WELCOME TO THE JOSS REPORT - WEEKLY TRADE ADVISOR

ClearTrade®
 Clearing Man Financial
The Joss Report trading recommendations and weekly trade advisor was first published in October 1998. Since that time, the Joss Report research has continued to evolve into an important source of technical insight for many traders. Our goal is to provide traders with a 'trading plan' to prepare for the trading day and week ahead.
ClearTrade's own technical analyst, Scott Joss*, is a veteran futures trader with twenty-eight years experience on and off the trading floor - as a technical analyst, pit trader, account executive handling arbitrage for Smith Barney, former member of the CBOT, non-member CTA and presently an IB. Scott prepares technical analysis in selected market groups when an opportunity presents itself and not only develops 'trading modules' on selected trading opportunities but 'feeds-forward', advising traders what to expect and how to react.
  At ClearTrade, we think it’s helpful to speak directly with traders who have requested The Joss Report research and 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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The Joss Report Archived Weekly Trade Advisor 2006

 

· TECH TALK - COTTON - SUGAR - JAPANESE YEN
· CHART WATCH - SOYBEAN MEAL - OATS
· CURRENT 'MONTHLY' RECOMMENDATIONS 
· FUTURES WATCH
· COMING EVENTS AND DATA RELEASES  

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

  
As, no doubt, most trader’s are well aware, volatility is nearing 100% for many major financial and commodity products.
Why is volatility increasing?
Within the past nine months, I began writing on various products such as the U.S. Dollar, Euro, Yen, Dow Jones, Sugar, Copper, Gold and Silver.
The Joss Report prides itself on ‘feeding forward’ each Sunday for the coming trading week. The Weekly Trade Advisor is an ever-changing road map, anticipating what ‘might be’ and how traders should deal with market conditions. Is the Joss Report always right? … No - but with the use of strict risk management tools, it is my intention that traders are prepared for the worst.
For the last several weeks, I’ve heard strong suggestions - via the media and from traders (new and old) - that commodities are where to put their monies.
Let me relay a few examples:
For several weeks the media has been touting Sugar as the next major commodity mover. Two weeks ago, my colleague and I were out to dinner and happened to speak with a CTA who touted Sugar as the commodity of choice to buy. For several weeks I’ve received email after email from CPO’s and CTA’s touting Sugar.
Eight months ago, before Sugar began its price advance, these same traders asked ClearTrade: ‘What are you trading?’ Our answer was simple…..Sugar.
http://www.cleartrade.com/images/letter_June_5.htm
Their reaction was…‘Sugar? That product never moves!’ There was not a word from the media about Sugar back then - and there were definitely no emails claiming Sugar would have a major price advance.
March Sugar began its price advance last June at 8.81 and posted 20-year highs two-weeks ago at 19.65.
I began discussing the U.S. Dollar eight months ago, advising traders that the U.S. Dollar was forming a very bullish ‘cup with a handle’ formation, which is very much alive today. And I advised traders to begin watching a bullish ‘head and shoulders’ bottom formation.
http://www.cleartrade.com/images/newsletter.html
http://www.cleartrade.com/images/letter_August_28.htm
http://www.cleartrade.com/images/letter_September_25.htm
Yet traders insist that reputable money managers and European banks are touting that the U.S. Dollar will weaken and have another major price decline. 
Note: The U.S. Dollar, Euro-Currency, Swiss Franc, British pound and Canadian Dollar are all developing potential monthly recommendations for March.
Three months ago I began writing ‘trading modules’ for Gold and Silver based on weekly and monthly trade signals. The past several weeks, many traders - old and new - are piling into these products. Recently, Gold appears to be developing a bearish rounded top.
NOTE: Silver is developing a potential monthly recommendation for March.
http://www.cleartrade.com/images/letter_11_13_05.htm
What do each of the commodities mentioned above have in common? 100% volatility.
Here is the kicker; while the Johnny-come-lately public pumps their money into these products, guess who’s liquidating? The major funds are selling. Take a look at the Rogers International Commodity Index Fund, which tracks the performance of his self-compiled commodity index @RCIVO.
On February 1, the Rogers fund hit an all-time high at 26.76.
On February 2, Gold posted its current high of 579.50.
On February 2, Silver posted its current high of 9.915.
On February 3, Sugar posted its current high of 19.65.
On February 3, Cotton posted its current high of 57.45.
On February 6, Copper posted its current high of 233.50.
If the Rogers fund posts a monthly close at or below 24.92, this would constitute a trend reversal and would suggest lower fund prices. My hat goes off to the Rogers Fund managers for a job well done.
If this trend reversal does occur, wouldn’t it reflect lower prices for products that the Rogers Fund invested in?
Don’t forget…. prices can decline at a faster pace than they advance. So don’t rule out trading the downside potential to these products listed above.
