Recently in exchanges Category

Monday or Tuesday expect regulators to change the rules to the game. This should cause more volatility in my opinion as opposed to less but time will tell.

Crude and the distillates fell hard today as expected and prices hit our $72 price objective. Though it may be a few days premature clients were advised to start buying Crude today. We have yet to commit on futures but on signs of stabilization we will probe longs in July for clients next week. Today clients were buyers of $5 call spreads in August. We expect in the coming weeks to see this contract back in the mid $80's. The charts are ugly but sometimes you have to close your eyes and buy. Inside day in natural gas but prices managed to keep their head above water. Some clients still hold longs others took a profit yesterday when prices failed to get above $4.40. We are mildly bullish but need to see a settlement above $4.40 soon to remain in longs with clients.

Clients were looking for weakness into the weekend and the indices delivered cutting thru the 100 day MA and as of this post prices are near their lows down 2-3%. We expect more downside and have convinced most clients to hold there June ES puts anticipating 1075 next week. Sugar was down 3.6% today and is back below the 9 day MA. Hopefully not a false breakout but pay close attention to the action early next week. Clients are positioned long but will be forced to cut loses if we do not see a trade higher next week. We got partial fills for some clients to exiting their OJ longs. Continue to scale out of longs as we think a setback is on the horizon. Coffee lost 2% today; still we would like to see a trade closer to $1.30 before exploring longs for clients.

Treasuries remain in our opinion a sell rallies market but days like today remind me of the risk as prices were up over 1%. This trade may take a few weeks to develop so be patient. Live cattle broke down today but we failed to make a move as it happened so quickly. Prices broke the 20 day MA for the first time in several weeks so we think there could be more downside. A 50% Fibonacci retracement on the move from December would drag prices in August back closer to 89/90 cents. Lean hogs also broke down today closing below the 20 day MA. This is the confirmation we've been waiting for. Clients still hold August shorts and should be able to capitalize on a move under 81 cents.

Copper lost 4% today closing below the 200 day MA. Believe it or not clients that were long put options exited today at a small loss even with prices collapsing. This is the reason why we have no interest in trading copper options again on behalf of clients. Indecision in the gold and silver market today with wild trading ranges; June gold $32 and July silver 76 cents. We expect both to break lower but do not take this as a short recommendation we have just lightened up or exited longs for clients. Those not willing to leave positions were advised to tighten up stops.

Agriculture was hit today with prices on grains falling 1-2.50%. Clients will be buying this dip in corn via September options and December futures. Outside of that the only trade we like is long KCBOT wheat against short CBOT wheat. Clients exited their Loonie shorts from yesterday at a nice profit. Next week we will continue to sell rallies in the Loonie and Pound for clients. The US dollar ended the week strong gaining over 1% today. In our opinion this is near a trend change; look for more specifics in our commentary next week.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Are we all having fun yet? Don't you just love the volatility? As an option seller, we do. If you are a call writer this environment is your dream. As a put sell, you have to love those premiums.

Fat finger......we don't think so. Most systems will not let you enter orders in the billions without a second review like to say "is this what you really want to do?" Good excuse... but it's only slightly better than "my dog ate my homework" in its credibility. Part of the reason for the free fall in the Thursday session can be attributed to mob mentality. The original stops placed in the markets caused, upon their election, a whoosh to the downside but then computers, or quants, noticing the downdraft piled into the trade accelerating the downdraft further. This was further complicated by NYSE stocks that were electronically halted compelling the market makers on the NYSE floor into action to make an orderly market, a slower market but orderly nonetheless. This caused some of the electronic sellers, looking for an exit, to abandon their NYSE platform and place those exit trades on the NASDAQ which, took full advantage of the situation and accommodated the trades.

