WELCOME TO CLEARTRADE'S NEWSLETTER
ClearTrade's trading recommendations and weekly commodity newsletter was first published in October 1998. Since that time, our research has continued to evolve into an important source of technical insight for many traders. Our goal is to provide traders with a 'game plan' to prepare for the trading day and week ahead.
ClearTrade's technical analyst, Scott Joss, is a veteran futures trader with twenty-eight years experience on and off the trading floor - as a pit trader, account executive handling arbitrage for Smith Barney, former member of the CBOT 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.
At ClearTrade, we think it’s helpful to speak directly with traders who have requested our research and/or may be interested in establishing an account with us. Understanding your trading needs and goals is important. And we think you should have an opportunity to get to know who we are and what we offer on a one to one basis.
ClearTrade Contact Phone Numbers
800-493-4444
773-561-9777
cleartrade.com
Weekly Newsletter should be used in conjunction with the Daily Recommendations, Weekly Recommendations and Monthly Recommendations.
ClearTrade's Archived Newsletters 2005
TECH TALK by Scott R. Joss (Non member C.T.A)*
OCTOBER SUGAR (SB5V)
In last week’s newsletter, I noted that Sugar prices were encountering their biggest challenge in three-months.
I poised the question; could Sugar close the week above 9.99?
Sugar posted a close on Friday at 9.87.
This week I poise the question; Will Sugar close above 9.99 or will Sugar fill the most recent unfilled price gap between 9.73 and 9.77 - or both?
Last week, Sugar began its first price pullback from highs of 10.35 to lows of 9.77. This was not a surprising development as price pullbacks in a bull market are deemed healthy. They weed out the weak longs, strong longs can take some profits, and bears can re-establish short positions. These factors rejuvenate the market for the next upward price move.
What traders should be wondering is how much of a pullback is necessary to weed out the weak longs and work off excess buying over the last twelve-weeks?
October Sugar, unlike the back months, appears to be forming a bearish ‘head and shoulders’ top.
The left shoulder developed between lows of 9.76 and highs of 9.99.
The head was established between lows of 9.86 and highs of 10.35.
The development of the right shoulder is currently between lows of 9.77 and highs of 9.92.
The all-important ‘neckline’ is not well defined because its trendline is not angled lower than the last low of 9.76. This would mean that a downward correction would be shallow.
The all-important ‘shoulder line is at 9.91.
A close above the head at 10.35 would confirm a failed ‘head and shoulders’ top.
Last week, I indicated that floor traders would challenge the validity of the 10.00 level last week.
This appeared to be an easy calculation because each week there is a new group of naysayer’s that believe a deep correction is due.
Two weeks ago, some technicians were anticipating a gap lower opening - which would have posted a potential bearish ‘Island reversal’ top.
Last week I noted that the Eliot wave theorists are convinced that the high of 10.35 was the fifth wave of their wave count.
This week the volume and open interest watchers - via the commitment of traders report posted each Friday - will be on the bandwagon.
They believe that if open interest declined last week, then the prices may have bottomed at 9.77. However, if open interest remained unchanged or increased, then Sugar was due for a deeper correction due to more long fund liquidation.
They’re going to have a hay day with this report……….
The ‘Commitment of Traders’ report - published each Friday - indicated that the change in open interest increased by 36,721 contracts - posting a lofty total open interest of 489,576 contracts.
Why is open interest increasing?
It is quite possible that Non-Commercial Funds and many Commercial Dealers believe that Sugar is not just an agricultural product anymore but an energy source, which would be influenced by Crude Oil.
As energy prices move higher, many believe the alternative to alleviate this problem is the use of Sugar Ethanol.
Will energy prices move higher or lower from where they closed Friday?
Crude Oil closed at 66.86.
Heating Oil closed at 1.9055.
Unleaded Gas closed at 2.0048.
Natural Gas closed at 9.588.
This weekend I noticed that my local Shell gas station was posting premium gas at $3.13 a gallon.
I was outraged - so on I kept on driving …passing one gas station after another. Each had either posted or were in the process of posting $3.00 plus prices on there marquees.
Finally, I found one station that was late posting their new prices - and I managed to fill my tank at the bargain price of $2.979 a gallon.
Goodbye $2.00 gas…. hello $3.00 gas ...or higher.
Why did energy prices post new highs last week? Maybe someone knew about President Bush’s upcoming speech. As quoted in the eia.doe.gov country analysis briefs, September 2004:
“In a stern warning to Iran, President Bush said "all options are on the table" if the Iranians refuse to comply with international demands to halt their nuclear program, pointedly noting he has already used force to protect U.S. security.”
“The Persian Gulf, also known as the Arabian Gulf, is a 600-mile-long body of water which separates Iran from the Arabian Peninsula, and one of the most strategic waterways in the world due to its importance in world oil transportation. At its narrowest point, (the Strait of Hormuz) the Gulf narrows to only 34 miles wide.”
“In 2003, the vast majority (about 90%) of oil exported from the Persian Gulf transited by tanker through the Strait of Hormuz, located between Oman and Iran. The Strait consists of 2-mile wide channels for inbound and outbound tanker traffic, as well as a 2-mile wide buffer zone. Oil flows through the Strait of Hormuz account for roughly two-fifths of all world traded oil, and closure of the Strait of Hormuz would require use of longer alternate routes (if available) at increased transportation costs.”
