exit their March 1050 puts and purchase March 1200 calls if 11.86 were posted.
Our objective will be the unfilled gap between 10.21 and 10.23.
# 9) If March Sugar posts a close below 10.90:
Aggressive traders are advised to either add to their existing short position or establish a short position, placing all stops above 11.40*.
Option traders are advised to either add to their March 1050 puts or purchase March 1050 puts, risking 50% of market value**.
Our objective will be the unfilled gap between 10.21 and 10.23.
# 10) If March Sugar first posts a weekly sell signal at 11.44 and posts a lower low than 11.12 - yet reverses:
Aggressive traders are advised to place resting buy stop orders at 11.86.
Option traders should prepare to purchase either March 1200 or March 1300 calls if 11.86 were posted.
If trading module # 10 is activated:
Aggressive traders would establish a long position at 11.86, placing resting buy stop and reverse orders for this position at 11.44.
Option traders would purchase either March 1200 or March 1300 calls, risking 50% of purchase price or a posting of 11.39**.
Our first objective will be 12.70.
Our second objective will be the unfilled price gap between 13.50 and 13.61 from 2/19/82.
# 11) If March Sugar next week trades above 11.44 yet below 11.86:
Aggressive futures traders are advised to sit on the sidelines and wait for a possible explosive double ‘Coil’ weekly recommendation to develop for the following week.
Option traders are advised to sit on the sidelines and wait for a possible - explosive ‘Coil’ weekly recommendation to develop for the following week.
For weeks, I’ve listed some Sugar option facts and will continue to provide updated information:
Sugar options for a two-year ‘implied volatility’ average are ranked number 14 out of 45.
14) Sugar (SB) High 42.12% - Low 18.90% - Current 27.39%.
.
Sugar options for a one-year ‘implied volatility’ average are ranked number 7 out of 45.
7) Sugar (SB) High 33.54% - Low 18.90% - Current 27.39%.
Sugar options for a six-month ‘implied volatility’ average are ranked number 13 out of 45.
13) Sugar (SB) High 27.18% - Low 18.90% - Current 27.39%.
DAILY CHART MARCH SUGAR:
http://bohl.minot.com/d_Chart.cgi?SB06H
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WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SB
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
----------------------------------------------------
DECEMBER CANADIAN DOLLAR (CD5Z)
This week I will begin developing several ‘trading modules’ for the December Canadian Dollar because of a weekly recommendation for next week and a possible monthly recommendation developing for November - which will not be revealed until the close of business October 31st.
Last week it was reported that Canada’s Retail sales dipped a sharper than expected 0.3 percent in August on a drop in vehicle sales. Excluding autos, sales rose 0.2 percent, but that fell far short of the 0.5 percent gain that analysts had expected.
In its semi-annual report on Thursday, the Bank of Canada lowered its 2006 economic growth outlook to 2.9 percent from 3.3 percent, even as it suggested it would continue hiking interest rates.
If the U.S. Dollar, which traders can read about in ‘Chart Watch’, truly has formed a long-term bullish ‘head and shoulders bottom’ on the daily, weekly and monthly charts, traders can anticipate a depreciation of the Canadian Dollar.
Why a depreciation vs. the U.S. Dollar?
Because Oil, Gold and other commodities account for more than a third of the nation's exports. Producers price oil in U.S. dollars and convert the proceeds to the local currency.
If Gold prices begin to tumble toward 440.40 and Oil prices are pressured to our anticipated short-term projection of 56.10, then the Canadian Dollars value should depreciate.
All eyes will be watching not only the commodities - but the release of September's consumer price data on Tuesday and producer and raw materials prices on Friday.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated that the net change in open interest last week increased 3,207, posting a total open interest of 112,354 contracts.
WHAT DOES THE CANADIAN DOLLAR CHART LOOK LIKE?
The December Canadian Dollar, has been in a five-month price advance from lows of .7900 (5/17/05) to highs of .8649 (9/30/05).
Currently, the Canadian Dollar has traded from highs of .8649 to recent lows of .8423 (10/14/05).
On 10/04/05, the December Canadian posted a daily sell signal at .8584.
For next week the December Canadian Dollar has a weekly recommendation: buy when trades .8556 - sell when trades .8428.
