Thursday, May 12, 2005

Traders Helping Traders Daily Update for Wednesday 5-11-05

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Market Update for Wednesday, May 11, 2005
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Subscribers got these on Tuesday evening, of course Test drivers get theirs after the fact. If you want it hot and fresh BEFORE the markets open, go to http://www.supportandresistance.com/subscribe.html

"If you must play, decide upon three things at the start: the rules of the game, the stakes, and the quitting time." - Chinese Proverb
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1: JULY CORN
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CN5 O=8 HI=9 3/4 LO=7 1/2 CL=8 1/4

Corn's still fighting the 210 resistance today, which it should, given the strength of this resistance level but I'm going to be stubborn and see if we can pick off the market from the top. We might see prices decline tomorrow which would confirm the resistance; however there's a biggie report due this Thursday so look for the market to remain relatively contained.

*SELL July Corn at 211 3/4
*Stop 214 1/4
*Approximate Risk Exposure: $125 per contract
*Profit Target: 200 3/4
*Approximate Profit Potential: $550 per contract
*RRR: 4:1
*Degree of Risk: Moderate
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2: JULY COTTON
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CTN5 O=20 HI=00 LO=01 CL=93

See why I told you this was a high risk trade? Obviously cotton didn't reverse off resistance today and instead traded higher. If you sold the market then you're currently short; however things don't look too promising at the moment, especially given today's strong close.
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3: JULY BEAN OIL
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BON5 O=65 HI=70 LO=25 CL=26

Today bean oil shows you why we avoid entering gapping markets...they're just not predictable. Not really sure what to make of bean oil right now, we've got good support below prices at 2320-ish, and RSI is at a testpoint suggesting we will see a bounce, but I just don't like the look of the chart right now. Could be getting a little shy regarding the WASDE report on Thursday as well.

Nothing new for tomorrow.
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4: JUNE LIVE CATTLE
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LCM5 O=65 HI=20 LO=35 CL=10

Cattle rallied right from the open and took us out of our short position for a $180 loss. I knew the market was taking too long to go somewhere, and that's always a problem when prices stall after you enter.

The only good thing was we had a definitive line of resistance to tell us when to get out, so we were able to keep losses to a minimum.
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5: JULY COCOA
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CCN5 O=95 HI=03 LO=92 CL=97

Cocoa tested the 1505 resistance today AND gave us a test on RSI as well. From here I would look to sell the market tomorrow in anticipation of a bounce. Bear in mind that it will be more predictable to wait for confirmation of resistance before selling, but the numbers look promising for tomorrow so let's give it a go, shall we?

*SELL July Cocoa at 1487
*Stop 1505
*Approximate Risk Exposure: $180 per contract
*Profit Target: 1421
*Approximate Profit Potential: $660 per contract
*RRR: 3 1/2:1
*Degree of Risk: Moderate to HIGH
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6: JULY WHEAT
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WN5 O=15 HI=23 LO=15 CL=21 1/2

Got the test of the 323 resistance today we were looking for. The market still seems strong and might continue a little higher tomorrow, but I'm still looking to sell.

If we get a reaction tomorrow I'll be sure to set up for a sell on report day, but for now I'm standing aside.
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7: JUNE CANADIAN DOLLAR
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CDM5 O=81 HI=93 LO=77 CL=88

Bit of a flinch off the 8100 resistance today just as we hoped. Since we're still technically in an uptrend I'll wait for the reaction before recommitting to this market; however I think we might be in for lower rates this week.
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8: JULY SILVER
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SIN5 O=8 HI=7.5 LO=4 CL=1.5

Silver's getting a little top heavy again and looks as though it might be ready for a reversal off the resistance near 720. RSI is also at a testpoint, so in anticipation of a reversal I would look to sell off the strong support at 703.

