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Our goal is to provide you with the up-to-date information you need to prepare for the trading week ahead.
ClearTrade's veteran Trader, Scott Joss, will prepare technical analysis in selected market groups when an opportunity presents itself.
We strive to provide tools to help traders with a 'game plan' in order to spot the best trading opportunities.
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• TECH TALK
•  CHART WATCH 
•  CURRENT 'MONTHLY' RECOMMENDATION
•  FUTURES WATCH
•  WEEKLY FEATURE
•  FED WATCH
•  COMING EVENTS AND DATA RELEASES

 

TECH TALK by Scott R. Joss (Non member C.T.A)*

MARCH S&P 500 (SP5H) 

In last week's newsletter I listed March S&P's in the 'chart watch' section (below) because of a possible 'intra-month' sell signal for January.

This week the S&P's have been elevated to top position in 'Tech Talk' because of sell signals that were posted last week on the daily, weekly and monthly charts.

On 1/03/05, the S&P's posted an 'intra-weekly' sell signal at 1207.20.

On 1/20/05, the S&P's posted a 'daily' sell signal at 1183.10.

On 1/20/05, the S&P's posted an 'intra-week' sell signal at 1176.40.

On 1/20/05, the S&P's posted a 'monthly' sell signal at 1175.60.
The S&P 500 has an unfilled price gap above the current market price between 1183.00 and 1183.20.

WHAT DOES ALL THIS MEAN?

If a product posts either buy or sell signals on the daily, weekly and monthly charts in consecutive order - in this case sell signals, then direction and momentum has been established.

Furthermore, if the signals are posted from contract highs or lows - in this case from contract highs, the importance of these signals is elevated. This would mean not only the probabilities are greatly skewed in favor of the direction of the signals but the shear momentum will be quick and to the point. 

In this case the March S&P 500 has posted consecutive daily, weekly and monthly sell signals from contract highs.

I mentioned last week that if this scenario did occur the collective trader's mindset would shift from buying dips to selling rallies.

WHAT DO THE CHARTS LOOK LIKE?

The question that I presented to my readers in last week's newsletter - 'Is this the market top?' - appears to be forming.

The daily chart appears to be developing a 'head and shoulders' top.

The 'left' shoulder was established between 1175.00 lows and 1199.50 highs.

The 'head' was established between 1195.20 lows and 1220.50 highs.

The 'right' shoulder has developed between 1197.50 highs and 1174.00 lows.

The shoulderline is at 1197.50.

The all-important 'neckline' is at 1173.60.

Friday the S&P 500 closed below the 'neckline'.

WHAT TRADERS WERE ADVISED TO DO LAST WEEK

Traders were advised to establish a short position at 1175.60 - placing stops above 1207.20, which was the weekly sell signal.
Conservative traders were advised to use the E-mini S&P as their trading vehicle.

Traders were advised to either add to their existing short position or establish a short position on a close below 1171.00 - placing stops above the monthly sell signal of 1175.60.

WHAT SHOULD TRADERS DO NEXT WEEK?

Traders who established their first short positions at 1175.60 should move their existing stop orders from 1207.20 to 1183.20 - which is the unfilled price gap left last week.

Traders who either added to their existing short position or established a short position on the close below 1171.00 should move their stops above 1176.40 - which was the 'intra-weekly' sell signal.

If the S&P approaches the 'neckline' at 1173.60, traders are advised to either add to their existing short position or establish a short position, placing stops for this position above 1176.40.

If the S&P were to close below 1161.00, traders are advised to either add to their existing short position or establish a short position, placing stops above 1171.00.

Our first objective will be 1130.90.

Our second objective will be 1103.90.

On the flip side....

If the S&P fills the unfilled gap above the market at 1183.20, traders are advised to re-establish their short positions against the 'shoulderline' at 1197.50, placing stops above 1207.20.

If the S&P ever closes above the 'head' at 1220.50, the 'head and shoulders' formation will have failed. If this were to occur, traders will be advised where to establish long positions. 

DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?SP05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SP

----------------------------------------------------

MARCH SOYBEANS (S5H) 

Last week I discussed how soybeans had been in a five month price consolidation between 510.00 (11/05/04) lows and 565.00 (11/23/04) highs.

This week the same scenario will hold true: Until soybeans close below 510.00 or above 565.00 on a monthly basis, they will probably continue their price consolidation.

On 1/14/05, soybeans posted an 'intra-weekly' sell signal at 524.25.

For January, soybeans have a monthly recommendation: buy when trades 561.25 - sell when trades 518.75.

On 1/18/05, soybeans posted a 'monthly' sell signal at 518.75.

WHAT DO THE CHARTS LOOK LIKE?

As mentioned above, there's currently price consolidation between lows of 510.00 and highs of 565.00. A price breakout would occur if soybeans were to close above or below their five month trading range.

WHERE IS RESISTANCE?

The daily chart has a descending trendline from highs that began at 640.00 (9/07/04) through 561.00 (12/20/04), 551.00 (1/11/05) and if touched would intersect at 547.25.

The weekly long-term chart, much like the daily chart, has a descending trendline from highs that began at 598.00 through 566.00, 563.00, and if touched would intersect at 559.50.

Resistance is between 547.25 and 559.50.

WHERE IS SUPPORT?

The daily long-term chart has a descending trendline from past lows that began at 522.00 (10/09/02) through 513.25 (8/07/03), 506.00 (10/12/04), and if touched would intersect at 503.50.

The weekly long-term chart, much like the daily chart, has a descending trendline from past lows that began at lows of 522.00 through 515.25, 506.00, and if touched would intersect at 502.00.

Minor support is between 502.00 and 503.50.

Soybeans had two unfilled price gaps below the current market price: The first between 517.25 and 519.00 was filled last week, the second between 499.25 and 501.00 is still unfilled.

Soybeans have two unfilled price gaps above the current market price: The first between 606.00 and 623.00, the second between 690.00 and 696.00.

WHAT TRADERS WERE ADVISED TO DO LAST WEEK

Traders were advised to establish a short position at the monthly sell signal of 518.75.

Also, aggressive traders were advised to either add to their existing short position or establish a short position at major resistance of 524.25 - which was the previous week's sell signal, placing stops above 534.50.

Conservative traders were advised to purchase March 500 puts, risking 50% of purchase price.

WHAT SHOULD TRADERS DO NEXT WEEK?

Traders should move their existing stops from 534.50 to above last week's high of 524.50.

If soybeans post a close below recent lows of 510.00, traders are either to add to their existing short position or establish a short position, placing all stops above the monthly sell signal of 518.75.

Conservative traders are advised to purchase March 490 puts, risking 50% of purchase price.

If soybeans post a close below 499.25 - effectively filling the second mentioned gap, traders are advised to either add to their existing short position or establish a short position, placing all stops above 503.50.

Our first objective, the gap between 517.25 and 519.00, was met last week.

Our second objective will be the gap between 499.25 and 501.00.

Our long-term objective if soybeans close below 487.00 is 455.50.

On the flip-side...

If soybeans post a weekly close above last week's highs of 524.50, traders are advised to watch for a possible price advance back to the 50-day moving average at 538.50.

This price advance, if it were to occur, would possibly confirm the extended trading range between 510.00 and 565.00 is still intact. If this were to occur, traders will be advised of any subsequent trading signals that may indicate the market direction in the future.

DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?S05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SH

----------------------------------------------------

MARCH WHEAT (W5H) 

We discussed last week that wheat has been in a eight month price decline which began from highs of 414.50 (5/04/04) to recent lows of 292.25 (1/04/05).

I also pointed out that wheat has a reoccurring pattern on the daily charts.

Wheat posted a low and consolidated for 4 to 5 weeks (revised from last week's reported 6-week's)and then begin their next price decline. During these weekly cycles they bounce 30-cents before the next price move down, each time posting new lows - about 42-cents from the previous high.

Currently, wheat is about to reach the end of it's current 4 to 5-week cycle - and if history repeats itself, a new low is due around February 4th.

The high for this past six week cycle was 312.00. If we subtract 42-cents from the high, then 270.00 should be the next price target.

