Wednesday, December 14, 2005

Erich's Update for Tuesday, December 13, 2005

Erich's Update for Tuesday, December 13, 2005

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"The miracle, or the power, that elevates the few is to be found in their industry, application and perseverance under the prompting of a brave, determined spirit." - Mark Twain

1: CURRENCIES
March Australian Dollar ADH6

A hesitation at 7560 will get me looking for another chance to buy into this market.

March British Pound BPH6
Yikes! That's one of the biggest opening gaps I've ever seen! I'd hate to be on the wrong side of that move. Nothing new here tomorrow.

March Canadian Dollar CDH6
The Canadian gapped our entry this morning. Too bad because if the AD and BP are any indication this market is likely to go higher. Holding off to see if we get another chance tomorrow.

March EuroFX ECH6
Big gap in the EC as well. Here too we are on hold until the market shows us resistance.

March Japanese Yen JYH6
The Yen finds itself at an RSI testpoint after today's session and while the trend has lost much of its original strength I'm still going to look at selling tomorrow. The safer trade is still to wait for a breach of the contract lows, but I might adjust it to sell the 8380 support.

*SELL March Japanese Yen at 8373
*Stop 8407
*Approximate Risk Exposure: $425 per contract
*Profit Target: 8153
*Approximate Profit Potential: $2750 per contract
*RRR: 6:1
*Degree of Risk: HIGH

March Mexican Peso MPH6
The Peso hit a wall today and bounced slightly. We should see which way the wind is blowing before we try to get into this market.

March Swiss Franc SFH6
Huge move in the Swiss Franc today as this market moved much higher on a gap.

March US Dollar Index DXH6
Nuts. I got caught sitting on my hands on this trade. I was thinking about selling the 9072 low from last Thursday but chickened out.

2: ENERGIES
February Unleaded Gas HUG6
I'm still not convinced that this is anything more than a retracement move; however we are technically bullish.

February Heating Oil HOG6
Heating Oil broke the RSI test today which gives us a buy signal. I'm going to bracket the range and trade the breakout side - hopefully I won't get whipped.

*BUY February Heating Oil at 183.65
*Stop 182.30
*Approximate Risk Exposure: $567 per contract
*Profit Target: 189.40
*Approximate Profit Potential: $2415 per contract
*RRR: 4:1
*Degree of Risk: HIGH

OR

*SELL February Heating Oil at 176.20
*Stop 177.60
*Approximate Risk Exposure: $588 per contract
*Profit Target: 171.90
*Approximate Profit Potential: $1806 per contract
*RRR: 3:1
*Degree of Risk: HIGH

February Crude Oil CLG6
Crude's trend is still too weak to try and take a trade here.

3: FINANCIALS/INDICES
September (06) Eurodollar EDU6
We've got an RSI test in the ED today as well, but I'll wait until we get closer to the contract lows before trying to sell again. FOMC report out tomorrow which will no doubt impact this market.

March mini-DOW YMH6
The Dow broke the RSI test today; however rates continued to hold the 10795 support line. I'll put in a sell order below here and a buy order above the high in case we get a bounce, but I'd prefer to see rates continue to the 50% level.

*BUY March mini-Dow at 10887
*Stop 10847
*Approximate Risk Exposure: $200 per contract
*Profit Target: 11033
*Approximate Profit Potential: $730 per contract
*RRR: 3 1/2:1
*Degree of Risk: Moderate to HIGH

OR

*SELL March mini-Dow at 10783
*Stop 10833
*Approximate Risk Exposure: $250 per contract
*Profit Target: 10611
*Approximate Profit Potential: $860 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

March mini-NAS NQH6
The NAS is holding its own, but it is not as strong a setup as the DOW. We should still have a chance to catch it off the contract highs if it does rally.

March mini-S&P ESH6
Same deal with the S&P, I'll wait to buy it off the contract highs.

4: GRAINS
March Corn CH6
There goes corn! I'm hoping that the 210 resistance will hold it just long enough to put on a buy order the day after.

March Oats OH6
Nice day in oats today as the market rallied enough to get our stops at least to breakeven for tomorrow.

