Support and Resistance Trading

Tom's Trades - Day Trading by AMBUSH!

admin@supportandresistance.com (Erich Senft) — Wed, 17 Jan 2007 15:06:00 +0000

BONDS

MARCH 30 YEAR T BOND

The daily chart sure made our call look good, but in actual fact the market moved so fast on Friday that we couldn't get a trade off. Rates fell steadily right from the open and didn't even flinch at the 111-00 line, our first action line, and simply continued lower to our target at 110-24 before holding up. The Bonds spent the rest of their time in the 110-24 region not doing a whole lot for the remainder of the day.

Given the strength of the line at the 110-24 area I'm going to toss this number into the mix along with our usual xxx-00 and xxx-16's that we normally play. The market is in a steep decline and I think we could see 110-00 before it finally bottoms out, at least for the short term.

So to start off Tuesday I'll be watching how the market continues to play 110-24. Err on the side of caution and wait for a retest if necessary before selling. There was a lot of pounding going on here so you should look at a possible buy if we rally back to the 111-00 line.

CURRENCIES

MARCH CANADIAN DOLLAR

The Canadian Dollar responded much better to our numbers last Friday. The market opened just above the 8525 line, which was the "new" number for the day. From here we saw rates dip slightly a few minutes into trading only to shoot higher through 8525 again. Given how quick the rally came I thought I had missed the move, but then we got the good ole retest at 8525 – just like it was supposed to.

From here the market once again turned higher and allowed me to buy in at 8535. I wasn't too disappointed at the "sloppy" fill as the steady pace easily allowed me to bring stops to breakeven. Even if you didn't get a chance to buy in off 8525 the CD did give another chance off our second line at 8550. This retest was a little quicker however, so you had to be on your toes to get it.

Stop management is a little trickier now. While it is tempting to leave the stops at breakeven (and probably safe to do so), it's probably more prudent to bring them under the 8550 support. Remember the Once Broken Theory – that once an area of resistance is broken the market should not reverse back through it.

I'll be playing the 8550 line again for Tuesday, so even if we do get stopped out we have a chance to re-enter. To the upside it looks like 8615 is our next area to be wary of. There's also the other side of the small gap from January 2 at 8600, so you might want to add that one to the list as well. While I don't think we'll see it, 8525 is still on the table for a move lower.

MARCH SWISS FRANC

The Swiss Franc was paying off like a loose slot machine last Friday. Our short from 8060 was at breakeven and we had 8025 in our sites as a profit target. The market opened quietly but then broke down hard through Thursday's lows wasting no time getting to the 8025 support! The speed of the move caught me by surprise, but I was still above to exit with decent profits.

Now that I was wide awake I was intently concentrating on the 8025 line. The market gave us a half hearted retest over the next 15 – 20 minutes but only got as low as 8032 before setting in another rally. If you recognized the move higher, what Tom calls "whispers", as the end of the retracement you could have bought the run to 8075, but don't feel bad if you missed it. While it was an impressive move, it was difficult to catch as rates whizzed right through anything resembling resistance until it got to 8075.

Our lines for Tuesday come at 25 point increments, which is typical of the currency markets. We'll start off the day playing the 8075 line which is followed by 8100 and finally 8125. I'm favouring a move to the upside, and this would be my preference.

The downside might see a retest of the 8050 line, which would give us an excellent opportunity to buy higher from here. While that is the ideal, a breakdown would bring 8025 back into play.

INDICES

MARCH MINI RUSSELL 2000

The Russell's range looks impressive on the daily, but truth be told it was very difficult to capitalize on the move. Friday's session began with a slight rally bringing the market to the 797 line, the one I was watching like a hawk to sell, remember? I got my wish as the market retreated from the resistance, retested, and fell off again. The move was short lived however as the Russ "felt" the 792 support early and bounced from 793, tagging me for a small loss in the process.

From here we saw another run to 796.50 (ie. 797). This time I was looking for the possibility of a breakout and got one after the brief retest of the resistance area. Rates chopped around considerably for the next couple of hours, leaving very little of my finger nails. I was more than a little relieved when we finally saw the 796.50 line hold the second time and rally higher from there. Before the close I brought the trade to breakeven, but forgot it was a holiday weekend in the US. It would have been much more prudent to exit, but there's not much I can do about that now.

For Tuesday I'll be paying particular attention to the 803 resistance and won't be shy about exiting here, or on the first sign of weakness. With the 805.50 resistance just above here I have to admit I'm skeptical about the upside for the beginning of the week, but long term might be a different story. Of course a breakout higher and subsequent retest should be bought, no matter how queasy it makes you feel.

While I don't think we'll see a full on reversal to start next week, but a dip to 796.50 – 797 would not be out of the question. Watch for the test/retest as a sign the support will hold before setting up for the next buy. Of course if the floor falls out, then 792 is going to be in play.

MARCH MINI $5 DOW

The Dow had my number on Friday as I was unable to ride out the choppy ranges that started the day. I was long from 12580 and hoping that we wouldn't see the index slip too much lower, but the quick move to 12550 stopped me out of the trade. Now I was lost until we saw something at 12600 or 12474, both of which seemed way out of reach for the day.

Of course I was wrong as the market made a big move to 12600 on a gap. From here we got a couple of retests. I bought the second one, not know that there would be a third, but all worked out okay as rates continued to climb to the end of the session. Given that this is a long weekend, I think I'll bring stops to breakeven (12610) for Tuesday, just in case we see a bigger than expected reversal.

12600 is obviously the monster line in play for Tuesday as is 12580. To the upside we have the contract highs at 12652 (ie. 12650) which are likely to have something to say about where the Dow is going. I'm favouring a reversal on Monday but with the recent strength you can't rule out a rally, but I would be suspicious.

GOLD

FEBRUARY GOLD

Gold began Friday right on schedule. The market rallied smoothly from the open and I thought we were going to get a good opportunity to work the 617 line, that was until the market blasted right through the line all the way to the 620 resistance! From here we saw prices contend with the 620 resistance and I was torn whether to buy or sell as I knew the market could go either way. Normally I would have preferred to short, but the quick move that got us here had given the market a bullish flavour.

I actually got a little luck with Gold as we had a test and retest of the 620 line. I was all set to sell the next bar lower when prices blew back to the 617 line. I wasn't prepared for such a large move and was quite relieved to see it was short lived as prices spent the next 20 minutes back at the 620 line.

We eventually saw the 620 resistance give way and break the previous high at 621 before stalling at 622. I set up to buy a breakout above 622 and got the fill less than 10 minutes later. Prices didn't look back at this point which made it very easy to bring the trade to breakeven on the next leg higher. I subsequently rolled the stops to the 625 resistance on the way up. Prices never got low enough to stop me out, but I had no intention of holding Gold over the weekend, so I exited before the close.

To start the week we will be paying particular attention to the 625 – 626 region again. From here the market could fail and send prices back to the 620 and maybe even 615 support. To the upside the first number of consequence seems to be 630 after which we'll be keeping a close eye on 637.

EDUCATION

The Concept of Test and Retest

You will hear me refer to test and retest a lot in my analysis in reference to how the market responds to a particular line of support or resistance. This concept is the cornerstone of our trading methodology since we "react" what the market does, rather than predict what it will do. The best way to understand how the market is reacting is to use the test/retest principle.

As support and resistance traders our job is to find the most influential lines of support and resistance and then trade off of them. Regardless of your time frame, the principle remains the same. What most people do wrong however is that they try to determine the strongest lines in the same time frame they are trading. This is not possible. While the current time frame might give you hints as to strength, you should be looking at a longer time frame to determine your action lines.

If you are day trading then you should be gathering your information from the daily charts, not the intraday. The intraday charts are where you initiate and manage your trade, but all your action numbers should be predetermined from the daily chart. Likewise if you are a position trader, you should be getting your information from the weekly chart, which is the next longer time frame. The weekly chart will give you your action numbers which you trade on the daily chart.

Okay, now that we now how to determine our action numbers, how do we establish a test and retest. Fortunately it isn't as difficult as it sounds. Remember that we are trading strong numbers. As a result, when a market breaches a strong area of resistance, it will have a tendency to retest that area to make sure that the breakout is valid. This retest is normally our best opportunity to enter a trade. Why? Because the breakout has already validated the direction and the retest is confirming the breakout; therefore we have a good opportunity to get into a market with minimal risk. Some diagrams should help clarify the principle.

Let's assume that prices are rallying and quickly approaching an area of resistance. It might look something like this:

When the market approaches the resistance it can do one of two things: it can break through, or it can bounce. Depending on how it reacts to the resistance level will determine how we react. So since we know "something" will happen here, we are on the alert to either buy or sell.

