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.
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• TECH TALK
•  CHART WATCH 
•  CURRENT 'MONTHLY' RECOMMENDATION
•  FUTURES WATCH
•  COMING EVENTS AND DATA RELEASES

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

OCTOBER SUGAR (SB5V)
Last week I explored the concept that Sugar may not have extreme price pullbacks despite being over-bought. I believe not only technically but fundamentally that prices are poised to climb higher - unabated, CAFTA or not.
A new bill is being introduced next week called the ‘U.S. Trade Rights Enforcement Act,’ a measure that would combat predatory trade practices abroad. This new bill is aimed at elected officials who are opposed to CAFTA because China may use Central America as a back door to bring in goods.
The bill would permit the U.S. to impose duties on imports of state-subsidized products; establish a system for monitoring Chinese compliance with international trade law and obligations; mandate that the Administration report regularly to Congress on enforcement on international trade law, and increase funding for the U.S. Trade Representative to monitor and combat unfair trade practices.
It has been reported the CAFTA trade agreement may be presented to the House for a vote as early as this Wednesday or Thursday.
My belief technically that sugar prices will go much higher - not only in the short-term but in years to come - is 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.
 I believe the fundamentals driving these technical formations are:
1) Crude Oil prices are high making alternative fuel much more attractive.
2) Oil is a finite product where demand outweighs supply.
3) Sugar cane based ethanol is cleaner and more efficient than fossil fuel or coal.
4) Contrary to recent reports, Sugar cane uses less energy to produce than oil and is more efficient than corn. Corn is used in the U.S. simply because of farmer lobbying efforts and is not an environmentally friendly ethanol source.
5) CAFTA, in conjunction with the WTO ruling, will slowly eliminate subsidies paid by the EU, Britain and the U.S. to an industry that supports overproduction.  
6) Large Sugar growers in the U.S., Europe, Britain and its colonial colonies will be forced out of business, decreasing supply.
7) Sugar cane ‘trash’ can and will be converted to electricity and power plants.
8) Sugar cane ethanol is now being used in ‘flex-fuel’ cars produced in Brazil. These cars can utilize either ethanol, gasoline or a mixture of the two. Producers will be able to rotate output depending on world oil prices and sugar prices. 
The most recent examples of sugar enterprises being forced out of business because of subsidies being dropped occurred on Friday.
BASSETERRE, ST. KITTS, JULY 22ND 2005, It is a day that will go down in the historic annals of the history of St. Kitts and Nevis, when at 1:15 P.M. on Friday 22nd July 2005, flower-decorated locomotives with their sirens and horns blaring, brought the last tonnes of cane to their sugar factory for grinding from the fields.
Report urges Jamaica government to get out of sugar industry
Kingston, Jul 22, 2005 (BBC Monitoring via COMTEX) -- The Planning Institute of Jamaica (PIOJ) has recommended the immediate divestment of the government's control of the sugar industry as well as major staff cuts as part of the restructuring of the industry.
Bottom line:
World sugar production is in a state of decline, decreasing supply.  
Major sugar producers like Brazil are converting sugar to ethanol and to a lesser extent, to refined sugar -which is decreasing supply.
 