January Rice RRF6
Rice might have recommitted to the upside in which case we're on the lookout for resistance to buy from.

January Soybean Meal SMF6
Big move and big gap to the upside in soy meal today. Hopefully we'll get another chance to buy here soon.

January Soybean Oil BOF6
We got stopped out at the open in bean oil today as prices gapped higher, but closed low and right back at the 2100 support. While I don't normally trade after a loosing day I will consider selling another break of 2100 tomorrow.

*SELL January Bean Oil at 2073
*Stop 2107
*Approximate Risk Exposure: $204 per contract
*Profit Target: 1971
*Approximate Profit Potential: $612 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

January Soybean SF6
Too bad we got gapped on the open today, but beans have shown us a definite respect for the 602 resistance area. I might consider buying a break above here tomorrow.

*BUY January Soybeans at 605 1/4
*Stop 599 3/4
*Approximate Risk Exposure: $275 per contract
*Profit Target: 625 3/4
*Approximate Profit Potential: $1025 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH

March Wheat WH6
Ouch! Not a good day in wheat as the market back up on us and stopped us out for a small loss. We might have to change our directional bias if prices trade much higher.

5: MEATS
January Feeder Cattle FCF6
The trend isn't nearly as strong as I would like, so this is raising the risk level of the trade considerably; however we've got this market in a bit of a pinch so I might try and bracket it and trade the breakout side.

*BUY January Feeder Cattle at 115.07
*Stop 114.45
*Approximate Risk Exposure: $312 per contract
*Profit Target: 117.27
*Approximate Profit Potential: $1100 per contract
*RRR: 3:1
*Degree of Risk: HIGH

OR

*SELL January Feeder Cattle at 113.65
*Stop 114.45
*Approximate Risk Exposure: $400 per contract
*Profit Target: 110.22
*Approximate Profit Potential: $1712 per contract
*RRR: 4:1
*Degree of Risk: HIGH

February Live Cattle LCG6
I want to buy Cattle on the bounce; however the contract highs are capping the profit potential

February Lean Hogs LHG6
Got filled on our short trade today, but it looks like we've got to keep our fingers crossed for tomorrow. RSI has popped higher and this could put a quick end to our selling position. Alternatively you could sell from today's low, it would be a much safer proposition.

6: METALS
March Copper HGH6
We should see copper showing support at the 197.50 area tomorrow. If we get that we can look to tighten our buy order.

*BUY March Copper at 204.05
*Stop 202.45
*Approximate Risk Exposure: $400 per contract
*Profit Target: 208.95
*Approximate Profit Potential: $1225 per contract
*RRR: 3:1
*Degree of Risk: HIGH

February Gold GCG6
Big fade day almost guarantees a lower session tomorrow which is strange considering the weakness of the US Dollar.

March Silver SIH6
Nasty range in silver today, but here too we're almost assured of lower prices tomorrow.

7: SOFTS
March Cocoa CCH6
Looking for a reaction off the 1500 resistance and another chance to buy tomorrow.

March Coffee KCH6
Coffee backed away from support today and rallied higher. Still watching and waiting.

March Cotton CTH6
Cotton continues to test resistance, but we could get a good buying opportunity before the end of the week.

January OJ OJF6
The long term resistance at 132 really has my shy about buying this market tomorrow in spite of today's very strong day. If we get a reaction here I'll definitely get on board. I just hope it doesn't run away in the meantime.

March Sugar SBH6
Hurray! Finally caught a good sugar trade...well at least it's good for today. You can bring stops to breakeven for tomorrow or if you wanted to give the trade a little more room consider the 1350 area.

"Tom's Trades" for Tuesday, December 13, 2005

"Tom's Trades" for Tuesday, December 13, 2005

TODAY IS FOMC MEETING DAY. EXIT ALL INTEREST SENSITIVE ISSUES ... BONDS, EURO$ AND CURRENCIES NOT LATER THAN 10:00 AM PST.

1: MARCH 30 YEAR T BOND
USDH6 O-2-02 HI-2-06 LO-1-14 CL-1-25

We began the day selling 111-27. From there we made a fairly relaxed slide down to 111-14, the low of the day. I exited at 111-16 for 11 ticks, $343. That was all she wrote for today.

