Traders Helping Traders Daily Update for Tuesday 3/22/05

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Erich's Update for Tuesday, March 22, 2005
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Hot off the commodity presses to you! (Well not exactly...if you're a test driver, you get these somewhat after the fact). Scroll down for Tom's Trades.

"The fool wonders, the wise man asks" - Benjamin Disraeli
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1: MAY CORN
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CK5 O=7 1/2 HI=7 1/2 LO=3 CL=4 1/2

The bottom fell out of the corn market today as prices fell off right from the open. The market is officially in a bear trend again and I'm hoping for a reaction soon so we can plan another entry.
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2: MAY COTTON
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CTK5 O=25 HI=30 LO=10 CL=12

Cotton fudged our 4930 line a bit today...but I'm sure that was more momentum than anything. Notice the hight closing price? Expect the market to rally for at least one session before falling off again. Just as before I'm very reluctant to buy cotton at this time of the year when we usually see it decline.
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3: MAY BEAN OIL
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BOK5 O=60 HI=68 LO=49 CL=55

Now that's a little more like it! Bean Oil prices fell off quite nicely today easily allowing us to sell this market. Just another example of why we're in the trading business rather than the "prediction" business. ;-)

Management is the key now. As always, let your account be your guide. We've got a little over $400 in accumulated profits as of the close. Bring exit stops at least to breakeven or the intraday resistance at 2290 to lock in the better part of the move.

There's only $200 left in the initial move, so if you wanted to maximize your profit potential, place stops above 2265 but realize you run the risk of getting stopped out tomorrow. First profit target remains support at 2227.
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4: ARPIL LIVE CATTLE
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LCJ5 O=.275 HI=.90 LO=.275 CL=.85

Cattle bounced a bit today and if you had exit stops brought up a bit, you would have been stopped out with profit today. If you had stops at breakeven then you're still short this trade, but if you did get stopped out you have another chance to sell this market tomorrow below recent support.

*SELL April Live Cattle at 8707
*Stop 8750
*Approximate Risk Exposure: $180 per contract
*Profit Target: 8540
*Approximate Profit Potential: $660 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH
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5: MAY COCOA
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CCK5 O=20 HI=30 LO=25 CL=33

The bottom fell out of cocoa today stopping us out of our long positions from last week. Fortunately the market didn't gap us, which could have been a real expensive start to the week. Support and resistance also kept us out of a potentially bad trade today as prices fell off hard from the open. Nothing here tomorrow.
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6: MAY WHEAT
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WK5 O=54 HI=55 LO=40 1/4 CL=42 1/2

Wheat prices followed the other grains lower today. In hindsight we could have put together a sell trade below last week's support; however the bull trend appeared to have some legitimate strength to it. No matter. Looking for a reaction tomorrow which might give us another chance at this market before the holiday weekend.
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7: JUNE CANADIAN DOLLAR
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CDM5 O=47 HI=75 LO=44 CL=72

Wow, what a crazy start to the week for the CD! The market is at an RSI testpoint, so I am expecting rates to recover tomorrow; however I think I'll let them confirm support before I get too anxious about buying.
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8: MAY SILVER
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SIK5 O=0 HI=0.5 LO=6.5 CL=1.2

No one can accuse silver of being wishy-washy today! Too bad we didn't get this move last week when we were ready for the market to decline...who would have thought we'd see a drop like this on a Monday? Not me! Big range is scaring me off of trading this market tomorrow.
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9: DECEMBER EURODOLLAR
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EDZ5 O•.84 HI•.85 LO•.83 CL•.845

In spite of the large ranges in the currencies and other markets, the ED was relatively calm today...maybe it just didn't know what was going on in the other markets. ;-) Sticking with the weekend plan for tomorrow. Selling this market still seems to make the most sense.
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10: WILD CARD - MAY BEAN MEAL
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SMK5 O=0.5 HI=0.7 LO=5.1 CL=7.3

Bean Meal fell off nicely today to our first profit target before recovering slightly. If you took profit here then you banked $1100 per contract - congrats!

If you're still short this market you might want to bring in exit stops above the close as it looks as though we might see a bounce tomorrow and we wouldn't want all this nice profit to disappear!
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"Tom's Trades" for Tuesday, March 22, 2005
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1: JUNE 30 YEAR T BOND
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USDM5 O=0-21 HI=0-24 LO=0-15 CL=0-18

Today was pretty much a replay of Friday ... just a lower price level. Just like Friday and Thursday last week, we saw a number of nice legs up and down. The problem was they all fell short of our targets on the topside. Once we figured out the game it wasn't too hard ... nor very productive.

