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Erich's Update for Thursday, August 4, 2005
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"Try not to become a man of success, but rather try
to become a man of value." ~Albert Einstein
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1: CURRENCIES
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September Mexican Peso MPU5
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The Peso seems to be the only currency offering us
a tradable formation at the moment. Many of the others
are on the move, but it's tough hitting a moving
target so we'll just wait for them to find resistance
and then re-enter.
I still like the parameters of this trade and will
run it again tomorrow.
*BUY September Mexican Peso at 9377
*Stop 9337
*Approximate Risk Exposure: $200 per contract
*Profit Target: 9775
*Approximate Profit Potential: $1987 per contract
*RRR: 9 1/2:1
*Degree of Risk: Moderate to HIGH
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2: ENERGIES
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September Heating Oil HOU5
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Got filled in our heating oil short today as the market
just got low enough to find our entry. The very bearish
session is a good sign for tomorrow; however we've got
a pretty tight stop on this market so I hope we don't
see the bulls look too far back.
This is seasonally a very weak time of the year for
this commodity. We'll see tomorrow if prices continue
lower.
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September Unleaded Gas HUU5
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Bearish day in the Gas market as prices did break
resistance, but not for very long. We could look at
buying long above the breakout day, but, given the
low close, it looks as though prices might be heading
lower. Standing aside for now.
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3: FINANCIALS/INDICES
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June (06) Eurodollar EDM6
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You might want to bring your exit stops in above today's
high if you're still short the ED as it looks like we
might see a testing of resistance over the next few days.
Short is still where I want to be with this market and we
will look at putting on another trade as soon as it is
feasible.
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September mini-NAS NQU5
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It looks like the mini-NAS might be in for a bit
of a pullback as the market has yet to break the
resistance level. Usually when a market takes this
long to get through resistance it is a sign that
it is running out of steam and might need to
"refresh" itself first.
*BUY September mini-NAS at 1640.5
*Stop 1622.5
*Approximate Risk Exposure: $360 per contract
*Profit Target: 1697
*Approximate Profit Potential: $1130 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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4: GRAINS
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September Corn CU5
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Okay, now that's more like it! :-)
Corn prices made a big move to the downside today and
are slightly more than halfway to our profit target.
We've got plenty of room to adjust stops now and it
all depends on what it is you want to do: ride the market
or protect profit. There is no right answer here, only
what is right for you.
If protecting profit is your game then consider using
the intraday resistance at 228 - 229 to place your exit
stops above. If you're looking to ride the market then
you'll want to be a little looser and bring your stops
above today's high.
First profit target is support at 220 1/4.
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September Wheat WU5
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Sold wheat today as the market followed corn lower.
Can't do too much with the exit stops just yet so
we'll have to leave them where they are in case we
see a bit of a bounce tomorrow.
First target is support at 310 1/4.
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September Soybean Meal SMU5
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The bean complex is showing signs of weakness as well
and we might have a good opportunity to sell the market
short below support. This is likely the type of trade
that there isn't too much rush to get into, but if you
wanted to sell a break of support then bean meal looks
to have a pretty good setup.
*SELL September Soybean Meal at 206.7
*Stop 209.3
*Approximate Risk Exposure: $250 per contract
*Profit Target: 197.1
*Approximate Profit Potential: $970 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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5: MEATS
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October Lean Hogs LHV5
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The pause in Hogs today is just what the commodity
doctor ordered. This hesitation allows us to look at
re-entering the market with a long order above today's
resistance. This bounce is partially a late reaction
to the 62% retracement line and I'd really like to see
a more substantial pullback - maybe even to the 5800
support before the next rally.
But just in case a reversal comes early:
*BUY October Lean Hogs at 6092
*Stop 6032
*Approximate Risk Exposure: $240 per contract
*Profit Target: 6295
*Approximate Profit Potential: $810 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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August Live Cattle LCQ5
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Cattle took off higher on a gap today. I'm not certain
what to make of this market right now, so I'll just
keep watching for the eventual bounce.
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6: METALS
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September Copper HGU5
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That was just mean. Copper dipped just low enough to
find our exit stops before rallying higher today. I
still can't believe that the market fell that low as
I thought the 165.50 would be adequate support.
Prices are still heading higher, the trend is strong
and everything looks bullish, but buying in and staying
is is being a bit of a pain.
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7: SOFTS
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October Sugar SBV5
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Sugar was pretty cooperative today as prices continued
to rally higher. Bring exit stops at least to breakeven
or if you wanted to protect some profits, bring stops to
just under 10.00 or as high as 10.10, but no higher.
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September OJ OJU5
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Darn! We had the right idea about OJ but the market gapped
our entry voiding the trade. We'll keep an eye on this one
though and look for another chance to sell.
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September Coffee KCU5
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A little bit of a setback in coffee today as prices
traded slightly lower. See the support at 105.50?