The December Canadian Dollar, may be developing a monthly recommendation for November.
The December Canadian Dollar, has three unfilled price gaps below the current market price. The first unfilled price gap is between .8293 and .8307. The second unfilled price gap is between .8209 and .8210.
The December Canadian Dollar has no unfilled price gaps above the current market price.
The December Canadian Dollar’s 40-day moving average and 50-day moving average as of Friday were at .8500 and .8469, respectively.
The December Canadian Dollar, closed Friday at .8440, which is above its 100-day moving average of .8324 and its 200-day moving average of .8231.
WHAT SHOULD TRADER DO NEXT WEEK?
For next week, the December Canadian has a weekly recommendation: buy when trades .8556 - sell when trades .8428.
Below are ‘trading modules’ for futures and option traders to consider next week.
# 1) If the December Canadian first posts a weekly buy signal at .8556:
Aggressive futures traders are advised to establish a long position, placing stops at .8428.
Option traders are advised to purchase December .8500 calls, risking 70% of purchase price**.
# 2) If the December Canadian posts multiple closes above .8575:
Aggressive futures traders are advised to either add to their existing long position or establish a long position, placing all stops below .8556*.
Options traders are advised to purchase December .8500 calls, risking 70% of purchase price**.
Our short-term objective will be a challenge of contract highs of .8649.
# 3) If the December Canadian posts multiple closes above contract highs of .8649:
Aggressive futures traders are advised to either add to their existing long position or establish a long position, placing all stops below .8575*.
Options traders are advised to purchase December .8600 calls, risking 70% of purchase price.
Our next objective will be .8727.
# 4) If the December Canadian first posts a weekly sell signal at .8428:
Aggressive futures traders are advised to not establish a short position but wait for multiple closes below .8422 before establishing a short position.
If multiple closes below .8422 was to occur, aggressive traders are advised to place resting stop and reverse buy orders at .8556.
Options traders are advised not to purchase an option position but wait for multiple closes below .8422 before purchasing December .8400 puts.
If multiple closes below .8422 were to occur, option traders are advised to be prepared to exit their December .8400 puts and purchase December .8500 calls if the .8556 price were to be posted.
# 5) If the December Canadian posts multiple closes below last month’s lows of .8397:
Aggressive futures traders are advised to either add to their existing short position or establish a short position, placing all stops above .8428*.
Options traders are advised to purchase December .8400 puts, risking 70% of purchase price.
Our next objective will be .8271.
Below are possible reversal ‘trading modules’ to consider next week:
# 6) If the December Canadian first posts a weekly sell signal at .8428 without posting multiple closes below .8422 yet reverses, posting the weekly buy signal at .8556:
Aggressive futures traders are advised to place resting buy stop orders at the weekly buy signal of .8556.
Options traders are advised to prepare to purchase December .8500 calls if the weekly buy signal at .8556 was posted.
If trading module # 5 is activated:
Aggressive futures traders will have an established long position from their resting buy stop orders at the weekly buy signal of .8556, place stops at .8428.
Options traders are advised to purchase December .8500 calls, risking 70% of purchase price**.
# 7) If the December Canadian first posts a weekly buy signal at .8556 yet reverses, posting the weekly sell signal at .8428:
Aggressive futures traders are advised to place resting sell stop orders at the weekly sell signal of .8428.
Options traders are advised to prepare to purchase December .8400 puts if the weekly sell signal at .8428 was posted.
If trading module # 7 is activated:
Aggressive futures traders will have an established short position from their resting sell stop orders at the weekly sell signal of .8428, place stops at .8556.
Options traders are advised to purchase December .8400 puts, risking 70% of purchase price**.
I have listed some Canadian option facts:
Canadian options for a two-year ‘implied volatility’ average are ranked number 12 out of 45.
12) Canadian (cd) High 10.40% - Low 6.85% - Current 8.37%
Canadian options for a one-year ‘implied volatility’ average are ranked number 22 out of 45.
22) Canadian (cd) High 10.40% - Low 6.85% - Current 8.37%
Canadian options for a six-month ‘implied volatility’ average are ranked number 10 out of 45.