Now it is common to want to buy/sell the first breakout/bounce, and sometimes that is all the market will give us. But more often than not we will have a test followed by a retest of the resistance which gives us a better opportunity.

Let's see what a breakout followed by a retest would look like:

A bounce is very similar. While most times you would be tempted to sell the first bounce, often the market will retest the resistance before committing to the downside. A bounce with retest would look like this:

Of course the exact opposite is true if prices are coming from above into support. Sometimes a market will give you several tests and retests before finally committing and other times it will only give you a one bar retest but the principle remains the same. Papertrade it for a while and you will see that it is true in all markets and in all time frames.

Tom's Trades for the Big Weekend Edition, Novemeber 6, 2006

admin@supportandresistance.com (Erich Senft) — Wed, 08 Nov 2006 14:22:00 +0000

Tom’s Trades
By R. Thomas Logé
I’m still spending more hours sleeping than awake. I walked a mile and a half Saturday and again today. Of course as soon as I got back to the house I was out for a couple of hours. I’ll be back at the doctor’s tomorrow for a new chest x-ray. Hopefully we’ll see some big improvements from the last one.

It felt good to be back trading Friday even though I didn’t do much. It is very important to be physically fit to trade I think. I really do believe there is a definite correlation between sustained mental exertion and one’s physical condition. I was really wiped out by the little trading I did on Friday. It’ll be interesting to see how I fare tomorrow.

Let’s get after our plan for the week and see what the markets are setting up for us.

NEW TRADES

DECEMBER TBonds

The employment report played havoc with the Bonds Friday. The increase in jobs fell short of estimates but they recast the prior 2 months much higher than originally reported which set off the selling. I think a bigger impetus came from lots pent up profit taking as I wrote Thursday night. I sold 112-27 rolled out at 111-29 for a nice pick up. I then sold it again at 111-28 and exited at -31 losing 3 ticks before selling -28 once more with an exit at -17 for a daily bank of $1187 on the 3 trades.

The coming week is very light on reports until Thursday. We’ll see unemployment claims, import/export pricing. Balance of Trade and wholesale inventories all on Thursday. On Wednesday and Thursday we have two big auctions … 3 year notes followed by 10 year.

Look for the weekly tone to be down and we’ll kick off Monday looking to trade 111-16 or 112-00. The possibility exists for us to open lower than 111-16 in which case 111-00 will become the initial focus.
DECEMBER Eurodollar

I didn’t do anything in the ED on Friday. The employment numbers impacted the Ed as well.
I will sell a retest into the 94.640/.660 area as it fails and begins dropping again. I will buy a break above 94.660. I will also sell a break below 94.580 or buy on a failed retest there.
I’m going to keep the stops as close as possible. I’m planning to keep them back .015 from the trigger price.
DECEMBER Canadian $
I sold 8875 on the break of 8880 on Friday and exited at 8855 for $200.

Any retest of 8820 or lower right down to 8800 is a buy as it turns back north. I’ll also sell a failed retest above 8870 as it dies and turns south. Any retest of 8900, 8920 or 8960 that fails and turns lower is good for a sell.

Use the 3’s above and the 7’s below trigger numbers for stops.

DECEMBER Swiss Franc

I tried to sell on the failed retest of 8040 but couldn’t get it done as the SF was moving hard on the back of the employment numbers.

Any failed retest of 8100 is a sell. Likewise a failure at 8060 gets sold. A retest of 8000 that fails to pop lower is a buy and n outright break lower than 8000 is a sell. A retest of 7940 or anything lower is a buy as it turns and begins climbing.

Use the 3’s and 7’s a la CD for management controls.

DECEMBER Mini Russell

I played 750 and 752 with some success Friday. I sell off the break of 752 and 2 buys on bounces above 750 netted about $600.

Now that earnings season is well behind us the game of guessing turns almost entirely to what will the FED do in the Spring. The talking head’s wish list had a rate CUT at the top. The numbers released last week lowered the probability of that happening and scuttled the advances of early session.

That’s a more solid floor at 750 than the chart portrays. I expect it to hold the market up but I don’t think we’ll make any sustained progress higher as 775/780 will do the work as a ceiling at least for a while, maybe all week.

Here are the numbers currently in play for the December contract:

780, 775, 773, 770, 768,
765, 760, 752, 750, 748,
745, 742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.

752 and above are add on’s.

DECEMBER Mini Dow

12000 is a critical number for the DOW. If we break it early Monday we may find it tough sledding to get back above it within the week. If it holds it will be a floor to be reckoned with.

Here are the current numbers in play for the DOW:

12200, 12150, 12100, 12060, 12000, 11940, 11900, 11800, 11775, 11750, 11700, 11620, 11600, 11580, 11550, 11500, 11475, 11440, 11400, 11370, 11350, 11330, 11300, 11240, 11200, 11170, 11150, 11050, 11000, 10970,
10950 and 10850.

DECEMBER Gold

Friday, I bought 621.50 and exited at 626.50 for $500. I might have done a bit better but lost my courage.

We ended Friday sitting on 630 so we’ll want to be ready to rock early on Monday. Play the $10 channels and be on watch for a chance to trade off 635 with a sell as mentioned in last Thursday’s update.

DECEMBER Cotton

I’ll buy a failed retest at 48.00, 48.50 or 49.00. I’ll buy a break higher from 49.50. I will also sell a failure at 49.50. I sell a failed retest of 50.00 or buy the break higher from there. Any failure between 50.50 and 51.00 is good for a sell as well. A break higher from there is fair game for a buy as well.

All stops are back 13 ticks from the trigger prices. Be very watchful of end’s of long runs and have some likely ONCE BROKEN numbers ready to go.

DECEMBER Cocoa

Cocoa is a pretty simple chart to decipher this week. I’ll buy a break above 1500 or sell a failed retest there. I’ll also sell a break below 1460 or buy a failed retest there as it turns higher. Stops are the 3’s above and the 7’s below the trigger numbers.

DECEMBER Corn

I’m purely a spectator for the moment. If I change my view I’ll advise you in the Daily Updates during the course of the week.

DECEMBER Wheat

I’ll buy a failed retest of 4.80 or sell a break below there. Same approach at 5.00 and 5.10 … buy the break higher; sell a failure.

Tom

Traders Helping Traders Big Weekend Edition - Part One and Part Two

admin@supportandresistance.com (Erich Senft) — Mon, 16 Oct 2006 13:53:00 +0000

Traders Helping Traders E-zine for the week 10-15-2006 - Test Drive Edition

Question: Do you ONLY cover one or two markets??
Answer: NO!! We cover all markets in all sectors - wherever there's a good trade, we'll cover it!

This is only the TEST DRIVE Edition. Our Subscribers get the whole thing.
For a detailed analysis of ALL the markets Erich and Tom cover along with explicit charts, entries, exits, stops, risk/reward ratio, potential profit, (and much more) please join us at http://www.supportandresistance.com/subscribe.html

Part One - Erich's Trades:

Lesson du Jour
Question:
How do you arrive at your profit targets?

Answer:
Profit targets are nothing more than subjective targets that the market might stop at. I arrive at these targets using the following tools:

If the market is retracing:
Fib levels, especially the 50% and 62%, but on larger trends, or long term charts the 38% will sometimes be influential

Trendlines, if the market is retracing to a trendline I will assume that the resistance near the trendline will cause the market to react (especially if it's in the direction of the major trend and not the pullback trend)

20 day moving average, which is a "moving" trendline.

The neckline (or full retracement) of the previous move. The reason rounded top/bottom formations are so powerful is that they repeat over and over again. I almost always assume a full retracement past the 62% line, but given the size of the move it might be a very long term target and I'll have shorter term targets in the meantime.
It is IMPORTANT TO NOTE that these tools only help me narrow my search for important support and resistance levels. I do not trade the numbers these tools offer up blindly, but they are helpful for narrowing your focus.

In a trending market:

1. If the trend is strong (ie. DMI is strong or building) I will often opt for trailing a stop. This usually allows me the greatest flexibility in capturing the better part of the move, but will routinely leave a lot more money at risk. October Sugar is a perfect example where we racked up over $2300 in profit per contract before finally getting stopped out, but I was running a stop almost $400 – 500 back, and that's a lot for sugar, but was necessary to "ride" the trend.

2. If the trend is weak I will almost always opt for a profit target. This is any area where the S&R is strong, which is determined by the tools in the manual you got. Essentially it's any area of extreme population, especially if there has been a previous reaction in that area as well.