The moral of the story is - developing a written trading plan with strict risk management tools is advised.
As the saying goes; the bulls make a little, the bears make a little, and the hogs get slaughtered.
Next week, due to the long holiday weekend, the Joss Report’s Weekly Trade Advisor will not be published. ClearTrade clients are to contact their account executive to review active ‘trading modules.’
----------------------------- 
MARCH COTTON (CT6H)
I began developing several 'trading modules' for March Cotton in the 12/08/05 Joss Report newsletter because of a weekly buy recommendation and several daily buy recommendations.
On 12/05/05, March Cotton posted a daily buy signal at 52.11.
On 12/12/05, March Cotton posted a weekly buy signal at 53.26.
On 12/16/05, March Cotton posted an 'intra-day' buy signal at 53.36.
Next week, traders are advised - depending on market conditions - to liquidate their March Cotton Futures and roll into the May contract.
The previously mentioned trade signals posted above suggest fund buying began from the 52.11 level in early December.
Last week I said the unthinkable: ‘move over Sugar - there’s a more volatile product at the New York Board of Trade.’
Is Cotton ready for a major price advance? Or will it fall victim to fund profit taking?
This product is for aggressive traders only - as this baby can really move.
Last week the WTO ruled in favor of GMO products.
This news article was posted:
The World Trade Organization (WTO) last week ruled that the European Union’s agricultural tariffs on genetically modified crops and food imports were breaking trade rules.
American sources said WTO trade judges had found that the EU had imposed illegal barriers on GMO imports, and that France, Germany, Austria, Italy, Luxembourg and Greece had broken the rules by applying their own bans.
The verdict addressed a complaint brought by leading GMO producers the United States, Argentina and Canada, which claimed the EU ban against new corn, cotton and soybean products was based on protectionism, and not on scientific concerns.
"This is a message to the world that (we) won't put up with the EU violating the rules," president of the National Corn Growers Association Len Corzine said to Reuters.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated the net change in open interest last week increased by 3,157, posting a total open interest of 131,823 contracts.
Traders are not to exceed the rule of thumb - 10% of equity to risk ratio.
If you do not fit this risk profile, traders are advised to consult their account executive for an option trading strategy.
WHAT DOES THE MARCH COTTON CHART LOOK LIKE?
March Cotton had been in a six-week price decline that began from highs of 59.25 (10/13/05) to lows of 51.38 (12/02/05).
March Cotton began its current nine-week price advance from lows posted at 51.40 (12/01/05) and 51.38 (12/02/05) to recent highs of 57.45 (2/03/06).
March Cotton has posted a bullish spread 'double bottom' at the 51.40 – 51.38 price level.
Confirmation of a spread 'double bottom' was multiple closes (4 business days) above 55.40.
Cotton needs to maintain a foothold on a weekly and monthly close basis above 55.40 or a possible price failure might occur.
March Cotton has multiple unfilled price gaps above the current market price. The most recent unfilled price gap is between 57.45 and 57.50.
March Cotton has three unfilled price gaps below the current market price. The first unfilled price gap is between 54.25 and 54.35. The second unfilled price gap is between 52.90 and 53.00. The third unfilled price gap is between 51.80 and 51.95.
March Cotton has closed above its 40-day moving average and 50-day moving average - which as of Friday was at was at 55.18 and 54.65, respectively.
March Cotton closed Friday at 55.97 - which is above its 100-day moving average of 54.67 and its 200-day moving average of 54.38
Last week I noted that the 100-day moving average was attempting to cross the 200-day moving average. This moving average crossover constitutes a change in trend and would suggest higher prices.
Friday’s close in March Cotton has allowed the 100-day moving average to cross above the 200-day moving average, however - it is imperative that March Cotton post a weekly or monthly close above its major resistance at 57.37.
For several weeks I have written that March Cotton has developed a symmetrical bullish ‘V’ bottom formation or a rounded saucer bottom formation.
The upward ‘V’ trendline begins at lows of 51.38 through lows of 53.07 and if touched today would intersect at 55.25.
The rounded saucer bottom is more visible when you look at the daily March Cotton chart.
Because of the possible long-term implications of a Cotton 'policy' change (subsidy cuts), I am watching December Cotton. The December Cotton chart recently developed a bullish ‘head and shoulders’ bottom. The breakout occurred at 57.30.
Listed below are the original trade signals that the March Cotton has recently posted:
On 12/01/05 and 12/02/05, March Cotton posted a potential spread 'double bottom' at 51.40 and 51.38, respectively.
On 12/05/05, March Cotton posted a daily buy signal at 52.11.
On 12/12/05, March Cotton posted a weekly buy signal at 53.26.
On 12/16/05, March Cotton posted an 'intra-day' buy signal at 53.36.
