Erich's Update for Friday, September 2, 2005

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Market Update for Friday, September 2, 2005
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1: CURRENCIES
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September Australian Dollar ADU5
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I can't believe the rally we've seen in the currencies the last couple of days. This is truely an out of the ordinary week. Obviously we're not doing anything tomorrow, just watching.
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September British Pound BPU5
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Well I guess it would have been safe to buy the BP after all as it made another huge rally based on the weakness in the US Dollar. With the holiday weekend approaching I wouldn't be surprised to see this market stop to catch it's breath.
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September Canadian Dollar CDU5
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The CD traded higher, but only moderately. It seems that the stall in crude oil might have trickled down to the CD as well. Here too I would prefer to see a bit of a stall tomorrow.
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December EuroFX ECZ5
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Okay, this one's really close as the Euro gapped our entry by a measly 10 points - that's not a lot in the Euro. If you decided to take the trade anyway, knowing that the currencies have a tendency to gap, or if you watched during opening range, you might have gotten on board this very strong rally today.

If you did buy into the Euro, then you'll want to bring exit stops at least below the 125.10 intraday support for tomorrow, but don't be shy about making it tighter still as there is over $1000 in accumulated profits today, and being flat before a holiday weekend is not a bad thing.
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September Japanese Yen JYU5
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A nice rally in the Yen today, and fairly steady day as well. It makes me sorry I didn't look at buying the Yen today, but that's okay, we'll have another chance next week.
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September Mexican Peso MPU5
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Fairly bearish day in the Peso, but we didn't get the RSI test we were looking for. I'm going to hold off to see if rates don't continue to challenge resistance before backing off again.
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December Swiss Franc SFZ5
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Nuts. We had the Swissy dead to rights today and the market gapped our entry. Unfortunately this gap was big enough that you probably held off the trade (I did). Disappointing to say the least, but we'll try again next week.
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December US Dollar Index DXZ5
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At least the US Dollar didn't run away on us today as we got a nice fill off the break in 8700 support. The market continued lower for most of the session with only the odd flare up.

If you wanted to let the trade run then consider bringing stops above 8657, but I've got too much money on the table to put up with a serious reversal before the weekend, so I'm jamming my stop in 12 ticks above the close. If the market backs up any more than that, then I'm outta here!
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2: ENERGIES
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October Unleaded Gas HUV5
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Another crazy day in Gas. Today gas took a 9 cent hike at the pumps...that's per liter here, which is about 40 cents a gallon. Ouch!
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October Heating Oil HOV5
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In hindsight I should have used yesterday's hesitation to buy the market long today - nice to know my hindsight's still 20/20!

While I would love to get back into these markets, and the trend is unbelievably strong, these are scary levels to trade at folks, and tomorrow will be compounded with the holiday looming. It will either be a calm day, or the craziest one yet!
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October Crude Oil CLV5
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Crude is subdued compared to Gas and Heating Oil. I should be using this hesitation to buy the market long tomorrow, but I can't afford to hold a crude position over a three day weekend. Heck, I don't even think Donald Trump could afford to hold crude over the holiday weekend!
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3: FINANCIALS/INDICES
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June (06) Eurodollar EDM6
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You're seeing history in the making folks. I have NEVER seen the ED rally like this for three days straight. It's a sight to behold for sure...but not to buy.
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December mini-DOW YMZ5
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Yeech! What a mess. Just when the Dow was looking like it was going somewhere we get this. I don't think I'll bother with this market tomorrow.
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December mini-NAS NQZ5
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The NAS flinched near resistance today, which is okay because it reinforces the resistance we based the trade on.

You *could* run the trade again tomorrow as we will probably see a rally, but I wouldn't recommend it. I'm just tossing it out there because it is a possible trade, but if I had a higher rating than HIGH risk on my scale, this would get it.

*BUY December mini-NAS at 1607.5
*Stop 1594.5
*Approximate Risk Exposure: $260 per contract
*Profit Target: 1647.5
*Approximate Profit Potential: $800 per contract
*RRR: 3:1
*Degree of Risk: HIGH
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December mini-S&P ESZ5
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Ditto for the S&P. It is tradeable tomorrow, but I would be very very very very very very cautious.