10) Canadian (cd) High 8.95% - Low 6.85% - Current 8.37%
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?CD05Z
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?CD
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
----------------------------------------------------
JANUARY ORANGE JUICE (OJ6F)
Last week, I began developing several ‘trading modules’ for January Orange Juice because of a ‘Coil’ daily recommendation, weekly recommendation for January Juice, and a monthly recommendation for November Orange Juice.
I explained last week that the January Orange Juice chart was too sketchy to view the monthly recommendation. Because of this, I analyzed the November monthly recommendation and hypothetically converted the monthly buy signal for January to 104.80.
Florida and Brazil combined produce 80 percent of the world's orange juice. Florida's orange juice availability is down 1 percent, and Brazil's is down 9 percent. World availability is down 5 percent, or 200 million gallons of orange juice.
Last year, Florida lost more than a fifth of its crop due to hurricanes. The losses cut into the reserves used to keep store shelves stocked in the off-season.
In addition, the latest citrus disease to hit Florida is citrus greening, which was confirmed last week by the Florida Department of Agriculture in two residential areas of Martin County and three in Palm Beach County. The disease causes trees to produce misshapen, bitter-tasting fruit - and die within a few years.
A spokesman for the Florida Department of Agriculture said Wilma (the current hurricane that Florida faces late Monday) could bring another problem: Canker disease. Canker is not treatable and requires infected citrus trees and all those within 1,900 feet to be chopped down. It spreads in rainy, windy conditions.
If Wilma does hit the south central portion of Florida, January Juice prices should surge even higher than last week’s high of 115.50.
If Wilma does not pose an immediate threat, then prices should pullback to support at 106.35, regroup and try to move higher again.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated that the net change in open interest last week increased 428, posting a total open interest of 27,981contracts.
WHAT DOES THE ORANGE JUICE CHART LOOK LIKE?
January Orange Juice has been in an eight-week price advance from lows of 90.80 (8/23/05) to recent highs of 115.50 (10/19/05).
On 10/03/05, November Orange Juice posted a monthly buy signal at 102.45. If I equate this to January Juice, it would be approx. at 104.80.
On 10/17/05, January Orange Juice posted a ‘Coil’ daily buy signal at 105.85.
On 10/17/05, January Orange juice posted a weekly buy signal at 106.45.
Orange Juice has developed a bullish ‘ascending’ right triangle, which was breeched last week at 106.35.
The major reason January Orange Juice was having problems advancing at the 106.00 level previous to last week’s breakout is because they were the highs for 2002 on the long-term charts.
The 106.00 level should be major support for January Orange Juice.
January Orange Juice had one unfilled price gap above the current market price between 106.05 and 108.60, which was filled last week. Contract highs for January Orange Juice are at 115.50.
January Orange Juice has three unfilled price gaps below the current market price. The most recent unfilled price gap is between 101.60 and 101.30.
January Orange Juice has closed six-weeks above its 40-day moving average and 50-day moving average - which as of Friday was at 101.20 and 99.90, respectively.
January Orange Juice closed Friday at 110.25, which is above its 100-day moving average of 100.70 and its 200-day moving average of 98.10.
WHAT WERE TRADERS ADVISED LAST WEEK?
# 1) If January Orange Juice first post a daily buy signal at 105.85:
Aggressive futures traders were advised to wait for the weekly buy signal at 106.45 before establishing a long position, placing stops at 102.45*.
Option traders were advised to wait for the weekly buy signal at 106.45 before purchasing January 100.00 calls, risking 70% of purchase price.
# 2) If January Orange Juice posted multiple closes above 106.50:
Aggressive futures traders were advised to either add to their existing long position or establish a long position, placing all stops at 102.55.
Options traders were advised to purchase January 100.00 calls, risking 70% of purchase price.
Our short-term objective of 110.65 was met last week
# 3) If Orange Juice posted multiple closes above contract highs of 109.75:
Aggressive futures traders were advised to either add to their existing long position or establish a long position, placing all stops below 104.00.
Options traders were advised to purchase January 110.00 calls, risking 70% of purchase price.
Our next objective 111.25 was met last week.
# 4) If Orange Juice posted multiple closes above 111.25:
Aggressive futures traders were advised to either add to their existing long position or establish a long position, placing all stops below 105.85.