On 1/16/06, March Cotton posted an ‘intra-week’ buy signal at 56.01.
On 1/20/06, March Cotton again posted an ‘intra-week’ buy signal at 56.01.
On 2/02/06, March Cotton posted an ‘intra-week’ buy signal at 56.85.
On 2/07/06, March Cotton posted a daily sell signal at 56.89.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
http://www.cleartrade.com/images/letter_2_05_06
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
For Monday, March Cotton has not only a daily recommendation but a ‘coil’ recommendation.
Generally, ‘coil’ trade signals are violent in nature and can catapult prices in the direction of a trend.
March Cotton has a daily recommendation for Monday: buy when trades 56.41 – sell when trades 55.91.
Aggressive traders who established a long position in March Cotton at 53.26 are advised to leave stops below 54.50* or liquidate positions if the daily sell signal at 55.91 is posted.
Options traders who rolled their March call positions to May 58 calls are advised to risk 30% of purchase price**.
Aggressive traders who either added to their existing long position or established a long position on the 'intra-day' buy signal at 53.36 are advised to leave stops below 54.50* or liquidate positions if the daily sell signal at 55.91 is posted.
Aggressive traders who either added to their existing long position or established a long position on the 'intra-week' buy signal at 56.01 are advised to leave stops below 54.50* or liquidate positions if the daily sell signal at 55.91 is posted.
Aggressive traders who added to their existing long position or established a long position on Cotton’s price decline to 54.70 are advised to leave stops below 54.50* or liquidate positions if the daily sell signal at 55.91 is posted.
Aggressive traders who added to their existing long position or established a long position on the ‘intra-week’ buy signal at 56.85 were advised to leave stops for this position only below 55.40*. This trade was liquidated last week.
Option traders who purchased July 67 calls, July 70 calls, December 75 calls and December 77 calls are advised to risk 50% of purchased price.
Below are possible ‘trading modules’ for futures traders to consider next week:
# 1) If March Cotton first posts a daily buy signal at 56.41:
Very aggressive traders are advised to add to their existing long position or establish a long position, placing stops for this position only at 55.91*.
Aggressive option traders are advised to purchase July 67 calls, July 70 calls, December 75 calls or December 77 calls, risking 30% of purchase price**.
# 2) If March Cotton posts a higher high than last week's high of 57.30:
Aggressive traders are advised to wait for multiple closes over 57.50 (4 business days) before adding to their existing long positions or establishing a long position.
If multiple closes above 57.50 are achieved, traders are advised to place all stops below 55.40*.
Option traders are advised to purchase July 67 calls, July 70 calls, December 75 calls or December 77 calls, risking 70% of purchase price**.
# 3) If March Cotton posts multiple closes above 58.40 (4 business days):
Aggressive traders are advised to either add to their established long position or establish a long position, placing all stops below 56.01*.
Option traders are advised to purchase July 67 calls, July 70 calls, December 75 calls or December 77 calls, risking 70% of purchase price**.
Our objective will be 59.42.
# 4) If March Cotton posts multiple closes above 59.50 (4 business days):
Aggressive traders are advised to either add to their established long position or establish a long position, placing all stops below 56.85*.
Option traders are advised to purchase July 70 calls or December 77 calls, risking 70% of purchase price**.
Our intermediate-term objective will be an assault on 60.30.
# 5) If March Cotton posts multiple closes above 60.50 (4 business days):
Aggressive traders are advised to add to their established long position or establish a long position, placing all stops below 57.45*.
Option traders are advised to purchase July 70 calls or December 77 calls, risking 70% of purchase price**.
Our intermediate-term objective will be 71.20.
# 6) If March Cotton first posts a daily sell signal at 55.91:
Aggressive traders are advised to leave stops as proposed above* or liquidate all long positions.
If traders opt to liquidate all their long positions yet the market reverses – refer to ‘trading module’ number 1 and number 2.
Option traders are advised to risk 30% of purchase price of May calls** and 50% of July and December calls**.
# 7) If March Cotton posts a lower low than last week’s low of 54.95:
Traders are to prepare for a possible price failure below 54.50.
Aggressive traders are advised to leave stops as proposed above*.
Option traders are advised to continue to risk 30% of purchase price of May calls** and 50% of July and December calls**.
Below are possible reversal ‘trading modules’ to consider next week:
# 8) If March Cotton first posts a higher high than last week's high of 57.30 yet reverses, posting a lower low than last week’s low of 54.95:
Aggressive futures traders and option traders are to prepare for a possible price failure.
If existing long positions are stopped below 54.50, traders are advised to place resting buy stop orders at 57.46.