A major problem causing this market meltdown is the extinction of trading floors, where some of this craziness was controlled. Machines just trade because of triggers, people actually think. True we can teach machines to think but they have difficulty reversing and adjusting as fast as the human can. The swings on Thursday are proof of this. The computers sold bought sold and when it was all over, a plunge of nearly 1000 points was reversed and the market gained back about 600 points by the end of the session. We need to obliterate trading halts or have all exchanges, including NASDAQ respect the same trading halts. On another front this Thursday accident speaks volumes to the value of the trading pit and the exchange floor market makers. When standing in the pit, you know who is selling and you know who is buying. True there are shenanigans always but they are a small price to pay for true price discovery and a true auction market. Electronics certainly have their place but to the credit of the people in the ring and on the floor that trade and fill our orders, the execution might be a tad slower but the results will be less chaotic. We have been both an electronic trader and pit trader. Both work well together but not to the exclusion of the other. Both should have the same rules of the road. We know that many who bought the Thursday low of the market had their fills canceled. This is another question which needs to be sorted out. If we cancel trades in this manor why would buyers step in? Wouldn't they be afraid of a subsequent cancellation and thus not provide the bid that the market needs to stabilize. If we remove those bids, where would the market stop if it would stop before a limit trading halt would be enforced? These are good questions and ones that need to be answered. The answer is a level playing field with uniform rules for all, not just for NYSE or whatever exchange has made a rule but for all exchanges.

We are sure that you would like to know where the market is going to go next week. Monday's have been up days in the market because the world survived the weekend and nothing major happened to cause the markets to blow up. That said, a relief rally appears and the all clear signal is sounded. This week, we don't expect to see a repeat of last week's craziness. We do expect to see a rally to at least 1117.03 and more probably 1136.12. The markets will remain nervous and the monthly expiration of options will add some increased concern. That said, we expect to see calmer waters in a sea of manic behavior.

Monday: the Bank of England releases its interest rate decision.
Tuesday: March wholesale inventories are released at 10:00.
Wednesday: March international trade is released at 8:30.
Friday: options expire at the end of the day, April retail sales are released at 8:30, April industrial production / capacity utilization are released at 9:15, May Michigan sentiment is released at 9:45 - 10:00 and March business inventories are released.

The US Dollar index retreated in the Friday session removing some of the excesses seen in the Thursday session leaving an inside day on the chart with signs of exhaustion. We are grossly overbought as measured by the stochastic indicator, the RSI and our own indicator. The Thomas DeMark Expert indicator is flat and slightly above neutral levels. The chart shows that the US Dollar index is forming a pole, the question is will the pole resolve into a bear or bull flag, or perhaps a pennant. In other words, the future direction is not clear from the recent trades. We would expect to see the US Dollar retreat in the coming sessions. A return to 82.87 and the uptrend line at 82.380 is likely. The 5-day moving average is at 83.945. The top of the Bollinger band is at 84.691 and the lower edge is seen at 79.325. During this past week we saw the US Dollar index trade above the upper Bollinger band for four of the five trading days. Friday, the index closed just below the upper Bollinger band. We are above the Ichimoku Clouds for all time frames. Euro fear is a wonderful thing for the US Dollar bulls. Remember as the dollar rallies, dollar based commodities will decline, making commodities more expensive for importers. Likely this will all smooth out. We have gotten used to seeing these sorts of extremes. This time is not different just the location is different.

The S&P 500 futures retreated this past week. The Thursday hysteria neared the February low of 1040.75 and came within a cat's whisker of electing the circuit breaker trading halt. The Thursday low was 1056. The action in the Friday session was far more subdued than the Thursday session and left a resulting inside day on the chart. We are oversold by all the indications and measures that we follow, yet we are getting mixed signals. Our own indicator is curling to the upside and could, in the next session, issue a buy-signal. The Thomas DeMark Expert indicator is flat at the oversold line, the stochastic indicator is curling over and could issue another sell signal at slightly above oversold levels. We expect to see the S&P 500 futures trade to the 1117.03, 1136.12 and possibly 1155.21 levels. Things are not going to return to the upside until some of this fear is worked off. We below the Ichimuko clouds for the daily and the monthly time-frames and remain above the clouds for the weekly time-frame. The 5-day moving average is at 1152.90. The top of the Bollinger band is at 1241.05 and the lower edge is seen at 1132.81. This should be a very interesting week.