Options traders were advised to purchase January 110.00 calls, risking 70% of purchase price.
Our next objective of 114.20 was met last week - however, multiple closes above 111.25 were not met.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Traders who exited their futures and option positions based on our objective of 114.20 are advised to follow the trading modules listed below.
Traders who did not exit their futures or option positions are advised to follow the trading modules listed below.
For next week, January Orange Juice has a daily recommendation: buy when trades 111.80 - sell when trades 109.85.
Below are ‘trading modules’ for futures and option traders to consider next week.
# 1) If January Orange Juice first posts a daily buy signal at 111.80:
Aggressive futures traders are advised to establish a long position, placing stops below 105.85*.
Option traders are advised to purchase January 110.00 calls, risking 70% of purchase price**.
# 2) If January Orange Juice posts multiple closes above 112.50:
Aggressive futures traders are advised to either add to their existing long position or establish a long position, placing all stops below 105.85*.
Options traders are advised to purchase January 110.00 calls, risking 70% of purchase price**.
Our short-term objective will be a challenge of contract highs of 115.50.
# 3) If January Orange Juice posts multiple closes above contract highs of 115.50:
Aggressive futures traders are advised to either add to their existing long position or establish a long position, placing all stops below 109.75, which were previous contract highs*.
Options traders are advised to purchase January 120.00 calls, risking 70% of purchase price.
Our next objective will be 122.25.
# 4) If January Orange Juice first posts a daily sell signal at 109.85:
Aggressive futures traders are advised to not establish a short position.
Options traders are advised not to purchase a put option position.
# 5) If January Orange Juice posts multiple closes below last month’s lows of 92.80 by the close of business October 31st:
Aggressive futures traders are advised to establish a short position, placing all stops above 98.65*.
Options traders are advised to purchase January 90.00 puts, risking 70% of purchase price**.
Our next objective will be 86.95.
Below are possible reversal ‘trading modules’ to consider next week:
# 6) If January Orange Juice first posts a daily sell signal at 109.85 yet reverses, posting the daily buy signal at 111.80:
Aggressive futures traders are advised to place resting buy stop orders at the daily buy signal of 111.80.
Options traders are advised to prepare to purchase January 110.00 calls if the daily buy signal at 111.80 was posted.
If trading module # 6 is activated:
Aggressive futures traders will have an established long position from their resting buy stop orders at the daily buy signal of 111.80, place stops below 105.85*.
Options traders are advised to purchase January 110.00 calls, risking 70% of purchase price**.
# 7) If January Orange Juice first posts a daily buy signal at 111.80 yet reverses, posting the daily sell signal at 109.85:
Aggressive futures traders are advised to place resting sell stop orders at the ‘intra-month’ sell signal of 92.80.
Options traders are advised to prepare to purchase January 90.00 puts if the ‘intra-month’ sell signal at 92.80 was posted.
If trading module # 7 is activated:
Aggressive futures traders will have an established short position from their resting sell stop orders at the ‘intra-month’ sell signal of 92.80, place stops above 98.65.
Options traders are advised to purchase December .8400 puts, risking 70% of purchase price**.
I have listed some Orange Juice option facts and will continue to provide updated information:
Orange Juice options for a two-year ‘implied volatility’ average are ranked number 21 out of 45.
21) Orange Juice (Jo) High 55.83% - Low 21.50% - Current 31.46%
Orange Juice options for a one-year ‘implied volatility’ average are ranked number 20 out of 45.
20) Orange Juice (Jo) High 43.93% - Low 21.50% - Current 31.46%
Orange Juice options for a six-month ‘implied volatility’ average are ranked number 5 out of 45.
5) Orange Juice (Jo) High 32.62% - Low 21.50% - Current 31.46%
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?OJ06F
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WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?OJ
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
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DECEMBER COCOA (CC5Z)
This week I will begin developing several ‘trading modules’ for December Cocoa because of a weekly recommendation for next week and a possible monthly recommendation developing for November - which will not be revealed until the close of business October 31st. Also, Cocoa is in danger of posting an ‘intra-year’ sell signal at 1299.