If March Cotton posted 57.46, aggressive traders will have reestablished their long positions, placing stops below 56.01*.
# 9) If March Cotton first posts a lower low than last week's low of 54.95 yet reverses, posting a higher high than last week's high of 57.30:
Aggressive futures traders are advised to place resting buy stop orders at 57.46.
If March Cotton posted 57.46, aggressive traders will have added to their existing long position, established a long position, or reestablished their long positions, placing stops below 56.01*.
Below are possible ‘monthly reversal trading modules’ to consider:
# 10) If March Cotton posts a monthly close at or below 54.35:
Aggressive traders will have liquidated their long positions and are advised to sit on the sidelines and wait for another trading opportunity.
I have compiled some Cotton option facts for traders:
Cotton options for a two-year ‘implied volatility’ average are ranked number 21 out of 45.
21) Cotton (CT) High 47.91% - Low 21.51% - Current 27.16%.
Cotton options for a one-year ‘implied volatility’ average are ranked number 24 out of 45.
24) Cotton (CT) High 38.90% - Low 21.51% - Current 27.16%.
Cotton options for a six-month ‘implied volatility’ average are ranked number 29 out of 45.
29) Cotton (CT) High 38.90% - Low 21.51% - Current 27.16%.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?CT06H
-----------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?CT
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
-----------------------------------------
MAY SUGAR (SB6K)
This week I will began developing several 'trading modules' for May Sugar because of a weekly recommendation for next week.
This is what traders have been waiting for – direction and momentum.
May Sugar has a weekly recommendation for next week: buy when trades 19.46 – sell when trades 17.64.
Remember - volatility is at extreme levels. Newly entered longs are looking for 25.00. Funds may have the all-important advantage on direction.
This product is for aggressive traders only.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated the net change in open interest last week decreased by -1,912, posting a total open interest of 516,881 contracts.
Traders are not to exceed the rule of thumb - 10% of equity to risk ratio.
The proposed weekly trade risk is $2,038.40, which suggests traders should have an account size of $20,380 per contract to trade this product.
If you do not fit this risk profile, traders are advised to consult their account executive for an option trading strategy.
WHAT DOES THE MAY SUGAR CHART LOOK LIKE?
May Sugar has been in an eight-month price advance that began from lows of 8.81 (6/15/05) to highs of 19.65 (2/03/06).
Currently, May Sugar has been in congestion between lows of 17.50 and highs of 19.65.
Until Sugar can post multiple closes below 17.50 or above 19.65, this product will remain in a 2-cent trading range.
Our long-term objective from the second bullish ‘W’ formation at 18.87 has been met.
May Sugar has multiple unfilled price gaps above the current market price. The most recent unfilled price gap is between 18.10 and 18.20. The second unfilled price gap is between 19.80 and 19.85.
May Sugar has several unfilled price gaps below the current market price. The first unfilled price gap is between 16.00 and 16.10. The second unfilled price gap is between 15.34 and 15.43.
May Sugar has closed above its 40-day moving average and 50-day moving average - which as of Friday was at was at 16.11 and 15.54, respectively.
May Sugar’s close Friday was at 17.85 - which is above its 100-day moving average of 13.51 and its 200-day moving average of 11.45.
For two weeks it appears May Sugar has been developing a bearish ‘V’ top formation.
The downward ‘V’ trendline begins at highs of 19.65 through highs of 19.24 and if touched today would intersect at 19.10.
Listed below are the current trade signals that May Sugar has recently posted:
On 2/08/05 and 2/09/05, May Sugar posted a bearish key reversal pair.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
For next week May Sugar has a weekly recommendation: buy when trades 19.46 – sell when trades 17.64.
Below are possible ‘trading modules’ for futures traders to consider next week:
# 1) If May Sugar first posts a weekly buy signal at 19.46:
Aggressive traders are advised to wait for multiple closes over 19.65 (4 business days) before establishing a long position.
If multiple closes above 19.65 are achieved, traders are advised to place all stops below 17.50*.
Option traders are advised to purchase May 1900 calls or July 2000 calls, risking 70% of purchase price**.
Our immediate objective will be the unfilled gap between 19.80 and 19.85.
# 2) If May Sugar posts multiple closes above 20.01 (4 business days):
Aggressive traders are advised to add to their established long position or establish a long position, placing all stops below 18.70*.
Option traders are advised to purchase May 20 calls, July 21 calls, risking 70% of purchase price**.
# 3) If May Sugar posts multiple closes above 21.40 (4 business days):
Aggressive traders are advised to add to their established long position or establish a long position, placing all stops below 19.46*.
Option traders are advised to purchase May 2100 calls or July 2200 calls, risking 70% of purchase price**.
