Traders Helping Traders Daily Trade Update for Wednesday, 5-25-05

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Erich's Update for Wednesday, May 25, 2005
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"Life shouldn't be printed on dollar bills." - Clifford Odets
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1: JULY CORN
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CN5 O=4 1/2 HI=4 1/2 LO=0 1/4 CL=1 1/4 1/2

Corn formed resistance today at 225 and promptly retreated from there. Not a big surprise given the large session from the day before - a little trader's remorse is to be expected after a session like that.

We could look at buying above the 225 resistance, but I feel like being really picky. Now that resistance has formed I would look for prices to retreat to the 217 support, from where we'll look at buying back in. On hold for tomorrow.
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2: JULY COTTON
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CTN5 O=25 HI=90 LO=61 CL=08

Cotton's getting ready to rally as prices continue to test the 5100-ish resistance. RSI is beginning to slope a little higher which makes me think we'll see a run up tomorrow...but since it's countertrend I think I'll let it pass.

If you're into buying the market however I would look to take profit as we approach 5250 resistance, from where I think we'll see a reversal.
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3: JULY BEAN OIL
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BON5 O=62 HI=97 LO=60 CL=87

Nearly the identical session as yesterday as bean oil prices continue to struggle against the 2300 resistance. I still think we will see prices poke through to 2340 before giving up. Think we'll see one more higher session before we look at selling again.
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4: JUNE LIVE CATTLE
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LCM5 O=60 HI=90 LO=40 CL=45

A slightly more subdued day in the cattle market today as prices looked bearish on the surface, but didn't really go anywhere. I'd like to see prices pullback a bit to give us another chance at this trade, but if you did take it short yesterday you might want to protect some of those profits and bring stops above today's high.
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5: JULY COCOA
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CCN5 O=66 HI=68 LO=34 CL=36

Got the bounce off 1470 resistance today. Pretty cool, huh? Okay, now we've got a good chance to get back into this market, and hopefully cocoa will respect our support and resistance numbers. I hope.

*SELL July Cocoa at 1429
*Stop 1453
*Approximate Risk Exposure: $240 per contract
*Profit Target: 1319
*Approximate Profit Potential: $1100 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate to HIGH
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6: JULY WHEAT
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WN5 O=32 1/2 HI=33 1/2 LO=29 1/2 CL=32

Wheat gave us a more moderate reaction than the corn market did today. The session was rather small, especially when you consider it next to yesterday's huge rally.

We're obviously in an uptrend now, and like corn I'm going to hold out and hope that we will see a little more testing of support before the next rally. I won't hold on too long though. Anything near the 321 support is going to get me thinking "buy" again.
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7: JUNE CANADIAN DOLLAR
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CDM5 O=43 HI=57 LO=13 CL=34

The Canadian Dollar didn't get high enough to test our resistance at 7980 but is showing signs of weakening. A quickie reversal might be in order tomorrow which is why I'm looking at running the sell trade again. I've adjusted the parameters to reflect the higher rates we're trading at.

If we finally get the 7980 test tomorrow I hope that rates don't range low enough to find the order. This is making the trade a little riskier than if we did see a 7980 test already.

*SELL June Canadian Dollar at 7907
*Stop 7927
*Approximate Risk Exposure: $200 per contract
*Profit Target: 7807
*Approximate Profit Potential: $1000 per contract
*RRR: 5:1
*Degree of Risk: Moderate to HIGH
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8: JULY SILVER
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SIN5 O=7 HI=1.5 LO=6 CL=0.3

Yeech! Day's like this annoy me as silver is just ranging for the sake of ranging. The market's not really going anywhere and it's not giving us a clear indication of what it wants to do either. Just watchin and waitin tomorrow.
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9: MARCH EURODOLLAR
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EDH6 O=.03 HI=.04 LO=.995 CL=.025

The ED is still toying with the 9610 resistance as rates refused to go any higher today. Actually they did trade somewhat higher, but nothing substantial.

We're left with the same problem as before, namely we can't sell because it's countertrend and can't buy because of the 9610 resistance. RSI is at a testpoint however so I expect to see rates fall off tomorrow.

Should we live on the edge anyway? Sure, why not...

*SELL March Eurodollar at 95.985
*Stop 96.025
*Approximate Risk Exposure: $100 per contract
*Profit Target: 95.785
*Approximate Profit Potential: $500 per contract
*RRR: 5:1
*Degree of Risk: Moderate to HIGH
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10: WILD CARD
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No wild card market for tomorrow.
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"Tom's Trades" for Wednesday, May 25, 2005
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Yesterday's computer break down forces us to play a little catch up, informationally speaking. The plan for this edition is to share what was done on Monday with you, discuss what most likely should have been on today, Tuesday and finally we'll set the table for Wednesday's trade. I didn't do much trading today since the 'puter didn't get working until about 10am my time.
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1: JUNE 30 YEAR T BOND
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USDM5 O=7-01 HI=7-08 LO=6-19 CL=6-30

We gapped lower at Monday's open which I don't think fooled anyone. We were headed higher given all the talking head speculation about rates, inflation(lack of) and I even heard someone advancing a case we'd see a rate decrease. Yeah right. The problem in part is the FED has no credibility after the debacle of the last meeting.

I bought 115-25 and the Bonds made the Mazda sound ... zoom, zoom. We made it to 116-10, paused pulling back to -06 and then resumed the climb to 116-20. I made the stop 116-17 at that point. They promptly came and got us. We bagged 24 ticks, $750. That was all she wrote for Monday. Tuesday we gapped up and continued an early show of strength. It failed at the then high of 117-08 worked lower giving an ooportunity to sell -28. This trade would have ended with a B/E stop being hit. A bit later a chance to again sell 29 appeared. It looks to me like this one would have ended up B/E as well ... maybe made 2-4 ticks depending on how rabid was your management.