The NASDAQ 100 retreated in the Friday session with a lot less volatility than seen in the Thursday session leaving an inside day on the chart. The indicators that we watch are giving us the same signals as that seen in the S&P 500 futures contract. The signals are mixed some showing that we will likely rally and some saying that we will not. It is our opinion that we will try to stabilize this week and we will likely rally into options expiration. Resistance will be found at 1855.39, 1894.12 and at 1932.85. The 5-day moving average is at 1937.90. The top of the Bollinger band is at 2101.37 and the lower edge is seen at 1899.47. We are inside the Ichimuko clouds for the daily and the monthly time-frames but are above the clouds for the weekly time-frame. When market suffers the damage seen this past week, they need to take some time to repair themselves. Thus most rallies will be met with seller and most retreats with buyers, but the buyers will be willing to take only limited risk on their trades. Thus we should see the S&P outperform the Russell 2000 as risk is removed from the market. We expect to see stabilization return to these markets in the coming week. Be prepared for the worst and hope for the best.

The Russell 2000 continued to slide in the Friday session. We continue to see mixed signals as generated by the indicators. The Thomas DeMark Expert indicator is trying to turn to the upside. We are getting a sell-signal from the stochastic indicator and our own indicator looks as though it might issue a buy-signal tomorrow or perhaps on Tuesday. The RSI continues to point lower. There is resistance at 763.23, 689.90 and at 700.56. Still we believe that if the market is going to take a less risky approach to the market, this index will underperform the rest of the market that is until the all clear signal is sounded. The 5-day moving average is at 691.92. The top of the Bollinger band is at 756.34 and the lower edge is seen at 671.63. The waterfall spill that occurred last week paints a picture of panic. When cooler heads prevail, the market will likely adjust its downdraft to a less sever waterfall pattern. We closed inside the Ichimuko clouds on the daily chart and above the clouds for the weekly chart. Both the weekly and the monthly charts are overbought and continue to issue a sell-signal.

Crude oil closed below the Ichimuko clouds in the Friday session leaving a large red candle on the chart. Crude oil has been down four out of the five trading days this past week. As to the indicators, crude oil is grossly oversold but shows no signs of reversal. Much of crude oils recent problem stems from the strength in the US Dollar. Some of the concern about the fragile global economies is bleeding into the crude oil market which is dependent on a certain amount of growth to continue its upward movement. There is also some concern about a possible slowdown in the expansion seen in China. The 5 day moving average is at 80.224. The top of the Bollinger band is at88.75 and the lower edge is seen at 77.52. We closed below the lower edge of the Bollinger and will likely move back inside the band.

Gold seems to have an evening star at on its daily chart. Gold is grossly overbought and continues to point to higher levels. The 5-day moving average is at1187.04. The top of the Bollinger band is at 1201.6 and the lower edge is seen at 1124.20. Although we have been somewhat of a gold bug for a while, we believe that gold has gone a bit further than it should have and will likely retreat in the coming week. We continue to buy gold on reasonable dips.

After 8 days of rest and relaxation we are back at it trying to figure out the best risk/reward scenarios in the commodities market. It is vital in our opinion to evaluate both before establishing positions as many commodity traders just look at the reward side of the equation.

After approaching $86 in early dealings Crude was off for the first time in three sessions losing just over $1. For aggressive traders we are advising buying dips as long as the $83 level holds in June futures. On a spike higher in RBOB and heating oil in the coming sessions we would advise exiting longs or at least halving your position. We had hoped for more follow thru in natural gas today after the strong close to end out last week. Prices remain at the upper end of the recent trading range but as we continue positioning our clients to take advantage of higher ground. We suggest long futures trailing stops in June and will start pricing out July-September options.