Our intermediate-term objective will be an assault on the 50% retracement level at 24.14.
# 4) If May Sugar first posts a weekly sell signal at 17.64:
Aggressive traders are advised to establish a short position, placing stops at 19.46*.
Option traders are advised to purchase May 1750 puts or July 1600 puts risking 70% of purchase price**.
# 5) If May Sugar posts multiple closes below 17.50:
Aggressive traders are advised to add to their existing short position or establish a short position, placing stops at 19.46*.
Option traders are advised to purchase May 1750 puts or July 1600 puts risking 70% of purchase price**.
# 6) If May Sugar posts multiple closes below 16.72:
Aggressive traders are advised to add to their existing short position or establish a short position, placing stops for this position above 17.64*.
Option traders are advised to purchase May 1650 puts or July 1500 puts risking 70% of purchase price**.
# 7) If May Sugar posts multiple closes below 15.98:
Aggressive traders are advised to add to their existing short position or establish a short position, placing all stops above 16.72*.
Option traders are advised to purchase May 1550 puts or July 1400 puts risking 70% of purchase price**.
# 8) If May Sugar posts multiple closes below 14.98:
Aggressive traders are to prepare for an all out assault on the monthly sell signal at 14.20.
Aggressive traders are advised to move all stops above 15.98*.
Below are possible reversal ‘trading modules’ to consider next week:
# 9) If May Sugar first posts the weekly buy signal at 19.46 yet reverses, posting the weekly sell signal at 17.64:
Aggressive futures traders and option traders are to prepare for a possible price failure.
Aggressive traders are advised to place resting sell stop and reverse orders at 17.64.
If May Sugar posted 17.64, aggressive traders will have exited their long positions and will have established a short position, placing stops at 19.46*.
# 10) If May Sugar first posts a weekly sell signal at 17.64 yet reverses, posting a weekly buy signal at 19.46:
Aggressive futures traders and option traders are to prepare for a possible price advance.
Aggressive futures traders are advised to place resting buy stop and reverse orders at 19.46.
If May Sugar posted 19.46, aggressive traders will have exited their short positions and will have established a long position, placing stops at 17.64*.
Below are possible ‘monthly reversal trading modules’ to consider:
# 11) If May Sugar posts a monthly close at or below 14.20:
Aggressive traders are advised to add to their existing short position or establish a short position, placing all stops above 16.72.
I have compiled some Sugar option facts for traders:
Sugar options for a two-year ‘implied volatility’ average are ranked number 4 out of 45.
4) Sugar (SB) High 52.89% - Low 18.90% - Current 43.17%.
Sugar options for a one-year ‘implied volatility’ average are ranked number 7 out of 45.
7) Sugar (SB) High 52.89% - Low 18.90% - Current 43.17%.
Sugar options for a six-month ‘implied volatility’ average are ranked number 10 out of 45.
10) Sugar (SB) High 52.89% - Low 21.26% - Current 43.17%.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?SB06K
-----------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?SB
 * (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
---------------------------
MARCH JAPANESE YEN (JY6H)
This week I will begin developing several 'trading modules' for the March Japanese Yen because of a weekly recommendation for next week.
The question of the week: Is the Yen moving against the U.S. Dollar - as it has for the past several years, or has that relationship changed, whereby the Yen and U.S. Dollar will move hand in hand?
Remember, the cash U.S. Dollar is still in a position of strength fostered by the bullish ‘cup with a handle’ and a bullish ‘head and shoulders’ bottom that we discussed many months ago. Our long-term objective for the U.S. Dollar has not yet been met at 102.16.
The March Yen has a weekly recommendation for next week: buy when trades .8587 – sell when trades .8426.
Remember, volatility is at extreme levels.
This product is for aggressive traders only.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated the net change in open interest last week increased by 9,174, posting a total open interest of 197,898 contracts.
Traders are not to exceed the rule of thumb - 10% of equity to risk ratio.
The proposed weekly trade risk is $2,012.50, which suggests traders should have an account size of $20,125 per contract to trade this product.
If you do not fit this risk profile, traders are advised to consult their account executive for an option trading strategy.
WHAT DOES THE MARCH YEN CHART LOOK LIKE?
The March Yen had been in a twelve-month price decline that began from highs of 1.0164 (12/03/04) to lows of .8338 (12/05/05).
Recently, the March Yen traded from lows of .8338 to highs of .8880 (1/12/06) before reversing and posting recent lows of .8413 (2/03/06).
Currently, the March Yen has been in congestion between lows of .8338 and highs of .8880.
The March Yen has multiple unfilled price gaps above the current market price. The most recent unfilled price gap is between .8758 and .8770.
The March Yen has several unfilled price gaps below the current market price. The first unfilled price gap is between .8480 and .8503. The second unfilled price gap is between .8378 and .8379.