World population growth and wealth will grow, increasing Sugar demand while world sugar cane supply diminishes.
Liquid Gold.
What basis do I have for making this claim?
Last Sunday I wrote about one Agribusiness Company called Cargill.
I explained that they were a leading exporter of Brazilian sugar - and they’re also the largest operator of this commodity - in terms of export sales as well as in global sugar trading.
I explained what they appeared to be establishing which is:
1) Purchasing land to grow Sugar at significantly reduced prices.
2)  Purchasing land to build ethanol plants.
So Cargill becomes not only the producer but the supplier of Sugar and ethanol.
They not only purchase land, build sugar mills, ethanol plants on the cheap - but have access to cheap labor.
Strangely, on Monday there was a press release from the Institute for Agriculture and Trade Policy confirming my findings.
Cargill is in the process of controlling all aspects of production and use less expensive transportation to get their product to market.
The concept is known as ‘vertical integration’ which is not a new concept and was used by some of the most successful business men in history.
What is vertical integration?
This important corporate strategy is a process where a firm, such as Cargill, owns its upstream suppliers and its downstream buyers.
Here is an example - taken from Wikipedia, the free online encyclopedia:
In microeconomics and strategic management, the term vertical integration describes a style of ownership and control. Vertically integrated companies are united through a hierarchy and share a common owner. Usually each member of the hierarchy produces a different product, and the products combine to satisfy a common need. It is contrasted with horizontal integration. Vertical integration is one method of avoiding the Hold-up problem.
One of the earliest, largest and most famous examples of vertical integration was the Carnegie Steel company. The company controlled not only the mills where the steel was manufactured, but the mines where the iron ore was extracted, the coal mines that supplied the coal, the ships that transported the iron ore and the railroads that transported the coal to the factory, the coke ovens where the coal was coked, etc.
Another example is the personal computer software company Microsoft. They produce the widely used Windows operating system which bundles with other Microsoft products such as the Internet Explorer web browser and Windows Media Player.
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.
I had hoped for either a pullback or sideways trade in order to work off some excesses from the Sugar buying that has occurred over the last six-weeks. However, this may or may not occur depending on companies like Cargill.
As I stated last week, Cargill, one of the key players in Sugar, may continue to take delivery of Sugar via the futures market as they did in the July contract. They did this by purchasing sugar futures and then taking delivery, maintaining price supports. A tricky strategy - but effective…and transparent.
The ‘Commitment of Traders’ report published each Friday indicated that the open interest increased by 15,974 contracts.  Rising prices in conjunction with rising open interest equates to higher prices.
October Sugar has been in a multi-year price advance which began from lows of 6.12 (2/13/04) to recent highs of 9.75 (7/22/05).
Sugar closed Friday at 9.70, which is above its 100-day moving average of 8.95 and its 200-day moving average of 8.94.
Take note, the 200-day moving average is about to cross over the 100-day moving average. This will officially signal that Sugar is in a bull move.
Several week’s ago I wrote that Sugar prices were entering backwardation, where front month prices are progressively higher than the back months, which is another indication of a bullish market.

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 three unfilled price gaps below the current market price. The closest price gap is between 7.36 and 7.43.
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.
This multiple three week close above 9.45 confirms a major breakout.
Last week's high was 9.75.
Last week's low was 9.35.
Last month's high was 9.46.
Last month's low was 8.70.
WHAT DO THE CHARTS LOOK LIKE?
The daily Sugar chart has developed a bullish “W” formation or a one-two-three bottom.
The all-important middle of the “W” is at 8.65. 
The long-term weekly Sugar chart has the same formation as the daily chart, which is a bullish “W” formation.
The all-important middle of the weekly “W” is at 8.85. 
The long-term monthly Sugar chart, which supports the daily and long-term weekly charts, has not only one but also possibly two “W” formations developing.
The all-important middle of the first monthly “W” is at 8.85.
The all-important middle of the second “W” is at 11.40.
Our short-term objectives are 12.88 and 18.87.
The main caveat still stands that Sugar maintains a foothold above the middle of the first correlating “W,” which is at 8.85.
The second caveat is that Sugar maintains a foothold above the previous contract high of 9.45.
WHY IS THE 8.85 LEVEL SO IMPORTANT?
Besides the fact that 8.85 is the middle of the ‘W’ formation, 8.85 represents Sugars ‘intra-year’ buy signal and major trend change.
Why does this signify a trend change?
On 2/28/03, Sugar posted a high of 9.13.
On 12/31/03, Sugar posted a low of 5.66.
On 2/29/04, Sugar posted a low of 5.27.
On 10/31/04, Sugar posted a high of 9.37.
What this means is that Sugar on a yearly basis in 2004 posted lower lows than the previous year of 2003. Then, Sugar posted higher highs in 2004 than the previous year of 2003 and settled above the previous year’s settlement, confirming a trend change.
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).
Last week I discussed that Sugar had a well-defined upward trendline that began from lows of 8.32 through lows of 8.35, and lows of 8.77. If this trendline were touched, it would intersect at 9.30.
Major support is at 9.30.
Last week I described some Sugar option facts and will provide updated information:
Last week Sugar options were ranked number 37 out of 45 - this week 27 out of 45 for a two-year ‘implied volatility’ average.
27) Sugar (SB) High 42.12% - Low 18.90% - Current 22.70%

