Commodity Futures,Forex, and Options Trading News, Articles and Trading Strategies

Carley Garner’s Stock Index Report

Carley Garner — Mon, 09 Nov 2009 21:14:30 +0000

November 9th, 2009

Stock bulls charge forward

It was a complete melt-up on Wall Street; once again the stock market correction was nothing more but a way to lure in the short-traders before squeezing them out. Although the “easy money” was made on the short-side of the market last fall, it is a completely different environment this time around.

A tumbling greenback propelled stocks and commodities higher but one has to wonder if the currency bloodbath will last. We can’t help but feel that the dollar will find some near term support in the mid to high 74’s. If this is the case, it should put a temporary cap on the equity rally.

Also helping the prospects for equities, the G-20 countries agreed to maintain economic stimulus. In theory, this should keep money flowing (interest rates low) and the economic recovery intact.

The day’s lack of economic news, and the upcoming Veteran’s Day holiday, created thinly traded markets. It seems reasonable to assume that much of the day’s gains were exaggerated by a lack of liquidity. In addition; based on my conversations with other traders and information from brokers at the CME, short covering played a large part in today’s rally. Short covering rallies tend to be “never-ending” and often have little in the way of corrective trade. Accordingly, we wouldn’t be surprised to see the December S&P futures trade higher to our initial target of 1103 in tomorrow’s session and without much of a digestion of the monster move beforehand.

Our “gut” feeling is that once slightly above 1100 is printed in the December S&P futures contract, the market might pull back 20 or more handles. However, ultimately we think that 1120/1130 will be seen. If you are trading the NASDAQ, first resistance will be seen near 1785 which equates to just under 600 in the Russell.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track ‘n Trade, Gecko software.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Please note: A mini S&P chart is used because it is better for charting purposes, but trade recommendations can be applied to either the full-sized S&P or the mini. Unless otherwise noted, profit and loss will be based on the mini version.

S&P 500 Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

October 28 – We recommended that our clients sell the November S&P 960 puts for $8. There were a few filled in the overnight trading session, but unfortunately the market turned without us. Those that were able to get a fill, were recommended to buy the option back at $3 to take a quick profit. We suspect that this order will get filled by tomorrow. If so, the trade locks in a quick $250 per contract before commissions and fees.

November 4 – Our clients were filled on the recommended GTC order to buy back the November 960 puts for $3.

October 30 – Our clients were recommended to sell the December S&P 900 puts for about $8. Fills were coming in from $7.75 to $9.

November 6 – clients were recommended to exit their positions by buying back the December 900 put this morning. Fills were coming in anywhere from 3.40 to 3.85.

Russell Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

Please note: A mini-NASDAQ chart is used because it is better for charting purposes, trade recommendations will denote whether a mini or full sized contract should be used.

NASDAQ Futures and Options Trading Recommendations

**There is unlimited risk in naked option selling and futures trading

Position Trade -

Flat

————–

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

www.CarleyGarnerTrading.com

www.DeCarleyTrading.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Carley Garner’s Bond Bulletin

Carley Garner — Mon, 09 Nov 2009 21:03:33 +0000

November 9th, 2009

Bonds and notes defy gravity

We have said in previous newsletters that Treasuries tend to rally during November and much of December regardless of fundamentals and that seems to be the only factor keeping bonds and notes above water. On a day in which fundamentals seemed to be decisively bearish in long-term interest rates, the market held its own.

All of the inter-market relationships that traders tend to rely on for guidance have all but vanished into pixie dust. Dramatically higher equities in recent days might have had something to do with the lack of upward momentum but it clearly hasn’t triggered the aggressive selling that one might have expected. Similarly, the weak dollar should be a bit more of a drag on Treasuries than it seems to have been as of late.

Although the CPI and the PPI have shown signs of inflation, the commodity markets are flying high. Many of them are trading near multi-month, or even year, highs. In fact, one of the most widely tracked commodities, gold, is trading near an all-time high and seems to be propelled solely by expectations of inflation; yet Treasuries have failed to budge.