The close at 111-15 has us watching for an early opportunity to get something done at 112-00 or 111-16 before we back away about 10 am PST and let the FOMC take over. I will not trade again until the following day. If you're braver than I, remember the notes come out in the late afternoon and they will drive the market.

2: MARCH 06 EURODOLLAR
EDH6 O.235 HI.240 LO.205 CL.220

We remain short the EDH6 from 95.250. ED gave us another chance to get short today if you were willing to give up $12-25 on the entry. We made some small progress as we're now up $75 gross in the trade. I'll watch how we act at .200 tomorrow. I expect it to get there and hover a bit, waffling both sides of .200. I'll bring the stop to .245 tomorrow.

3: DECEMBER CANADIAN DOLLAR
CDZ5 O-38 HI-96 LO-31 CL-86

Nothing here for us today as the CD showed some real strength. We'll stay focused on the same Weekend TT numbers for tomorrow. We're still good to go in DEC.

4: DECEMBER SWISS FRANC
SFZ5 O-66 HI-82 LO-65 CL-49

Very frustraing to see your numbers ... 7700 ... hit but so early in the morning you get get to them and then watch the RTH hours produce moves that we'd have made a tidy profit on. I'll stay with the same numbers from TT for now. Dawg gone it.

5: DECEMBER MINI RUSSELL 2000
ERTZ5 O-4.10 HI-7.40 LO-0.30 CL-5.10

A day full of nasty little pullbacks. Thankfully, a lot of occurred at numbers beyond the level we were willing to play. Very whippy, Skippy. Our first trade came up about 9:05 as we bought 695.40. We exited at 695.20 dropping $20. I sold 694.60 about 9:35 and exited at 694.20 making $40. I bought 695.40 just after 10 am and was out at B/E. I sold 694.70 about 11:05 and exited 691.20 ustilizing a "once broken" play for $350. I bought 691.30 about 12:40 and exited at 693.80 for $250. I ended it right there.

All the numbers from TT tomorrow

6: FEBRUARY GOLD
GCG6 OT0.00 HIT3.00 LOS0.80 CLS1.50

A big, $900 opening gap up was pretty scary to watch. The little tap on 540 was enough of a confirmation so I sold 538.40 and exited at 537.50 for $90. Late in the day I sold 538.30 and exited at 532.40 picking up $590. We ended the day at 531.50 so we'll be looking for a confirmation testing 530 and giving us an opportunity to buy as we turn higher.

It's been a long time coming. It seems as though I had jinxed the strategy when I did the CBOT seminar. Of course that's crazy talk but, hey, they do play with your mind. While I'm not going to parade through the streets declaring the $10 Channels are back, I think it is a nice reminder of the power of having a plan and sticking to it.

$10 channel again tomorrow.

7: MARCH COTTON
CTH6 O-.35 HI-.60 LO-.10 CL-.41

Speaking of opening gaps ... Cotton jumped about 60 points, extended it to about 100 and then went to sleep spending the bulk of the day in no more than a 20 point trading range. I sold 53.45 after the initial run up. I bailed at 53.35 for $50 and folded my Cotton tent for the day.

TT numbers again tomorrow.

8: MARCH COCOA
COH6 O-70 HI-92 LO-69 CL-79

We leapfrogged our number just enough to put us on the sidelines. Play the TT numbers again tomorrow. Now it's a break back below 1460 we'll trade instead of looking for a retest.

9: MARCH CORN
CH6 O-2.06 1/2 HI-2.09 1/4 LO-2.05 3/4 CL-2.07 3/4

I'm baaaack. That sure didn't take long, did it? A 4 cent advance and a strong showing for the whipping boy Corn has been of late. I really don't think this changes much. I'll sell a retest of anything near 2.10 when it fails and turns south. I will not yet buy the break above 2.10 ... biases die hard. It'll be a scalp so penny and a quarter stops and rolls.

10: MARCH WHEAT CH6 O-3.11 1/2 HI-3.15 LO-3.11 CL-3.14 3/4

I will buy the break above 3.15 or sell a failure there. Yes, a scalp so penny and quarter rules on stops and rolls.