“In 2003, Persian Gulf countries had estimated net oil exports of 17.2 million bbl/d of oil. Saudi Arabia exported the most oil of any Persian Gulf country in 2003, with an estimated 8.40 million bbl/d (49% of the total). Also, Iran had estimated net exports of about 2.6 million bbl/d (15%), followed by the United Arab Emirates (2.4 million bbl/d -- 14%), Kuwait (2.0 million bbl/d -- 12%), Iraq (0.9 million bbl/d -- 9%), Qatar (0.9 million bbl/d -- 5%), and Bahrain (0.01 million bbl/d -- 0.1%).”
“Besides oil, the Persian Gulf region also is important because it contains huge reserves (2,462 Tcf) of natural gas, with Iran, Qatar, Saudi Arabia, and the United Arab Emirates holding the world's second, third, fourth, and fifth-largest reserves (behind Russia), respectively.”
“According to the Oil and Gas Journal (1/1/05), Iran holds 125.8 billion barrels of proven oil reserves, roughly 10 percent of the world's total, up from 90 billion barrels in 2003 (note: in July 2004, Iran's oil minister had noted that the country's proven oil reserves had increased to 132 billion barrels following discoveries in the Kushk and Hosseineih fields of Khuzestan province).’
Major Export Partners (2003): Japan, China, Italy, Taiwan, Turkey, South Korea Major Import Partners (2003): Germany, France, China, Italy, UAE, South Korea, Russia, Japan
Many believe Brazil, the world’s largest sugar grower, will divert more sugar to ethanol production -thereby leaving a gap between raw sugar supply and demand.
My belief technically 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. In addition, Sugar in 2004 posted an ‘intra-yearly’ buy signal at 8.85.
WHAT ARE THE TECHNICALS OF SUGAR?
Each week I stress to traders that the Sugar ‘trading module’ I have developed is a long-term trade 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.
The positions in the March contract are based originally on daily, weekly, and monthly trade signals from the July contract and now, October trade signals.
October Sugar has been in a multi-year price advance which began from lows of 6.12 (2/13/04) to recent highs of 10.35 (8/04/05).
Sugar closed Friday at 9.87, which is above its 100-day moving average of 9.06 and its 200-day moving average of 9.02.
Sugar has eight unfilled price gaps above the current market price. The first unfilled price gap above the current market price is between 11.72 and 11.80 (1/09/98).
Sugar had four unfilled price gaps below the current market price. The closest price gap is between 9.73 and 9.75.
On 5/18/05, Sugar posted a weekly buy signal at 8.54.
On 6/17/05, Sugar posted an ‘intra-weekly’ buy signal at 9.04.
On 7/07/05, Sugar posted a major price breakout by posting a weekly close above past contract highs of 9.45 from 3/17/05.
On 7/13/05, Sugar posted a daily buy signal at 9.55.
On 7/15/05, Sugar posted its second weekly close above the major price breakout of 9.45 from 3/17/05.
On 7/21/05, Sugar posted an ‘intra-day’ buy signal at 9.55.
On 7/22/05, Sugar posted an ‘intra-week’ buy signal at 9.60.
On 7/22/05, Sugar posted its third weekly close above the major price breakout of 9.45 from 3/17/05.
On 7/25/05, Sugar posted a daily buy signal at 9.74.
On 7/29/05, Sugar posted its fourth weekly close above the major price breakout of 9.45 from 3/17/05.
On 8/01/05, Sugar posted an ‘intra-day’ buy signal at 10.00.
On 8/02/05, Sugar posted an ‘intra-week’ buy signal at 10.00.
Multiple weekly closes above 10.00 are needed to confirm a breakout.
Last week's high was 10.19.
Last week's low was 9.77.
Last month's high was 9.99.
Last month's low was 9.10.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Aggressive traders who either added to their existing long position or established long positions for the last several weeks below 9.45 were advised to leave their stops below 9.30.
Options traders who purchased either March 1100 calls or March 1200 calls were advised to continue risking 100% of purchase price.
Aggressive traders who either added to their existing long position or established long positions last week on a higher weekly and monthly high of 10.00 were advised to place stops for this position only below 9.70.
If Sugar prices first pullback to support at 9.75, aggressive traders were advised to either add to their existing long position or established a long position, placing stops for this position only below 9.61.
WHAT SHOULD TRADERS DO NEXT WEEK?
Sugar has a daily recommendation for Monday: buy when trades 9.91 - sell when trades 9.81.
Sugar has a weekly recommendation for next week: buy when trades 10.20 - sell when trades 9.76.
Aggressive traders who either added to their existing long position or established long positions for the last several weeks below 9.45 are advised to move their stops below 9.60.
Options traders who purchased either March 1100 calls or March 1200 calls are advised to continue risking 100% of purchase price.
Aggressive traders who either added to their existing long position or established long positions last week on a higher weekly and monthly high of 10.00 are advised to place stops for this position only at 9.70.
Aggressive traders who either added to their existing long position or established long positions last week on a price pullback to support at 9.75 are advised to place stops for this position only below 9.60.
If Sugar first posts a daily buy signal at 9.91, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for this position only at 9.76.
If Sugar first posts a weekly buy signal at 10.20, aggressive traders are advised to either add to their existing long position or established a long position, placing all stops at 9.76.
If Sugar first posts a higher high than contract highs of 10.35, traders are not advised to add to their existing long position.
If this were to occur, traders are advised to let the market do the work for them and are advised to leave stops at 9.76 for now.
If Sugar were to post a monthly close above 10.66, traders are advised to move all stops below 9.99, which was last month‘s high.
If Sugar were to rotate higher, traders are advised to wait for a monthly close above the second “W” at 11.40 before adding to their existing long position or establishing a long position.
