Erich and Tom's Updates for Thursday, October 6, 2005

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Market Update for Thursday, October 6, 2005
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Hot off the commodity presses to you!
Erich http://www.supportandresistance.com
"If you're going to be thinking anyway you might as well think big." - Donald Trump
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1: CURRENCIES
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December Australian Dollar ADZ5
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The Aussie retreated from resistance today, and in a big way. Probably see rates continue lower tomorrow but I'm standing aside for now.
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December British Pound BPZ5
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The Pound is still hovering around support at 175.50. I'll run the sell order from the weekend tomorrow, although you could sell today's low if you wanted to be more aggressive.

*SELL December British Pound at 174.97
*Stop 175.37
*Approximate Risk Exposure: $250 per contract
*Profit Target: 173.27
*Approximate Profit Potential: $1062 per contract
*RRR: 4:1
*Degree of Risk: HIGH
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December Canadian Dollar CDZ5
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The CD snapped as RSI broke the trendline today. What do you think, should we wait for support or sell today's low? I think I'll err on the side of caution and wait.
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December EuroFX ECZ5
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The EC continues to hang around support, although today's session looked much more bullish. Still waiting to sell it short though and I'll run the same trade again tomorrow.

*SELL December EuroFX at 119.07
*Stop 119.57
*Approximate Risk Exposure: $625 per contract
*Profit Target: 117.27
*Approximate Profit Potential: $2250 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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December Japanese Yen JYZ5
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A bit of a hiccup in the Yen today, but we're still short with stops at 8879. You'll want to leave them there for tomorrow as well.
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December Mexican Peso MPZ5
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The Peso bounced like it was *supposed* to. I should be buying it long tomorrow, but I'm going to press my luck and wait.
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December Swiss Franc SFZ5
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The Swiss Franc was a little more aggressive on the pullback than the EC, but here too I'll continue to look short. I doubt we'll get filled, but I'll run the trade all the same.

*SELL December Swiss Franc at 7713
*Stop 7753
*Approximate Risk Exposure: $500 per contract
*Profit Target: 7557
*Approximate Profit Potential: $1950 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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December US Dollar Index DXZ5
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I'll leave the USD numbers the way they are for now, but if the market continues to build resistance on the high I'll look to tighten them a bit.

*BUY December US Dollar Index at 9043
*Stop 8997
*Approximate Risk Exposure: $460 per contract
*Profit Target: 9225
*Approximate Profit Potential: $1820 per contract
*RRR: 3 1/2:1
*Degree of Risk: HIGH
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2: ENERGIES
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December Unleaded Gas HUZ5
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Gas is officially a bear market again as prices made a big reversal today. Last barrier is support at 182 before we get serious about selling.
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December Heating Oil HOZ5
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Got stopped out of our Heating Oil trade today. Too bad because we had the right idea, but weren't able to ride out the ranges. Might have been a good place to do an option trade instead.
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December Crude Oil CLZ5
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We had the right idea about crude as well, but in this case the market stopped us out with $700 in profit. The downside is that there is likely greater downside. I'm looking for a bounce off 6200 and another chance to sell.
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3: FINANCIALS/INDICES
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September (06) Eurodollar EDU6
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Bit of a bounce in the ED makes our entry look even better today. I'm running the same trade tomorrow, but we might be a little early still. If support continues to hold I'll tighten the trade.

*SELL September Eurodollar at 95.295
*Stop 95.345
*Approximate Risk Exposure: $125 per contract
*Profit Target: 95.065
*Approximate Profit Potential: $575 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate
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December mini-DOW YMZ5
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Two solid bear days in the Dow almost assure us of a bounce off the 10340 support. The market gave us a very nice fill today, and we can safely bring stops at least to breakeven for tomorrow. Tighten stops even more if you don't mind getting stopped out, as we're halfway to our profit target.
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December mini-NAS NQZ5
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The NAS also filled our short as the market fell off sharply today. Look for a possible bounce tomorrow, so get those stops to breakeven, or tighter. First profit target is support at 1566.5.
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December mini-S&P ESZ5
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King S&P stood up the other markets by failing off sharply enough to find our first profit order at 1200 before today's close. Chaulk up $675 in profit if you exited here. If you're still short you might want to use the 1210 resistance to hide your stops.
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4: GRAINS
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December Corn CZ5
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Corn's still choppy. I'll run the buy order again tomorrow, but I doubt we'll get a fill. If we get a little closer we'll look at selling, but with the holiday around the corner I'm not expecting too much.