On 1/14/05, wheat posted a 'daily' sell signal at 303.25.

On 1/18/05, wheat posted a 'weekly' sell signal at 297.00.

Also... wheat could possibly post a 'monthly' sell signal if a close below 295.00 were to occur by the close of business January 31st.

WHAT DO THE CHARTS LOOK LIKE?

Currently, we're experiencing a 4 to 5-week price consolidation between lows of 292.25 and 312.00.

The daily long-term chart has a descending trendline that began from highs of 391.00 (6/01/04) through 341.25 (9/17/04), 312.00 (1/07/05), and if touched would intersect at 306.50.

The weekly long-term chart, much like the daily chart, has a descending trendline that began from highs of 321.00 through 312.00, and if touched would intersect at 307.00.

Major resistance is between 306.50 and 307.00.

Wheat has an unfilled price gap below the current market price between 262.50 and 265.50.

Wheat has an unfilled price gap above the current market price between 325.00 and 326.50.

WHAT TRADERS WERE ADVISED TO DO LAST WEEK 

Traders were advised to establish a short position at the weekly sell signal of 297.00.

Aggressive traders were advised to either add to their existing short position or establish a short position against minor resistance at 303.25, which was the daily sell signal, placing stops above 308.75 - the downward trendline.

Conservative traders were advised to purchase March 290 puts, risking 50% of purchase price.

WHAT SHOULD TRADERS DO THIS WEEK?

Traders are advised to move all existing stops from above 308.75 to above 303.25, the previous daily sell signal from 1/14/05.

Wheat has a daily trade recommendation for Monday: buy when trades 298.00 - sell when trades 294.00.

If wheat post a daily sell signal at 294.00, traders are either to add to their existing short position or establish a short position, placing stops for this position only at 298.00.

If wheat posts a close below recent lows of 292.25, traders are either to add to their existing short position or establish a short position, placing all stops above the weekly sell signal of 297.00.

Conservative traders are advised to purchase March 280 puts, risking 50% of purchase price.

Our objective will be the gap between 262.50 and 265.50.

On the flip-side...

If wheat posts a daily buy signal at 298.00, traders are not advised to establish a long position but should be on guard.

If wheat posts a close above last week's high of 302.00, traders are advised to prepare for a possible attack on the 'weekly' sell signal and possibly the major downward trendline at 307.00.

If wheat posts a close above this month's high of 312.00, traders are advised to establish a long position, placing all stops below the downward trendline breakout of 307.00.

Conservative traders are advised to purchase March 300 calls, risking 50% of purchase price.

If wheat posts a close above 314.00, traders are either to add to their existing long position or establish a long position, placing all stops below 310.75.

Our first objective will be the gap between 325.00 and 326.50

DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?W05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?WH

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.'

===========================

MARCH JAPANESE YEN (JY5H)
The yen is being listed this week in 'chart watch' because of a possible monthly recommendation forming for February.
The yen has been in a six-week trading range, which began from lows of .9476 (12/10/04) to highs of .9885 (12/02/04).
Until the yen closes below .9476 or above .9885 on a monthly basis, it will probably continue its price consolidation. However, because a possible monthly recommendation is developing for February, it never hurts to properly prepare - we must rely on our technical 'expertise.' Remember, I feed-foreword on what might happen... and prepare.
Simply put - develop a 'game plan' in case we have the monthly recommendation.
I will continue to observe the daily, weekly and monthly charts - giving updates to chart progress as the weeks progress.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?JY05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?JY
----------------------------------------------------
MARCH CANADIAN DOLLAR (CD5H)
The Canadian is being listed this week in 'chart watch' because much like the yen there is a possibility of a monthly recommendation forming for February.
The Canadian has been in a six-week trading range, which began from highs of .8472 (12/02/04) to lows of .8018 (12/22/04).
Until the Canadian closes below .8018 or above .8472 on a monthly basis, it will probably continue its price consolidation.
As with the yen, I'll continue to observe the daily, weekly and monthly charts - giving updates to chart progress as the weeks progress.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?CD05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?CD
----------------------------------------------------
MARCH ORANGE JUICE (OJ5H)
Orange juice is being listed this week in 'chart watch' because of a possible monthly recommendation for February.
I don't write often on juice because of its lack of volume and low volatility. However, in the last several months volume has increased and volatility continues to  develop.
Last August and September I wrote about juice because of daily, weekly and monthly recommendations that developed.
In my August newsletter I wrote that a 'spread double' bottom had been established and confirmed at the 58.50 level. I further wrote that Juice had posted an 'intra-monthly' buy signal at 72.80 and traders were advised to establish a long position.
Traders have since exited this long position last October. However, juice prices have fallen back recently and have retested - several times - the original 72.80 'intra-monthly' buy signal from last year.
Is it time to re-establish our long positions?
    