Our short-term upside objective is 10.66.
Our second price objective will be the gap between 11.72 and 11.80 (1/09/98).
On the flipside…
If Sugar first posts a daily sell signal at 9.81, traders are not advised to establish a short position.
If Sugar posts a weekly sell signal at 9.76, traders are to prepare for an assault on the unfilled gap between 9.73 and 9.77.
If Sugar first posts its daily and weekly sell signals - yet reverses, traders are advised to place resting buy stop orders at 10.20.
If this were to occur, traders would add to their existing long position or established a long position. Stops for all positions would be moved below 9.73.
If Sugar first posts a daily sell signal and a weekly sell signal and closes below 9.62, traders are to prepare for an assault on the contract high breakout at 9.45.
If Sugar posts a close below 9.45, traders are to prepare for an assault on the original breakout at 9.30.
If Sugar were to post a weekly close below the original breakout at 9.30, traders are to prepare for an assault of the monthly sell signal at 9.10 and possibly the 100-day and 200-day moving average at 9.06 and 9.02, respectively.
If Sugar were to post a monthly close at or below 9.10, traders are advised to sit on the sidelines and wait for another trading opportunity.
Each week I will continue to post Sugar’s past unfilled price gaps above the current market price so we can reference them quickly if the need presents itself.
1) Price gap between 11.72 and 11.80 (1/09/98).
2) Price gap between 13.50 and 13.61 (2/19/82).
3) Price gap between 19.80 and 19.85 (4/03/81).
4) Price gap between 25.85 and 26.20 (2/13/81).
5) Price gap between 31.25 and 31.30 (1/09/81).
6) Price gap between 33.85 and 35.05 (11/28/80).
7) Price gap between 51.20 and 53.20 (11/29/74).
8) Price gap between 59.20 and 61.10 (11/22/74).
For several weeks, I’ve described some Sugar option facts and will continue to provide updated information:
Last week Sugar options for a two-year ‘implied volatility’ average were ranked number 18 out of 45 - this week 21 out of 45 .
27) Sugar (SB) High 42.12% - Low 18.90% - Current 24.04%
Last week Sugar options for a one-year ‘implied volatility’ average were ranked number 6 out of 45 - this week 10 out of 45
21) Sugar (SB) High 33.54% - Low 18.90% - Current 24.04%
Sugar options for a six-month ‘implied volatility’ average were ranked number 7 out of 45 - this week 7 out of 45 .
17) Sugar (SB) High 27.18% - Low 18.90% - 24.04%
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?SB05V
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SB
----------------------------------------------------
S&P 500 (SP5U)
For several weeks I’ve written in my newsletter that I am not convinced that the S&P is in the right hands at this time. Many indicators are showing divergences that are inconsistent with the new highs that were posted three week’s ago at 1248.00 and two week‘s ago at 1248.40.
Traders need to continue to remain cautious and on high alert for a possible price failure in case a ‘spread double top’ has been posted.
The September S&P has been in a four-week price advance that began from lows of 1186.50 (7/07/05) to highs of 1248.40 (8/03/05).
The S&P has three unfilled price gaps above the current market price. The most recent unfilled price gap is between 1249.30 and 1250.80.
The S&P has four unfilled price gaps below the current market price. The most recent gap is between 1180.50 and 1184.50.
On 7/07/05, the S&P posted an ‘intra-week’ buy signal at 1208.60.
On 7/12/05, the S&P posted an ‘intra-month’ buy signal at 1225.20.
On 7/20/05, the S&P posted an ’intra-day’ buy signal at 1233.90.
On 7/25/05, the S&P posted a ‘daily’ buy signal at 1238.10.
On 7/27/05, the S&P posted a ‘daily’ buy signal at 1237.60.
On 8/05/05, the S&P posted a ‘weekly’ sell signal at 1230.80.
Last week’s high was 1248.40.
Last week’s low was 1227.50.
Last month’s high was 1248.00.
Last month’s low was 1186.50.
WHAT DO THE CHARTS LOOK LIKE?
The S&P may be developing a possible monthly recommendation for September which will not be revealed until the close of business August 31st.
If the S&P does not post higher highs than 1248.40 nor lower lows than 1186.50 by August 31st, then traders will be able to rely on a monthly recommendation for direction and momentum.
Major support for the S&P is at the recently posted ‘intra-week’ buy signal at 1208.60.
Minor support for the S&P is at the recently posted ‘intra-month’ buy signal of 1225.20.
A weekly close above 1248.40 is needed for a continuation of higher prices and a weekly close below 1225.00 is needed for further price erosion.
As I previously mentioned, many technical indicators have divergences with the highs posted at 1248.40 and 1248.00. This continues to disturb me.
On 8/05/05, the S&P posted a weekly sell signal at 1230.80.
Adding some significance to this weekly sell signal at 1230.80 is the fact that it was posted after establishing new contract highs at 1248.40.
This could be a precursor to a trend change and a price failure in the weeks and months ahead.
One indicator that stood out was the VIX index.
In last week’s newsletter I took excerpts from Investopedia.com to explain the meaning and function of the VIX.
Typically, VIX has an inverse relationship to the market, which means that a rising stock market is viewed as less risky and a declining stock market more risky.
The higher the perceived risk is in stocks, the higher the implied volatility and the more expensive the associated options, especially puts. Hence, implied volatility is not about the size of the price swings but rather the implied risk associated with the stock market.
When the market declines, the demand for puts usually increases. Increased demand means higher put prices and higher implied volatilities.
