Big Weekend Edition Part Two - Tom's Trades

This is only Part Two of a three part publication that is broadcast each Sunday.

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Part Two - Tom's Trades - by Tom Loge' 1-30-05
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Notable Trading Tactics for Stocks and Commodities
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Opening Comments
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The saga of Julius the cat continues. We found his real house, across the walk street from us. Seems Julius was kinda' on a strike of sorts. The family there just had a new baby and Julius took exception to the arrival … wouldn't eat, wouldn't come in the house. The owners have a friend who lives out in the country on a ranch. Julius now has new digs.

Everyone had sort of acclimated to his presence at our house. So the lobbying has begun. I think, operative word "think", Jacki and I are on the same page … NO Julius II. The grandkids and housekeeper, of course, have a diverging strategy. This will not go away quickly, I fear.

Erich and I are working on the details for the first seminar. It is beginning to look more and more as if it will be in Vegas. I feel somewhat obligated to the Dallas crowd as their response pretty much buried everyone else … maybe first Vegas, second Dallas. A comparison of air fares is playing a significant role in the decision. More on this later.

We had a decent week of trading despite the fact our staple market, the Bonds, didn't produce very well for us. We made hay in a couple of surprises, most notably in Cotton. It points up the importance of diversity and being flexible enough to cover an array of markets. Hey, you have to be in the trade to BE in the trade.

Our short stops help us facilitate this approach as we keep the margin requirements and account balance to very modest levels. We also saw a week that illustrated a great lesson on the advantages of you all getting the two-pronged examples coming from Erich and I. The grain markets are at a place they will eat you up if you insist on buying in anticipation of the "Big Move". We ain't there yet and won't be there for some time.

Those who persist in playing them with the usual approach are in for a bitter couple of months. Even those of you for whom my tactics are a little tough to do will benefit from sliding down the scale from Erich's longer term position trades to my shorter time frame, shorter risk and approach these markets with more of a scalpers' mentality.

Let's close out last week and get after our game plan for Monday.
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Trade Review
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MARCH 30 Yr TBonds
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Friday's action was decidedly bullish with Bonds advancing on a half point pop right after the open. I was still in the "no buy" zone so I could only watch and curse softly under my breath. The buy at 114-03 would have been problematic to begin with and the quick jump was followed by some pretty wicked chop that only luck would have prevented us from some profit erosion anyway. Thus, I'm not viewing the non trading as a significant disappointment.
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MARCH Eurodollar
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We began the final day of the week short from 97.040 with a clear understanding we'd be flat by day's end. Friday was another day of mind numbing tight ranges. I jumped ship at 97.030 pocketing $25 which I used to lobby votes my way on the Julius referendum. Wasted effort I do believe.
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MARCH Canadian Dollar
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We opened with small gap down and then a climb to 8078. I judged this to be a failure of the 8080-90 focus area and sold 1 at 8075. We made our way to 8018, which turned out to be the low of the day, and then snapped back. I rolled the stop to 8031 and got stopped out at 32 for $430. There was enough support in the 8015-22 range to have gotten a clue. Wished I had seen it before instead of after the fact … I should have made a bit more. Don't get me wrong; I'm not at all unhappy with this outcome all things considered.
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FEBRUARY Gold
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Friday's open picked right up where we left off on Thursday. If they would have just pushed it up a tad more … and if pigs could fly, right. Sat and watched as Gold tanked $300 worth. Yes, indeed, where did the dive pull up and reverse? Why, right at 424.00, of course. I bought 1 at 424.50 looking for it to go back to at least near the opening range. It didn't get there. I found the exit at 425.40 for $90.
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New Trades
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MARCH 30 Yr TBonds
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Friday's high at 114-27 takes us right back to the recent highs. A bit of a failure occurred right at the end of day as we backed off the high to settle at 114-21. Not to hard to figure that one out … ¾ of a point run up on a Friday … think there was some profit taking going on? I'll bet. 114-21 leaves us eyeing 115-00 and 114-16 for sells.

I won't do any buying until we see a bounce off of 113-16. I'm going to be extra cautious of entries on Monday morning. Expect one heck of a struggle from 114-24 up to 115-00. There is a good chance we'll see it fail just as it did last time we visited this lofty territory. I think there might well have been some significant money parking going on ahead of the Iraqi elections … so much dire reporting about threats against voters, etc. In any event I'm about half decided not to do anything during the first hour.

I'd hate to miss another day like we had on Tuesday but I would dislike even more to get caught in something the brainiacs on the street are setting up. You pay the bucks for a call, so here it is … NO TRADES IN THE FIRST HOUR … unless they give us a clear failure and THEN a clear shot at selling the break of 114-16.
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MARCH Eurodollar
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With strength in the Bonds and a solid, with a capital "S", support line at 97.025-.020, it becomes hard to make a case for selling the ED. I'm going to relax a little on the press to sell this market and watch for some resolution. I will hang on to my play from 2 weeks ago, buying on a break above 97.055. The following was written in the 1/16 edition … it's been a long time since we've done any buying here … for very obvious reasons.