New highs were rejected in indices across the board. This is likely due to profit taking ahead of the 2 day FOMC meeting. As we posted in our weekly commentary this morning we would need to see settlements below the 20 day MA's to feel confident an interim top has formed. Inside day in sugar; it may be premature to re-establish plays in sugar until a bottom is confirmed. We are pricing out spreads on futures but have yet to commit any client capital...stay tuned. July OJ was unchanged on today's session; on a trade above $1.40 our objective for clients should be reached at a 15-20% profit on their July options. We started initiating longs for clients in coffee today; they bought September 15 cent call spreads to play a bounce in the coming weeks. Though clients have no exposure aggressive traders could continue to sell rallies in the Treasury complex (10-yr notes/30-yr bonds) with stops above the recent highs.

On a breach of the 20 day MA in Euro-dollars look for more selling pressure. Clients were advised to lift their May short corn hedges today as the LTD is April 30. Those still seeking protection we advised to place sell stops below the recent lows in July against their December longs. Clients were advised to take any longs off in soybeans and soybean meal as prices are starting to look toppy. We are suggesting selling rallies in wheat but would prefer to be a seller of KCBOT or CBOT closer to $5 on the July contract...stay tuned.

Cancel any orders to short cattle at the moment as prices may grind higher, we should have some trading suggestions in the coming days. We've yet to make a move for clients but we may buy the 84/80 put spread in June lean hogs the next few days if they can pay $400. Uneventful day in metals with gold slightly lower and silver slightly higher. Clients have NO exposure long or short gold/silver currently. We expect to see a correction of 75 cent s-$1 in silver and $40-60 before we have an interest in longs. Clients continue to sell rallies in the Cable and Loonie expecting breaks lower. We would not recommend trading without stops to limit losses, if prices turn south our objectives are 1.5200 and .9825 in the June contracts.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

According to reliable sources, the S&P futures have only closed positive 9 sessions in a row twice since 1987 prior to today. However, the March contract closing in the green on Wednesday makes it three times. The others occurred in 2003 and 2009.

The index has only posted gains in 10 consecutive sessions once and has never closed higher 11 in a row. Another startling stat, S&P futures have closed positive in 16 of the last 18 sessions and has moved over 100 handles from the early Feb low.

The market is clearly overbought and due for, at minimum, some back and filling but there is no telling how high the squeeze could see before stocks turn over. Our resistance in the March S&P at 1148 held but we are hearing that there are a substantial number of stop orders accumulating above 1148 which run through 1153ish....so there could be one more run left in the move. The question is, will there be any bears left to benefit from a potential correction?

It feels like this market wants to go up forever, but that is usually when it doesn't. near term resistance in the three major indices is 1148 (March S&P), 1921 (March NASDAQ) and 678 (March Russell). However, it seems like a blow off top could bring us to the next levels...1153ish, 1940 and 683.

According to our trusty sources on the CME floor, the last 11 times that the S&P has closed positive for 8 consecutive sessions the next trading day has seen a red close 81% of the time. This ignores magnitude but seems to be evidence that the market might be a little overheated up here.

Based on conversations that I have had with other analysts/traders, it is clear that the current rally has pummeled the bears into submission. It appears as though, many have run out of capital and conviction and have therefore, moved to the sidelines. Unfortunately, this can often be a precursor to a market reversal. Remember, markets tend to cause as much pain as suffering to speculators as possible and a reversal from here would catch the complacent bulls sleeping and act as the thorn in the side of the bears that have thrown in the towel.

Also, the headlines have gone from bearish to bullish and S&P 1300 seems to be back into conversations. However, it is the exact bullish sentiment that is luring sidelined cash into the market that makes me doubt the ability of recent gains to hold.

We don't know where the exact highs of this move will be, and if you have been following this newsletter you have likely realized that we turned bearish far too early into this rally. Nonetheless, we can't "buy" into this move.

We are sticking to yesterday's technical numbers...Resistance in the S&P near 1148 (but our floor brokers think 1153ish). The NASDAQ should struggle near 1921 with the next technical level being 1940 (ouch!). The Russell faces resistance at 673 and then again at 682.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

February 19 - Our clients were advised to sell the April 1165 calls for about $7.50, fills were coming in near $7.25 and a handful at $7.50.