Last week Sugar options were ranked number 35 out of 45 - this week 21 out of 45 for a one-year ‘implied volatility’ average.
21) Sugar (SB) High 33.54% - Low 18.90% - Current 22.70%
Sugar options have been ranked number 34 out of 45 - this week 17 out of 45 for a six-month ‘implied volatility’ average.
17) Sugar (SB) High 27.18% - Low 18.90% - Current 22.70%
What do these numbers boil down to?
Sugar option volatility is moving higher - still mid-range, but not yet too expensive.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Aggressive traders who either added to their existing long position or established long positions at the ‘intra-weekly’ buy signal of 9.04 were advised to move their stops below 9.15.
Aggressive traders who either added to their existing long position or established long positions at 9.13 were advised to move their stops below 9.15.
Options traders who purchased either March 1100 calls or March 1200 calls were advised to continue risking 100% of purchase price.
If Sugar first posted a daily buy signal at 9.58 and posted a higher high than the previous week‘s high 9.60, traders were advised to either add to their existing long position or establish a long position, placing stops for this position only at 9.39, which would fill the first downside gap. (This position was stopped out).
On 7/21/05, aggressive traders were advised to either add to their existing long position or establish a long position on the ‘intra-day’ buy signal at 9.56, placing stops for this position only below 9.25.
On 7/22/05, aggressive traders were advised to either add to their existing long position or establish a long position on the ‘intra-weekly’ buy signal at 9.61, placing stops for this position only below 9.25.
Options traders were advised to either add to their March 1100 calls or March 1200 calls, risking 100% of purchase price.
WHAT SHOULD TRADERS DO NEXT WEEK?
Aggressive traders who either added to their existing long position or established long positions at the ‘intra-weekly’ buy signal of 9.04 are advised to move their stops below 9.25.
Aggressive traders who either added to their existing long position or established long positions at 9.13 are advised to move their stops below 9.25.
Aggressive traders who either added to their existing long position or established long positions at the ‘intra-day’ buy signal of 9.56 are advised to move their stops below 9.25.
Aggressive traders who either added to their existing long position or established long positions at the ‘intra-weekly’ buy signal of 9.61 are advised to move their stops below 9.25.
Options traders who purchased either March 1100 calls or March 1200 calls are advised to continue risking 100% of purchase price.
For Monday Sugar has a daily recommendation: buy when trades 9.74 - sell when trades 9.61.
If Sugar first posts a daily buy signal at 9.74 and posts a higher high than last week‘s high of 9.75, traders are advised to either add to their existing long position or establish a long position, placing stops for this position only at 9.39, which is the most recent gap filled.
If Sugar first pulls back to support at 9.30, traders are advised to either add to their existing long position or establish a long position, placing stops below 9.25.
If Sugar posts a close above 9.82, traders are advised to either add to their existing long position or establish a long position, placing stops for all positions below 9.30.
Conservative traders are advised to purchase either multiple March 1200 calls or March 1300 calls, risking 100% of purchase price.
Our next objective will be 10.66.
If Sugar posts a close above 10.66, traders are advised to either add to their existing long position or establish a long position, placing stops for this position only below 10.33.
If Sugar does post a close above 10.66, traders should prepare for a possible assault on the previous high and the second ‘W’ of 11.40.
Our next 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 9.61, traders are not advised to establish a short position. However, traders are advised to place resting buy stop orders at 9.74 to either add to their existing long position or establish a long position.
If this scenario were to evolve, traders are advised to place their stops for this position only at 9.34.
If Sugar were to post a monthly close at or below 8.70, traders are to sit on the sidelines and wait for another trading opportunity.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?SB05V
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WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SB
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S&P 500 (SP5U)
Two week’s ago I discussed the possibility that the summer rally could be in place. However, the September S&P would need a close at or above 1225.20 by the close of business July 29th.
The September S&P had been in an eight-week price advance that began from lows of 1143.00 (4/20/05) to highs of 1225.20 (6/17/05).
Recently, the S&P had been in a three-week price decline that began from highs of 1225.20 to lows of 1186.50 (7/07/05).
Currently, the S&P has traded from lows of 1186.50 to highs of 1239.80 (7/20/05).
The S&P has two unfilled price gaps above the current market price. The most recent 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.
 