That's what you want to bring stops below to protect
some accumulated profits in case coffee trades lower
still.
The "best" stop placement is still breakeven, but I
don't feel like giving back $500 to the market.
First profit target is resistance at 111.90.
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==================================================
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"Tom's Trades" for Thursday, August 4, 2005
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1: SEPTEMBER 30 YEAR T BOND
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USDU5 O=114-24 HI=115-08 LO=114-22 CL=115-05
A tough day today ... one of the worst in recent memory, in fact. We just never got in
synch with the market today. This is bound to happen sometimes. You just accept it, review
your trades to make sure you observed all your rules and, then, move on.
We opened by selling -28 and were stopped at B/E. I sold -28 again and got stopped out
at -31 dropping 3 ticks. I sold -29 and again got tapped at 115-00 on my -31 stop. Down
another 3 ticks. I bought 115-03 and promptly got stopped out at B/E. I did one more buy
at -03 and again got stopped at B/E. Done for the day with a loss of 6 ticks, $187.
We closed at 115-05 so 115-00 and 115-16 will be our initial focus for tomorrow.
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2: SEPTEMBER EURODOLLAR
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EDU5 O=96.020 HI=96.020 LO=96.010 CL=96.020
I held off again today as we duplicated the prior 2 days of trade. I will wait for a move
back above .020 looking to sell a break back below or buy a break above .025.
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3: SEPTEMBER CANADIAN DOLLAR
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CDU5 O=8275 HI=8281 LO=8235 CL=8236
A sizable gap up at the open put us right on 8280. We sold 8271. When we broke 50 I
brought the stop to 57; they got us at 58 for $130. Didn't get another shot at 'em after
that. All the same numbers again tomorrow.
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4: SEPTEMBER Swiss Franc
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SFU5 O=7934 HI=7964 LO=7925 CL=7959
SF gapped up very strongly and finished the day almost 100 points higher. We were on
the right track all along but the gap leapfrogged our number and get us sidelined. Same
numbers in play tomorrow plus we'll trade off 7960 selling a retest that fails or buying on
a break above 7964. Stops are 7967 on the sell and 7957 on the buy.
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5: SEPTEMBER MINI RUSSELL 2000
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ERTM5 O=689.10 HI=689.10 LO=683.50 CL=684.80
The daily trading window opened with the Russell at 688 which had us poised to sell a break
below 687. I sold 686.70. The market dropped down to our next in line mark at 685 but
didn't quite make it to the next at 683 pulling up at 683.50. I exited at 685.30 for $140. I
then bought 685.30 and bailed at 687.50 for $220. Next up I sold 686.70 and out at 684.80
for $190. I was done for the day.
The full array of numbers for tomorrow ... no additions at this time.
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6: DECEMBER GOLD
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GCZ5 O=439.60 HI=443.00 LO=439.60 CL=442.70
The gap open took us solidly into the next higher channel at 440/450. I didn't see anything
that I could clearly call a confirmation so I had nothing to do.
$10 channel again tomorrow. I will also play 443.00 tomorrow selling a retest that fails or
buying a break above.
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7: DECEMBER COTTON
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CTZ5 O=52.90 HI=53.19 LO=52.20 CL=52.29
We got it back down to 52.50 but it came too late in the day for me to be comfortable with
the sell. Especially since it came at the end of a preety stout run.
All the same numbers from TT and this weeks updates again tomorrow.
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8: SEPTEMBER COCOA
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COU5 O=1495 HI=1505 LO=1481 CL=1491
I bought 1503 and got stopped at 1497 for a loss of $60. Did it again with the exact same
result ... I'm now down $120. The two big failures at 1500 gave me cause to sell on the
third one. I knew that doing this in all probability would not do better than 1480 so I was
clearly in scalp mode. Sold 1497, I tried to get out as soon as we hit 1481 but couldn't get
it done until 1486. We made back $110 of the $120 loss.
Same numbers for tomorrow. We can sell a failure at 1500.
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9: DECEMBER CORN
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CZ5 O=2.45 1/2 HI=2.46 1/4 LO=2.37 1/4 CL=2.40
We sold 2.45 1/2. Once we got rolling to the downside it became necessary to settle in
on some targets to put some teeth in our management. 2.42 was pretty obvious but we
barely blinked as we destroyed it. That left 2.38 by default as the logical place to take a
stand. When we breached that level I threw in a 2.38 stop and it was hit very quickly. We
were out with 7 1/2 cents, $375.
Same numbers for tomorrow ... 2.46 1/2 with the added play at 2.38. Sell the breqak below
or buy the failed retest as it breaks north.
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10: DECEMBER WHEAT
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WZ5 O=3.46 1/2 HI=3.47 1/2 LO=3.40 CL=3.41 1/2
Nothing today, same 3.42 for tomorrow.
