Wednesday, December 21, 2005

Erich's Update for Tuesday, December 20, 2005

"You might be walking around lucky and not even know it." Jay Trotter, Let It Ride

1: CURRENCIES

March Australian Dollar ADH6
We didn't get the bounce we were looking for in the AD today, so let's pull the trade for tomorrow.

March British Pound BPH6
175.50 175.60 is looking like a likely support area for the Pound. If we get it we *might* consider a buy.

March Canadian Dollar CDH6
The CD fell off hard today which nixes any notion of a buy. Nothing here tomorrow.

March EuroFX ECH6
The EC is holding that trendline pretty well isn't it? We've got three hits at the 120.73ish area, so this is getting to be pretty solid resistance. The market is in an uptrend, so I'll look to buy a breakout higher, but if we get a moderate bounce I'll look to sell.

*BUY March EuroFX at 121.03
*Stop 120.67
*Approximate Risk Exposure: $450 per contract
*Profit Target: 122.67
*Approximate Profit Potential: $2050 per contract
*RRR: 5 1/2:1
*Degree of Risk: Moderate to HIGH

March Japanese Yen JYH6
The Yen's at the 38% retracement, which should translate into a bounce soon. I hope.

March Mexican Peso MPH6
I'm thinking about buying the Peso, but we've got to get back above 93.000 before I get serious.

March Swiss Franc SFH6
Still looking for a decent setup to trade.

March US Dollar Index DXH6
I forgot to include the US Dollar in the weekend commentary, sorry about that! We're still short, and you might consider bring stops in above today's high in case we see a bounce tomorrow.

2: ENERGIES
February Unleaded Gas HUG6
Looks like gas might be making a run to 150 over the next few days.

February Heating Oil HOG6
Looking for support in the 172 area as early as tomorrow. A hesitation here might be all we need to try another sell.

February Crude Oil CLG6
Crude is picking up some downward momentum which is adding strength to the trend. Looking for a chance to sell.

3: FINANCIALS/INDICES

September (06) Eurodollar EDU6
The ED fell off today, but I'm sticking to my guns for tomorrow. If rates continue to fall we'll short from the old support at 95.000.

*BUY September Eurodollar at 95.255
*Stop 95.185
*Approximate Risk Exposure: $175 per contract
*Profit Target: 95.525
*Approximate Profit Potential: $675 per contract
*RRR: 3 1/2:1
*Degree of Risk: Moderate

March miniDOW YMH6
If you left you profit target too loose on Friday the market would have tagged you today as the index fell to support. We could see a recovery here tomorrow however.

March miniNAS NQH6
Big drop in the NAS today. In hindsight I was going to sell 1690; however I thought we'd get a bit of support before the breakout.

March miniS&P ESH6
Will the S&P follow the NAS lower tomorrow? I think it will, but I can't put together a trade with a reasonable risk/reward so I'll have to pass.

4: GRAINS

March Corn CH6
The 210 resistance line is holding strong, so I'll run with the weekend trade tomorrow. The only *problem* here is that RSI is getting slightly overbought.

*BUY March Corn at 211 1/4
*Stop 207 3/4
*Approximate Risk Exposure: $175 per contract
*Profit Target: 221 3/4
*Approximate Profit Potential: $525 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

March Oats OH6
Ever wonder what yoyo's were made out of? They're not wood, they're made from oats.

January Rice RRF6
I'm still not too crazy about the existing setup; however Rice has formed good resistance on the high, which I'll use to cover the trade, and enter above the December 12 high.

*BUY January Rough Rice at 797.5
*Stop 787.5
*Approximate Risk Exposure: $200 per contract
*Profit Target: 832.5
*Approximate Profit Potential: $700 per contract
*RRR: 3 1/2:1
*Degree of Risk: Moderate

January Soybean Meal SMF6
Soy meal caught me snoozing as prices rallied right to the 50% level today. Nothing here tomorrow, but let's hope for some resistance.

March Soybean Oil BOH6
It looks like it's time to abandon our hope of a short position in bean oil and look at buying if prices break nearby resistance. The trade's a little tighter than I would have liked, but here we go:

*BUY March Bean Oil at 2217
*Stop 2187
*Approximate Risk Exposure: $180 per contract
*Profit Target: 2317
*Approximate Profit Potential: $600 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
January Soybean SF6
Beans lead the charge higher today. Just watching tomorrow.

March Wheat WH6
I suspect wheat will post a higher session tomorrow. Hopefully we can get some numbers we can work with.

5: MEATS

January Feeder Cattle FCF6
It's still a viable trade, but it's still extremely risky.

*SELL January Feeder Cattle at 113.47
*Stop 114.12
*Approximate Risk Exposure: $325 per contract
*Profit Target: 110.22
*Approximate Profit Potential: $1625 per contract
*RRR: 5:1
*Degree of Risk: HIGH

February Live Cattle LCG6
Cattle continues to struggle with resistance. I expect to see prices fall off tomorrow.

February Lean Hogs LHG6
Hogs might have found support early. We'll know for sure tomorrow.

6: METALS

March Copper HGH6
I can't believe the strength of the 203 line! We're at an RSI test so something's going to happen tomorrow!

*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
Gold looks to be in a pullback mode. We might have another chance to sell after the holidays.

March Silver SIH6
Ditto for silver.

7: SOFTS

March Cocoa CCH6
That was a bit of a surprise, but no matter, we'll pull the buy order for tomorrow.

March Coffee KCH6
Are you into a high risk coffee trade for tomorrow?