Started the day buying 1 at 110-19. As we touched -24 it was evident the tank was, if not dry, on reserve. I bailed at -22 for plus 3. I bought -19 again and bailed at -23 for 4 ticks.Bought -19 a third time and again bailed at -23 for another 4. I closed it down after this last one as it was not a very efficient use of time ... obviously. Total for the day 11 ticks, $343.
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2: JUNE EURODOLLAR
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EDM5 O=.500 HI=.505 LO=.490 CL=.495

It's always a good thing to see a red candle on the daily when you're short ... even if it takes a microscope to see it. Status quo.
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3: JUNE CANADIAN DOLLAR
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CDM5 O‚47 HI‚75 LO‚44 CL‚72

A big gap down on the open reflected the strength in the U.S Dollar that built up over night. I watched for a bit thinking 8270 was close enough to 80 but when I started playing with RRR with 60 so close I abandoned that idea real fast. Same numbers from TT for tomorrow. Although I wouldn't hold my breath in anticipation of a trade here anytime soon.
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4: JUNE MINI RUSSELL 2000
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ERTM5 O=2.50 HI=4.40 LO=8.30 CL=2.90

I had to let the first big leg go. I bought one at 620.20 and was stopped out at 620.10 for a $10 loss. I bought 620.20 again on the rebound and when we got to 622 it fizzled. I exited at 621.90 for $170. I bought 620.50 and exited at 623.30 for $280. All the same TT numbers for tomorrow.
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5: JUNE $5 DOW
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EYMM5 O=635 HI=650 LO=557 CL=581

When our trading window opened paralleling the RTH session in the big Dow we were floating about 10635 to 45. On the second punch above 10645 I sold one with a stop at 10663. We went to 10560 and pulled up. I watched for a few minutes and became convinced it run the tank dry. I bailed at 10570 for $465. That was it for me. I set an alarm at 10520 and 10645 and went to play elsewhere ... I never heard a peep. Same numbers from TT for tomorrow.
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6: APRIL GOLD
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GCJ5 O=4.50 HI=4.60 LO=9.20 CL=1.40

A big gap down on the open but us on the trailer. It got low enough to buy but it was too late in the day for me even with a pretty nice confirmation. $10 channel for tomorrow.
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7: MAY COTTON
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CTK5 O=.60 HI=.20 LO=.00 CL=.78

A fair gap down here derailed us as well. Awfully close but just a tad too short of 50.50 for me. It dropped smartly from there before rebounding above 50.00 again. We closed at 50.12. The shame of it is they took it almost down to our target pegging the low at 49.10. Same TT numbers for tomorrow.
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8: MAY COCOA
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COK5 O=20 HI=30 LO=25 CL=33

Another gap down and another dose of "almost" frustration. The focus now turns to 1720 where we will buy a retest there that fails to go lower or we'll sell a break below 1720. Thestop for the buy is 1713 and we'll get to B/E at 1727. The target for the buy is 1770-75. Stop on the sell is 1723 with B/E coming at 1710 and the target is 1660.
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9: MAY CORN
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CK5 O=2.17 1/2 HI=2.17 1/2 LO=2.13 CL=2.14 1/2

I hate it when people do this, I particularly hate when trading advisors do this ... I just can't help myself ... I told you this wasn't the break out move. I told you to be scalpers, play it close to the vest. All those 2.17/2.18 longs are officially toast or close to it. All those 2.12 longs are now barely profitable after being up almost a grand. Not you guys though. You have periodic RRR working for you. Not you guys, you are traders not blindly reliant analysts. Not you guys, you'd rather miss a few cents than have trades back up on you. Good for our side.

I could not have designed by hand a better example to illustrate what we do and what we don't do anymore than this fiasco. If you do nothing in the next week to understand the concepts we are trying to shine a light on at least study the past 20 sessions in corn. It is an outstanding trading lesson.

During the 20 sessions examined we saw prices run from 2.10 to 2.25 back to 2.12 back again to 2.31 and back to 2.13 low today. If you hit every high and every low there was about $3500 of price flucuation in the market. We captured, during that time, $1323 of it. We risked very little, we had no drama of the kind that played out over the prior 3 or 4 sessions and what we did capture is in the bank ... not given back as so many "by the book" traders experienced in the past few sessions. This is huge; you guys ... soak it up.
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10: MARCH WHEAT
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WK5 O=3.54 HI=3.55 LO=3.40 1/4 CL=3.42 1/2

We didn't get the little bounce we needed to bring our big number into focus. The small gap down took it away from us. That's the bad news. The good news is we anticipated that and with the help of good ol' S&R we had him pegged.

I sold 3.53. When we hit 3.40 1/4, which turned out to be the low of the day and one of our roll points, I took the stop to 3.41 1/4 and got hit at 3.41 3/4. Out with 11 1/4 cents, $562.

We'll play off of 3.40 tomorrow either way ... buy or sell. Stops are no more than 3.41 1/4 on the sell ans 3.39 1/4 on the buy. Periodic RRR rules the trade use the numbers in reverse from TT to manage the buy. On the sell the target is 3.30 but respect 3.35 and 3.32