In two weeks, I will begin developing several ‘trading modules’ for March Cocoa because first notice day for the December contract is 11/15/05. However, the volume remains in December for now.
As reported by Reuters: Ivory Coast's government failed on Friday to announce a new set of cocoa taxes and levies for the 2005/06 season, effectively prolonging a block on exports into next week, industry and government sources said.
They said ministers disagreed over whether or not to suppress contributions to a prudential reserve, part of the annual seasonal tax package.
Exports of cocoa from Ivory Coast bought since the October 1 start of the 2005/06 season have been suspended because the new tax rates have not yet been set.
It was widely expected the new taxes would be announced on Friday in the world's No. 1 cocoa grower.
"No agreement has been reached on the prudential reserve. Some people want it to be suspended and others want it maintained," a government source told Reuters.
The prudential fund, which is financed by a specific tax, is a savings fund intended to be used as a protection against fluctuations in the market price of cocoa.
"I think that next week at the latest the new taxes will be definitively published so we can go ahead with the exports that have been blocked since last week," the source added.
During the 2004/05 season, the contribution to the prudential reserve was set at 10 CFA francs per kilo.
"According to our information, the Agriculture Minister favors a suspension of the prudential reserve, while others want it maintained. That's what's holding up a definitive decision on the taxes," one industry source, who asked not to be named, told Reuters.
"We're certainly not going to get them today because the discussions are still continuing," he added
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated that the net change in open interest last week increased 4,711, posting a total open interest of 133,853 contracts.
WHAT DOES THE DECEMBER COCOA CHART LOOK LIKE?
December Cocoa has been in a seven-month price decline from highs of 1887 (3/18/05) to lows of 1328 (9/26/05).
Currently, Cocoa has traded from recent lows of 1328 to highs of 1444 (9/30/05).
On 9/09/05, December Cocoa posted an ‘intra-day’ sell signal at 1542.
On 9/21/05, December Cocoa posted an ‘intra-day’ sell signal at 1366.
For next week December Cocoa has a weekly recommendation: buy when trades 1406 - sell when trades 1355.
December Cocoa may be developing a monthly recommendation for November - which will not be revealed until the close of business October 31st.
December Cocoa may be developing an ‘intra-year’ recommendation for January - which will not be revealed until the close of business December 30th.
December Cocoa has no unfilled price gaps below the current market price.
December Cocoa has three unfilled price gaps above the current market price. The first gap is between 1507 and 1516. The second gap is between 1700 and 1772.
Cocoa has a bearish ‘island reversal top’ that was posted on 9/12/05 between highs of 1507 and lows of 1516.
December Cocoa’s 40-day moving average and 50-day moving average as of Friday were at 1410and 1406, respectively.
December Cocoa closed Friday at 1366, which is below its 100-day moving average of 1447 and its 200-day moving average of 1526.
WHAT SHOULD TRADERS DO NEXT WEEK?
For next week, December Cocoa has a weekly recommendation: buy when trades 1406 - sell when trades 1355.
Below are ‘trading modules’ for futures and option traders to consider next week.
# 1) If the December Cocoa first posts a weekly buy signal at 1406:
Aggressive futures traders are not advised to establish a long position.
Option traders are advised to not purchase March calls.
# 2) If December Cocoa posts multiple closes above 1575:
Aggressive futures traders are advised to establish a long position, placing all stops below 1450*.
Options traders are advised to purchase March 1500 calls, risking 70% of purchase price**.
Our short-term objective will be a challenge of past highs of 1620.
# 3) If December Cocoa posts a multiple closes above 1620:
Aggressive futures traders are advised to either add to their existing long position or establish a long position, placing all stops below 1575*.
Options traders are advised to purchase March 1600 calls, risking 70% of purchase price.
Our next objective will be 1672 highs.
# 4) If December Cocoa first posts a weekly sell signal at 1355:
Aggressive futures traders are advised to not establish a short position but wait for multiple closes below 1347 before establishing a short position.
If multiple closes below 1347 were to occur, aggressive traders are advised to place resting stop buy orders at 1406.
Options traders are advised not to purchase an option position but wait for multiple closes below 1347 before purchasing March 1300 puts.
If multiple closes below 1347 were to occur, option traders are advised to be prepared to exit their March 1300 puts if the 1406 price were to be posted.