Last week’s high was 1239.80.
Last week’s low was 1225.60.
Last month’s high was 1225.20
Last month’s low was 1192.50.
WHAT DO THE CHARTS LOOK LIKE?
As long as the S&P 500 maintains a foothold above the highs of 1993 - which was 1111.50, the S&P are in an up-trend.
Major support for the S&P is at the current ‘intra-week’ buy signal 1208.60.
Minor support for the S&P is at the current ‘intra-month’ buy signal 1225.20.
If the S&P can post a monthly close at or above last month’s high of 1225.20 by the close of business July 29th, this would constitute a continuation of the current up-trend.
On Friday, the S&P closed the session with a daily recommendation for Monday.
Buy when trades 1238.10 - sell when trades 1228.40.
This daily recommendation posted is also considered a ’coil’ day, which is explosive.
A major move is imminent.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Traders that established a long position in the S&P at the ‘intra-weekly’ buy signal at 1208.50 were advised to move their stops below 1208.20.
Traders that established a long position in the Emini S&P at the ‘intra-weekly’ buy signal 1209.00 were advised to move their stops below 1209.00.
Traders that either added or established a long position in the S&P on a higher high than 1217.00 were advised to move their stops below 1209.00.
Traders that either added or established a long position in the S&P on a weekly close above 1225.20 were advised to move their stops below 1216.70.
If the S&P first pulled back to minor support at 1225.20, traders were advised to either add to their existing long position or establish a long position, placing stops for this position below 1216.70.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Traders that established a long position in the S&P at the ‘intra-weekly’ buy signal at 1208.50 are advised to move their stops below 1225.20.
Traders that established a long position in the Emini S&P at the ‘intra-weekly’ buy signal 1209.00 are advised to move their stops below 1225.20.
Traders that either added or established a long position in the S&P on a higher high than 1217.00 are advised to move their stops below 1225.20.
Traders that either added or established a long position in the S&P on a weekly close above 1225.20 are advised to move their stops below 1225.20.
Traders that either added or established a long position in the S&P on a pull back to minor support of 1225.20 are advised to move their stops below 1225.20.
Monday the S&P has a daily recommendation: buy when trades 1238.10 - sell when trades 1228.40.
As mentioned previously, the S&P is coiling and is poised for a major move.
If the S&P posts a daily buy signal at 1238.10, traders are advised to either add to their existing long position or establish a long position, placing all stops at 1228.40. 
If the S&P posts a higher high than last week’s high of 1239.80, traders are advised to either add to their existing long position or establish a long position, placing all stops at 1228.40. 
Our short-term objective will be to fill the unfilled price gap above the current market price between 1249.30 and 1250.80.
Our long-term objective will be 1263.90
On the flipside…
If the S&P posts a daily sell signal at 1228.40, traders are to prepare for an assault on the ‘intra-monthly’ buy signal at 1225.20.
If the S&P posts a lower low than last week’s low of 1224.00, traders are advised to establish a short position, placing stops above 1228.40.
If the S&P posts a lower low than 1216.70, traders are advised to either add to their existing short position or establish a short position, placing stops for this position above 1225.20.
If the S&P posts a lower low than 1208.50, traders should prepare for an all out attack on the 1200.70 support level.
If the S&P were to post a monthly close below 1192.50, traders are advised to either add to their existing short position or establish a short position, placing stops above 1200.70.
Our objective will be the unfilled price gap below the current market price between 1180.50 and 1184.50.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?SP05U
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WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?SP
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SEPTEMBER US 30-YEAR BOND (US5U)
Two weeks ago I discussed that 30-year Bonds had been placed on ‘chart watch’ because of a possible monthly recommendation for August, which will not be revealed until the close of business July 29th.
This week I will move the 30-year Bond to ‘Tech Talk’ because of a possible monthly breakdown from a nine-week trading range.
Last week the 30-year Bond penetrated the bottom of a nine-week trading range between 115-26 lows and 119-23 highs. However, the Bonds were unable to post a weekly close below 115-26.
Until bonds post a monthly close below 115-26 or a monthly close above 119-23, they still appear to be in congestion.
Bonds have no unfilled price gaps above the current market price.
Bonds have four unfilled price gaps below the current market price. The most recent gap is between 113-26 and 113-29. The second unfilled price gap is between 112-14 and 112-20.
Last week’s high was 116-22.
Last week’s low was 114-31.
Last month’s high was 119-23
Last month’s low was 115-26.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Sit on the sidelines and wait until Bonds post a monthly close above 119-23 or below 115-26.