Other than the other financial and commodity markets moving, there was little news for the bond market to digest. However, there was a 3-year note auction which was absorbed relatively well. The U.S. government issued $40 billion in 3-year notes at a rate of about 1.4% to a 3.33 bid to cover and an indirect take of 68.5%. The market still maintains a healthy appetite for the Treasuries risk averse, light yield securities.

Perhaps some of the lack of direction has to do with the auctions on tap. The market is said to be expecting a little less demand for the record $25 billion in 10-year notes on deck for tomorrow and the $16 billion in 30-year bonds on Wednesday.

We have been patiently awaiting better levels to be a bull, preferably a bit under 117 (maybe even closer to 116) in the long bond but the opportunity has failed to materialize. We aren’t comfortable buying into such quiet markets with either futures or options because the one thing that I have learned is that quiet markets don’t stay that way for long.

I prefer waiting for something better, but if you have to be in the markets…the best play might be a long strangle using (cheap) out of the money puts and calls. For instance, you can buy the December 121/116 strangle for about $400.

Support in the 30 year bond lies in the mid-117’s then again at 116′30…there is some chance of a temporary, yet swift, slide closer to the 116 area. If this happens, it should be a great place to be a bull.

**Seasonality is already be factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

October 15 – Yesterday afternoon, our clients were advised to sell puts against a possible Thursday plunge. We recommended to sell the December T-bond 112 and 113 puts for 20 and 26 ticks respectively, or about $312 and $406 before commissions and fees.

October 20 – Our clients were recommended to exit the 112 puts near 6 ticks and the 113 puts near 8. Fills on the 113 puts were coming in at 9, we recommended to make the 6 tick buyback on the 112’s GTC. Those that still have a short 113 put open, we recommend a GTC order to buy it back at 9 or 10.

These orders have all been filled, you should be out of this trade.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

————

Carley Garner

Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE

Local : 702-947-0701

www.CarleyGarnerTrading.com

www.DeCarleyTrading.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Daily Gold Futures Market Commentary

Fast Brokers News — Mon, 09 Nov 2009 16:49:33 +0000

Gold Breaks Past $1100/oz

Gold has finally broken past its psychological $1100/oz level after a week-long debate. The precious metal is finding strength from a broad-based weakness in the Dollar as the Aussie, Euro, and Pound all log solid gains against the Greenback. Furthermore, India’s large purchase of IMF bullion is probably increasing speculation that global central banks are beginning to diversify their reserves and decrease their reliance on the Dollar. Gold is a direct beneficiary of such a trend since it is a notorious safe haven asset. Meanwhile, we also notice sizable topside movements in both crude and the S&P futures, indicating today’s activity in Gold’s correlations are all creating an environment supportive of the precious metal’s psychological breakout.

Gold’s near-term reaction should remain reliant on the Dollar’s reaction to upcoming econ data. In focus will be tomorrow’s EU ZEW Economic Sentiment number followed by a wave of Chinese data late Tuesday EST. If tomorrow’s econ releases should impress and the Dollar reacts negatively, gold would likely be a beneficiary, and vice versa. Technically speaking, gold’s movement beyond $1100/oz is another key uptrend statement from the precious metal. Although there’s the possibility gold may retrace towards the upper end of the $1100/oz psychological zone, the precious metal’s technicals are still supportive of its medium-term uptrend. It’s difficult to place too many topside resistances until gold cools down, while the precious metal has multiple uptrend lines along with 11/6 lows serving as technical cushions.

Meanwhile, investors should keep an eye on the EUR/USD’s interaction with its highly psychological 1.50 level along with our 2nd and 3rd tier downtrend lines. Gold has been strongly correlated with the EUR/USD lately, meaning a topside breakout in the Euro could push gold highs, adding more weight to tomorrow’s ZEW data.