*BUY December Corn at 210 3/4
*Stop 206 3/4
*Approximate Risk Exposure: $200 per contract
*Profit Target: 229 3/4
*Approximate Profit Potential: $950 per contract
*RRR: 4 1/2:1
*Degree of Risk: HIGH
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December Oats OZ5
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Yep, the bulls definitely have the Oat market under control. Ticks me off that we got whipsawed the other day as we sure called this move.
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November Rice RRX5
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I was hoping for a better day from rice today, and the small session doesn't instill a lot of confidence for tomorrow. You could bring stops to breakeven to assure you get out without a loss, or leave them where they are if you want to try your luck.
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December Soybean Meal SMZ5
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Bean Meal came up a couple of ticks shy of our first profit target today. And while I think Meal still has lower to go, I might consider taking profit at the 165 area if we see it again tomorrow. If you want to let it run, leave exit stops at 169.3.
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December Soybean Oil BOZ5
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Bean Oil's still looking for support. Prices did trade higher today, but from the closing price I don't think we're out of the woods yet.
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November Soybean SX5
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Still looking to sell Beans below the recent support. Nothing fancy, I just want to be there if prices fall off.

*SELL November Soybeans at 554 3/4
*Stop 561 1/4
*Approximate Risk Exposure: $325 per contract
*Profit Target: 522 1/4
*Approximate Profit Potential: $1625 per contract
*RRR: 5:1
*Degree of Risk: Moderate to HIGH
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December Wheat WZ5
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Wheat might have found support today, but we won't know until tomorrow. I'm tightening my buy order for the eventual reversal.

*BUY December Wheat at 349 1/4
*Stop 344 3/4
*Approximate Risk Exposure: $225 per contract
*Profit Target: 364 3/4
*Approximate Profit Potential: $775 per contract
*RRR: 3:1
*Degree of Risk: Moderate
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5: MEATS
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November Feeder Cattle FCX5
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Feeders finally took a breather after the big rally last week. I wouldn't mind seeing prices hover around here for a few days before we look to buy again.
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October Live Cattle LCV5
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Cattle backed up on us today and stopped us out with $340 in profit per contract. Not what I was hoping for, but not a big surprise seeing how late we got into the trade. While we might see the trend continue higher tomorrow, I'm holding off until after the holiday. Switching to December next week.
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December Lean Hogs LHZ5
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Still watching Hogs. Still nothing I want to trade right now.
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6: METALS
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December Copper HGZ5
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Okay, Copper's officially trending again. Expect a lower session tomorrow, and if we get it we might try as limit buy off the low.
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December Gold GCZ5
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Gold is near support today and the higher closing price would suggest a rally tomorrow. I'm holding off until we either see a confirmation of support, or the market trading near the contract highs.
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December Silver SIZ5
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While Gold and Silver follow each other around the charts, I'll look to buy silver on a break of this week's support, just above today's high. In order to make the trade feasible I'll cover just below the close, so this is a HIGH risk trade.

*BUY December Silver at 752.5
*Stop 747.5
*Approximate Risk Exposure: $250 per contract
*Profit Target: 768.5
*Approximate Profit Potential: $800 per contract
*RRR: 3:1
*Degree of Risk: HIGH
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7: SOFTS
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December Cocoa CCZ5
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Not the day I was expecting in cocoa today as prices traded higher, but closed low. We might still be filling the gap, but we're technically bearish so I'll look to sell a break of 1370's support.

*SELL December Cocoa at 1367
*Stop 1387
*Approximate Risk Exposure: $200 per contract
*Profit Target: 1301
*Approximate Profit Potential: $660 per contract
*RRR: 3:1
*Degree of Risk: HIGH
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December Coffee KCZ5
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Coffee continued to chop around today as well. The trend is not nearly as strong as it once was, but I'll run the trade for one more day in case we get a *crazy* day before the holiday.

*SELL December Coffee at 9135
*Stop 9230
*Approximate Risk Exposure: $356 per contract
*Profit Target: 8715
*Approximate Profit Potential: $1575 per contract
*RRR: 4:1
*Degree of Risk: HIGH
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December Cotton CTZ5
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RSI bounced today which gave us a more bullish day overall. I'll dust off the weekend trade for tomorrow, although you could buy it above today's high if you wanted.

*BUY December Cotton at 5463
*Stop 5413
*Approximate Risk Exposure: $250 per contract
*Profit Target: 5667
*Approximate Profit Potential: $1020 per contract
*RRR: 4:1
*Degree of Risk: Moderate to HIGH
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November OJ OJX5
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OJ recovered a bit after yesterday's wild range. I'm just watching tomorrow, but I am on the lookout for another chance to buy.
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October Sugar SBV5
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Sugar's trend is still extremely strong, and I'd love to buy the stuff, but we're just not getting a decent chance!
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"Tom's Trades" for Thursday, October 6, 2005
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1: DECEMBER 30 YEAR T BOND
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USDZ5 O=4-05 HI=4-16 LO=4-01 CL=4-06

We began the day buing 114-03 and were rewarded, predictably, with a move higher. Bonds went to -14 and sanpped back to -11 stopping us out with 8 ticks, $250. We sold -13 stopped at B/E. We sold -13 again a bit later and this one was stopped at -09 for 4 ticks, $125.

