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Author: JsnStein Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 113  
Subject: Market summary 6-23-06 Date: 6/23/2006 11:24 PM
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Since futures are my forte I figured I would try this. (Actually, I should request a "Futures Trader" board as I trade all futures not just commodities.) I have heard a few people say putting their thoughts in writing helps to organize them and synthesize all the input. Feel free to tell me to shut up if you think this is useless, banal, annoying, etc. Any critiques or criticism (writing style or content) is also welcome.

In the interest of keeping this short I won't go into a lot of detail. Since I have no history (writing this) some of the positions won't have any basis. Although I will try to give some, I will rely on questions (if any) to fully explain anything that is lacking detail.


Currencies

Well, it looks like the short dollar play has fallen apart. I got stopped out of my long British Pound and long Japanese Yen positions over a month ago. It appears there are a bunch of short dollar traders on the sidelines anxious to get short but the data just doesn't support it and Bernanke is making it dangerous.

The Australian dollar is not confirming the metals sell-off. It predicted it and then defied it. I am just watching this.

I find it interesting that bullish Canadian Dollar news came out of Canada this week yet the Canadian dollar couldn't rally. It is trading in a channel; although I will play the break to the downside if it comes I don't hold a lot of faith in the break because I can't see a top to this bull market playing out that easily. I would definitely play a break to the upside but that is looking unlikely.


Energy

I think everyone is fully aware of what is going on in this market, even people who don't trade. Although a crash is imminent I am beginning to believe it may not happen until next year or at least the end of the year, and there actually may be a spike higher before then. I may trade an upside break of the declining trendline (traced from the high). I say I may, because of the volatility in this market I will need to find an entry point that limits risk. This market could have large, quick moves that will really hurt if one is not careful.


Grains

Corn broke its uptrend support giving a bearish signal. I am looking for a place to enter short. None of the other markets are compelling. Rough rice broke out to the upside but has since traded sloppily. A low risk long position would be taken if given. Soybeans are essentially dead.

I probably have to explain the corn short. There is a lot of buzz around ethanol, so some might think a corn short to be crazy. But the buzz around ethanol is that there is not enough. There isn't enough infrastructure to deliver the goods, thus not a lot of corn is being used. And I am still dubious as to how much demand will really be there when the hype dissipates.


Interest Rates

Simple, I'm bearish. If I can find a place to enter the short side then I will do it. Everything is pointing down. Too many people are talking about the imminent end to rising rates for me to accept that it is a foregone conclusion. Also, as mentioned above, the currency markets aren't saying they think that Bernanke is on the cusp of stopping.


Meats

I really missed this one. I was long Feeder Cattle but since I was holding four other positions I felt over-extended so I liquidated my long. It went straight up since then while I got stopped out of all my other positions. Isn't that how it always happens. Pick your market, Feeder Cattle, Live Cattle, Lean Hogs, Pork Bellies, they are all candidates for long positions. I am sure the fact that Japan removed its import ban on U.S. beef is sure helping the long argument in cattle.


Metals

No comment. :-) If anything, these markets could provoke the most heated debate. Gold bugs tend to love their yellow metal. So far this year my long copper trade has been my most profitable. But I liquidated it very early; the volatility scared me off, and still scares me. Copper is the strongest metal and silver is the weakest. I am currently on the sidelines but if I become bullish I will play copper, if I become bearish I will play silver. The gold bugs think gold can continue its uptrend; I am in the, "I will believe it when I see it" mode. There has been a lot of technical damage done to gold recently.


Softs

My favorite markets recently. I liquidated my Sugar #11 shorts last week at an OK profit. I am still bearish as the overhead resistance is strong. The sell-off today really hurt the bull case. Weather fears, particularly a dry harvest time in Brazil brought on the spike this week. I am actively watching for a place to get short with stops somewhere just above 17.

I am currently long OJ from 163 when it broke out of the pennant formation this week. The position is doing well. I added to my position today. Monday I am going to bring my stop up to just above break-even. I think the hurricane threat is helping to drive this market and also scaring any sellers away, limiting downside.

I am going to find a good short entry in cotton. I thought shorting it today would be "jumping the gun" as it hadn't completely broke down yet but evidently not, it continued it's precipitous fall.

Lumber is also resting on a long-term uptrend support, so I am waiting for the downside break there as well. This market is so thin I will insist on a good entry point. The housing slow-down helps make the case for a short. Coffee is also weak, but cocoa is looking strong. Not actively looking at coffee but I am eyeing a cocoa long if strength continues.


Indexes (Stock Markets)

I am solidly bearish. However, I liquidated my Sept Nasdaq short around 1590 a few weeks ago. Volatility, not the least of which that 300 point two-day rally has clouded the picture immediate picture. The Nasdaq and S&P are hovering just under downtrend resistance and their 50-day MA's. I would like to see them run up a little to provide a better short entry but I am really waiting to see how this plays out to clear up some sloppy action. I am only considering the short side right now; the challenge is finding a good, low-risk entry point. Getting stopped out of this volatile market is a big concern.

The Nikki 225 looks like it is tracing out a bear flag, that coupled with a break of it's 200-day MA makes for a compelling bearish case. However, my momentum indicators show the downside has run its course so I will wait for a definitive break before I take action.


Open Positions
Long Sept OJ


Potential
Short Sugar #11
Sept Canadian Dollar
Short Dec Corn
Short Dec Cotton
Long Sept Cocoa
Short Sept 10-yr Treasury Notes
Short Sept Nasdaq
Short Sept Nikki 225


Liquidated
Short Sugar #11


Jason
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