You might want to consider the size of your account as well. I almost always recommend that small account traders take profit on target when they get it. Sometimes the market will move well past your intended target, but other times it will reverse. More often than not you'll be better served taking profit on target, and when in doubt, that's what you should do.

Remember that it's not the size of the profit that's important; rather it's the consistency in getting the profit. Once you have the consistency part down, the larger profits come from taking more contracts, not making home run trades.

Does that help?
Got a question that needs answering like an itch you can't scratch? Send it along to me at Erich@tradershelpingtraders.net and I'll be happy to try and clear things up for you.

You can see a sampling of Erich's Markets we're covering this week- Currencies and Energies (mini Natural Gas, Canadian Dollar and the British pound) along with charts at http://www.supportandresistance.com/Trade-Updates/testdrive-10-15-06.html

A Sampling of Tom's Trades we're covering this week: T-Bonds and the Mini Russell.

Let’s take a look what the coming week has in store for us in trading opportunities.

NEW TRADES

DECEMBER TBonds

Seems to me traders are on a hyper-sensitive watch for any signs of inflation which they think might spur the FED to more interest rate increases. In Friday’s Bond trading we dropped a full point minus 6 ticks on reports that one had to really reach for the case to be made. In fact, many would say the drop was not at all supported by the data but traders shrugged it off and went the lower route anyway.

The coming week is rich with reports that speak directly to the inflation issue. Monday we have the New York Fed manufacturing report, Tuesday it’s the Producer Price Index (PPI) and the FED’s Industrial Production report. On Wednesday we have the big kahuna of inflation reports as the Consumer Price Index (CPI) comes out. On Thursday we turn attention to the employment report and the Conference Board’s Index of leading economic indicators.

Look for some choppy up and down trading for the whole week. If we can get to -00 and -16 to open the day along the way our methods should be productive. I’ll try to relegate my trading to -00 and -16 at least initially but will not be afraid to jump on the quarters if need be.

Friday’s session closed at 110-11 so we’ll be focused on 110-00 and 110-16 for Monday morning. I’m also going to be poised to take a flyer off 110-08 either way. If we look at the daily chart we’ll see that 11-08 and 110-00 are critical support levels for Bonds.
DECEMBER Eurodollar

We did break .620 so I decided to hold the trade over the weekend. .600/.595 is the next critical level to get thru. I now have the stop at B/E and will quickly bail if .620 is exceeded on Monday.
For those not in and looking to establish a trade on Monday, I’d be willing to sell a break below .595 or buy a failure as it rose above .600. Stops are at .625 on the sell and .595 on the buy. The only management that makes sense is thru the use of periodic RRR.
DECEMBER Canadian $
No mystery in the CD charts this week. We’ll buy a failed rest or break back above 8800. I’ll also sell a break lower. Targets are at 8920 for the buy and 8700 for the sell.

I also like the 8840 level and will buy a break out higher or sell the failed retest there as it breaks lower. I’ll use the same targets as above.

There’s S&R all along the pathway to each of the targets at 20 point intervals. We need to keep the stops rolling along behind any trade that’s making progress. We know in the currencies we have enough price flow to get trades almost every day so it is imperative that we come away with profits on every trade that gives them to us. There is no sense in allowing profits to dissipate where such high trade frequency exists. Be ever mindful of your periodic RRR.

We’ll use the same stop structure as usual … 3’s above on sells and 7’s below on buys.

DECEMBER Mini Russell

Strong earnings reports persist and all the economic reports seem to be reinforcing the “soft landing” the FED keeps talking about. That makes for a pretty rosy picture for stocks as the DOW continues to set new highs. This may be an October that breaks the normal pessimism that usually prevails during this month.

I doubt we’ll see anything in the reports to change the tide of higher values in the indices. This is going to test our ability to enter trades until we get some backfilling forming structure we can get our analysis teeth into. We are in for some lean times I fear in light of the huge advance of Thursday and Friday.

Here are the numbers currently in play for the December contract:

750, 748, 745, 742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.

To get the full Big Weekend Edition with both Tom's Trades and Erich's picks, join us at http://www.supportandresistance.com/subscribe.html

Good trades to you!

Traders Helping Traders Big Weekend Edition - Part Two

admin@supportandresistance.com (Erich Senft) — Mon, 02 Oct 2006 22:51:00 +0000

Tom's Trades By R. Thomas Logé

The Day Fire is all but out after burning for a solid month and consuming 254 square miles of brush and timber. It is testimony to the amazing work of firefighters that only one house was lost.

The fire robbed me of 2 days of trading but we came back for the final 3 and did pretty well all things considered.

That's another benefit of the way we trade, picking predetermined price levels rather than chasing after each day's price flow. We can leave the markets for a day or 2 or even more and come right back without feeling we lost touch.

I'm going to dig right in and get after the game plan for next week.

NEW TRADES

DECEMBER TBonds

The coming week is light on reports with 2 exceptions. On Monday we start off with a heavyweight in the form of the ISM report on manufacturing activity. Analysts expect a reading around 53.5; maybe a bit higher after Chicago's regional reading on Friday. On Friday we'll cap the week with the employment report. Since it is the only report Friday it may have even greater weight than normal so be wary.

The close on Friday at 112-13 ended the week on a sour note for bulls. I think we'll open the week with more weakness and tread water from there all week. We'll be watching for opportunities at 112-16 and 112-00 to began the week.

DECEMBER Eurodollar

I'm still short from .695 from Thursday. The stop is at B/E now. I'm thinking we have a shot at seeing .620 and maybe even .580. Periodic RRR is going to dictate how this trade concludes. If I weren't involved in this short trade I'd be looking at selling a break below .660 with a stop at .675.

DECEMBER Canadian $

In Thursday's Daily Update I added 9040 and 9020 to the mix of playable numbers. We'll play either way now off all 4 numbers … 9040, 9030, 8980 and 8940. For buys at 9020 or 40 we'll look at 9080 as a target. For sells we'll look at 8940 and hope to get thru there to open up the 8860 target discussed below.

We have two primary lines in the sand to contemplate Monday morning … 8980 and 8940. We'll buy the break above 8980, sell the break below 8940 or sell the failed retest at 8980 or buy the failed retest at 8940. I'll also play at 8920 either way dependent on the appropriate whisper there. Targets are 8860 on any sell and as much as I'd like to say 9040 on the buy the real "what's most likely" is 9020. That makes the buy at 8980 a very small trade with less than a $400 profit potential.

The stops will be on the same basis we've been using for sometime now … on buy trades they go at the next lower XXX7 and on sells they are at the next higher XXX3. We'll be risking only about $80-$100 on the 8980 buy but that barely yields a 4:1 RRR. If you take the buy there you can't leave it out of your sight for even a minute.

DECEMBER Swiss Franc

We're right back where we were week before last.

I'll take a flyer at 8060 either buying the break higher or selling the failed retest there.

Target for the buy is 8160 and for no good reason, 8000 on the sell. Any trade done here needs to be rolled to B/E very quickly about 10 ticks I imagine.

The stops will be on the same basis we've been using for sometime now … on buy trades they go at the next lower XXX7 and on sells they are at the next higher XXX3.

DECEMBER Mini Russell

The market played out almost as we predicted last week. I had it pegged at 2 up and then 3 down, we actually did 3 days of up and then 2 down. We're going to stay strong but suffer a bit in trying to gain and hold new altitude. This will likely be a frustrating week for us as we keep bumping above price levels we can play. I can't add any new numbers on the high side yet so we'll probably be handicapped in buying some of the spikes we'll inevitably see.

I think it's going to be quite taxing to play the markets both ways capitalizing on both buy and sell trades. Some of you may find it more comfortable to ambush only buys on pullbacks.

Here are the numbers currently in play for the December contract with the addition of 742 and 740:

742, 740, 738, 735, 732, 730, 726, 722, 718, 715, 712, 710, 706, 704, 702, 700, 698, 696, 694, 690, 688 and 680.

DECEMBER Mini Dow

The DOW clearly has been less riddled by volatility than has the Russell. It has been a much smother ascent to current levels. The DOW is going to be a difficult play fir us exactly for those reasons.

Here are the current numbers in play for the DOW:

11775, 11750, 11700, 11620, 11600, 11580, 11550, 11500, 11475, 11440, 11400, 11370, 11350, 11330, 11300, 11240, 11200, 11170, 11150, 11050, 11000, 10970, 10950 and 10850.

DECEMBER Gold

I think the coming weeks will play out very well for our $10 Channel theory. I see gold becoming more and more a creature of range and less and less able to make sustained moves in one direction. This tendency coupled with the Channel play should reap benefits for us throughout the week.