March 5 - Clients with ample margin and guts, were recommended to add to this position by selling the 1165 calls for $9.50.

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

March 9 - Sell 1 mini Russell @ 682 OB

Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.

NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

March 3 - Sell 1 e-mini NASDAQ at 1878 or better

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading
cgarner@DeCarleyTrading.com
1-866-790-TRADE
Local : 702-947-0701

www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Economic Woes Continue...

This week thus far we have traded a $43.00 range in the Comex Gold Market. This range has been primarily due to the U.S Dollars performance versus the the struggling European Union and the Euro. It has become apparent the situation in Europe is much worse than previously reported. It is my opinion that investors are looking to get away from the day to day speculation ratio between the Dollar and the Euro and are seeing safer havens. (precious metals).

So far this week has revealed more bad news regarding the U.S Economy.

Consumer Confidence has dropped to its lowest level since April 2009... This certainly indicates a lack of confidence by the American consumer as the are convinced the economy will be slow to rebound.

*New Home Sales Dropped 11%....

*Projections show 3 Million Homes will be reach foreclosure in 2010.

*The U.S Labor Department reported that Initial Jobless Claims rose by 22,000...
(496,000)...MUCH WORSE than expected. Economists were expecting a decline... (460,000)

*A Gallup - Poll reported 19.9% (30 Million) of American workers are UNDER employed

*FOMC Chairman Ben Bernanke has stated that KEY U.S Interest Rates will remain low...

The Precious metals have been supported through strong physical demand throughout the Asian sector as they are buying the price dips ...deeming it as "Bargain Hunting"...

The Chinese recently stated they were NOT interested in buying the remaining IMF Gold at these levels.....Are these the same Chinese who have boasted to the world that they will take their current 1500 metric tons status up to the10, 000 metric ton level in 10 years?

The Chinese posses a lot of U.S Dollars! They are using television promotions to educate their citizens to purchase Gold and Silver as a hedge against pending Inflation to help protect their new found wealth....The Peoples Bank of China has raised rates twice this month...stating they were not going to continue being the lending source for the Globe. A good poker player never tips their hand!!!

These precious metals are resilient !!!

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-4669
312-775-3014
312-563-8029

*There is Extreme risk trading futures, options, and forex*

Gold Closes $21.90 Higher Today.... ($1039.70)

Today's Gold session traded all-time High's. Once again a very weak U.S. Dollar and Inflationary expectations fueled a mammoth rally in the Gold today. It started with the Australian Central Bank raised rates more than expected.The Australian Dollar jumped to a 14 month high. Gold futures climbed to $1044.70 (day session) While the U.S Dollar dropped 0.6 % against a basket of 6 currencies. Gold is becoming the "DOMINATE" world currency. The continued U.S Dollar weakness has investors concerned this will accelerate pending inflation. Also remember we are now in "VIRGIN" territory......

The following are my swing numbers for 10/07/09

(DECEMBER GOLD)

RESISTANCE #2........................$1053.00
RESISTANCE #1........................$1046.00
PIVOT.......................................$1038.00
SUPPORT # 1............................$1031.00
SUPPORT # 2............................$1023.00

Mike Daly /Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-4669
312-775-3014

* THERE IS EXTREME RISK TRADING FUTURES,OPTIONS,and FOREX*

click the chart to enlarge

The Continuous Commodity Index (CCI) is a basket of 17 major raw commodity futures prices rolled into one composite price index. It's an excellent gauge of the overall trend in commodity futures prices, as well as commodity price inflation. See on the daily chart for the CCI that prices have backed off from the summertime high. At present, there is the specter of a big and bearish double-top reversal pattern forming in the CCI. If prices drop below the solid technical support level seen on the daily CCI chart, then the bearish double top would be more likely to be confirmed and odds would increase that the CCI would trend lower in the coming weeks. Right now, the CCI is in "no man's land" between the key support and resistance levels on the chart. Stay tuned! Jim Wyckoff