Monday, May 23, 2005

Traders Helping Traders Daily Update for Friday 5-20-05

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Erich's Update for Friday, May 20, 2005
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1: JULY CORN
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CN5 O=0 HI=1 1/2 LO=9 1/4 CL=9 1/2

I knew it...corn would call my bluff just before the weekend. How'd you like that? Big question now is whether we take the trade or not. Holding a corn trade over the weekend at this time of the year can be risky to say the least.

I think what I'll do is make corn move far enough to make a decent break of the resistance at 208 and 209 before finding the order. Hopefully this will keep us on the right side of the trade.

*SELL July Corn at 207 3/4
*Stop 210 1/4
*Approximate Risk Exposure: $125 per contract
*Profit Target: 193 3/4
*Approximate Profit Potential: $700 per contract
*RRR: 6:1
*Degree of Risk: Moderate to HIGH
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2: JULY COTTON
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CTN5 O=60 HI=60 LO=10 CL=15

Wow, that was quick! I thought for sure we'd see cotton rebound a little bit before the weekend, but I guess it was not to be. Probably see prices continue lower tomorrow, although a bit of a bounce and/or hestiation would be welcome as it would give us another chance to sell next week. Nothing for tomorrow.
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3: JULY BEAN OIL
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BON5 O=14 HI=22 LO=01 CL=04

A quickie reaction in the bean oil market today as well; however I think I'm just going to sit on my hands tomorrow. Prices are hovering around the 2200 support, which is solid, but I'm not crazy about holding over the weekend. If we're even a little luck prices won't move too far tomorrow.
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4: JUNE LIVE CATTLE
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LCM5 O=00 HI=00 LO=55.5 CL=82.5

Should be no surprise that cattle prices are fighting with the support at 8550. Do you see it, from a couple of week's ago? That's what's the problem for lower prices right now.

That and the fact that there's a Cattle on Feed report due out tomorrow. Like the WASDE report for the grain market this report will likely spur cattle in either direction.

Exit stops should be no further than 8642 and closer if you want to protect more profit. I wouldn't argue with you if you wanted to bring them in above today's high...8600 is an important number you know. First target is support at 8505.
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5: JULY COCOA
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CCN5 O=58 HI=69 LO=35 CL=46

That may be as close to the 1470 resistance as cocoa will get this time around. RSI is at a test point as well which makes me think that prices will head lower tomorrow. As usual we get these nice setups going into a Friday, so I'll wait for the reaction and sell below its support on Monday.
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6: JULY WHEAT
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WN5 O=16 HI=17 1/2 LO=08 1/4 CL=09 1/2

There it is boys and girls, the bounce off the 317 resistance. Beautiful, ain't it?

Okay, now that we have obvious confirmation of resistance it's time to sell again. As with the corn trade we have to be careful to avoid getting caught in a wandering market. The easiest way to do this is to make prices break the 307 1/2 support before finding the order. If we get a reasonably strong session we should be in the clear.

*SELL July Wheat at 306 3/4
*Stop 310 1/4
*Approximate Risk Exposure: $175 per contract
*Profit Target: 294 1/4
*Approximate Profit Potential: $625 per contract
*RRR: 3 1/2:1
*Degree of Risk: Moderate to HIGH
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7: JUNE CANADIAN DOLLAR
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CDM5 O=23 HI=48 LO=09 CL=45

Steady...steady. The CD rallied a bit today and is at our first resistance area at 7950. I'm not really expecting a reaction here, but if we get one tomorrow then I'll probably look at selling next week, otherwise I'll be watching the 7980 area for a possible reaction.
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8: JULY SILVER
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SIN5 O=0.5 HI=4.5 LO=1 CL=4

Yet again we have a market giving us a good selling opportunity on a Friday! But with silver I think I'll pass on the opportunity...just to be safe.

RSI has hooked off the 724 resistance area, which also coincides with the price trendline. Look for prices to continue lower tomorrow and possibly retrace to the support at 695.

I fiddled with the numbers for some time, but I can't get the risk to a reasonable number. If you can day trade it...well that's another story. A break of 710 should get you in sell mode.
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9: MARCH EURODOLLAR
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EDH6 O=.025 HI=.04 LO=.98 CL=.985

Here we go again! The ED gave us a reaction off the 9610 resistance area today just like we thought it would. "Why didn't you sell it Erich?" you ask. Good question. Primarily because the market is in an uptrend and a downside move could be stopped at 9594...not too far away.

All right, let's throw caution to the wind. We've got confirmation of resistance, let's try to sell it, but keep in mind that this is countertrend and it will likely come back to bite us in the behind. Just so you know.

*SELL March Eurodollar at 9597.5
*Stop 9601
*Approximate Risk Exposure: $88 per contract
*Profit Target: 9567.5
*Approximate Profit Potential: $750 per contract
*RRR: 8 1/2:1
*Degree of Risk: Moderate to HIGH
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10: WILD CARD
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No wild card market for tomorrow.
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