During periods of market turmoil, the VIX spikes higher, largely reflecting the panic demand for OEX puts as a hedge against further declines in stock portfolios. During bullish periods, there is less fear and therefore less need for portfolio managers to purchase puts.
The VIX has been in an approx. two-year downturn, beginning from highs of 23.26 (9/30/03) to recent lows of 9.88 (7/20/05).
Currently, the VIX has moved from lows of 9.88 to highs of 12.92, which have not been visited since 7/07/05.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Aggressive traders who established a short position at the weekly sell signal of 1230.80 were advised to place stops at 1248.50.
Conservative traders who established a short position in the Emini S&P at the weekly sell signal of 1231.00 were advised to place stops at 1248.50.
If first the S&P were to rally to fill the gap between 1235.90 and 1236.70, aggressive traders were advised to either add to their existing short position or establish a short position, placing stops above 1248.40.
Conservative traders were advised to use the Emini S&P as their trading vehicle.
If the S&P were to first rally to resistance at 1230.70 yet reverse posting a lower low than last week‘s low of 1227.50, aggressive traders were advised to wait for the S&P to post a close below 1225.20 to either add to their existing short position or establish a short position, placing stops above 1236.70 (this did not occur).
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Aggressive traders who established a short position at the weekly sell signal of 1230.80 are advised to leave stops at 1248.50.
Conservative traders who established a short position in the Emini S&P at the weekly sell signal of 1231.00 are advised to leave stops at 1248.50.
If the S&P posts a close below 1224.30, traders are to prepare for a possible price failure.
If the S&P posts a close below 1216.70, aggressive traders are advised to either add to their existing short position or establish a short position, placing stops for this position only above 1230.80.
Conservative traders are advised to use the Emini S&P as their trading vehicle.
If the S&P posts a close below 1208.50, traders are advised to either add to their existing short position or establish a short position and prepare for an all out attack on the 1200.70 support level.
If this were to occur, traders are advised to move all stops above 1224.30.
Conservative traders are advised to use the Emini S&P as their trading vehicle.
If the S&P were to post a monthly close below 1186.50, traders are advised to either add to their existing short position or establish a short position, placing all stops above 1216.70.
Our objective will be the unfilled price gap below the current market price between 1180.50 and 1184.50.
On the flipside…
If the S&P were to first post a lower low than last week’s low of 1224.30 yet reverse and post a higher high than last week’s high of 1245.20, traders are to prepare for an assault on the monthly highs and contract highs of 1248.40.
If this were to occur, traders are advised to sit on the sidelines and wait for another trading opportunity.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?SP05U
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SP
----------------------------------------------------
- DECEMBER SOYBEAN OIL (BO5Z)
- NOVEMBER SOYBEANS (S5X)
- DECEMBER WHEAT (W5U)
- DECEMBER SOYBEAN MEAL (SM5Z)
All of the products listed above had and still have monthly recommendations and in addition, Soybeans, Soybean Meal and Soybean oil had weekly recommendations.
Two weeks ago, I decided that because all four products were intertwined and influenced each other, I would design a ‘trading module’ for Soybeans - the king of the group.
NOVEMBER SOYBEANS (S5X)
November Soybeans had been in an eighteen-week price advance from lows of 519.50 (2/09/05) to highs of 770.00 (6/22/05).
Recently, Soybeans had been in a volatile trading range between 751.00 highs and 666.00 lows.
Note: 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.
Clients should be cautioned that they must have an equity to risk ratio of no more than 10% to trade this product.
That means if the risk in Beans is $4,275 - you must have an account size of $42,000 per contract.
If you do not fit this profile, consult your account executive and consider an options strategy.
Soybeans need to have multiple closes either above 751.00 or below 666.00 to break out of the current trading range. Until this occurs, Soybeans should continue in a volatile trading range.
Confirmation of a breakout on the upside would be s close above 770.00.
Confirmation of a breakout on the downside would be a close below 660.50.
Soybean’s 100-day moving average is at 661.50 and the 200-day moving average is at 614.50.
Soybeans have three unfilled price gaps below the current market price. The most recent between 646.50 and 649.00 was filled last week.
Soybeans have one unfilled price gap above the current market price between 662.50 and 669.50.
Soybeans had and still have a monthly recommendation for August: buy when trades 751.25 - sell when trades 665.75.
The monthly recommendation will not be confirmed until the close of business August 31st.
If Beans close at or above 711.25 on the close of business August 31st, Beans will have posted a monthly buy signal.
If Beans close at or below 669.75 on the close of business August 31st, Beans will have posted a monthly sell signal.
On 8/05/05, Beans posted a weekly sell signal at 669.75.
On 8/05/05, Beans posted an unconfirmed monthly sell signal at 665.75.
On 8/12/05, Beans posted an ‘intra-day’ sell signal at 649.00.
Last week’s high was 680.00.
Last week’s low was 642.00.
Last month’s high was 751.00.
Last month’s low was 666.00.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
As previously mentioned, Beans posted a weekly sell signal at 669.75 and an unconfirmed monthly sell signal at 665.75.
Traders were advised to use caution because of the closing price the Friday before last. Beans had recaptured two-thirds of their losses by the close and settled at 669.00 - which was still below the weekly sell signal of 669.75.
Technically, this could have been construed as an exhaustion tail.
Aggressive traders who established a short position at the weekly sell signal of 669.75 were advised to leave their stops above 711.25.