*BUY March Coffee at 101.85
*Stop 100.95
*Approximate Risk Exposure: $337 per contract
*Profit Target: 106.35
*Approximate Profit Potential: $2025 per contract
*RRR: 6:1
*Degree of Risk: HIGH

March Cotton CTH6
Cotton's getting closer to our resistance area. We'll run the same trade as before.

*BUY March Cotton at 5383
*Stop 5327
*Approximate Risk Exposure: $280 per contract
*Profit Target: 5573
*Approximate Profit Potential: $950 per contract
*RRR: 3:1
*Degree of Risk: Moderate

January OJ OJF6
OJ took a bounce off the trendline, but the trend doesn't seem to have as much strength as before. Just watching.

March Sugar SBH6
You can easily bring the trade to breakeven for tomorrow, or as tight as below today's low if you choose. Sugar's choppy so a lower session is likely tomorrow.
=============================================
"Tom's Trades" for Tuesday, December 20, 2005
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1: MARCH 30 YEAR T BOND
USDH6 O=231 HI=313 LO=226 CL=303

We started the day with a buy at 11302 after a nice easy march up to 11310 we pulled back to bounce around 08. I exited at 07 for 5 ticks as the 08 resistance we spoke of in TT exerted its influence. On the next pop up to 10 and failure I sold 07 and was stopped out at 12 losing 5. We end the day at B/E. The 11303 close has us on 11300 and 11316 tomorrow. Also possible is an open thru 11300 in which case we'll focus on 11216. Play 11308 and 11224 at will.

2: MARCH 06 EURODOLLAR
EDH6 O=.245 HI=.245 LO=.230 CL=.235

We got a bit of help today as we slid lower and off the .250. We remain short from 95.250 with a stop at .265. An easy entry was possible at .245 today if you chose that route.

3: MARCH CANADIAN DOLLAR
CDH6 O=47 HI=56 LO=65 CL=83

As I watched the day unfold I was fuming. It broke right from our number, the problem was it did it 3 hours before the RTH opened. It tried to come back to teat 8640 making it to 8635 before falling off dramatically. I'd have sold the test at 35 if it had stayed there for more than a second. A real shame. The call should have easily gotten us $800 or so. Same numbers from TT. If I get a whack at 8580 I'll go either way buying a retest and failure to go lower or selling the break lower.

4: MARCH SWISS FRANC
SFH6 O=20 HI=31 LO=83 CL=02

A big move lower just prior to the open thwarted our selling plan at 7800. I finally did climb back to 7800, actually twice. I chose to pass on both. If you did them, worst case should have been a B/E and best case maybe you made a few ticks. Same numbers from TT for tomorrow.

5: MARCH MINI RUSSELL 2000
ERTH6 O=5.10 HI=6.60 LO=4.30 CL=6.20

We were really rollin' at the open. All I could do was watch as it tore thru 685. Finally about 9:45 I got a chance to sell off a 682.50 which I did at 682.20 which I exited at B/E about 10:10. I then sold 682.10 about 10:35. I exited at 680.10 for $200. I sold 679.40 about 12:35 and exited at 677.10 for $230. I missed the final trade of the day selling a break of 677.00. All the numbers from TT tomorrow

5: MARCH MINI $5 DOW
EYMH6 O=925 HI=973 LO=873 CL=888

First, a correction. In TT I stated the hours as 7:15 am to 3:15 pm. The correct hours of the RTH are 7:20 to 3:15. I began selling 10948 about 8 am. I exited at 10937 picking up $55. I bought 10944 and exited at 10964 for $100. I sold 10945 about 12:15 and exited at B/E. I then sold 10948 about 12:35 and exited at 10931 for $85. I sold 10922 at 1:10 and exited at 10887 for $175. Done for the day with $415. All the TT numbers again tomorrow. This is a nice small point count market where it's pretty hard to get yourself into trouble if your playing S&R with a good management plan. I had a bit of fun today. WAY, WAY less stressful than the Russell.

7: FEBRUARY GOLD
GCG6 O=0.80 HI=2.10 LO=6.00 CL=6.10

A big gap up open took us back to 510/11. They gave us a couple or 3 good confirmations I thought but they would drop all the way past the indecision point ... which is the idea behind observing it; so we don't get in in a choppy area. Finally about 12:40 Gold made a run which failed precisely at 510 ... a nice confirmation. We sold 508.60 and exited at 506.50 for $210. A very weak close had me thinking about hanging on to it but I was smart enough, barely, to do the RRR math and pased on that idea. $10 Channel tomorrow.

8: MARCH COTTON
CTH6 O=.50 HI=.65 LO=.39 CL=.63

I got the idea it was going to chop around 53.50. That in combo with being a little busy elsewhere was enough to make me let it be. TT numbers again tomorrow.

9: MARCH COCOA
COH6 O50 HI51 LO36 CL39

I sold 1446 knowing that I was potentially in a very short trade with 1440 looming in front of us. It did exactly that ... pulled up at 1440. I exited at 1438 after about a half hour for a small $80 winner. We'll play the TT numbers tomorrow as well as sell a break below 1440.

10: MARCH CORN
CH6 O=2.09 1/2 HI=2.09 3/4 LO=2.06 1/2 CL=2.08 3/4

I sold 2.09 1/4 and exited at 2.07 1/4 for 2 cents, $100. Same numbers from TT tomorrow.

11: MARCH WHEAT
CH6 O=3.23 HI=3.23 1/2 LO=3.19 1/2 CL=3.23 1/4

I sold 3.23 even and exited at 3.21 1/2 for a small $62 gross. Same numbers from TT guide us tomorrow plus we'll play off 3.18 also.