Present Price: $1106.80/oz

Resistances: $1108.20/oz, $1110.59/oz

Supports: $1103.64/oz, $1100.97/oz, $1098.11/oz, $1094.78/oz, $1090.71/oz, $1088.55/oz

Psychological: $1100/oz, $1075/oz.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Daily S&P Futures Market Commentary

Fast Brokers News — Mon, 09 Nov 2009 16:21:02 +0000

The S&P Futures Head Higher Amid Broad-Based Dollar Weakness

Investors are ignoring Friday’s disappointing unemployment data and have sent the S&P futures well beyond our downtrend line. Hence, investors appear to be opting for the topside following Friday’s erratic session. Today’s topside breakout in equities further signifies the S&P’s increasing reliance on the path of the Dollar. The Dollar is experiencing a broad-based selloff today after the G20 released a statement saying global central banks will maintain stimulus measures and historically loose monetary policies. The Dollar’s downward trajectory is boosting the S&P futures higher sans noteworthy U.S. eocn data. Speaking of the Dollar, the GBP/USD has popped past all of our previous downtrend lines while the EUR/USD tests its highly psychological 1.50 level. Hence, investors should keep an eye on the EUR/USD since a breakout beyond 1.50 and October highs could help the S&P futures head towards their previous 2009 highs. In addition to the Greenback’s weakness, we also notice that gold has broken through its psychological $1100/oz level. This is yet another key topside movement for gold, supportive of further weakness in the Dollar and consequently stronger U.S. equities.

Meanwhile, the U.S. will be relatively quiet on the data front following a busy week. Investors won’t receive much from the U.S. until Thursday’s weekly Unemployment Claims data. Hence, the S&P’s immediate-term performance may become increasingly reliant upon movements in the Dollar. Since the U.S. will be taking a timeout from data, focus will shift to the Far East. China will be printing a wave of data late Tuesday EST, including Industrial Production, CPI, PPI, and Fixed Asset Investment. Any outperformance in China’s econ data could help fuel a S&P retest of 1100.

Technically speaking, although the S&P futures have darted beyond our downtrend line, they still have to deal with previous 2009 highs and the psychological 1100 level. Therefore, a couple key topside technicals do remain before the S&P has the opportunity to experience a more protracted breakout. As for the downside, the S&P futures have multiple uptrend lines service as technical cushions now along with 11/06, 11/05, and 11/03 lows. Furthermore, the psychological 1050 level should service as a reliable support should it be tested.

Price: 1079.50

Resistances: 1079.5, 1083.5, 1089, 1094.5, 1098.75

Supports: 1073.25, 1063, 1056.5, 1047.5, 1043.25

Psychological: 1100, 2009 Highs, 1050

Brewer FX Forex Trading Commentary

Brewer FX — Mon, 09 Nov 2009 15:22:11 +0000

November 8, 2009

Weak U.S. Economy May Not Mean Weak Dollar This Time

The U.S. Dollar closed trading mixed after trading in a range most of the day following the release of a poor October jobs data report. The loss of 190,000 jobs was somewhat of a surprise. Traders were positioned for a loss of 175,000 jobs. The unemployment rate climbed to a 26-year high to 10.2% and the world didn’t fall apart. Traders either believe this is the bottom in unemployment or they have become complacent which could mean huge volatility is looming.

The Dollar was treated as a safe-haven by some currencies while others remained focused on their own fundamentals. The action in the outside markets suggests lower interest rates and a weaker economy. Chicago financial market traders increased bets that the Fed will keep interest rates low for some time.

This week-end the G-20 meets in Scotland. Members will discuss the value of the Dollar and Asian currency rates then take a group photo on the steps of some famous building. Don’t expect anything earth-shattering at this meeting.

The Euro lost ground to the Dollar on Friday. This may be an indication that traders believe the U.S. economy will drag down the Euro Zone. If the U.S. employment picture isn’t improving then don’t expect any improvement out of Germany.

The British Pound traded higher. Traders must believe that the Bank of England’s quantitative easing expansion was the right amount necessary to give the economy a boost. I also think that traders were relieved that the report showed the U.S. economy was still weak. For awhile it looked as if the U.K. economy was going to be the last to recover.