Aggressive traders who either added to their existing short position or established a short position at the unconfirmed monthly sell signal of 665.75 were advised to move their stops for this position only above 687.50.
If Beans posted a close below 665.75, aggressive traders were advised to either add to their existing short position or establish a short position, placing all stops above 687.50.
Conservative traders were advised to purchase November 620 puts, risking 70% of purchase price.
If Soybeans posted a close below 660.50, traders were to prepare for an all out assault on the 100-day moving average at 659.25 and possibly the unfilled price gap between 646.50 and 649.00.
If Beans posted a close below 646.50, aggressive traders were advised to either add to their existing short position or establish a short position, placing all stops above 666.00.
Soybeans posted a close Friday at 648.00.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Aggressive traders who established a short position at the weekly sell signal of 669.75 are advised to leave their stops above 711.25.
Aggressive traders who either added to their existing short position or established a short position at the unconfirmed monthly sell signal of 665.75 are advised to leave their stops for this position only above 687.50.
Aggressive traders who either added to their existing short position or established a short position at the second posting of the unconfirmed monthly sell signal of 665.75 are advised to leave their stops for this position only above 680.00.
Conservative traders, who purchased November 620 puts, should continue risking 70% of purchased value.
If Beans first post a lower low than last week’s low of 642.00, aggressive traders are advised to either add to their existing short position or establish a short position, placing for this position at 680.25.
If Soybeans post a weekly close below 634.75, aggressive traders are advised to either add to their existing short position or establish a short position, placing all stops above 666.00.
Our next objective will be the second unfilled price gap between 618.00 and 621.00.
Our long-term objective will be 581.00
On the flip side…
If Soybeans first post a higher high than last week’s high of 680.00 yet reverses, aggressive traders are advised to place resting sell stops at 641.75... In affect, aggressive traders will be either adding to their short positions or establishing a short position.
If this were to occur, aggressive traders are advised to place stops for this position only above 666.00.
Conservative traders are advised to purchase November 780 calls, risking 70% of purchased value.
If Beans were to post a close above 711.25, aggressive traders are advised to establish a long position, placing stops below 665.75.
If Soybeans were to post a close above 719.00, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for this position only below 669.75.
If Soybeans were to post a close above 735.50, aggressive traders are advised to either add to their existing long position or establish a long position, placing a stop for this position only below 719.00.
If Soybeans were to post a close above 741.00, traders are to prepare for an assault on the monthly buy signal at 751.25.
Traders are advised if this were to occur to move all stops below 719.00.
If Soybeans post an ‘intra-monthly’ buy signal at 751.25, traders are advised to either add to their existing long position or establish a long position, placing all stops below 735.50.
Conservative traders are advised to purchase November 800 calls, risking 70% of purchased value.
If Soybeans post new contract highs and close above contract highs at 770.00, traders are advised to either add to their existing long position or establish a long position, placing all stops below 751.25.
Our first objective will be 810.00.
Remember the monthly buy signal of 751.25 or the monthly sell signal of 665.75 will not be confirmed until the close of business August 31st.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?S05X
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?S
----------------------------------------------------
DECEMBER GOLD (GC5Z)
In my July 24tht newsletter, December Gold was placed on ‘Chart Watch’ because of a possible monthly recommendation for August, which would not be revealed until the close of business July 29th.
In my July 31st newsletter, Gold was placed in ‘Tech Talk’ because of a pending daily recommendation, weekly recommendation, and monthly recommendation for August.
I explained that this trading opportunity might turn out to be a more complex monthly recommendation.
There was nothing complex about this monthly recommendation.
In my July 31st newsletter, I developed several ‘trading modules’ so we could prepare for either a breakout from congestion or develop a ‘coil month.’
December Gold had two unfilled price gaps above the current market price. The most recent between 452.80 and 453.50 was partially filled last week when gold posted highs of 453.40. Gold has a second unfilled price gap above the current market price between 459.00 and 465.00.
Gold has two unfilled price gaps below the current market price. The first unfilled gap is between 440.00 and 440.90. The second is between 442.60 and 443.80.
On 7/25/05, Gold posted a weekly buy signal at 432.10.
On 7/27/05, Gold posted an ‘intra-day’ buy signal at 430.50.
On 7/28/05, Gold posted a buy signal at 431.60, which was the ‘neckline’ breakout of a ‘head and shoulders’ bottom.
On 8/04/05, Gold posted a monthly buy signal at 444.10.
Gold’s 100-day moving average is at 436.00.
Gold’s 200-day moving average is at 440.90.
Last week’s high was 453.40.
Last week’s low was 438.40.
Last month’s high was 444.00.
Last month’s low was 424.20.
WHAT DO THE CHARTS LOOK LIKE?
The daily December Gold chart had formed a bullish ‘head and shoulders’ bottom.
The ‘left’ shoulder was established between 428.00 lows and 434.00 highs.
The ‘head’ developed between 431.00 highs and 424.20 lows.
The ‘right’ shoulder developed between 430.00 highs and 427.70 lows.
The all-important ‘neckline’ was at 431.60.
The projection, from this mini ‘head and shoulders’ bottom was 441.80.
The December daily Gold chart had a well defined downward trendline that began from highs of 471.00 through highs of 450.00. The all-important breakout occurred at 445.30.
The December weekly continuation Gold chart developed a pennant formation by posting higher lows and lower highs.
The downward trendline of the weekly pennant began from highs of 456.00 through highs of 442.50 and 439.00.
The upward trendline of the pennant began from contract lows of 255.00, through lows of 413.20 and 418.20.