By the way, did I mention you should be very cautious about taking this trade?

*BUY December mini-S&P at 1236.25
*Stop 1230
*Approximate Risk Exposure: $312 per contract
*Profit Target: 1255
*Approximate Profit Potential: $937 per contract
*RRR: 3:1
*Degree of Risk: HIGH
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4: GRAINS
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December Corn CZ5
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With yesterday's bounce in oats I had a bad feeling it would filter through to the corn market, which it did, stopping us out of our short trade for a small loss.

I'm not going to bother with corn tomorrow, but I do expect another lower session.
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December Oats OZ5
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Go figure that Oats would reverse and head lower after yesterday's hiccup. I'm starting to think this market has it *in* for me. Nothing new here tomorrow.
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September Rice RRU5
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I did say I would look at buying rice tomorrow on a decent session today - which is what we got. But I'd forgot that this is the holiday weekend, so while this is a favourable looking setup, I can't bring myself to buy before the holiday.
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December Soybean Meal SMZ5
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Meal continues to flirt with the support line at 184 - 185. I dearly want to sell this market, but like the other trades I can't do it before the holiday. We might see mean head lower tomorrow, but I'm going to be flat.
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December Soybean Oil BOZ5
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I hate it when the market just breaks a resistance level enough to find my order and then reverse to stop me out. Of all the markets, bean oil does it with the most consistency. This doesn't mean we're one the wrong side of the trade, just that we were wrong today.

Nothing new tomorrow.
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November Soybean SX5
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Beans rallied off support today, and weren't as wishy-washy as bean oil was. Given today's high close I'll run the trade again tomorrow, but be aware that it is extremely risky and you should consider your investment *gone* if you take the trade.

You might consider pulling the order after lunch as well as the pits are likely to get really thin.

*SELL November Soybeans at 592 3/4
*Stop 598 1/4
*Approximate Risk Exposure: $275 per contract
*Profit Target: 548 1/4
*Approximate Profit Potential: $225 per contract
*RRR: 8:1
*Degree of Risk: Moderate to HIGH
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September Wheat WU5
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Got the wheat bounce we were looking for today off teh 318 support line. I don't think we'll see the market rally too far however and might even see a reversal tomorrow off resistance at 328.
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5: MEATS
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October Feeder Cattle FCV5
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Now that's what I call a pullback! What a wild day in Feeders as the market plummeted right from the open. They're not done though and look for prices to fill the 107.25 gap tomorrow.
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October Live Cattle LCV5
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I guess I should have commented about cattle's lack of movement to the downside earlier as today the market fell off the map. Of course cattle is following feeder's lead and is likely to head lower tomorrow as well.
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October Lean Hogs LHV5
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Big move for Hogs today as well as prices went looking for support. Hogs broke the 6225 support as well as support at 6200. RSI is at a test point so I would expect a bounce tomorrow, but again I'm just watching because of the holiday.
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6: METALS
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September Copper HGU5
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Gee, a higher day after a lower day...is this copper or sugar we're looking at?
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December Gold GCZ5
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Out at breakeven as gold did spike with the USD's decline. Lot's of resistance at 450 which might put the brakes on the rally tomorrow.
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September Silver SIU5
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Big rally in silver today. No doubt the market was spurred higher by the overflow from gold's rally. Standing aside for tomorrow until things settle down a bit.
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7: SOFTS
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December Cocoa CCZ5
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Today was a bit of a surprise in cocoa to say the least. The big rally does look like it might continue tomorrow, but I'm going to pass.
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December Coffee KCZ5
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Coffee plodded higher today as well. Look for prices to likely continue higher tomorrow until they encounter resistance at 108-ish. Then it might run into some problems.
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December Cotton CTZ5
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An *evil* day in the cotton pits as traders went looking for orders to whipsaw. While I can't prove it, that's exactly what the bar looks like. Nothing here tomorrow.
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November OJ OJX5
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The opening gap voided our trade today as prices opened very low, only to fade higher the rest of the session. Not quite what I was expecting, so I think I'll watch tomorrow.
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October Sugar SBV5
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There's sugar's reaction to the resistance on the contract high. We might see a test of support at 990 tomorrow, but again I'm just a spectator.
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