The close at 114-06 has us locked onto 114-16 and 114-00 as the opening plays tomorrow.
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2: MARCH 06 EURODOLLAR
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EDH6 O=.450 HI=.485 LO=.440 CL=.450

We opened right where I'd intended to roll my stop so I just bailed, out at 95.450 banking profit of $662. For an encore, I'm going to just watch a few days. I'll let you know when and why I'm ready to do something when the time comes.
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3: DECEMBER CANADIAN DOLLAR
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CDZ5 O=28 HI=30 LO=67 CL=73

I entered 2 trades breaking 8500 only to be stopped out at B/E on both. The third break I sold at 8596. It broke fairly hard for about 30 points. When the run ended so did my trade. On the pullback from 67 I exited at 71 picking up $250 for the effort.

I'll sell a break below 8465 tomorrow with a stop at 71. The stop will be rolled very tight at 8452 for obvious reasons. If we can get thru that level I think 8350 is possible. Watch 8425, 8400, 8475 on our travels to the target.
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4: DECEMBER SWISS FRANC
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SFZ5 O=55 HI=92 LO=45 CL=68

I don't expect much for a while in the SF. I'll certainly buy a bounce above 7800. Other than that obvious trade I don't see anything I'd play with real money on at this time.
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5: DECEMBER MINI RUSSELL 2000
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ERTZ5 O=4.80 HI=5.20 LO=7.00 CL=7.30

You gotta' love today. The window swung open with the Russell trading right around 665.00. It tried about 4 or 5 times to break above and couldn't do it. That wasn't a whisper, that was a SCREAM ... sell me. I did at 664.40. I exited at 662.40 for $200. I then sold 661.60. Boy, did we launch from there, the bottom came right out of it. We went clear to 654.70 before the brake lights came on. I wished it had gone just a bit lower so I could have used 654.00 for guidance. It snapped back hard from there. I made it out at 655.50 for $610. Yee haw! I bouhgt one at 656.50 and bailed at 655.60 dropping $90. I bought 656.60 and exited at 658.10 for $150. Next in line was a sell at 657.60. I exited this trade at 653.30, for $$430. I then sold 653.30 on the failure at 654 and exited at 651.50 for another $180. I took a break at this point to recharge the batteries a bit. I came back to see us at 656. I was a little slow on the draw and missed buying the break above 656. I then sold 657.60. I exited at 655.20 for $240. Next we sold 655.50. 649.20 was the exit. We tacked on another $630 to the day's take. I was done with a capiatl "D".

This is hard work! The amount of continuous focus required does take a toll. I cannot stress too much the importance of taking breaks. It is so easy to get lost in the flow of a market like the Russell or the Dow or the Emini. I have overtraded the prior 2 days. Part of that is due to writing the Daily Updates ... I feel obligated to do every trade at every number we're watching. I'm going to lighten up a bit and assume a more comfortable pace.

The full array from TT for tomorrow.
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6: DECEMBER GOLD
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GCZ5 O=8.40 HI=9.60 LO=5.90 CL=9.30

A bit of a wild ride and a close for no change. Wicked. I sold 468.50 for a B/E trade. Sold again at 468.40 and exited at 466.90 for $150. $10 channel tomorrow if it shows.
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7: DECEMBER COTTON
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CTZ5 O=.05 HI=.95 LO=.80 CL=.91

I bought 53.10. After the failure at 53.50 I baoiled at 53.30 for $100. Of course it climbed to the 90's thereafter. We'll play 54.00 tomorrow ... either way.
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8: DECEMBER COCOA
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COZ5 O=10 HI=17 LO=85 CL=88

I sold 1408 as we reverted back to our previous and TT number. Dumped it at 1390 for $180.
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9: DECEMBER CORN
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CZ5 O=2.05 1/2 HI=2.06 1/4 LO=2.04 1/2 CL=2.04 3/4

Nothing ... THAT'S exactly why we sat out this inning.
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10: DECEMBER WHEAT
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WZ5 O=3.46 HI=3.46 3/4 LO=3.42 3/4 CL=3.45

Sell a failed retest of 3.48 tomorrow. Penny and a quarter stop. See if we can't make it to 3.40.