Today's close at 116-30 puts us on 117-00 or 116-16 for tomorrow. No buy zone until 115-16 or possibly 115-24.
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2: JUNE EURODOLLAR
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EDM5 O=.580 HI=.585 LO=.577 CL=.580

We maintained the staus quo over both days. I'm a wee bit surprised we did get a bump in prices here today. We are still long from 96.555 with the stop set at B/E.
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3: JUNE CANADIAN DOLLAR
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CDM5 O=43 HI=57 LO=13 CL=34

Still waiting on structure or a move to 7980. We got closer with the Monday/Tuesday action but still not there yet.
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4: JUNE MINI RUSSELL 2000
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ERTM5 O=3.90 HI=4.70 LO=9.80 CL=2.00

The window opened and I bought 610.40 and exited the trade at 612.80 after it broke back below 613 for $240. I actually sold 2 at this point exiting the long and establishing a short. This one went right straight to 610 and bounced ... I bailed at 610.60 picking up another $220. I again reversed this time buying 2. It went right back to 613 so I jumped out at 612.60 for another $200. I probably should have reversed again but I was out of wind, couldn't keep the momentum up. I took a breather.

I came back just in time to watch it fail near 613 on 3 consecutive 5 min candles. I sold 612.70 ... stopped out at 613.20 for a $50 loss. I was burned out so I quit for the day. By quitting when I did I missed 2 more small trades but might have made another $200-$300 had I the requisite stamina. I didn't trade Russell at all today, just too much interference to overcome. It looks like we missed a couple of buys at 610 and maybe 1 or two sells off 613. Bully for you if you got 'em. Especially in a market like the Russell, if you can't get your mind clear of any and all distractions ... take a chair on the sidelines.

The full array from TT are in play for tomorrow. Remember the Forum amendment courtesy of Steve F. We'll play 614 as a range 613-614. This means we sell breaks below 13 and buy breaks above 14.
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5: JUNE GOLD
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GCM5 O=8.50 HI=9.30 LO=7.40 CL=7.70

I think, in retrospect, I could've done better here on Monday. The test of the upper edge of 420 was a little light at 418.50 but it sure enough was a valid confirmation. I should have sold it but didn't. It wouldn't have been a real big trade within the confines of the $10 channel only producing maybe a tad over a $100, but I think it was a valid trade and I missed it. It was a good mind jogger for Tuesday though. Wioth Monday's thoughts fresh in your mind it would have definitely made you more amenable to the dish laid on the Tuesday table. I wasn't able to pounce with the 'puter down but you should have. It was a sell after the touch on 419.30. You should have been filled about 418.60-.40. You should have been out of the trade about 417.70 or so. Again, not a bank breaker but a solid setup just the same.

$10 channel for tomorrow.
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6: JULY COTTON
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CTN5 O=.25 HI=.90 LO=.61 CL=.08

I tried to buy on Monday as we broke above 50.10. I couldn't get the trade done. I could only watch it rise to 51.00 and then come all the way back closing at 50.10. Tuesday I would have tried to sell the break below 50.00. You might not have been able to get this done which wouldn't have been so bad as it was probably a B/E trade at best. Looks also like I would have bought the break back above 50.10. That trade looks like it had a chance of being filled at 50.10-.15. Worst case we would've been out at 50.50-50.65. That would have produced, worst case, about 35-40 points, $175-200 of profit.

We closed today at 50.08 so we'll be right back tomorrow to play the TT numbers.
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7: JULY COCOA
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CON5 O=66 H=34 CL=36

A lot of numbers repeating themselves over the past few sessions. We're getting there slowly but surely. I did no trades either day.

I will buy a break above 1460 tomorrow with a stop at 1453. Roll to B/E at 1468 and use 1500 as the target. Roll tight, really protect 1480 on the way. TT numbers are still in play as well should we see 1480 or 1500.
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8: JULY CORN
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CN5 O=2.24 1/2 HI=2.24 1/2 LO=2.20 1/4 CL=2.21 1/4

We called the strength pretty good over the weekend. The opening gap on Monday was just a little too far above 2.17 1/2 to warrant jumping on. I had to let it go. Then on Tuesday just the opposite ... a big failure on the open. 2.24 and 2.22 were certainly "what's most likely" numbers at which to suspect a failure. You couldn't have gotten anything done at .24 but you could have at .22. 2.20 was also a good number to protect so you might have made a little selling off the break of 2.22.

I'll play 2.20 tomorrow buying a retest that fails to break it as it starts rising. I'll also sell a break below 2.20. Use the stops and rolls from TT ... penny and a quarter. I'll also play 2.17 the same way as well should we get there.
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9: MAY WHEAT
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WN5 O=3.32 1/2 HI=3.33 1/2 LO=3.29 1/4 CL=3.32

Wheat also gapped open strongly on the open Monday. 3.18/3.19 was a big S&R area we wrote about not too long ago. I bought 1 at 3.19 on Monday. We shot right thru the target area for the Weekend TT trade. The next level was 3.29. We got to 3.28 1/2, I rolled to 3.27 1/2 and was stopped at 3.27 even for 8 cents, $400. We broke above 3.29 a few minutes later and I tried to buy 3.30 or better and couldn't get so I missed the rest of the run to 3.36. Today we got a little pullback seeing 3.29 1/2 as the low.

For tomorrow I'll look for a retest as high as 3.38. If that should fail I'll be a seller as it comes back thru 3.35. I'll also buy a break above 3.38. Penny and a quarter stops and B/E rolls.
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