Juice has been in a seven-week trading range, which began from lows of 76.70 (11/30/04) to highs of 89.00 (12/24/04).
Until juice closes below 76.70 or above 89.00 on a monthly basis, it will probably continue its price consolidation.
Orange juice also has a weekly recommendation for next week: buy when trades 84.20 - sell when trades 78.60.
For the remaining six trading days in January, my hope is that juice remains stagnant and trades between lows of 78.70 and highs of 84.10. If this scenario were to occur by the close of business January 31st, juice will not only have a monthly recommendation for February but a 'double' weekly recommendation for the first week in February.
Traders are to sit and wait to see if this scenario develops. I will update you next week.
Aggressive traders are advised to establish a long position against Decembers lows of 76.60, placing stops below 72.80.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?OJ05H
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?OJ

CURRENT 'MONTHLY' RECOMMENDATIONS
FOR JANUARY:

- MARCH SOYBEANS (S5H)

FUTURE WATCH

Future watch will list developing 'monthly' recommendations to watch in January for February use. 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 January 31st and sent via email for February use.

- MARCH TEN YEAR NOTES (TY5H)
- MARCH ORANGE JUICE (OJ5H)
- MAY COFFEE (KC5K)
- MARCH JAPANESE YEN (JY5H)
- MARCH CANADIAN DOLLAR (CD5H)

WEEKLY FEATURE

 Doubtful USDA will change border opening
 
Bryan Doherty 
Market analyst for Stewart-Peterson
 
TOP FARMER WEEKLY PERSPECTIVE
We believe it is highly doubtful that the USDA will change the border opening date for Canadian cattle. The scheduled date is March 7, and unless a significant revelation in late January or February occurs, we see little reason to expect the USDA to change their mind. Great uncertainty has erupted over the last three weeks, as two confirmed cases of BSE from Canada put great uncertainty into the marketplace. However, we do believe the USDA will hold fast with the ruling.
Click here for more
--------------------------------
Winter blahs hit
 
By Roy Smith 
Market analyst
  
This is a depressing time of year for many farmers. Excitement caused by the big harvest is fading fast. It is too early to be energized by prospects of going to the field for 2005. Worse yet, grain markets seem to be stuck in the doldrums. Farmers wanting to convert grain to cash find the government loan as good as cash prices if they have not taken the LDP. For those who have taken the LDP, the current market is comparable to water torture.
Those who study markets realize that recent market action is typical for this time of year. One of the first seasonal events I discovered when I began studying price trends 20 years ago was the 'John Deere low.' It is the result of farmers needing cash to make payments. At the time, I had a new 4440 tractor on which the payment was due March 1 each year. Hence the name for the low in grain prices which seemed to come with regularity every February.
In the past few years this event has become slightly less reliable. Twenty years ago I counted on a major low between the middle of February and March 10 every year. In looking back at the past ten years, there has been a low in February in at least six of the years. Sometimes it was a definite low. Sometimes it was one of multiple lows. Sometimes the low was as early as the first part of January. Other times it was as late as the last week of March.
On my long term chart the average date for the low is February 14. That is nine days earlier than it was on earlier versions. While this event has become less predictable over the years, prices are seldom positive in January and February. Farmers who know that they will need cash flow should focus on getting grain sold prior to harvest or on the 'Dead Cat Bounce' that comes every year.
Click here for more
--------------------------------
Are soybean prices reacting to supply and demand?
 