The March Yen has closed below its 40-day moving average and 50-day moving average - which as of Friday was at was at .8647 and .8598, respectively.
The March Yen closed Friday at .8509 - which is below its 100-day moving average of .8689 and its 200-day moving average of .9032.
Long-term readers of the Joss Report Weekly Trade Advisor will remember when the Yen posted a yearly sell signal at .8710.
http://www.cleartrade.com/images/letter_10_30_05.htm
At that time, traders were advised to establish short positions.
The .8710 level will be our judge and jury to see if the Yen can overcome this major obstacle.
This will be a dogfight - but if the Yen can post multiple closes over this level of resistance, then a major price advance just may occur. Will this happen overnight? Probably not - but in the next few months this may be the stepping stone to higher prices against the Euro and Swiss.
Let’s begin watching the long-term monthly Yen chart; could it be similar to the U.S. Dollars bullish ‘head and shoulders’ bottom formation?
Listed below are the current trade signals posted recently:
On 2/07/06, the March Yen posted an ‘intra-day’ buy signal at .8479.
On 2/10/06, the March Yen posted an ‘intra-day’ buy signal at .8496.
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
For next week the March Yen has a weekly recommendation: buy when trades .8587 – sell when trades .8426.
Below are possible ‘trading modules’ for futures traders to consider next week:
# 1) If the March Yen first posts a weekly buy signal at .8587:
Aggressive traders are advised to establish a long position, placing stops at .8426.
Option traders are advised to purchase June 88 calls, risking 70% of purchase price**.
# 2) If the March Yen posts multiple closes above .8614 (4 business days):
Aggressive traders are advised to add to their established long position or establish a long position, placing all stops below .8532*.
Option traders are advised to purchase June 88 calls, risking 70% of purchase price**.
# 3) If the March Yen posts multiple closes above .8658 (4 business days):
Aggressive traders are advised to add to their established long position or establish a long position, placing all stops below .8586*.
Option traders are advised to purchase June 88 calls, risking 70% of purchase price**.
Our intermediate-term objective will be an assault on the .8710 level.
# 4) If the March Yen first posts a weekly sell signal at .8426:
Aggressive traders are advised to establish a short position, placing stops at .8587*.
Option traders are advised to purchase June 85 puts risking 70% of purchase price**.
# 5) If the March Yen posts multiple closes below .8413:
Aggressive traders are advised to add to their existing short position or establish a short position, placing stops for this position above .8532*.
Option traders are advised to purchase June 84 puts risking 70% of purchase price**.
# 6) If the March Yen posts multiple closes below .8395:
Aggressive traders are advised to add to their existing short position or establish a short position, placing stops all stops above .8438*.
# 7) If the March Yen posts multiple closes below .8354:
Aggressive traders are to prepare for an all out assault on contract lows at .8338.
# 8) If the March Yen posts multiple closes below .8338:
Aggressive traders are advised to add to their existing short position or establish a short position, placing all stops above .8427*.
Option traders are advised to purchase June 83 puts risking 70% of purchase price**.
Our objective will be .8252.
Below are possible reversal ‘trading modules’ to consider next week:
# 9) If the March Yen first posts the weekly buy signal at .8587 yet reverses, posting the weekly sell signal at .8426:
Aggressive futures traders and option traders are to prepare for a possible price failure.
Aggressive traders are advised to place resting sell stop and reverse orders at .8426.
If the March Yen posted .8426, aggressive traders will have exited their long positions and will have established a short position, placing stops above .8532*.
# 10) If the March Yen first posts a weekly sell signal at .8426 yet reverses, posting a weekly buy signal at .8587:
Aggressive futures traders and option traders are to prepare for a possible price advance.
Aggressive futures traders are advised to place resting buy stop and reverse orders at .8587.
If the March Yen posted .8587, aggressive traders will have exited their short positions and will have established a long position, placing stops below .8532*.
Below are possible ‘monthly reversal trading modules’ to consider:
# 11) If the March Yen posts a monthly close at or above .8880:
Aggressive traders are advised to add to their existing long position or establish a long position, placing all stops below .8710.
I have compiled some option facts for traders:
Yen options for a two-year ‘implied volatility’ average are ranked number 4 out of 45.
4) Yen (JY) High 52.89% - Low 18.90% - Current 43.17%.
Yen options for a one-year ‘implied volatility’ average are ranked number 7 out of 45.
7) Yen (JY) High 52.89% - Low 18.90% - Current 43.17%.
Yen options for a six-month ‘implied volatility’ average are ranked number 10 out of 45.
10) Yen (JY) High 52.89% - Low 21.26% - Current 43.17%.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?JY06H