DECEMBER Cotton

We made the plunge below 51.60. There isn't a thing down here that gives us an ability to read a course of action. I'm going to play only at 51.60 and only by buying a break higher. The stop is 51.53. The target is 52.60 with an aggressive roll at 52.00.

The trade will more than likely terminate on the end of a long run or as a result of periodic RRR considerations as opposed to arriving at a target.

DECEMBER Cocoa

There is evidence of support at several price levels from 1460 to 1480. I'm going to play only 1470. I will buy a break higher or a failed retest there. The stop will be 1467 and I'm looking at a target of 1530 - 1540. 1480. 90, 1500, 1510 and 1520 all command respect worthy of a roll. I don't think you can manage this market that tight so again mixing periodic RRR with the S&R will be the likely way to go.

I think I'll sell Cocoa on a failure up at 1500/1510 with a stop at 1513 or 03 depending on the fill price.

DECEMBER Corn

My first line in the sand comes at 2.68. I will buy a break higher; I would prefer to sell a failed retest there as it turns and heads back south.

I'll sell a failed retest at 2.65 1/2 - 2.66. I will not buy the break higher from there. I'll also sell the break lower at 2.62.

2.52 and 2.54 are also levels I'll play. I'll look to sell breaks lower at either number or buy any failures there. These are pretty much the first buy levels I'm comfortable with outside of the buy of the break higher at 2.68

These are all scalps so the penny and a quarter rolls and stops are in play.

DECEMBER Wheat

Wheat has been on a 2 week plus pattern of alternating up and down days. The ups have non the less out paced the downs as Wheat added 65 cents to price. Monday will determine whether the pattern repeats or not. We'd expect an up day. I really think we'll be down.

I'm going to play 4.41 selling the break there. It is a scalp trade so the stop is a penny and a quarter as are the rolls.

Tom

Traders Helping Traders Big Weekend Edition

admin@supportandresistance.com (Erich Senft) — Mon, 02 Oct 2006 22:04:00 +0000

Here's a little something I picked up while surfing the web. Some of it might not be new to you, but it's all true – in life as well as trading.

Rules for Life

You will receive a body. You may like it or hate it, but it will be yours for as long as you live. How you take care of it or fail to take care of it can make an enormous difference in the quality of your life.

You will learn lessons. You are enrolled in a full-time school called Life. Each day you will be presented with opportunities to learn what you need to know. The lessons presented are often completely different from those you THINK you need to know.

There are no mistakes -- only lessons. Growth is a process of trial and error and experimentation. You can learn as much from failure as you can from success.

A lesson is repeated until it is learned. A lesson will be presented to you in various forms until you have learned it. When you have learned it (as evidenced by a change in your attitude and behaviour), then you can go on to the next lesson.

Learning lessons does not end. There is no stage of life that does not contain some lessons. As long as you live, there will be something more to learn.

"There" is no better than "here". When you "there" has become another "here", you will obtain another "there" that will again look better than your "here". Don't be fooled by believing that the unattainable is better than what you have.

Others are merely mirrors of you. You cannot love or hate something about another person unless it mirrors something you love or hate about yourself. When tempted to criticize others, ask yourself why you feel so strongly.

What you make of your life is up to you. You have all the tools and resources you need. Remember that through desire, goal-setting and unflagging effort you can have whatever you want. Persistence is the key to success.

The answers lie within you. The solutions to all life's problems lie within your grasp. All you need to do is ask, look, listen, and trust.

You will forget all of this. Unless you consistently stay focused on the goals you have set for yourself, everything you just read won't mean a thing.

Anonymous

Got a question that needs answering like an itch you can't scratch? Send it along to me at Erich@tradershelpingtraders.net and I'll be happy to try and clear things up for you.

Traders Helping Traders Big Weekend Edition

admin@supportandresistance.com (Erich Senft) — Wed, 27 Sep 2006 00:50:00 +0000

The rest of the Big Weekend Edition is online at

http://www.supportandresistance.com/Trade-Updates/testdrive-9-25-06.html

--------------------------
Here's the Lesson Du Jour
--------------------------
Question:

I was just toying with the thoughts...what are the funds up to in soybeans? I noticed that they have slowly increased their short position in beans. Just for fun, I thought I would look at all the COT's, and with the exception of coffee, they are consistently net long. Why is that? Why are they suddenly taking a net short position in beans?

Answer:

[I'll defer this question to Tom as he has some great advice regarding the COT data.]

Thanks for the question ... been awhile since I had a opportunity to do my COT tirade ... just kidding ... sort of ... :)

First we need to get a handle on what and who we're looking at. The COT is the by product of a CFTC requirement that all traders taking positions above a certain size (it varies according to market) report their TOTAL positions to the CFTC on a regular basis. The penalty for not doing so is steep.

The report itself is divided into 3 parts: Commercial, Non Commercial and Non Reporting. The non reporting number is us little guys, Commercials and others with positions below reporting thresholds. This number is derived by deducting the reported positions of Commercials and Non Commercials with reportable positions from the total open interest number.

The commercial number is just that, commercial firms reporting positions. The Non Commercial number is everyone but commercials who hold positions above the threshold. This would include funds, institutions and individuals with large positions.

Commercials take positions for very different reasons than funds or you and I. There are 2 classifications of commercials: producers and users.

Producers are already LONG the cash market. They own, raise, grow, store or otherwise control the physical commodity. Since they are LONG the cash they use short positions in the futures market to hedge there physical holdings. The only way they get hurt is by falling prices - they get less for the product when it is time to sell the physical. You will almost never see these people LONG the futures. Why would they? They are LONG the cash, getting long the futures only expands there risk of lower or falling prices.

Users have just the opposite situation. They have a need to buy the commodity; they are SHORT the cash market. They are only hurt by rising or higher prices. They use the futures market to hedge their purchase requirements by being LONG futures to offset the risk of their SHORT cash positions.

You will rarely see these folks short futures ... again, because that only expands their risk which is already substantial because they MUST buy the commodity to make their product. Think Kellogg's buying corn to make Cornflakes or Rolex and Zales Jewellers who need Gold and Silver to make watch cases and bands. You can think of all kinds of examples.

The commercials do what they do for actuarial reasons; it is, effectively, an insurance policy for them. The net positions, long or short, of the commercials will fluctuate depending on prices, production, etc. IT IS NOT A CASE of the commercials sitting around deciding whether to be long or short as we do.

At times the Elevators, Co-op's, and the farmer will be in the futures with big short positions and users will be absent the market. At other times the users will be in there long to the teeth and the producers will be on the sidelines. Commercials tend to be very early in taking positions and hold them for long periods through thick and thin ... until their insurance policy has served its purpose.

Why do you think the short side has been expanding as to commercials ... are we not in the midst of or beginning harvest? When do we historically have lowest prices? Right before, during and just after harvest when we have tons of stocks. Lots of reasons for the producers, the short guys, to be in there right now, low urgency for the users to be playing as their risk is higher prices.

Funds are a different story. They do what they do for the same reasons we take positions ... acceptance of the price fluctuation risk from the producers and users in exchange for hoped for profits. However they do their thing much differently than we do it. They have huge amounts of money to play with. They trade with very little overhead. They are in and out in the blink of an eye since they can make out quite nicely on very small price changes. A penny move for us barely covers our overhead. With 3,000 contracts in play a penny is big money for them. You get the picture.

I firmly believe we cannot gain any edge from following the COT. The actions of commercials and funds are in the prices we see on the charts. It's in there already. Trying to gauge what and when they will do things is futile. The best defence against these behemoths is to track Resistance and Support closely, to roll stops at significant R&S points and to work with small stops affording us an opportunity to demand performance from the market - and when it doesn't materialize to be gone early in the recognition process.

These are absolutely the best tactics to contend with these guys and play the game in their shadow.

Tom

Traders Helping Traders Big Weekend Edition

admin@supportandresistance.com (Erich Senft) — Mon, 18 Sep 2006 21:03:00 +0000

The Traders Helping Traders Big Weekend Edition is online! http://www.supportandresistance.com/Trade-Updates

The Traders Helping Traders Big Weekend Edition - Part One - is online! Check out Erich's latest trade updates in all the market sectors. If you want to learn how to trade commodities using technical analysis, Erich is the guy to talk to.

THT Big Weekend Edition Part One

admin@supportandresistance.com (Erich Senft) — Mon, 11 Sep 2006 22:18:00 +0000

Currencies Market Overview

The currency complex hit the skids last week as many of the markets topped out on resistance and headed lower. Of course the USD did the opposite and broke through the top side of the larger triangle formation that had contained the market for the last few months.