Ron and Susan Mortensen, Advantage Ag Strategies 
 
Many experts have suggested soybean prices will go lower during this crop year due to the incredibly ample supplies, both in the US and in the fields in South America. The supply and demand tables certainly look a lot different than they did one year ago. Looking at some of the numbers, the situation is truly bearish.
But looking at these supply and demand tables is sometimes a frustrating exercise. Often, these tables provide clues as to price action for the coming year or two. This year, the carryout as a percentage of supply is a new large number (15.5 percent) and the world carryout as a percentage of supply is also a new large number (25.5 percent). Why haven't prices plunged to new lows?
Click here for more
---------------------------------
The University of Michigan's index of consumer confidence slipped from 97.1 to 95.8 in January, less than expected.   
----------------------------------
After the close, the USDA said that there were 11.309 million head of cattle on feed as of January 1st, up .5% from a year ago. December placements were up 5% and marketing's were up 2% from a year ago.       
----------------------------------
The U.S. cocoa grind totalled 99,849 tons in the fourth quarter, up 3% from a year ago.     
----------------------------------
Retail sales in the U.K. were down 1% in December, the worst December performance in 23 years.
----------------------------------
Wholesale sales in Canada were up .5% in November to C$37.9 billion.
----------------------------------
USDA Drought Monitor
http://www.drought.unl.edu/dm/monitor.html

FED WATCH

What's This? A Weak Dollar Isn't a Miracle Cure?: Caroline Baum
Jan. 20 (Bloomberg) -- The most over-reported, over- analyzed, over-hyped and politicized story over the last six months has been the decline of the U.S. dollar and the rise of the U.S. trade deficit.
The relationship isn't supposed to work that way, economists say. A fall in the dollar -- three years and counting -- makes exports more attractive to foreigners and raises the price of imports, reducing the demand for them and narrowing the trade gap.
A report last week of a record $60.3 billion trade deficit in November elicited oohs and ahhs from spectators, shock and awe from forecasters (the deficit was a cool $6 billion above the average estimate), and cries of it's-not-working from everyone else.
And just in case you missed the lead quote in all the stories, the trade deficit is still ``unsustainable'' after all these years.
Back in the late 1980s, there was a lot of talk about something called the ``J-curve effect.'' The first-order effect from a significant, sustained decline in the value of a nation's currency is a deterioration in the trade deficit because imports cost more.
It takes a while for the volume of exports and imports to adjust -- more of the former, less of the latter -- at which point the gap narrows.
 
http://www.bloomberg.com/news/commentary/cbaum.html
----------------------------------
Fed's Yellen Sees `Self-Sustaining' Economy, Inflation `Well-Contained'
 
Jan. 20 (Bloomberg) -- The U.S. economy is in a ``self- sustaining'' expansion and inflation is likely to remain ``well contained,'' said Janet Yellen, president of the Federal Reserve Bank of San Francisco.
``When I look at all of the elements that influence inflation -- slack, inflation expectations, mark-ups, oil prices, the dollar, and productivity -- it seems that the most likely outcome over the next year or so is that inflation will remain well contained,'' Yellen said in remarks to the Financial Women's Association of San Francisco. ``The pace of removing policy accommodation will depend on how developments unfold.''
The central banker said she wanted to explain her views on inflation following the Jan. 4 release of minutes from the Fed's December interest rate meeting. Those documents said some policy makers viewed rising prices as ``likely to become a clearer intermediate-term risk to sustained good economic performance.'' Investors pushed up yields on U.S. Treasury 10-year notes after the minutes were released.
The Fed's Open Market Committee has raised the benchmark overnight lending rate in five straight meetings and is forecast to increase it by another quarter point to 2.5 percent on Feb. 2, according to the median estimate of 64 economists surveyed by Bloomberg News. Yellen is a non-voting member this year.
http://www.bloomberg.com/news/economy/fedwatch.html

 

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, toll free, 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.

====================================

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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 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.

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The contents of this site are copyright 1999-2005, Scott R. Joss/ClearTrade, Inc. *TM. All Rights Reserved.

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