Erich's Update for Wednesday, August 31, 2005

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Market Update for Wednesday, August 31, 2005
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Erich http://www.supportandresistance.com
"It's not that I'm so smart, it's just that I stay with problems longer." ~Albert Einstein
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1: CURRENCIES
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September Australian Dollar ADU5
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Yep, I'm really wishing I sold the AD when I had the chance, now we're just left watching the show. This market can go lower still, but it will interesting to see what happens at 7445.
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September British Pound BPU5
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The Pound fell off sharply today. No chance to short the market given the gap, but it looks like we're definitely in a retracement. I would guesstimate the short term target to be support around 177.
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September Canadian Dollar CDU5
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Unlike most of the other currencies, the CD showed us support today and rallied higher. This is probably due to the skyrocketing oil prices, which have a huge affect on the Canadian economy. I might regret this tomorrow, but I'll hold off another day to see what happens around all this resistance.
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September EuroFX ECU5
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The Euro fell to trendline support today. The session was rather indecisive overall which might lead to a bounce tomorrow. If we do get a bounce we'll look at buying again, but I have to admit it looks a bit iffy.
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September Japanese Yen JYU5
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Big gap lower today as the Yen fell off the map. I'm still looking for a chance to trade this market but the ranges and gaps have made it a bit difficult.
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September Mexican Peso MPU5
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As I figured the Peso continued higher today after bouncing off support yesterday. Might see a more extensive pullback than first anticipated. We'll see if rates can get back to 92.800, then we'll get serious about selling again.
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September Swiss Franc SFU5
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The Swiss Franc was much more aggressive to the downside today than it's EuroFX counterpart. These markets typically mirror each other pretty closely, but today the Franc declined further breaking trendline support.

I'm not too happy with the formations we're looking at right now and might give the Franc another day to straighten up.
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September US Dollar Index DXU5
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The US Dollar's rally today is what put the beating on the foreign currencies. The market is at an RSI test, so we'll see if we get a bounce tomorrow off resistance. If we do, and if it's enticing enough, we might consider selling again.
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2: ENERGIES
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October Unleaded Gas HUV5
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Ever wonder what a $10K day looks like? Take a close look at the Gas chart. Hindsight being 20/20 makes it easy to say we should have bought the open and held, but this isn't nearly as easy to do for real.

Gas prices are likely to continue higher, but quite frankly I'm scared of the ranges. If we see a bearish day tomorrow I *might* consider another buy.
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October Heating Oil HOV5
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Heating oil was almost as crazy today as Gas, but only posted $6K gains - only. This is another market that's bound to head higher, but getting on now is like trying to get into a Formula One race car while it's driving!

Like Gas I'd love to see a bit of a setback tomorrow. This would at least give us a chance to get in while the market isn't moving so fast.
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October Crude Oil CLV5
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Strangely enough, crude was the mildest of the energies today, and while this market normally *drives* the others, crude's session was quite tame by comparison.

Crude is also likely to head higher, but like the other markets we have to be extremely careful about where we decide to get in. Don't hate me, but I'm going to hold off one more day.
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3: FINANCIALS/INDICES
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June (06) Eurodollar EDM6
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The ED made a huge reversal today stopping us out of our short trade. The next strongest resistance is just above today's high at 9575, so I'll wait to see what happens here before looking at another trade - but as before I'd still perfer to sell.
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September mini-DOW YMU5
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Okay, I'm liking the short side again in the DOW, but I'd also like to see an RSI test before selling again.
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September mini-NAS NQU5
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The NAS is a mess. Plain and simple. We'll have to wait a couple of days to let the market sort itself out before looking for another trade.
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September mini-S&P esU5
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The S&P is looking a little more inticing today. This market is also poised to head lower and a confirmation of resistance tomorrow will get me serious about selling.
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4: GRAINS
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December Corn CZ5
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Sure...now corn decides to head lower, a day late. Do you feel like throwing caution to the wind? The consider selling today's low and covering the market near the 221 resistance. We've got to stretch the trade a bit to get a reasonable RRR, but it is doable...just a little tight to proven support and resistance.