-----------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?JY
* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
  

CHART WATCH by Scott R. Joss (Non member C.T.A)*

 

Readers and clients call during the week and ask: What are you watching?

Watching can mean that the markets are developing a 'recommendation' or a chart pattern that has not yet fully developed - or may never develop.

During the course of the week or month it is not uncommon to find an `intra-day, intra-week or intra-month' recommendation that was previously not revealed when this newsletter was written.

Products that currently fit into this 'watch' category are listed below and should be 'watched.'

 

MARCH SOYBEAN MEAL (SM6H)
Last week March Soybean Meal was posted in ‘Chart Watch’ because of a pending monthly recommendation.
March Soybean Meal has a monthly recommendation: buy when trades 202.1 – sell when trades 175.5.
In coming weeks I will switch to May Soybean Meal because of the approaching first notice day. However, March Meal is still lead month because trade signals are generated by front month volume.
May Soybean Meal has a monthly recommendation: buy when trades 200.9 – sell when trades 177.9.
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated the net change in open interest last week increased by 4,609, posting a total open interest of 131,474 contracts.
Meal is not for the inexperienced trader due to extreme volatility.
The proposed March monthly trade recommendation risk is $2,660.
Traders are not to exceed the rule of thumb - 10% of equity to risk ratio.
This means to trade March Soybean Meal based on the monthly recommendation, traders should have an account size of $26,600 per contract.
If you do not fit this risk profile, traders are advised to consult their account executive for an option trading strategy.
WHAT DOES THE MARCH SOYBEAN MEAL CHART LOOK LIKE?
March Soybean Meal has been in a twenty-six week price decline that began from highs of 237.0 (6/24/05) to recent lows of 169.0 (11/28/05).
Recently, March Meal prices advanced from lows of 169.0 to highs of 204.5 (12/27/05) before retreating back down to lows of 175.6 (1/18/06).
Currently, March Meal has traded from lows of 175.6 to highs of 190.5 (1/30/06) and retracing back to support at 175.8 (2/07/06) and 175.8 (2/08/06).
On 1/30/06, March Meal posted a low of 175.6.
On 2/07/06, March Meal posted a low of 175.8.
On 2/08/06, March Meal posted a low of 175.8.
Support continues to reappear at the mid 175.0 levels.
March Meal closed below its 40-day moving average and 50-day moving average as of Friday which were at 187.6 and 186.0, respectively.
March Meal closed Friday at 180.5 which is below its 100-day moving average of 181.3 and below its 200-day moving average of 193.2.
March Meal has several unfilled price gaps above the current market Price. The most recent unfilled price gap is between 204.5 and 205.2.
March Meal has several unfilled price gaps below the current market price. The most recent unfilled price gap is between 169.0 and 167.5.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
http://www.cleartrade.com/images/letter_2_05_06
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Remember, intra-month we will also rely on potential weekly recommendations that may develop to guide us in direction and the eventual posting of the monthly trade signal of this product.
If a weekly or monthly trade signal is not posted, then traders are advised to sit on the sidelines and wait for a trading opportunity next month.
Below are possible ‘trading modules’ for futures and option traders to consider next week:
# 1) If the March Meal first posts the monthly buy signal at 202.1:
Aggressive futures traders are advised to establish a long position, placing stops at 175.5.
Option traders are advised to purchase May 200 calls, risking 70% of purchase price**.
# 2) If the March Meal first posts the monthly sell signal at 175.5:
Aggressive futures traders are advised to establish a short position, placing stops at 202.1.
Option traders are advised to purchase May 175 puts, risking 70% of purchase price**.
Below are possible ‘weekly reversal trading modules’ to consider:
# 3) If March Meal posts a lower low than last week’s low of 175.8 yet reverses, posting a high of 184.4:
Very Aggressive traders are advised to establish a long position, placing stop and reverse sell orders at 175.5.
If 175.5 were to be posted, traders will have liquidated their long positions and will have established a short position, placing stops above 180.0*.
However, if the ‘intra-week’ buy signal at 184.4 is posted and the monthly buy signal at 202.1 is posted, aggressive traders are advised to add to their existing long position or establish a long position, placing all stops below 180.0*.
Option traders are advised to purchase May 200 calls, risking 70% of purchase price**.
# 4) If March Meal posts a higher high than last week’s high of 184.3 yet reverses, posting a low of 175.5:
Aggressive traders are advised to establish a short position, placing stop and reverse buy orders at 202.1.
If 202.1 were to be posted, traders will have liquidated their short positions and will have established a long position, placing stops below 184.3*.
However, if the ‘intra-week’ sell signal at 175.7 is posted and the monthly sell signal at 175.5 is posted, aggressive traders are advised to add to their existing short position or establish a short position, placing stops above 190.5*.
Option traders are advised to purchase May 175 puts, risking 70% of purchase price**.
Below are possible ‘monthly reversal trading modules’ to consider:
# 5) If March Meal posts a monthly sell signal at 175.5 yet reverses:
Aggressive traders are advised to place resting stop and reverse buy orders at 202.1.
If 202.1 were to be posted, traders will have liquidated their short positions and will have established a long position, placing stops below 190.5.
# 6) If March Meal posts a monthly buy signal at 202.1 yet reverses:
Aggressive traders are advised to place resting stop and reverse sell orders at 175.5.
If 175.5 were to be posted, traders will have liquidated their long positions and will have established a short position, placing stops above 180.0.
I have compiled some option facts:
Meal options for a two-year ‘implied volatility’ average are ranked number 14 out of 45.
14) Meal (SM) High 45.08% - Low 19.65% - Current 28.07%.
Meal options for a one-year ‘implied volatility’ average are ranked number 27 out of 45.
27) Meal (SM) High 45.03% - Low 21.03% - Current 28.07%.
Meal options for a six-month ‘implied volatility’ average are ranked number 11 out of 45.
11) Meal (SM) High 32.39% - Low 21.03% - Current 28.07%.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?SM06H