While it remains to be seen if this current move in the currencies is a full blown reversal or merely a short term adjustment we should have a better idea as the week progresses. Personally I think it might be a change in trend as DMI has already swung over for many of the markets. As such I'll be looking to get on board with the new trend as soon as the markets show us resistance/support.

Japanese Yen

Not too much has changed for the Yen since this time last week. We did see the market make a brief rally last week; however it was short lived as rates fell off to the 8665 – 8670 region before the weekend. Did you count all the hits here? Did you notice that the majority of them are recent? This makes for a pretty strong support zone!

Given the strength of the line I consider shorting the market from here, but opted to stick with 'Plan A' and sell the market on a break of the contract lows. This will allow us to enter the market on a break through stronger support, as well as making it break two support zones to prove itself (8665 AND the contract lows). Hopefully this will translate into a more predictable fill as well as allowing us to keep the trade relatively tight by using the strong resistance at 8665 to cover the trade in the event of a reversal.

The only "problem" spot in the trade is the RSI hooked early. I would have preferred to have seen the hook occur at the trendline test, but it happened near the 50% level instead. As you know this is almost as good, as the 50% level represents a neutral market, much like the 50% level on a Fib retracement; therefore it might be enough to send the market lower from here.

SELL December Japanese Yen from 8617
Exit Order: 8665
Approximate Risk Exposure: $600 per contract
Profit Target: 8427
Approximate Potential Profit: $2375 per contract
RRR: 3 1/2:1
Degree of Risk: Moderate to HIGH

Click here to see the yen chart: http://www.supportandresistance.com/charts/yen51.png

To see the rest of the trades in all the other markets, go to http://www.supportandresistance.com/subscribe.html

Archives of older trades can be viewed at http://www.supportandresistance.com/Trade-Updates/

Enjoy!

Traders Helping Traders Big Weekend Edition

admin@supportandresistance.com (Erich Senft) — Wed, 23 Aug 2006 03:49:00 +0000

==================================================
Market Update for Tuesday, August 8, 2006
==================================================

Hot off the commodity presses to you!

Erich
http://www.supportandresistance.com

"All bad decisions come out of fear." - Erich Senft

==================================================
1: CURRENCIES
==================================================

----------
September Australian Dollar ADU6
----------

The Aussie fell off slightly today. If we get more of the same tomorrow I'll bring the entry down as well, but right now I'll hold off buying until we're above resistance.

*BUY September Australian Dollar at 7677
*Exit Stop: 7639
*Approximate Risk: $380 per contract
*Profit Target: 7793
*Potential Profit: $1160 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

----------
September British Pound BPU6
----------

The BP stalled today so we can probably expect something lower tomorrow. Decision time as far as the stops go: either leave them below 189 if you're trying to ride the trend, or bring them below today's low AND put another buy order above the high in case we get stopped out.

----------
September Canadian Dollar CDU6
----------

The 8960 high today is past the 8950 line we were watching, but it might have been momentum that carried the market through here. We should know tomorrow.

----------
September EuroFX ECU6
----------

Ugly day in the EC. The plan for the stops reads exactly the same as for the British Pound.

----------
September Japanese Yen JYU6
----------

It looks like the Yen is going to head lower tomorrow, and if RSI is any indication, possibly for the short term as well, at least until we get another testpoint that is.

----------
September Mexican Peso MPU6
----------

I don't like the fact that the Peso stalled so close to the 92000 line, this could spell trouble for our trade tomorrow. While the best stop is still the original, you could put them below today's low to cover the trade on the first sign of reversal.

----------
September Swiss Franc SFU6
----------

The Swiss Franc had a bearish looking day today. I'm holding off here tomorrow, but something lower looks likely.

----------
September US Dollar Index DXU6
----------

RSI is hooking higher which would hint of higher rates to come. If the DX does head higher we'll be on hold until the next testpoint.

==================================================
2: ENERGIES
==================================================

----------
September Unleaded Gas HUU6
----------

I'm probably going to regret this, but the RSI trendline hook combined with the resistance at 230 is almost too much for me to bear, so I'm planning to buy the market higher tomorrow. The bad news is that the trend is non-existent, so a whipsaw is not out of the question.

*BUY September Unleaded Gas at 231.10
*Exit Stop: 228.45
*Approximate Risk: $1113 per contract
*Profit Target: 224.955817 per contract
*RRR: 5:1
*Degree of Risk: HIGH

----------
September Heating Oil HOU6
----------

I thought about trying the same kind of trade in Heating Oil as the trend is a little stronger, but today's range is making it too difficult to get a low money trade to jive. Maybe tomorrow.

----------
October Crude Oil CLV6
----------

Hmmm...looks like I should have set up to buy Crude on the next break higher since this move seemed to come out of nowhere. Next time.

==================================================
3: FINANCIALS/INDICES
==================================================

----------
March (07) Eurodollar EDH7
----------

I know I said I'd buy the ED on the next sign of resistance, but I can't bring myself to do it - yet.

----------
September mini-DOW YMU6
----------

RSI is overbought and the trend is weak - everything is hinting that the current resistance should hold for the short term.

----------
September mini-NAS NQU6
----------

If we had a slightly stronger trend here I'd be more comfortable trying to short the NAS tomorrow. As it is the trend is undefined which could mean a lot of chop - something I try to avoid.

----------
September mini-S&P ESU6
----------

Ditto for the S&P.

==================================================
4: GRAINS
==================================================

----------
September Corn CU6
----------

We didn't get the buy in Corn today as prices fell off. That's okay, we halfways expected that, but if prices continue lower tomorrow as well I might look at another trade.

----------
September Oats OU6
----------

I thought about selling Oats today, but this morning's opening gap would have voided our attempts. Sitting on my hands for tomorrow.

----------
November Rice RRX6
----------

It's not the best setup we've ever seen, but Rice did break the bottom of the trading channel today. The good news is that the breakout was mild, and prices didn't run away, so we've got another chance to short it again tomorrow.

*SELL November Rough Rice at 934.5
*Exit Stop: 945.5
*Approximate Risk: $220 per contract
*Profit Target: 900.5
*Potential Profit: $680 per contract
*RRR: 3:1
*Degree of Risk: Moderate

----------
September Soybean Meal SMU6
----------

I'm not surprised at today' move in Soy Meal; however I am a little surprised at the strength at which the market moved lower. I'm on hold here until we see support, but this one is definitely near the top of the list!

----------
September Soybean Oil BOU6
----------

Not impressed by Bean Oil's day today, but I will run the buy order again tomorrow for the heckuvit.

*BUY September Bean Oil at 2707
*Exit Stop: 2647
*Approximate Risk: $360 per contract
*Profit Target: 2993
*Potential Profit: $1716 per contract
*RRR: 5 1/2:1
*Degree of Risk: Moderate

----------
September Soybean SU6
----------

A "holy moley" day in Beans as the bottom fell out of the market. Now that we have direction we only need another chance to get in. Tomorrow's probably heading the same way, but where and how to enter are too iffy.

----------
July Wheat WN6
----------

A rather subdued day in Wheat today as prices fell slightly. We're very close to another RSI testpoint, so I'll hold off until we get it.

==================================================
5: MEATS
==================================================

----------
August Feeder Cattle FCQ6
----------

Feeder's punched through the 115.70 resistance today like it wasn't even there. Still on hold for tomorrow.

----------
October Live Cattle LCV6
----------

Live Cattle continued higher today on Feeder's strength. The best place for stops is to leave them where they are, but I understand if you don't want to leave yourself in a risk position, so bring them to breakeven and keep your fingers crossed.

----------
October Lean Hogs LHV6
----------

Nuts. A strong day in Hogs and we missed it. This market wasn't giving many clues though. We're on hold for the moment.

==================================================
6: METALS
==================================================

----------
September Copper HGU6
----------

What happened to Copper's trend? This market used to be buy and hold just a few months ago and now it's turned into chop-city.

----------
December Gold GCZ6
----------

Not much to report in Gold today as trendline resistance continued to hold the market down. RSI did move higher, so I'll run the weekend trade tomorrow.

*BUY December Gold at 671.5
*Exit Stop: 660.0
*Approximate Risk: $1150 per contract
*Profit Target: 724.5
*Potential Profit: $5300 per contract
*RRR: 4 1/2:1
*Degree of Risk: Moderate to HIGH

----------
September Silver SIU6
----------

An "off" day in Silver is bringing us back to the 1200 support line where we might see a bounce. Holding off for tomorrow, but soon...very soon we'll have another trade.