*SELL December Corn at 216 3/4
*Stop 220 3/4
*Approximate Risk Exposure: $200 per contract
*Profit Target: 204 3/4
*Approximate Profit Potential: $600 per contract
*RRR: 3:1
*Degree of Risk: HIGH
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December Oats OZ5
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Got a nice move in Oats today as prices moved nicely to the downside. Trade management depends on your tolerances. We have about $275 in profit as of the close, so you could bring stops pretty tight if you chose, but you will probably get stopped out tomorrow.

If you're looking to let the trade run, then either put stops in above today's high, or above the intraday resistance at 152 1/2.
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September Rice RRU5
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Here's Rice at trendline support - again. We can either expect a break or bounce tomorrow, but as choppy as this market has been I think I'll hold off for a bit.
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December Soybean Meal SMZ5
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I was hoping to see Meal rally a little higher before one of these bearish looking days, but that's what we got today. I'll wait for the market to confirm resistance by trading lower tomorrow, otherwise expect a stab at 195.
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December Soybean Oil BOZ5
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Did somebody finally clue in that Bean Oil can be used in disel engines? Today's session rallied early before flatlining for the rest of the day. Nothing I want to commit to here - yet.
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November Soybean SX5
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Is this all the bounce we're going to get out of beans? I sure hope not, but the market is giving us an RSI test, so we could see a bounce tomorrow. I'll wait for confirmation before putting together a trade.
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September Wheat WU5
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Wheat made a clean break of support today and looks to be heading lower. We'll catch up when the market trades off the 318 support.
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5: MEATS
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October Feeder Cattle FCV5
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No surprise here as Feeder's bounced off the resistance at the contract high. We might be in for a big bounce as prices have a ways to go to *normalize*.
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October Live Cattle LCV5
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Cattle followed Feeders lower today. Here too I think we will see a bigger reaction to the downside over the next few days. Nothing tradeable though.
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October Lean Hogs LHV5
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Hogs were a little more persistent than Cattle, but we're still dealing with some serious resistance and a market that is quite overbought. Hoping to see prices fall off a bit over the next few days.
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6: METALS
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September Copper HGU5
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Copper traded higher again today like nothing ever happened. I'm not convinced to buy in just yet and will watch tomorrow.
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December Gold GCZ5
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Gee, I guess adding the sell order was a pretty good idea, huh? ;-)

Gold prices fell off quickly and substantially today allowing us to get our trade to breakeven after one session. I think we will see the market continue to trade lower, but it's not uncommon to see a reaction after a big day like today.

First profit traget is support at 425.7
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September Silver SIU5
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Silver's definitely on a roll, now we just need another chance to get short this market. Watching for another reaction to get short.
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7: SOFTS
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December Cocoa CCZ5
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Cocoa traded lower on a gap today. I'm not too concerned about prices running away as we have strong support at 1375 from where we can enter.
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December Coffee KCZ5
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Coffee continues to test the support line at 9500. I'm still looking for the right time to sell this market as it continues to look extremely bearish. You could sell the 9500 support tomorrow, but I'll press my luck and wait another day.
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December Cotton CTZ5
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I'm still sulking over yesterday's hit in cotton. Hurricane Katrina is playing havoc with the cotton producing states and this is sending prices higher for the short term.

Just watching tomorrow.
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November OJ OJX5
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I'm surprised that OJ hasn't rallied because the hurricane, but it's been pretty laid back. We're getting close to another sell, but I wouldn't mind a bounce off the 9300 resistance either.
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October Sugar SBV5
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Sugar's actually looking like it wants to trend again as the market rallied for two days in a row. Expect resistance tomorrow though as we're getting a bit overbought and a reaction is likely.