Traders were advised to see if Bonds could bounce up last week and continue to develop a potential monthly recommendation for August.
Be prepared for an explosive trading opportunity.
WHAT SHOULD TRADERS DO NEXT WEEK?
If the 30-year Bond posts a close at or below 115-25 by the close of business July 29th, traders are advised to establish a short position, placing stops above 116-22.
Conservative options traders are advised to purchase either December 113 puts or December 112 puts, risking 60% of purchase price.
Our first objective will be 113-08.
On the flipside….
If Bonds were to close at or above 115-26 by the close of business July 29th, traders are advised to sit on the sidelines and wait for another trading opportunity.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?US05U
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WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?US
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DECEMBER GOLD (GC5Z)
Last week December Gold was placed on ‘chart watch’ because of a possible monthly recommendation for August, which will not be revealed until the close of business July 29th.
This week Gold will be placed in ‘Tech Talk’ because of a daily recommendation for Monday, a weekly recommendation for next week and a possible monthly recommendation for August.
I explained that this trading opportunity may turn out to be a more complex monthly recommendation.
Why more complex? 
Because my gut feeling is that Gold may also develop a monthly recommendation in August that would not be revealed until the close of business September 30th.
I might be wrong about this possible ’double’ monthly recommendation. However, if it were to occur - it would be explosive.
The caveat is we must continue in a trading range this month below 450.00 and above 421.70.
If all goes well, next month (August) we will need to remain below 444.00 and above 424.20.
WHAT DO THE CHARTS LOOK LIKE?
The December weekly Gold chart appears to be developing a pennant formation by posting lower highs and higher lows.
The downward trendline of the pennant begins from highs of 456.00 through highs of 448.00 and highs of 437.50.
The upward trendline of the pennant begins from lows of 394.40, through lows of 413.20.
The long-term weekly Gold chart has an upward channel that began from lows of 271.70 through lows of 320.10 and if touched today would intersect at 400.00.
The long-term monthly Gold chart has an upward channel that began from lows of 277.20 (1/03/02) through lows of 320.10 and if touched today would intersect at 401.00.
Gold has been trading in a six-month range between 415.50 lows and 442.50 highs.
Gold has two unfilled price gaps above the current market price. The most recent is between 452.80 and 453.50.
Gold has one unfilled price gaps below the current market price. The recent gap is between 423.30 and 424.20.
Last week’s high was 432.00.
Last week’s low was 424.50.
Last month’s high was 450.00.
Last month’s low was 421.70.
WHAT SHOULD TRADERS DO NEXT WEEK?
Gold has a daily recommendation for Monday: buy when trades 431.90 - sell when trades 430.10.
Gold has a weekly recommendation for next week: buy when trades 432.10 - sell when trades 424.40.
Gold is developing a possible monthly recommendation for August, which will not be revealed until the close of business July 29th.
If Gold first posts its daily buy signal at 431.90, aggressive traders are advised to establish a long position, placing stops below 424.40.
If Gold first posts a weekly buy signal at 432.10, aggressive traders are advised to either add to their existing long position or establish a long position, placing stops at 424.40.
If Gold first posts its daily buy signal and posts its weekly buy signal - yet reverses, traders are advised to place a resting stop entry order at 421.60 to establish a short position. If this were to occur, aggressive traders are advised to place their stops above 424.40.
If Gold posts a close above 434.00, aggressive traders are advised to either add to their exiting long position or establish a long position, placing stops below 428.80.
Conservative traders are advised to wait for a possible monthly recommendation to develop for August.
On the flipside…
If Gold first posts its daily sell signal at 430.10, aggressive traders are advised to establish a short position, placing stops at 431.90.
If Gold first posts a weekly sell signal at 424.40, aggressive traders are advised to either add to their existing short position or establish a short position, placing stops at 431.90.
If Gold first posts its daily sell signal and posts its weekly sell signal - yet reverses, aggressive traders are advised to place a resting stop entry order at 432.10 to establish a long position. If this were to occur, traders are advised to place their stops at 424.40.
If Gold posts a monthly close below 421.00, traders are advised to either add to their exiting short position or establish a short position, placing stops above 424.40.
Conservative traders are advised to wait for a possible monthly recommendation to develop for August.
Note: Gold options this week are ranked 45 out of 45 for a two-year ‘implied volatility’ average.
Options are getting cheap.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?GO05Z
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WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?GO