Gold had been trading in a six-month range between 415.50 lows and 442.50 highs.
WHAT WERE TRADERS ADVISED TO DO?
On 7/25/05, Gold posted a daily buy signal at 431.90.
On 7/27/05, Gold posted an ’intra-day’ buy signal at 430.50
On 7/28/05, Gold posted a weekly buy signal at 432.10.
On 8/04/05, Gold posted a monthly buy signal at 444.10.
Aggressive traders who established a long position at the daily buy signal at 431.90 were advised to place stops below 424.40.
Aggressive traders who established a long position at the ‘intra-day’ daily buy signal at 430.50 were advised to place stops below 424.40.
Aggressive traders who established a long position at the weekly buy signal at 432.10 were advised to place stops below 424.40.
Aggressive traders who established a long position on a close above 434.00 were advised to place stops below 424.40.
Our first objective would be 441.80.
Major resistance was at 446.60.
Aggressive traders who established a long position on the monthly buy signal of 444.10 were advised to place stops below 436.60, which was the previous week‘s low.
Conservative traders who purchased either December 450 calls or 460 calls were advised to risk 70% of purchase price.
Our second objective would be the unfilled gap between 452.80 and 453.50.
WHAT SHOULD TRADERS DO NEXT WEEK?
Aggressive traders who established a long position at the daily buy signal at 431.90 are advised to move stops below 444.10.
Aggressive traders who established a long position at the ‘intra-day’ daily buy signal at 430.50 are advised to move stops below 444.10.
Aggressive traders who established a long position at the weekly buy signal at 432.10 are advised to move stops below 444.10.
Aggressive traders who established a long position on a close above 434.00 are advised to move stops below 444.10.
Aggressive traders who established a long position on the monthly buy signal of 444.10 are advised to move stops below 444.10.
Conservative traders who purchased either December 450 calls or 460 calls are advised to risk 50% of purchase price.
If Gold first pulls back to support at 447.50, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops below 444.10.
If Gold first posts higher highs than last week’s high of 453.40, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops below 446.60 for this position only.
If Gold posts a close above 458.50, aggressive traders are advised to wait for a weekly close above 459.00 before either adding to their existing long position or establishing a long position.
If this were to occur, traders are advised to move all stops below 446.60.
Our third objective will be the unfilled price gap between 459.00 and 465.00.
If Gold were to ever post a monthly close at or above 471.00, traders should prepare for an ‘intra-year’ buy signal.
If this were to occur, Gold prices would accelerate upward in a violent rush to reach $500 per ounce.
On the flipside…
If Gold first posts a higher high than last week’s high of 453.40 yet reverses below 438.40, traders are to be on guard for a possible price failure.
If this were to occur, traders are advised to sit on the sidelines.
Note: Several weeks ago the Gold options for a two-year ‘implied volatility’ were ranked 44 out of 45 and are ranked 25 out of 45 this week.
Options are still reasonably cheap.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?GO05Z
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?GO
----------------------------------------------------
SEPTEMBER JAPANESE YEN (JY5U)
Let’s begin developing a ‘trading modules’ for the Yen.
The Yen had been in a ten-week down trend from highs of .9710 to lows of .8844.
Recently, the Yen has traded from lows of .8844 to highs of .9181.
The Yen for six-weeks has been in a wide trading range waiting for the Chinese to re-value their currency, the Yuan.
This new re-weighting of their currency, which occurred on 7/21/05, appears to be 30-40% US Dollar; 20-25% Euro-Currency; 20% Yen; 10% South Korea.
On 7/20/05, the Yen posted lows of .8844.
On 7/22/05, the Yen posted highs of .9152.
On 8/10/05, the Yen posted a daily buy signal at .8992.
The Yen has two unfilled price gaps above the current market price. The most recent is between .9523 and .9560.
The Yen has no unfilled price gaps below the current market price.
The Yen appears to have made a bullish ‘double reversal’ from lows of .8923.
The formation almost looks like a ’W’ formation.
The left side of the reversal was developed between highs of .9158 and lows of .8844.
The middle of the reversal was established from lows of .8844 and highs of .9152.
The right side of the reversal was developed between lows of .8844 and highs of .9160.
The all-important breakout was at .9152.
The projection from this formation is .9460.
The Yen’s 100-day moving average is at .9294.
The Yen’s 200-day moving average is at .9533.
Last week’s high was .9181.
Last week’s low was .8915.
Last month’s high was .9152.
Last month’s low was .8884.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
On 8/10/05, the Yen posted a daily buy signal at .8992.
On 8/12/05, the Yen posted a weekly close above .9152.
Aggressive traders were advised on Wednesday night to establish a long position at the daily buy signal at .8992, placing stops at .8945.
On Friday, aggressive traders were advised to either add to their existing long position or establish a long position on a close above .9152, placing stops for this position only below .9068.
WHAT SHOULD TRADERS DO NEXT WEEK?
Aggressive traders who established a long position at the daily buy signal of .8992 are advised to move their stops to .8992.
Aggressive traders who either added to their existing long position or established a long position on Friday’s close above .9152 are advised to leave their stops below .9068.
If the Yen first pulls back to support at .9152, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for this position below .9068.
If the Yen first posts a higher high than last week’s high of .9181, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for this position only below .9115.
If the Yen posts a close above .9236, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for all positions below .9152.
If the Yen posts a close above .9312, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops for all positions below .9236.
Our first projection is .9460.
On the flipside…
If the Yen first posts a higher weekly high than last week’s high of .9181 yet reverses and posts a close below .8992, aggressive traders should prepare for a price failure.