Our first objective will be a challenge of last month’s low of 1328.
# 5) If December Cocoa posts multiple closes below last month’s lows of 1328:
Aggressive futures traders are advised to either add to their existing short position or establish a short position, placing all stops at 1406.
Options traders are advised to purchase March 1300 puts, risking 70% of purchase price.
Our objective will be last year’s low of 1300.
# 6) If December Cocoa posts multiple closes below last year’s low of 1300:
Aggressive futures traders are advised to either add to their existing short position or establish a short position, placing all stops above 1355*.
Options traders are advised to purchase March 1300 puts, risking 70% of purchase price**.
Our objective will be 1080.
Below are possible reversal ‘trading modules’ to consider next week:
# 6) If December Cocoa first posts a weekly sell signal at 1355 yet reverses, posting the weekly buy signal at 1406:
Aggressive futures traders are not advised to place resting buy stop orders at the weekly buy signal of 1406.
Options traders are not advised to purchase March 1500 calls if the weekly buy signal at 1406 is posted.
# 7) If December Cocoa first posts a weekly buy signal at 1406 yet reverses, posting the weekly sell signal at 1355:
Aggressive futures traders are advised to place resting sell stop orders at the weekly sell signal of 1355.
Options traders are advised to prepare to purchase March 1500 puts if the weekly sell signal at 1355 is posted.
If trading module # 7 is activated:
Aggressive futures traders will have an established short position from their resting sell stop orders at the weekly sell signal of 1355, place stops at 1406.
Options traders are advised to purchase March 1300 puts, risking 70% of purchase price**.
I have listed some Cocoa option facts:
Cocoa options for a two-year ‘implied volatility’ average are ranked number 25 out of 45.
25) Cocoa (cc) High 45.90% - Low 26.49% - Current 31.05%.
Cocoa options for a one-year ‘implied volatility’ average are ranked number 32 out of 45.
32) Cocoa (cc) High 45.90% - Low 26.49% - Current 31.05%.
Cocoa options for a six-month ‘implied volatility’ average are ranked number 28 out of 45.
28) Cocoa (cc) High 37.81% - Low 25.63% - Current 31.05%.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?CC05Z
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WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?CC
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
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CASH U.S. DOLLAR (DXY$Y)
In the August 28th Joss Report, I added the U.S. Dollar and Cash U.S. Dollar index to ‘Chart Watch’ because of a possible bullish ‘head and shoulders’ bottom formation developing on the long-term weekly and monthly charts.
The Japanese Yen has been added at the end of the U.S. Dollar piece because of an ‘intra-year’ sell signal posted last week at .8711.
For seven weeks I have been writing on and off that traders should focus on the Cash Dollar chart because the rollovers that occur in the futures Dollar chart every three-months might confuse traders. The Cash Dollar is one continuous chart that makes it easier to identify with over a long period of time.
Three-weeks ago, I stated that if the Cash U.S. Dollar could post a monthly close at or above 89.44 by the close of business September 30th, this would constitute a continuation pattern conducive with higher prices.
Conversely, I noted to currency traders that the Euro-Currency (FX) and the Swiss Franc had posted ’intra-monthly’ sell signals.
However, the main story is the Japanese Yen.
The ‘Commitment of Traders’ report for the Japanese Yen - published each Friday by the CFTC - indicated that the net change in open interest last week increased 23,517, posting a total open interest of 199,678 contracts.
The ‘Commitment of Traders’ report for the U.S. Dollar - published each Friday by the CFTC - indicated that the net change in open interest last week increased 3,551, posting a total open interest of 24,239 contracts.
WHAT DOES THE U.S. DOLLAR CHART LOOK LIKE?
The Cash U.S. Dollar has been in a multi-year price decline, which in actuality means the dollar has depreciated against the major currencies around the world. The U.S. Dollar, unlike other currencies, is a basket of all currencies.
Currently, it appears the U.S. Dollar futures and the Cash U.S. Dollar may be forming a ‘head and shoulders’ bottom on the daily, weekly and monthly charts.
If this bullish ‘head and shoulders’ bottom were to occur, this would represent either the celebration that Mr. Greenspan is leaving office or that the Bush Administration has changed from a weak Dollar policy to a stronger Dollar policy..