==================================================
7: SOFTS
==================================================

----------
September Cocoa CCU6
----------

With all this support below the market I'm afraid to short Cocoa and with the huge move lower a few weeks ago I'm afraid to buy it!

----------
September Coffee KCU6
----------

I was hoping Coffee would normalize a little more on this correction, but after today's session I'm not sure we're going to see that.

----------
December Cotton CTZ6
----------

Cotton's just plain crazy right now. I expect it will continue to exchange higher/lower days, but not with me it won't.

----------
September OJ OJU6
----------

Wow, I can't believe that OJ broke resistance again. I could buy tomorrow, but truth be told I don't trust the move higher.

----------
October Sugar SBV6
----------

A nice move lower in sugar today. You could bring your stops above today's high or leave them at breakeven for one more day. The trend is strong so I really want to try and ride this one out.

ERICH'S TRADE UPDATE FOR Wednesday August 9th

admin@supportandresistance.com (Erich Senft) — Thu, 10 Aug 2006 03:11:00 +0000

ERICH'S TRADE UPDATE FOR Wednesday August 9th

*************************
Subscribers get these BEFORE the markets open! To get yours hot and fresh off the presses with ALL the markets covered by both Erich and Tom included, join our trading family at http://www.supportandresistance.com/subscribe.html
*************************

1: CURRENCIES

September Australian Dollar ADU6
The Aussie did dip lower today, so I'll bring the buy order in a little tighter. This does add risk to the trade since we're planning on entering before we clear the resistance around 7660 - 7670, which could bounce the market lower.

We're nearing the trendline support however, and are currently hitting support at 7600, so if it's going to go, it's gotta go soon.

*BUY September Australian Dollar at 7647
*Exit Stop: 7603
*Approximate Risk: $440 per contract
*Profit Target: 7797
*Potential Profit: $1500 per contract
*RRR: 3:1
*Degree of Risk: HIGH

September British Pound BPU6
Caught a break in the Pound as the market held the 190.50 support and traded higher today. This means that you should leave stops below the 190.50 line for tomorrow, but the outlook is better.

September Canadian Dollar CDU6
We got the bounce we were looking for, but truth be told I'm still a little reluctant to buy given the weak trend. I'll continue to watch tomorrow.

September EuroFX ECU6
The EC tried to push higher today, but without much to show for it. Stops should at least be at breakeven and you could consider putting them below today's low as well. Of course this is if you're trying to ride the market further. If you just want to protect accumulated profit jam them under the close.

September Japanese Yen JYU6
I was expecting more of a pullback in the Yen and the dipping RSI says that we might get it yet. Standing aside for Wednesday.

September Mexican Peso MPU6
Whew! That was close! Almost got nabbed by the Peso today as the market looked to see how low it could go! The falling RSI still has me concerned, but the high closing price is encouraging. If it's too much for you bring the stops to breakeven otherwise leave them below the low.

September Swiss Franc SFU6
The Swiss Franc is just barely bearish. I hope this changes soon. It might be what the other markets are waiting for.

September US Dollar Index DXU6
RSI higher, rates lower. Not a good combo. I'd expect RSI to win the toss so I'm holding off right now.

ERICH'S TRADE UPDATE for Tuesday August 8th

admin@supportandresistance.com (Erich Senft) — Thu, 10 Aug 2006 03:02:00 +0000

ERICH'S TRADE UPDATE
1: CURRENCIES FOR TUESDAY 8-8-06

September Australian Dollar ADU6
The Aussie fell off slightly today. If we get more of the same tomorrow I'll bring the entry down as well, but right now I'll hold off buying until we're above resistance.

*BUY September Australian Dollar at 7677
*Exit Stop: 7639
*Approximate Risk: $380 per contract
*Profit Target: 7793
*Potential Profit: $1160 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

September British Pound BPU6
The BP stalled today so we can probably expect something lower tomorrow. Decision time as far as the stops go: either leave them below 189 if you're trying to ride the trend, or bring them below today's low AND put another buy order above the high in case we get stopped out.

September Canadian Dollar CDU6
The 8960 high today is past the 8950 line we were watching, but it might have been momentum that carried the market through here. We should know tomorrow.

September EuroFX ECU6
Ugly day in the EC. The plan for the stops reads exactly the same as for the British Pound.

September Japanese Yen JYU6
It looks like the Yen is going to head lower tomorrow, and if RSI is any indication, possibly for the short term as well, at least until we get another testpoint that is.

September Mexican Peso MPU6
I don't like the fact that the Peso stalled so close to the 92000 line, this could spell trouble for our trade tomorrow. While the best stop is still the original, you could put them below today's low to cover the trade on the first sign of reversal.

September Swiss Franc SFU6
The Swiss Franc had a bearish looking day today. I'm holding off here tomorrow, but something lower looks likely.

September US Dollar Index DXU6
RSI is hooking higher which would hint of higher rates to come. If the DX does head higher we'll be on hold until the next testpoint.

NO! The Currencies are NOT the only markets we cover! For the rest of the markets in all sectors covered by BOTH Tom and Erich in the Daily Updates, join our happy trading family at http://www.supportandresistance.com/subscribe.html

Tom Loge' Live at the Amphitheatre!

admin@supportandresistance.com (Erich Senft) — Wed, 09 Aug 2006 13:13:00 +0000

Here's the deal ...

On Saturday, August 26 beginnig at 9:00 am I will be spending about 5-6 hours
in a one man show for the Denver Trading Group. It is open to the public(non
DTG members) I understand the reservations are getting up there, I guess they
have moved it from the regular conference room to the amphitheater.

I'm extending an invitation to all subscribers and friends of
supportandresistance.com to attend. Below is the url for their website and the
contact info for Ron Rossway who runs the group so effectively. Make your
reservationa as soon as possible if you'd like to attend.

http://www.denvertradinggroup.com/Pages/Schedule.html

Ron Rossway
rrossway@DenverTradingGroup.com
(303) 750-5176

I will be staying at the Marriott Tech Center, site of the seminar. I will be
arriving in Denver at 4:30 pm on Friday. If anyone is interested I will host a
little informal get together on Friday evening. If you plan to attend and
would like to partake in some pre seminar fellowship (that means we drink a
little wine or soda, share some laughs and tell lies to each other)please
email me by Monday, August 21 so I can make the arrangements.

Obviously, I'd love to see any of you who can make it and have a little moral
support as I face down the non-believers on Saturday. We'll have some fun, for
sure.

THT Trade Update for Wednesday, July 26, 2006

admin@supportandresistance.com (Erich Senft) — Fri, 04 Aug 2006 03:05:00 +0000

==================================================
Market Update for Wednesday, July 26, 2006
==================================================
1: CURRENCIES
==================================================
September Australian Dollar ADU6
Oh-oh. Big gap 'n fade day in the Aussie today doesn't look good for our short (if you're still short) tomorrow. Leave stops below today's low and keep your fingers crossed!

September British Pound BPU6
I'd like to see the Pound dip further still and test the 183. 35 support zone. We'll have to see what the market gives us tomorrow.

September Canadian Dollar CDU6
I would expect the CD to rally a little more and test the 8825 resistance tomorrow. I don't know if that will be enough to turn this market lower again but we might consider a sell from here if we get the test.

September EuroFX ECU6
We got gapped two days in a row here, but we definitely had the right idea. Too bad, this one was a money maker!

September Japanese Yen JYU6
We got filled in our Yen short trade today. If you can stand the risk leave the stops where they are for one more day; otherwise you could bring them in above today's open, but I'd resist going much tighter than that.

September Mexican Peso MPU6
Nothing's really changed for the Peso setup and we can continue with the trade as is.

*BUY September Mexican Peso at 91.925
*Exit Stop: 91.250
*Approximate Risk: $337 per contract
*Profit Target: 93.975
*Potential Profit: $1025 per contract
*RRR: 3:1
*Degree of Risk: HIGH

September Swiss Franc SFU6
And of course we're still watching with the Swiss Franc trade as well. Got the direction bang on, but the gaps are brutal.

September US Dollar Index DXU6
I was humming and hawing about buying the USD and I guess I should have as we got a very nice move higher today. Next time.
==================================================
2: ENERGIES
==================================================
September Unleaded Gas HUU6
Looks like Unleaded might give us that RSI test after all. On hold for tomorrow, but I'd be looking for support to show itself.

September Heating Oil HOU6
Whew! I think this is the closest an energy market has ever come to whipsawing us in a channel trade! What a day! Running the same trade tomorrow, but RSI broke to the downside so that's my preference. A very HIGH risk trade no matter how you slice it.