If the Yen posts a weekly close below .8915, aggressive traders are advised to establish a short position, placing stops above .9152.
If the Yen posts a monthly close at or below .8844, aggressive traders are advised to either add to their existing short position or establish a short position, placing stops for all positions above .8915.
If this were to occur, our downside objective would be .8436.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?JY05U
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?JY
----------------------------------------------------
SEPTEMBER US 30-YEAR BOND (US5U)
On 7/29/05, I moved the 30-year Bond to ‘Tech Talk’ because of a possible monthly breakdown from a nine-week trading range between 115-26 and 119-23.
I wrote that until bonds posted a monthly close below 115-26 or a monthly close above 119-23, they appeared to be in congestion.
On 7/29/05, Bonds posted a decisive close below 115-26 - ending the week and month at 115-10.
Bonds had no unfilled price gaps above the current market price.
Bonds had four unfilled price gaps below the current market price. The most recent gap was between 113-26 and 113-29, which was filled on 8/09/05.
Last week’s high was 116-00.
Last week’s low was 113-24.
Last month’s high was 119-04.
Last month’s low was 114-29.
WHAT DID THE CHARTS LOOK LIKE?
Bonds had a bearish ‘M’ formation or a one-two-three top.
The middle of the ‘M’ was at 115-26.
The short-term projection from the ‘M’ formation was 112-09.
The long-term projection from the ‘M’ formation was 111-26.
WHAT DID THE 30-YEAR BONDS YIELD CHART LOOK LIKE?
Last week, I explained the inverse relationship of the 30-year bond yield chart to the 30-year futures bond chart. As future prices drop, yields rise - and vice versa.
Moreover, for the last nine-years bond yields have fallen from highs of 7.232 (7/31/96) to recent lows of 4.151 (6/30/05). The recent low in yields at 4.180 (6/27/05) almost matched the lows posted at 4.135 (6/30/03).
Yields appeared to have posted a spread ‘double bottom.’
The daily yield chart showed a bullish ‘W’ formation; I made note of the inverse of the bond futures that have a bearish ‘M’ formation.
The all-important breakout of the yields was at 4.453 - which is the middle of the ‘W’ formation.
Our first projection on 30-year yield was 4.721.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Two weeks ago, Bonds had a weekly recommendation: buy when trades 116-14 - sell when trades 115-00.
Aggressive traders who established a short position at or above 115-10 were advised to move stops above 115-13, which was the previous week‘s high.
Conservative options traders who purchased December 113 puts or December 112 puts were advised to continue to hold their options, risking 60% of purchase price - or unless Bonds posted a weekly close above 115-13.
Aggressive traders who sold against resistance at 115-15 were advised to place their stops above 115-13, which was the previous week‘s high.
Aggressive traders who sold on a lower low than last month’s low of 114-29 were advised to place stops above 115-13, which was last week‘s high..
Aggressive traders who sold on a weekly close below 114-07 were advised to place stops for this position only above 115-01, which was the previous week’s weekly sell signal.
Our first objective was 113-08.
WHAT WERE TRADERS ADVISED TO DO MID-WEEK?
On 8/09/05, the 30-year Bond filled the previously mentioned gap between 113-26 and 113-29.
On 8/09/05, the 30-year Bond posted an ‘intra-day’ buy signal at 114-09.
On 8/09/05, traders were advised to either liquidate their short positions or lower their stops above 114-29, which was last month‘s low.
On 8/11/05, the Treasury’s auction of $13 billion ten-year notes was well received by the markets and demand exceeded expectations. The reemergence of foreign sponsorship for that issue sparked buying momentum.
On 8/11/05, Bonds posted highs of 115-02 - liquidating any trader who remained in their short positions.
On 8/12/05, Bonds posted an ‘intra-weekly’ buy signal at 115-13.
WHAT SHOULD TRADERS DO NEXT WEEK?
Traders are advised to sit on the sidelines and wait for another trading opportunity.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?US05U
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?US
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.'
DECEMBER COTTON (CT5Z)
I have been writing for over nine-hours today so I will keep Cotton and Cocoa short and to the point.
Attention Cotton traders:
It appears December Cotton has posted the opposite of the Yen formation.
Cotton has a bearish ‘double reversal’ formation to go lower.
On 8/04/05, Cotton posted a daily sell signal at 52.19.
On 8/10/05, Cotton posted a close below the ‘M’ or middle of the ‘double reversal’ at 51.09.
Aggressive traders that established a short position at the daily sell signal 52.19, move your stops above 49.90.
Aggressive traders that established a short position at 51.09 or lower, move your stops above 49.70.
Our first objective was met Friday at 48.90.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?CT05Z
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?CT
----------------------------------------------------
DECEMBER COCOA (CC5Z)
Attention Cocoa traders:
It appears December Cocoa last week posted a potential ‘intra-monthly’ sell signal at 1377, which will not be revealed until the close of business on August 31st.
If Cocoa posts a monthly close at or below 1377 by August 31st, this will constitute a major trend reversal.
Also, Cocoa has the potential to post an ‘intra-yearly’ sell signal at 1297, which were last year’s low.
If Cocoa posts a close below 1296, traders may see a dramatic collapse.
Our objective would be 858.
Begin watching the March 2006 135 puts.
Good luck…more next week.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?CC05Z
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?CC
----------------------------------------------------
DECEMBER COFFEE (KC5Z)
Two week’s ago I began developing a ‘trading module’ for December Coffee because of a pending weekly recommendation and a potential monthly recommendation for September.