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.'

SEPTEMBER LUMBER (LB5U)
Lumber will be added to chart watch this week because of a potential monthly recommendation for August, which will not be revealed until the close of business July 29th. Current discussions between the U.S. and Canada on Lumber are referenced below.
Prepare for a possible trading opportunity.
WASHINGTON - Canadian and U.S. officials met in Washington July 18-20 for discussions on the potential for resolution of the softwood lumber dispute. The discussions allowed for a better understanding of each other’s respective positions. Both sides will need time to reflect on the discussions.
"This week’s talks were a constructive start, and gave us a better understanding of each other’s positions. Minister Peterson and I have spoken and I am convinced that both sides are serious about seeking to resolve this dispute. We look forward to continuing the talks," said U.S. Trade Representative Rob Portman.
"I have asked Canada's negotiating team to continue to seek input from Canadian industry and provinces as we take the necessary time to evaluate the options that have been presented," said Canadian Trade Minister Jim Peterson. "Ambassador Portman and I will be following the issue closely and will continue to remain in close contact."
The negotiators intend to use the coming weeks for further consultations with stakeholders and will seek to meet again to discuss the softwood lumber dispute in Ottawa by late August.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?LB05U
----------------------------------------------------
DECEMBER CORN (C5Z)
Several weeks ago I developed a ‘trading module’ for December Corn, which is listed below.
The trading module is still active until Corn posts a close below the ‘head’ of the ‘head and shoulders’ formation, which is at 229.50 - or reaches our objective at 281.50.
Recently, an inexperienced trader called me to explain that the trading module “did not work” and he was stopped out.
His statement was “I guess you can throw your analysis out the window.”
I responded by explaining that trading and technical analysis is not a perfect art form… there are too many variables. If it WAS a perfect ‘predictor,’ then there would be little or no risk and everyone would have winning trades.
I have been trading for 28 years - on and off the floor of the CBOT. All experienced traders in the pits and technicians realize that not all goes perfectly as planned. When I first started trading on the floor, the first trading advice I received was ‘don’t risk a lot of money.’ So you must have a game plan in place before entering a trade. Each week I write several trading modules. As good as a trading module may be, you cannot control the market - but you can control your risk.
As a technician, the best I can do at any given time is to interpret what the charts appear to tell me - and most of all, realize what the market wants to do. I try not to out-think the market because the market will always be right. The less I think, the better my trades do. Then I look at other factors that influence the markets - from weather to world events, both political and economic. Even when those resources fail to correctly predict what the markets will do, I’m satisfied in knowing that by providing stops for every product I discuss, traders have minimized their potential risk. And risk management is essential to all good (and smart) traders.
In my newsletter dated 6/26/05 I wrote: ‘this week would be a challenging one to trade grains technically.’
I included several trading scenarios for Corn because of bullish weather patterns and bearish cattle news.
I explained that the eventual outcome, if history repeated itself, was a major price advance towards the 330.00 level.
One ‘trading module’ I included was that corn may trade as low as 229.00. However, I further explained that Corn should recover within a week from 229.00 lows and begin a major price advance to highs of 331.25.   
Traders were also advised that sometimes a crisis presents an opportunity and to think logically - not emotionally…. and manage risk.
December Corn has one unfilled price gap above the current market price between 282.00 and 282.50.
Corn on the long-term weekly chart has two unfilled price gaps. The first is between 302.50 and 307.25 (6/11/2004). The second gap is between 9.95 and 9.96 from 1971.
Corn has three unfilled price gaps below the current market price. The most recent unfilled gap below the current market price is between 236.50 and 241.00 (7/05/05).
On 5/23/05, Corn posted an intra-monthly buy signal at 240.50.
On 7/13/05, Corn posted a major breakout above its ‘head and shoulders’ neckline at 254.25.
Last week's high was 273.00.
Last week's low was 243.00.
Last month's high was 256.75.