THE DAILY CHART:
The Cash U.S. Dollar daily chart shows the ‘left’ shoulder was developed between 92.25 highs (5/13/04) to lows of 87.00 (7/19/04).
The daily chart shows the ‘head’ with a ‘W’ formation was established between 80.42 lows and 86.93 highs, with the middle of the ‘W’ at 85.44.
The daily chart shows the current development of the ‘right’ shoulder between highs of 90.77 and lows of 86.02.
The all-important neckline breakout would occur at 90.48 and confirmation of a breakout would occur on multiple closes above 90.77, which were recent highs.
THE WEEKLY CHART:
The weekly chart gives support to the daily cash chart.
The weekly chart shows the ‘left’ shoulder developed between 87.02 lows and 92.29 highs.
The ‘head’ with a ‘W’ formation was established between 80.39 lows and 86.93 highs.
The ‘right’ shoulder is developing between 90.77 highs and 86.02 lows.
The all-important neckline breakout would occur at 90.48 and confirmation of a breakout would occur on multiple closes above 90.77, which were recent highs.
THE MONTHLY CHART:
The monthly Cash Dollar chart supports the daily and weekly charts.
The monthly chart shows the ‘left’ shoulder developed between 87.02 lows and 92.29 highs.
The ‘head’ with a ‘W’ formation was established between 80.39 lows and 87.82 highs.
The ‘right’ shoulder is developing between 90.77 highs and 86.02 lows.
The all-important neckline breakout would occur at 90.48 and confirmation of a breakout would occur on multiple closes above 90.77, which were recent highs.
WHAT DOES ALL OF THIS MEAN?
It appears that the U.S. Dollar may be forming a long-term bottom, which may take between today and four-months more to develop.
Once the formation is complete, our objective will be 102.16.
On the close of business September 30th, the Euro-Currency (FX) (EC5Z) posted an ‘intra-monthly’ sell signal at 1.2195. This constitutes a continuation pattern to the downside.
On the close of business Friday, the Japanese Yen posted an ‘intra-year’ sell signal at .8712, yet to be confirmed.
WHAT SHOULD JAPANESE YEN TRADERS DO NEXT WEEK?
This product is extremely volatile and should only be traded by aggressive traders.
This is not for the inexperienced trader or the faint of heart.
Traders should have an equity to risk ratio of no more than 10% to trade this product. The proposed risk to trade this product is $2,200.
That means traders should have an account size of $22,000 per contract to trade this product.
If you do not fit this profile, I suggest that traders consult their account executive and consider an options strategy.
Below are possible ‘trading modules’ for futures traders to consider next week:
# 1) If the December Yen first posts a higher high than last week’s high of .8853:
Aggressive futures traders are advised to not establish a long position
Option traders are not advised to purchase a call position.
# 2) If the December Yen first posts a lower low than last week’s low of .8677:
Aggressive futures traders are advised to establish a short position, placing all stops above .8872*.
Options traders are advised to purchase December .8600 puts, risking 70% of purchase price.
Our first objective will be .8496.
# 3) If the December Yen posts multiple closes below .8478:
Aggressive futures traders are advised to either add to their existing short position or establish a short position, placing all stops above .8677*.
Options traders are advised to purchase December .8400 puts, risking 70% of purchase price.
Our next objective will be .8222.
Below are possible reversal ‘trading modules’ to consider next week:
# 4) If the December Yen first posts a higher high than last week’s high of .8853 yet reverses, posting lower lows than the previous week’s low of 8677:
Aggressive futures traders are advised to place resting sell stop orders below the previous week’s low of .8677.
Options traders are advised to prepare to purchase December .8600 puts if the previous week’s low of .8677 was closed below.
If trading module # 4 is activated:
Aggressive futures traders will have an established short position from their resting sell stop orders below the previous week’s low .8677, place stops at .8853*.
Options traders are advised to purchase December .8600 puts if the previous week’s low of .8677 were closed below, risking 70% of purchase price**.
# 5) If the December Yen first posts a lower low than last week’s low of .8677 yet reverses, posting a higher high than the previous week’s high of .8853:
Aggressive futures traders are advised to not establish a long position but are advised to sit on the sidelines and wait for another trading opportunity.