Coffee will remain in ‘Chart Watch’ until the last trading day of August because of this potential monthly recommendation for September.
Coffee will need to stay above lows of 100.70 and below 113.90 between now and the close of business August 31st.
If this were to occur, traders will be notified via email.
Coffee has been in an extended down move for 9-weeks from highs of 147.00 (3/11/05) to recent lows of 100.70.
On 6/10/05, Coffee posted an ‘intra-monthly’ sell signal at 122.75.
In addition, Coffee had developed a bearish ‘M’ formation or a one-two-three top.
The middle of the ‘M’ was established at 118.75 (4/15/05).
The short-term projection from the ‘M’ formation was 96.50.
The long-term projection from the ‘M’ formation was 90.50.
December Coffee has two unfilled price gaps above the current market price. The most recent is between 122.00 and 123.35.
Coffee has several unfilled price gaps below the current market price. The most recent is between 100.00 and 100.70.
On 7/25/05, Coffee posted an ‘intra-day’ buy signal at 104.55.
On 7/28/05, Coffee posted an ‘intra-day’ buy signal at 105.30.
On 8/02/05, Coffee posted a weekly buy signal at 108.15.
On 8/12/05, Coffee posted an ‘intra-day’ sell signal at 110.55.
Coffee’s 100-day moving average is at 120.55.
Coffee’s 200-day moving average is at 116.60.
Last week’s high was 113.00.
Last week’s low was 106.00.
Last month’s high was 113.90.
Last month’s low was 100.70.
WHAT DO THE CHARTS LOOK LIKE?
The daily December Coffee chart appears to be in a long-term down channel.
The top of the downward channel began from highs of 141.00 through highs of 133.50 and if touched today would intersect at 120.30.
The bottom of the downward channel began from lows of 118.75 through lows of 100.70 and if touched today would intersect at 95.40.
Take note that the support line is coming from the ‘M’ formation that I previously mentioned.
One technical factor is that Coffee has to close on a monthly basis above 118.75 before this market is considered bullish.
If Coffee can close on a monthly basis above 118.75, then funds will step in and buy.
Recently, December Coffee breached the critical .618 retracement at 104.95 which began from lows of 79.00 to highs of 147.00.
The 50% retracement is at 113.00.
Coffee traded to highs last week at 113.00 before funds stepped in to sell.
The long-term weekly chart indicates Coffee needs to remain above 100.70 in order to advance to higher prices.
The long-term monthly chart shows the original bullish rounded bottom formation that developed over a six-year period between 1999 and 2005.
The low posted in the month of November 1999 was 101.80.
Coffee developed a yearly recommendation in 2003.
In 2004, Coffee posted a yearly buy signal at 70.80.
Last year’s high was 108.70.
I will remind traders that 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.
Clients should be cautioned that they must have an equity to risk ratio of no more than 9% to trade this product.
That means if the risk in Coffee is $4,950 - you must have an account size of $44,500 per contract.
If you do not fit this profile, consult your account executive and consider an options strategy.
WHAT SHOULD TRADERS DO NEXT WEEK?
Sit on the sidelines and wait for a potential trading opportunity for September.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?KC05Z
------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?KC
CURRENT 'MONTHLY' RECOMMENDATIONS
FOR AUGUST:
- U.S. 30-YEAR BOND (US5U)
- SOYBEANS (S5X)
- WHEAT (W5U)
- SOYBEAN MEAL (SM5Z)
- SOYBEAN OIL (BO5Z)
- GOLD (GC5Z)
- LEAN HOGS (LH5V)
- COFFEE (KC5Z)
FUTURE WATCH
Future watch will list developing 'monthly' recommendations to watch in August for September. 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 August 31 and sent via email for September.
- DOW JONES
- S&P 500
- EMINI S&P
- FEEDER CATTLE
- COFFEE
August 2005 |
|
Weekly Reports |
|
*** The above dates can change without notice. *** |
NOTE:
If you do not completely understand this information, you are advised to take NO action until speaking with your Account Executive.
ClearTrade, Inc. may be reached at 800-493-4444
====================================
* Recommendations and Newsletter prepared by Scott Joss, Non- Member C.T.A.
Scott Joss is a 'non member' CTA and is providing recommendations to ClearTrade, Inc. clients. Scott Joss 'is a principal' of ClearTrade, Inc. and 'is a registered IB member' with the NFA.
====================================
ClearTrade, Inc.
5415 N. Sheridan Rd.
Suite 2104
Chicago, IL 60640
(800) 493-4444
(773) 561-9777 Voice
(773) 561-9775 Fax
Mailto:research@cleartrade.com
http://www.cleartrade.com/
====================================
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 will be limited in any manner whatsoever.
Unless otherwise indicated, the links presented in this newsletter are in no way affiliated with ClearTrade, Inc. Likewise, sites linked through ClearTrade's 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 future conditions are attempted.
Scott Joss is a 'non member' CTA and is providing recommendations to ClearTrade, Inc. clients. Scott Joss 'is a principal' of ClearTrade, Inc. and 'is a registered IB member' with the NFA.
NOTE: Past results are no indication of future performance. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.
REPRODUCTION OR REBROADCAST OF ANY PORTION OF THIS INFORMATION IS STRICTLY PROHIBITED WITHOUT THE WRITTEN PERMISSION OF CLEARTRADE, INC.
The contents of this newsletter are copyright 1997-2005, Scott R. Joss/ClearTrade, Inc. *TM. All Rights Reserved.