Wednesday, November 08, 2006

Tom's Trades for the Big Weekend Edition, Novemeber 6, 2006

Tom’s Trades
By R. Thomas Logé
I’m still spending more hours sleeping than awake. I walked a mile and a half Saturday and again today. Of course as soon as I got back to the house I was out for a couple of hours. I’ll be back at the doctor’s tomorrow for a new chest x-ray. Hopefully we’ll see some big improvements from the last one.

It felt good to be back trading Friday even though I didn’t do much. It is very important to be physically fit to trade I think. I really do believe there is a definite correlation between sustained mental exertion and one’s physical condition. I was really wiped out by the little trading I did on Friday. It’ll be interesting to see how I fare tomorrow.

Let’s get after our plan for the week and see what the markets are setting up for us.

NEW TRADES

DECEMBER TBonds

The employment report played havoc with the Bonds Friday. The increase in jobs fell short of estimates but they recast the prior 2 months much higher than originally reported which set off the selling. I think a bigger impetus came from lots pent up profit taking as I wrote Thursday night. I sold 112-27 rolled out at 111-29 for a nice pick up. I then sold it again at 111-28 and exited at -31 losing 3 ticks before selling -28 once more with an exit at -17 for a daily bank of $1187 on the 3 trades.

The coming week is very light on reports until Thursday. We’ll see unemployment claims, import/export pricing. Balance of Trade and wholesale inventories all on Thursday. On Wednesday and Thursday we have two big auctions … 3 year notes followed by 10 year.

Look for the weekly tone to be down and we’ll kick off Monday looking to trade 111-16 or 112-00. The possibility exists for us to open lower than 111-16 in which case 111-00 will become the initial focus.
DECEMBER Eurodollar

I didn’t do anything in the ED on Friday. The employment numbers impacted the Ed as well.
I will sell a retest into the 94.640/.660 area as it fails and begins dropping again. I will buy a break above 94.660. I will also sell a break below 94.580 or buy on a failed retest there.
I’m going to keep the stops as close as possible. I’m planning to keep them back .015 from the trigger price.
DECEMBER Canadian $
I sold 8875 on the break of 8880 on Friday and exited at 8855 for $200.

Any retest of 8820 or lower right down to 8800 is a buy as it turns back north. I’ll also sell a failed retest above 8870 as it dies and turns south. Any retest of 8900, 8920 or 8960 that fails and turns lower is good for a sell.

Use the 3’s above and the 7’s below trigger numbers for stops.

DECEMBER Swiss Franc

I tried to sell on the failed retest of 8040 but couldn’t get it done as the SF was moving hard on the back of the employment numbers.

Any failed retest of 8100 is a sell. Likewise a failure at 8060 gets sold. A retest of 8000 that fails to pop lower is a buy and n outright break lower than 8000 is a sell. A retest of 7940 or anything lower is a buy as it turns and begins climbing.

Use the 3’s and 7’s a la CD for management controls.

DECEMBER Mini Russell

I played 750 and 752 with some success Friday. I sell off the break of 752 and 2 buys on bounces above 750 netted about $600.

Now that earnings season is well behind us the game of guessing turns almost entirely to what will the FED do in the Spring. The talking head’s wish list had a rate CUT at the top. The numbers released last week lowered the probability of that happening and scuttled the advances of early session.

That’s a more solid floor at 750 than the chart portrays. I expect it to hold the market up but I don’t think we’ll make any sustained progress higher as 775/780 will do the work as a ceiling at least for a while, maybe all week.

Here are the numbers currently in play for the December contract:

780, 775, 773, 770, 768,
765, 760, 752, 750, 748,
745, 742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.

752 and above are add on’s.

DECEMBER Mini Dow

12000 is a critical number for the DOW. If we break it early Monday we may find it tough sledding to get back above it within the week. If it holds it will be a floor to be reckoned with.

Here are the current numbers in play for the DOW:

12200, 12150, 12100, 12060, 12000, 11940, 11900, 11800, 11775, 11750, 11700, 11620, 11600, 11580, 11550, 11500, 11475, 11440, 11400, 11370, 11350, 11330, 11300, 11240, 11200, 11170, 11150, 11050, 11000, 10970,
10950 and 10850.


DECEMBER Gold

Friday, I bought 621.50 and exited at 626.50 for $500. I might have done a bit better but lost my courage.

We ended Friday sitting on 630 so we’ll want to be ready to rock early on Monday. Play the $10 channels and be on watch for a chance to trade off 635 with a sell as mentioned in last Thursday’s update.

DECEMBER Cotton

I’ll buy a failed retest at 48.00, 48.50 or 49.00. I’ll buy a break higher from 49.50. I will also sell a failure at 49.50. I sell a failed retest of 50.00 or buy the break higher from there. Any failure between 50.50 and 51.00 is good for a sell as well. A break higher from there is fair game for a buy as well.

All stops are back 13 ticks from the trigger prices. Be very watchful of end’s of long runs and have some likely ONCE BROKEN numbers ready to go.

DECEMBER Cocoa

Cocoa is a pretty simple chart to decipher this week. I’ll buy a break above 1500 or sell a failed retest there. I’ll also sell a break below 1460 or buy a failed retest there as it turns higher. Stops are the 3’s above and the 7’s below the trigger numbers.

DECEMBER Corn

I’m purely a spectator for the moment. If I change my view I’ll advise you in the Daily Updates during the course of the week.

DECEMBER Wheat

I’ll buy a failed retest of 4.80 or sell a break below there. Same approach at 5.00 and 5.10 … buy the break higher; sell a failure.

Tom