Options traders are advised not to purchase a call option position but are advised to sit on the sidelines and wait for another trading opportunity.
I have listed some Japanese Yen option facts:
Japanese Yen for a two-year ‘implied volatility’ average are ranked number 22 out of 45.
22) Japanese Yen (jy) High 12.72% - Low 6.84% - Current 8.31%
Japanese Yen options for a one-year ‘implied volatility’ average are ranked number 14 out of 45.
14) Japanese Yen (jy) High 11.06% - Low 6.84% - Current 8.31%
Japanese Yen options for a six-month ‘implied volatility’ average are ranked number 10 out of 45.
10) Japanese Yen (jy) High 9.30% - Low 6.84% - Current 8.31%
DAILY DOLLAR CHART:
http://www.bohl.minot.com/d_Chart.cgi?DX05Z
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DAILY YEN CHART:
http://www.bohl.minot.com/d_Chart.cgi?JY05Z
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WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?JY
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
CHART WATCH by Scott R. Joss (Non member C.T.A)*
Readers and clients call during the week and ask: What are you watching?
Watching can mean that the markets are developing a 'recommendation' or a chart pattern that has not yet fully developed - or may never develop.
During the course of the week or month it is not uncommon to find an `intra-day, intra-week or intra-month' recommendation that was previously not revealed when this newsletter was written.
Products that currently fit into this 'watch' category are listed below and should be 'watched.'
- NO CHART WATCH THIS WEEK
CURRENT 'MONTHLY' RECOMMENDATIONS
FOR OCTOBER:
- DECEMBER S&P 500 (SP5Z)
- DECEMBER EMINI S&P (ES5Z)
- DECEMBER CRUDE OIL (CL5Z)
- NOVEMBER ORANGE JUICE (OJ5X)
FUTURE WATCH
Future watch will list developing 'monthly' recommendations to watch in October for November. By listing these products, traders can `feed-forward' with anticipation and focus - centering on products that will provide direction and hopefully, opportunity.
Traders should begin studying the 'daily', 'weekly' and 'monthly' charts for the products listed below. Don't forget between now and the end of the month, some or all of these products may be de-listed.
'Monthly' recommendations will be revealed on the close of business October 31 and sent via email for November.
- WHEAT
- COCOA
- CASH CRB
- CANADIAN DOLLAR
October 2005 |
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November 2005 |
|
Weekly Reports |
|
*** The above dates can change without notice. *** |
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* The Joss Report trade recommendations and weekly trade advisor is prepared by Scott Joss, Non- Member C.T.A.
Scott Joss is a 'non member' CTA and is providing the Joss Report weekly trading advisor and trade recommendations to ClearTrade®, Inc. clients. Scott Joss 'is a principal' of ClearTrade, Inc. and 'is a registered IB member' with the NFA.
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DISCLAIMER: * COMING EVENTS AND DATA RELEASES: Calendar provided by Briefing.com, Inc. Data is provided for informational purposes only, and is not intended for trading purposes. Neither ClearTrade, Inc. nor any of its data or content providers (such as Reuters, CSI, and Briefing.com) shall be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Market recommendations are strictly the opinion of the writer and are intended solely for informative purposes and are not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade in any commodities or securities herein named. No guarantee of any kind is implied or possible where projections of future conditions are attempted. Futures trading involve substantial risk. In no event should the content of a market letter be construed as a promise that you will profit or that losses can or w! ill be limited in any manner whatsoever. Unless otherwise indicated, the links presented in this publication/newsletter are in no way affiliated with ClearTrade, Inc. Likewise, sites linked through ClearTrade's Joss Report weekly trade advisor newsletter are not necessarily connected with ClearTrade, nor do any such links imply an endorsement by either party. ClearTrade®, Inc. does not necessarily promote or endorse the services or publications described herein. Unless otherwise indicated, ClearTrade Inc. has had no role in the production or review of these products or services and makes no warranty, either expressed or implied, as to their contents, accuracy or performance. Past results are no indication of future performance. Information provided in this newsletter is intended solely for informative purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of futu! re conditions are attempted.
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