*BUY September Heating Oil at 206.05
*Exit Stop: 203.15
*Approximate Risk: $1218 per contract
*Profit Target: 215.95
*Potential Profit: $4158 per contract
*RRR: 3:1
*Degree of Risk: HIGH

OR

*SELL September Heating Oil at 199.40
*Exit Stop: 202.10
*Approximate Risk: $1134 per contract
*Profit Target: 190.55
*Potential Profit: $3717 per contract
*RRR: 3:1
*Degree of Risk: HIGH

September Crude Oil CLU6
That was a close to a whipsawed trade as I dare get! Crude made the daily highs during the night session, but did manage a poke higher shortly after the open. Fortunately for us the resistance held and our order wasn't filled. Taking the day off tomorrow.
==================================================
3: FINANCIALS/INDICES
==================================================
March (07) Eurodollar EDH7
I thought about shorting the ED tomorrow but it's another day where the market diverged and traded lower while RSI flipped higher.

September mini-DOW YMU6
The Dow is testing scattered but strong resistance in the 11175 area today. I think this will turn the market tomorrow; however I'll wait for the reaction before getting too anxious to sell.

September mini-NAS NQU6
The NAS also has its hands full at the 1500 line. Let's wait and see if it turns.

September mini-S&P ESU6
The S&P was the most aggressive of the three. The resistance here is much looser, but based on the other two we might get a reaction here as well.
==================================================
4: GRAINS
==================================================
September Corn CU6
It's not the best setup because of the strong support at 227, which is likely to give us problems on the way down; however the market is in pullback mode and the trend is picking up so we could look at shorting nearby support.

*SELL September Corn at 237 1/4
*Exit Stop: 242 1/4
*Approximate Risk: $250 per contract
*Profit Target: 221 3/4
*Potential Profit: $775 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

September Oats OU6
Oats are still too lost to consider trading. We'll wait until they pick a direction and then go with them.

November Rice RRX6
We got the RSI hook today which looks very promising for our buy position tomorrow. The trend isn't as strong as I would have liked, but at least DMI is looking bullish.

*BUY November Rough Rice at 975.5
*Exit Stop: 965.5
*Approximate Risk: $200 per contract
*Profit Target: 1034.5
*Potential Profit: $1180 per contract
*RRR: 5 1/2:1
*Degree of Risk: Moderate

September Soybean Meal SMU6
No surprise we got an RSI test today as prices found resistance at 172. Coincidence? I think not! I'll set up to short on a break through the 168 support. You could try to sell today's low and cover above the high, but why be greedy?

*SELL September Soy Meal at 168.3
*Exit Stop: 172.3
*Approximate Risk: $400 per contract
*Profit Target: 155.3
*Potential Profit: $1300 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

September Soybean Oil BOU6
Still holding out for the RSI testpoint. If we get another day like today we should get it no problem.

September Soybean SU6
The Big Bean market actually looks to be the most aggressive of the three. I'll stand aside for now since we're in a downtrend and should be selling, not buying.

July Wheat WN6
Wheat continued to chop around a bit. We got a move lower today, but I have to admit that the weak trend is giving me pause. I don't want to be in a choppy market if I can help it.
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5: MEATS
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August Feeder Cattle FCQ6
The 112.75 support line held and as promised I'll sell my brains out tomorrow. The only "problem" is that the trend has lost all momentum, so I hope we don't see a half-hearted stab lower. I'll place my entry a touch further to stay safe.

*SELL August Feeder Cattle at 112.62
*Exit Stop: 113.45
*Approximate Risk: $412 per contract
*Profit Target: 109.05
*Potential Profit: $1787 per contract
*RRR: 4:1
*Degree of Risk: Moderate to HIGH

August Live Cattle LCQ6
Same idea for Live Cattle. You could sell the October contract if you choose, but August isn't too bad yet. I'm looking to short below yesterday's low as this is where the market has shown us support by trading higher today. Besides, it's also where the trendline's at.

*SELL August Live Cattle at 8177
*Exit Stop: 8282
*Approximate Risk: $420 per contract
*Profit Target: 7852
*Potential Profit: $1300 per contract
*RRR: 3:1
*Degree of Risk: Moderate to HIGH

August Lean Hogs LHQ6
Don't you hate that? We had the market short then it cleared us out with a big range only to fall off again.
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6: METALS
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September Copper HGU6
Too bad our limit trade didn't work out because we nailed this one! Copper found our first profit target today. Still on hold for tomorrow.

August Gold GCQ6
A bullish reaction; however the market is still technically in a downtrend so I'm sitting on my hands.

September Silver SIU6
Got the rally we were looking for but we also got RSI divergence as it dipped. Better wait and see.
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7: SOFTS
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September Cocoa CCU6
I knew it was too good to be true. Cocoa's up to something, but I can't put my finger on it - yet.

September Coffee KCU6
Coffee showed us some support today. I "could" sell the support tomorrow, but I'll wait.

December Cotton CTZ6
A reaction off the 62% line... but can we trust it? I don't know yet.

September OJ OJU6
OJ continued higher today which still has me a touch baffled. RSI is dipping so that's not a good thing, but the trend is in tack so it might not affect it that much. The contract highs look like formidable resistance, but this is OJ so anything can happen.

October Sugar SBV6
And sugar there goes sugar lower after doing the whipsaw dance yesterday. At least it only got us at breakeven.

Tom's Trades

admin@supportandresistance.com (Erich Senft) — Fri, 04 Aug 2006 02:50:00 +0000

========================================================
"Tom's Trades" for Tuesday July 25, 2006
========================================================
1: SEPT 30 YEAR T BOND
========================================================
We began with a buy at 107-21. We went on a nice smooth run to 107-31 and pulled up in almost predictable per the book fashion. I exited at -29 for $250. I then sold -27 and exited at -22 for $156. I tried to buy -21/-22 but didn't succeed. Done for the day.

The settle at 107-23 has watching 107-16 and 108-00 for tomorrow.
========================================================
2: DECEMBER 06 EURODOLLAR
========================================================
I bought 94.455 and hung on to it into tomorrow. The stop is at 94.445. We closed at .470. If we don't see some strength early tomorrow I will move the stop to break even in sort of a mini - squeeze.

If you didn't choose to play today you can pick up the TT numbers for an attempt tomorrow.
========================================================
3: SEPTEMBER CANADIAN DOLLAR
========================================================
A very frustrating day here. The trading window opened with the CD edging up and stalling at 8794. Oh boy, I thought, get yer game face on; here comes the sell at 8780. It went from 86 to 63 in less than a minute. Great action off a strong S&R number and zippity do dah to show for it. We climbed back from 8742 to 8780. I passed on the chance to sell it or buy it as the number came at the end of a long run and late in the RTH session.

TT numbers again tomorrow.
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4: SEPTEMBER SWISS FRANC
========================================================
We hung out all day just above the 8060/50 channel we pointed out in TT. Nothing for us here today.

I'll stay on the TT numbers again tomorrow. Add 8050 to the mix both ways. 8075 is first focus.
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5: SEPTEMBER MINI RUSSELL 2000
========================================================
This was one of the very few days when I was watching with a complete directional bias ... up. 675 was just too, too to not. I had to wait a bit all the while it was climbing. The window opened and I immediately bought 680.40 and exited at 684.80 on an OB play when it failed at 685.50. We picked up $440. I then bought 683.50 and exited at 684.70 on an ob for $120. I sold 684.50 and exited at 683.60 for $90. I missed the ensuing 683 break out higher. I caught back up with it at 685.50 with a buy and exited at 690.90 for $440 again. I took a little break until about 12:10 CDT and came back to buy 688.50 and exit at 689.80 for $130. Next I bought 688.60 and caught another nice move exiting at 695.60 right at the end of the day for $700.

We'll be there tomorrow with all the numbers.
========================================================
5: SEPTEMBER MINI $5 DOW
========================================================
The wheels were already in motion when the RTH session in the big DOW opened. I bought 10955, put in a stop at 10927 and just let it go. I put in an alarm at 11050. When it went off I came back for a look see. By then we were climbing thru 11060. I jumped ship at 11060 after the big failure at 11075 for $525. I bought 11055 and exited at 11095 for another $200.

All the numbers from TT weekend edition.
========================================================
7: AUGUST GOLD
========================================================
They dealt us the dreaded gap lower leaving us nothing to do. I finally bought 611.50 and exited at 611 losing $50. We got down a slow as 602.50 but I couldn't get a fill under 602 so I passed. By the time we got a useable confirmation it was too late in the day and the bounce was too rapid to get in below 612 so I passed again. There was a lot of range today and I was, frankly, a bit miffed at our result.