*SELL July Silver at 702.5
*Stop 707.5
*Approximate Risk Exposure: $250 per contract
*Profit Target: 687.5
*Approximate Profit Potential: $750 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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9: MARCH EURODOLLAR
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EDH6 O=.87 HI=.90 LO=.86 CL=.895

The ED took us out of our trade this morning on the open stopping us out for $115 loss. Not really sure what to expect from this market right now, but I would like to see it test support once more before heading lower. Nothing new tomorrow.
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10: WILD CARD
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No wild card market for tomorrow.
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"Tom's Trades" for Wednesday, May 11, 2005
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1: JUNE 30 YEAR T BOND
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USDM5 O=4-06 HI=4-21 LO=4-04 CL=4-20

The open leaped over us a bit. I had to wait until -08 became a factor to get something done. I bought -09 and dumped it at 16 for 7 ticks. I sold -14 and exited at -09 for 5 more. I bought -09 and called it a day at -16 for another 7. That gave me 19 ticks on the day, $593.

When we get into tight trading ranges I'm much less willing to roll stops looking for continuation moves beyond the focus numbers. I'm more prone to simply setting up an exit assuming the -00, -16 or lately the -08 or -24 will be made but not much more. In the tight range days I find that playing the game tighter by assuming exits seems to produce a better return scenario than simply rolling tight and seeing what comes next. Usually what comes next is a pullback taking an extra couple of points away from me.

The close today at 114-20 has us eyeing 115-00, 114-16 and 114-24.
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2: JUNE EURODOLLAR
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EDM5 O=.555 HI=.570 LO=.555 CL=.565

I bought 96.555 this morning with a stop at 96.535 risking $50. If we get back to 96.600 I'll grab it. I now have the stop at 96.545 risking only $25 of my money $50 total.
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3: JUNE CANADIAN DOLLAR
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CDM5 O=81 HI=93 LO=77 CL=88

I bought 8082, rolled to B/E and was stopped out at 8077. Nice fill, guys, Polly want a cracker? we lost $50. I tried to buy 82 a second time and they wouldn't let me in. I put a fork in this one and moved on to other more cordial markets.
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4: JUNE MINI RUSSELL 2000
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ERTM5 O=2.70 HI=3.10 LO=3.70 CL=6.50

Our trading opened with the Russell hovering right around 600. I sold 599.50. I took it at 597.50 for $200. I sold 599.40 on the second trade. I exited here at 595.20 for $420.

All the same numbers from weekend TT tomorrow PLUS I will add 597 to the mix. This level has definitely been a factor and deserves recognition.
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5: JUNE GOLD
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GCM5 O=7.80 HI=8.80 LO=7.60 CL=7.90

I sold 428.40 and was stopped at B/E. I wanted to try it again but I just ran out of time. $10 channel for tomorrow.
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6: JULY COTTON
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CTN5 O=.20 HI=.00 LO=.01 CL=.93

Nothing for us as Cotton put in another strong showing. I will stay focused on the break below 55.00 and the other TT numbers.
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7: JULY COCOA
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CON5 O=79 HI=94 LO=76 CL=89

Pegging the resistance at 1505 kept us out of what would have been a very aggravating trade today. We'll retain our focus on a break above there as the trigger for a buy.
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8: JULY CORN
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CN5 O=2.08 HI=2.09 3/4 LO=2.07 1/2 CL=2.08 1/4

I sold at 2.09 1/2 with a 2.10 3/4 stop. When we broke 2.08 I brought my stop to 2.08 1/4 and was stopped out there for a penny and a quarter, $62. Yes, we are still scalping. That's an ugly trade, no doubt. Go back and look at the daily chart and refamiliarize yourself with the S&R lines. This is a great example of taking what they give us, listening to the market whispering our ear. Many would say why bother for 62 bucks. The answer is really quite obvious.

I know Corn is going to trade 2.05 soon. I can't make anything unless I'm in the trade. No one, I don't think, would argue with the buy on the retest of 2.10. If you can see THAT then you can also see the wisdom in protecting the trade once it broke 2.08. Sure that makes for a "kiss your sister" trade. Sure it's some effort for very little payoff. But I was in appropriately and, more importantly, I was OUT appropriately, in my opinion. This is a very key concept in our trading. It is probably the most scoffed at and misunderstood part of my trading. We'll talk about this tomorrow night.

I'll go right back after the same numbers tomorrow ... 2.10 and 2.05.
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9: MAY WHEAT
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WN5 O=3.15 HI=3.23 LO=3.15 CL=3.21 1/2

Nothing for us today, unfortunately. The little gap up at the open but us too far gone on 3.13 to take a flyer. Same 3.13 and 3.20 plays for tomorrow.