-----------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?SM

* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).
----------------------------------------------------
MARCH OATS (O6H)
Last week March Oats was posted in ‘Chart Watch’ because of a pending monthly recommendation and light volume.
March Oats have a monthly recommendation: buy when trades 202.25 – sell when trades 182.50.
In coming weeks I will switch to May Oats because of the approaching first notice day. However, March Oats are still lead month because trade signals are generated by front month volume.
May Oats have a monthly recommendation: buy when trades 195.25 – sell when trades 179.25.
March Oats on 2/06/06 posted its monthly buy signal – May Oats on 2/03/06 posted their monthly buy signal at 195.25 (possibly due to light volume).
The ‘Commitment of Traders’ report - published each Friday by the CFTC - indicated the net change in open interest last week decreased by -45, posting a total open interest of 12,284 contracts.
Oats, due to light volume and open interest, are prone to extreme slippage - so be cautious and never enter a market order. Traders are to only enter limit orders.
The proposed March monthly trade recommendation risk is $987.50.
Traders are not to exceed the rule of thumb - 10% of equity to risk ratio.
This means to trade March Oats based on the monthly recommendation, traders should have an account size of $9,875 per contract.
If you do not fit this risk profile, traders are advised to sit this one out because of the lack of volume in the options.
WHAT DOES THE MARCH OAT CHART LOOK LIKE?
March Oats had been in a fourteen-week price advance that began from lows of 156.25 (8/31/05) and 156.00 (9/12/05) to recent highs of 206.00 (12/13/05) and 206.00 (12/14/05).
Last week I posed the question: Is there a ‘spread double bottom’ at the 156.00 level or a ‘spread double top’ at the 206.00 level? This is still a question to be answered.
The long-term weekly and monthly charts appear to be possibly forming two bullish ‘W’ formations. The first ‘W’ formation breakout would be a close above the middle of the ‘W’ at 248.00. The second ‘W’ formation breakout would be a close above the middle of the ‘W’ at 296.00.
If these potentially bullish ‘W’s were to become active, it appears this product could lead all the grains to higher prices.
The old highs in 1988 were 393.00.
Currently, March Oats are congesting between lows of 179.25 and highs of 206.00.
Until March Oats either post multiple highs (4-days minimum) above 206.00 or multiple lows below 179.25 (4-days minimum), this product will continue trading in its current range.
March Oats closed below its 40-day moving average and 50-day moving average as of Friday which were at 192.25 and 192.75, respectively.
March Oats closed Friday at 191.50 which is above its 100-day moving average of 182.50 and below its 200-day moving average of 192.75.
March Oats has one unfilled price gap above the current market Price between 202.00 and 202.50.
March Oats has several unfilled price gaps below the current market price. The most recent unfilled price gap is between 179.00 and 179.25.
WHAT WERE TRADERS ADVISED TO DO LAST WEEK?
http://www.cleartrade.com/images/letter_2_05_06
WHAT ARE TRADERS ADVISED TO DO NEXT WEEK?
Remember, intra-month we will also rely on potential weekly recommendations that may develop to guide us in direction and the eventual posting of the monthly trade signal of this product.
If a weekly or monthly trade signal is not posted, traders are advised to sit on the sidelines and wait for a trading opportunity next month.
Below are possible ‘trading modules’ for futures and option traders to consider next week:
# 1) If the March Oats first post the monthly buy signal at 202.25:
Futures traders are advised to wait for multiple closes above 206.00 (4 business days) before establishing a long position, placing stops at 182.50.
# 2) If the March Oats first post the monthly sell signal at 182.50:
Futures traders are advised to wait for multiple closes below 179.25 (4 business days) before establishing a short position, placing stops at 202.25.
Below are possible ‘monthly reversal trading modules’ to consider:
# 3) If March Oats post a monthly sell signal at 182.50 yet reverses:
Aggressive traders are advised to place resting stop buy orders at 202.25.
If 202.25 were to be posted, traders will have established a long position, placing stops at 182.50.
If March Oats post a close over 206.00, traders are advised to add to their existing long position or establish a long position, placing stops below 188.25*.
Our objective will be 232.75.
# 4) If March Oats post a monthly buy signal at 202.25 yet reverses:
Aggressive traders are advised to place resting stop sell orders at 182.50.
If 182.50 were to be posted, traders will have established a short position, placing stops at 202.25.
If March Oats post a close below 179.25, traders are advised to add to their existing short position or establish a short position.
Our objective will be 152.50.
DAILY CHART:
http://www.bohl.minot.com/d_Chart.cgi?O06H
-----------------
WEEKLY CHART:
http://www.bohl.minot.com/w_Chart.cgi?O

* (Futures traders and their account executives are advised to discuss this suggested stop).
** (Option traders and their account executives are advised to discuss the suggested risk).

CURRENT 'MONTHLY' RECOMMENDATIONS FOR FEBRUARY:

- MARCH SOYBEAN MEAL

- MARCH OATS

- MAY SOYBEAN MEAL

- MAY OATS

FUTURE WATCH

Future watch will list developing 'monthly' recommendations to watch in February for March. 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 February 28 and sent via email for March.

 

- SOYBEANS

- SOYBEAN OIL

- DOW JONES

- SILVER

- COCOA

- COFFEE

- EURO-CURRENCY (FX)

- SWISS FRANC

- CANADIAN DOLLAR

- BRITISH POUND

- U.S. DOLLAR

 

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

* The Joss Report trade recommendations and weekly trade advisor is prepared by Scott Joss, Non- Member C.T.A.

Scott Joss is a 'non member' CTA and is providing the Joss Report weekly trading advisor and trade recommendations to ClearTrade®, Inc. clients. Scott Joss 'is a principal' of ClearTrade, Inc. and 'is a registered IB member' with the NFA.

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.

Unless otherwise indicated, the links presented in this publication/newsletter are in no way affiliated with ClearTrade, Inc. Likewise, sites linked through ClearTrade's Joss Report weekly trade advisor newsletter are not necessarily connected with ClearTrade, nor do any such links imply an endorsement by either party.

ClearTrade®, Inc. does not necessarily promote or endorse the services or publications described herein. Unless otherwise indicated, ClearTrade Inc. has had no role in the production or review of these products or services and makes no warranty, either expressed or implied, as to their contents, accuracy or performance.

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.
====================================

REPRODUCTION OR REBROADCAST OF ANY PORTION OF THIS INFORMATION IS STRICTLY PROHIBITED WITHOUT THE WRITTEN PERMISSION OF S.R. JOSS INC./CLEARTRADE®, INC.

The contents of this newsletter are copyright 1997-2005, Scott R. Joss/S.R. Joss Inc./ClearTrade®, Inc. *TM. All Rights Reserved.

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