Last month's low was 229.50.
WHAT DO THE CHARTS LOOK LIKE?
The daily December Corn chart had developed a distinct ‘head and shoulders’ bottom.
The left shoulder was established between 242.00 lows and 256.75 highs.
The head developed between 241.50 highs and 229.50 lows.
The right shoulder developed between 255.00 highs and 242.00 lows.
The all-important neckline was at 254.25.
On 7/13/05, December Corn penetrated the neckline and posted a close at 261.75.
The projection for the ’head and shoulders’ formation is 281.25.
How did I get this projection?
First, I took the highest point of the left shoulder at 256.75.
Next, I took the lowest point of the head at 229.50.
Next, I found the price of the neckline breakout at 254.25.
So let’s do the math:
256.75 - 229.50 = 27.25-cents
Next I added the 27.25-cents to the neckline breakout of 254.25.
254.25 + 27.25 = 281.50.
Our first projection is 281.50.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
Traders who established a long position in December Corn on the intra-month buy signal of 240.50 (5/23/05) or below were advised to move their stops below the neckline of 254.50.
Traders who established a long position in December Corn on a close above the all-important neckline of 254.50 or above were advised to move their stops below the neckline of 254.50.
Trader’s who established a long position in December Corn on a higher high than the breakout high of 265.00 were advised to leave their stops below 258.25.
Conservative traders who either purchased December 260 calls or December 270 calls were advised to risk 50% of purchased price.
If Corn first pulled back to support at 260.50, traders were advised to either add to their existing long position or establish a long position, placing stops for this position only below last month’s high of 256.75
Our first objective was 281.50
Traders who were advised to establish long futures positions in December Corn liquidated their positions last week.  Some aggressive options traders are still long December 260 and December 270 calls.
DAILY CHART:
http://bohl.minot.com/d_Chart.cgi?C05Z
------------
WEEKLY CHART:
http://bohl.minot.com/w_Chart.cgi?CZ
----------------------------------------------------
- DECEMBER SOYBEAN OIL (BO5Z)
- NOVEMBER SOYBEANS (S5X)
- SEPTEMBER WHEAT (W5U)
- DECEMBER SOYBEAN MEAL (SM5Z)
Two weeks ago I posted several grain products that will remain on ‘chart watch.’
Each is still developing a possible monthly recommendation for August, which will not be revealed until the close of business July 29th.
It has been my experience that when a group of related products - in this case grains - are all developing potential monthly recommendations, it is time to step back and sit on the sidelines.
WHAT SHOULD TRADERS DO?
Wait for possible monthly recommendations in these products to develop for August. This will give traders direction and momentum.
Monthly recommendations for these products will not be revealed until the close of business July 29th - which will be sent via email. However, if any of the previous month’s highs or lows is closed above or below, clients will be updated and advised during the trading week. If this should occur, I have developed trading modules for each product listed below. Please discuss this with your account executive.
DECEMBER SOYBEAN OIL (BO5Z)
Last month’s high was 2684.
Last month’s low was 2299.
NOVEMBER SOYBEANS (S5X)
Last month’s high was 770.00.
Last month’s low was 660.50
SEPTEMBER WHEAT (W5U)
Last month’s high was 356.00.
Last month’s low was 320.50.
DECEMBER SOYBEAN MEAL (SM5Z)
Last month’s high was 2430.
Last month’s low was 2035.
For the last two-week’s I have found it practical to let the locals (pit traders), hedge funds, and commercial funds search for price discovery and when the dust settles, our true direction will be revealed.
Bottom line:  preserve your capital for future opportunities that will develop in these explosive markets.

CURRENT 'MONTHLY' RECOMMENDATIONS
FOR JUNE:

There are no current monthly recommendations.

FUTURE WATCH

Future watch will list developing 'monthly' recommendations to watch in July for August. 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 July 29 and sent via email for August.

- SOYBEANS
- WHEAT
- SOYBEAN MEAL
- SOYBEAN OIL
- GOLD
- LUMBER
- LEAN HOGS

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.
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Suite 2104
Chicago, IL 60640

(800) 493-4444
(773) 561-9777 Voice
(773) 561-9775 Fax

Mailto:research@cleartrade.com 
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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.

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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.

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