I'm going to break that pattern. I will buy a break above 97.055 with a stop at 97.040. The target is 97.095. I'll start squeezing pretty hard on ticks above 97.080. Keep an eye on appropriate RRR management along the way.
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MARCH Canadian Dollar
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The CD market continues to look for resolution at the significant support at 8060 and 8080. Friday's close at 8061 leaves us right on it. My comments from Tuesday's Daily update are just as appropriate now as they were Tuesday. We're back testing the bottom edge support of the recent trading range at 8090-80. The U.S Dollar is banging it's head on some significant recent resistance. I'd judge this a very important point for the CD.

Tomorrow I will buy a break above 8100 with an 8193 stop. Roll to B/E at 8109 and use the numbers above there from TT of 1/23 for management guidance. I will also sell a break below 8979 with a stop at 8087 and a B/E roll at 8069. 7970 is the first logical target. Trail a stop back $125-150 until we break 8000. From there down, no more than $100 at risk.
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FEBRUARY Gold
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We've been mired within the 430-420 channel for almost 4 weeks in and of itself that's pretty amazing. I will certainly continue to monitor the $10 CHANNEL. I will also continue to trade the 424 line as I've done with some success this past week. I'm adding sells off of 428 that fail there. This in essence a little compression tool applied to Gold and the $10 channel's.

Treat and play it much as you would the full on channel. Just pretend 428 is 430 and 424 is 420 and use 1 dollar ranges within which to find the confirmations.
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MARCH Cotton
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The downdraft continued on Friday, not as dramatic as Thursday's but a 185 point move still is enough to raise the heart rate of even the most jaded Cotton trader. Unfortunately it has moved us into an area of an RRR conundrum. While I think 43.50 is a tradable level of S&R, the next super area is 43.00 and 42.50.

Given the most likely result of trades against 43.00 playing it to win most likely only 50 points makes no sense when applying the RRR criteria to the trade. Hands are tied until we challenge 43.00. I will buy on a failed attempt to break 43.00 with a stop just below … 42.91 or 87 at most for risk of just $75 or $80. 44.00, 44.50 and 45.50 become tight roll triggers with 45.50 being the target. Roll it to B/E at about 43.15.
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MARCH Cocoa
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The Friday close at 1562 leaves us sitting on one of the important lines. The Cocoa has been quite choppy the last few sessions. For Monday, I will sell a break below 1560 with a stop at 1567 for risk of $70 and a roll to B/E at 1557. If we start Monday on a positive note I'll wait until 1580 and sell there if we fail. Stops and rolls … add 20 to all the numbers above. We'll have to deal with 1560 on the way back down.

Don't hesitate to play it very tight as we approach 1560. We can always get back in as it breaks 1560. I'll buy only a break above 1600 with a stop at 1593 and a B/E roll at 1607 or 09. The target here is 1680. Be tight with the rolls at 1620, 40 and 60. With the chop of late and the power of 1560, 80 and 1600 being so close together, DO NOT let Cocoa into a position where it can do you damage, it will if you give it the opening.

Be aggressive with the management … really aggressive … even to the point of sacrificing profits to ensure against losses. Maneuvering for another shot at a profitable trade is way, way easier than trying to recoup losses.
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MARCH Corn & MARCH Wheat
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First let me say and please listen closely … ANY BUY I DO, I DO NOT EXPECT PROFITS BEYOND 2.00. Trade accordingly. If you are trading Corn right now you best be in a scalping frame of mind or I guarantee you will drop 20 cents in the next month trying to get on winning position trades. I'm going to watch both Corn and Wheat tomorrow. I'll share a play with you in the Update tomorrow night. Tom

The forum script is having a bit of an issue with the new server. Shaggy is working on making them more polite to each other. We apologize for the interruption and inconvenience!

Thanks for tuning in.
-Tom
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Asher's Stats
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Asher's trading-price Ranges, Breakouts, and Pivot Point calculations for Corn, Canadian Dollar, Silver, and Soybeans for each day. Fresh calculations for these and other commodities are sent out daily to subscribers, FREE. http://www.tradershelpingtraders.com/asherstatssignup.html
and posted to the site weekly: http://www.TradingThingys.com

Ashers site is one of the few that specializes in Pivots: http://www.supportandresistance.com/Asher/pivots.html
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The Commercial Stuff
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The Support and resistance manual upon which the trading analysis in this ezine is based, is available here: http://www.supportandresistance.com
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The Legal Stuff
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Trading commodity Futures and options on futures involves significant risk. You must consult licensed professionals or your own advisors before trading to determine if it is suitable for you. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. You must consult your broker or advisor before making any trade to insure current prices, margin requirements and other factors determinant to suitability.

By reading this newsletter you agree to make no trade relying in whole or in part on the comments of the writer. You agree before doing any trade contained herein to consult your charts and advisors to verify all information and make your own decision.

Being a successful paper trader does not mean that you will make money when you actually trade real money. Paper trading can NEVER approximate real money trading! Most individual traders who trade commodity futures or options lose money. Did you get that? MOST! Past Results are not necessarily indicative of future results. This publication is NOT to be construed as trading advice in any shape or form whatsoever.