$10 channels for tomorrow.
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8: DECEMBER COTTON
========================================================
Nothing for us as the play of the day was a buy off the break lower form 53.50 or the buy on the failure to press lower at 53.00. There was no way to get a fill off the 53.50 break and the buy was not allowed under my rules. Goose eggs today.

TT numbers for tomorrow.
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9: SEPTEMBER COCOA
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We watched. I'll buy a break above 1542 tomorrow and that's it.
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10: SEPTEMBER CORN
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Nothing here until it was too late in the day.
TT numbers again tomorrow.
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11: SEPTEMBER WHEAT
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I sold 4.04 ½ to start my day in Grains. I exited at 4.02 for $125. I then bought 4.00 ½ and exited at 4.04 ½ for $200. I then sold 4.04 ½ and exited at 4.01 for $175.

It's TT again tomorrow.

Traders Helping Traders Daily Update for Tuesday 7/25/06

admin@supportandresistance.com (Erich Senft) — Fri, 04 Aug 2006 02:45:00 +0000

==================================================
Traders Helping Traders Market Update
for Tuesday, July 25, 2006
==================================================
http://www.supportandresistance.com
"Fall seven times, stand up eight." ~Japanese Proverb
==================================================
1: CURRENCIES
==================================================
September Australian Dollar ADU6
The AD continued to flounder today. If you brought stops to breakeven then you're currently flat, if you had them below Friday's low then you're still short. It's a tough call, but if you're going to give it a run leave the stops where they are.

September British Pound BPU6
The Pound took a breather today. If we see more of the same tomorrow I'll look for support and another chance to buy.

September Canadian Dollar CDU6
Of course the CD would drop off today after stopping us out a few days ago. This move also casts some doubt over the AD position as these markets often move together.

September EuroFX ECU6
Right idea but the opening gap voided our short position. Still on the lookout for another chance.

*SELL September EuroFX at 126.49
*Exit Stop: 127.03
*Approximate Risk: $675 per contract
*Profit Target: 123.31
*Potential Profit: $3975 per contract
*RRR: 5 1/2:1
*Degree of Risk: HIGH

September Japanese Yen JYU6
The Yen also fell off today and put the market back near the support lines we were watching last week. The thing I like about the Yen is that the trend is still pretty solid to the downside, so I feel a little better about selling it.

*SELL September Japanese Yen at 8607
*Exit Stop: 8653
*Approximate Risk: $575 per contract
*Profit Target: 8327
*Potential Profit: $3500 per contract
*RRR: 6:1
*Degree of Risk: HIGH

September Mexican Peso MPU6
It might be a little early to be buying the Peso again, but the market did show us support today as rates bounced near the 91000 line. I'll look to buy a breakout higher tomorrow. I wanted to buy above 92000, but I couldn't get the numbers to jive, so we're going to be a little more aggressive.

*BUY September Mexican Peso at 91.925
*Exit Stop: 91.250
*Approximate Risk: $337 per contract
*Profit Target: 93.975
*Potential Profit: $1025 per contract
*RRR: 3:1
*Degree of Risk: HIGH

September Swiss Franc SFU6
Right idea in the Swiss Franc as well, but the market gapped our entry in a big way voiding our short trade. Disappointing to say the least.

September US Dollar Index DXU6
The USD moved higher on a gap today. I "should' be buying tomorrow, but I'm going to hold.

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2: ENERGIES
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September Unleaded Gas HUU6
I was hoping that Unleaded would get closer to the RSI testpoint before the next rally, but after today's session it looks like it doesn't want to wait.

September Heating Oil HOU6
A small hook off the RSI testpoint is making me cautiously bullish in Heating Oil tomorrow. I'm going to buy above the 205.75 - 205.80 resistance line and cover the trade below intermediate support around 203.20. On the downside I'm shorting today's low and covering around the 202.00 resistance.

It's too bad this market is so expensive. I would have liked to have "loosened" things up a bit.

*BUY September Heating Oil at 206.05
*Exit Stop: 203.15
*Approximate Risk: $1218 per contract
*Profit Target: 215.95
*Potential Profit: $4158 per contract
*RRR: 3:1
*Degree of Risk: HIGH

OR

*SELL September Heating Oil at 199.40
*Exit Stop: 202.10
*Approximate Risk: $1134 per contract
*Profit Target: 190.55
*Potential Profit: $3717 per contract
*RRR: 3:1
*Degree of Risk: HIGH

September Crude Oil CLU6
Crude is still at the RSI test and we got a bit of a hook today so we'll run the weekend buy order again tomorrow.

*BUY September Crude Oil at 7555
*Exit Stop: 7495
*Approximate Risk: $600 per contract
*Profit Target: 7945
*Potential Profit: $3900 per contract
*RRR: 6 1/2:1
*Degree of Risk: HIGH

==================================================
3: FINANCIALS/INDICES
==================================================

March (07) Eurodollar EDH7
The ED came down and RSI went up. Think I'll leave it alone tomorrow, but I'd still like to short it.

September mini-DOW YMU6
What a fickle market. If you brought stops to breakeven it didn't hurt too badly today; otherwise you're out with a loss. Nothing here tomorrow.

September mini-NAS NQU6
The NAS had the greatest downward momentum and now we see a rally off support! Nothing here tomorrow either.

September mini-S&P ESU6
Yuck! What an ugly day in the S&P. I hate the chop in these markets. It seems they take a long time to setup and then "poof!" it's over and back to wait-mode.

==================================================
4: GRAINS
==================================================

September Corn CU6
I'll wait one more day for corn to rally a little higher so I can try to sell from a better price. This market is still looking very bearish to me right now.

September Oats OU6
Oats rallied off support as we thought; however the closing price casts a shadow of doubt over the whole bullishness of the market.

November Rice RRX6
We flipped into November this week as this market has the greater volume and open interest, and in a market like Rice every little bit helps!

Prices bounced off the contract highs today reinforcing the resistance that's there. This makes it the ideal place to buy a breakout. The market is at an RSI testpoint, so I guess the timing is right as well.

*BUY November Rough Rice at 975.5
*Exit Stop: 965.5
*Approximate Risk: $200 per contract
*Profit Target: 1034.5
*Potential Profit: $1180 per contract
*RRR: 5 1/2:1
*Degree of Risk: Moderate

September Soybean Meal SMU6
A week since our fill and today the market takes us out with a measly $280 profit on the gap open. Oh well, I guess it's better than a loss.

September Soybean Oil BOU6
Still nothing in bean oil to get too excited about.

September Soybean SU6
Nor beans.

July Wheat WN6
Wheat is winding up pretty tightly. I think we'll see a big move here this week. I'm going to give it one more day to setup. Hope I don't regret it.

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5: MEATS
==================================================

August Feeder Cattle FCQ6
A miserable way to start the week as Feeders opened gap down stopping us out for a $260 loss per contract. I'm really hoping that we'll see a reaction off the 112.75 support tomorrow. If we get that I'll short my brains out on Wednesday!

August Live Cattle LCQ6
Once again Cattle are painting a different picture as the market bounced off trendline support today. I would expect higher prices here tomorrow.

August Lean Hogs LHQ6
Things were looking so promising for our Hog trade... until today that is when prices rallied stopping us out for a small loss. We'll have to reassess. Nothing for this market tomorrow.

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6: METALS
==================================================

September Copper HGU6
We knew it was a gamble, and we had the right idea; unfortunately the market reached just a little too low for us to hold on to our limit position.

August Gold GCQ6
Gold also fudged support today; however it looks like we're going to see a rally here tomorrow.

September Silver SIU6
Silver was the most cooperative of the bunch as prices found support at 1068 today. Expecting a rally here tomorrow.

==================================================
7: SOFTS
==================================================

September Cocoa CCU6
I didn't believe Cocoa had enough left in it to poke through support without refreshing itself first. This might prove to be a false break though. We'll know tomorrow.

September Coffee KCU6
If you followed my lead you would have been stopped out in coffee today as we were unable to ride out the range. If you did as I "should" have and left the stop back, then you would have done fine and can bring the trade at least to breakeven for tomorrow.

December Cotton CTZ6
Cotton continues to charge higher. Still nothing to do but wait.

September OJ OJU6
I have to admit that I didn't see this one coming at all, although there is weekly support which likely held the market up. Good ole OJ. Rally outta nowhere. Nothing here right now.

October Sugar SBV6
And sugar is up to its old tricks again as prices rallied stopping us out at breakeven today. Nothing new here tomorrow.