The Dollar also lost ground to the Japanese Yen as traders sought safety in the lower yielding U.S. currency. Yen traders seem to think that U.S. rates are going to plunge or remain lower for a prolonged period of time.

The USD CAD finished higher after the Canadian Jobs Report showed an unexpected loss. Traders were looking for an increase of 10,000 jobs but the report showed a loss of 43,200. The high priced currency during the third quarter most likely killed business and any chance of a recovery. Companies were left with nothing else to do except slash jobs.

The AUD USD closed higher on the news that the Reserve Bank of Australia increased GDP expectations. It also hinted at future interest rate hikes. We’ll see Monday if this was just a reaction to the news or a change in trend back to the upside. Friday’s action looked as if it was short-covering rather than fresh buying.

The groundwork has been laid out by the Fed for another “demand for higher yield” rally but today’s action seems to reflect trader concerns that the global economy is still struggling to recover and that perhaps the safe-haven Dollar is the place to be. A big decision is going to

have to be made soon to either use the excess liquidity to chase yields or put it in a safe place like the Dollar.

Please do not hesitate to contact us at 1-800-971-2440, with any questions.

www.brewerfx.com
forexblog@brewerfx.com

DISCLAIMER: Forex (off-exchange foreign currency futures and options or FX) trading involves substantial risk of loss and is not suitable for every investor. The value of currencies may fluctuate and investors may lose all or more than their original investments. Risks also include, but are not limited to, the potential for changing political and/or economic conditions that may substantially affect the price and/or liquidity of a currency. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. The leveraged nature of FX trading means that any market movement will have an equally proportional effect on your deposited funds and such may work against you as well as for you. In no event should the content of this correspondence be construed as an express or implied promise or guarantee from B.I.G. Forex, LLC and Brewer Investment Group, LLC or its subsidiaries and/or affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information contained in this correspondence is intended for informational purposes only and was obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Brewer Futures’ Daily Commentary

Brewer Futures Group — Mon, 09 Nov 2009 15:20:40 +0000

Monday, November 9, 2009

Demand for higher risk assets is helping to trigger a strong rally in U.S. stock markets. Although the markets are still below their highs for the year, appetite for risk is expected to continue for some time which gives the indices plenty of time to attack the major highs. The action by the Fed last week combined with bearish unemployment report is expected to keep pressure on interest rates which is helping investors build confidence in the long side of the market.

Interest rate futures are under pressure this morning. Increased supply from this week’s Treasury auction is helping to attract selling pressure. The stronger stock market is encouraging treasury traders to shift money into higher yielding assets.

The U.S. Dollar is getting trounced overnight after the G-20 finance ministers failed to discuss the value of the Dollar, thereby effectively offering no support. In addition, they decided to keep stimulus measures in place until the global economy can show sustained gains.

The real selling pressure hit the Dollar after an IMF report issued at the meeting said, “the Dollar has moved closer to “medium-term equilibrium” but “still remains on the strong side.” This statement was a shot at the Dollar being overvalued versus the Asian currencies particularly the Chinese Yuan. Aggressive traders seized this moment as an opportunity to increase selling pressure on the Dollar.

The fact that the G-20 Finance Ministers failed to talk up the U.S. currency came a few days after the Federal Reserve voted to leave interest rates at historically low levels, and it was reported the U.S. lost more jobs while boosting the jobless rate to a 26-year high. All of this added up to a perfect storm versus the Dollar. The Fed decision itself added up to a free ride for the Dollar bears until the Fed meets in December. With interest rates at historically low levels and plenty of liquidity available, traders should continue to treat the Dollar as the world’s funding currency throughout the foreseeable future.

Higher than expected German Industrial Production in September is giving the December Euro an additional boost. The Euro chart indicates the main trend is up and within striking distance of the October high at 1.5062.

The CFTC Commitment of Traders Report on British Pound futures showed a major reduction in the number of short contracts. This is a sign that traders are shifting back toward demanding higher risk assets. It is also a sign that traders may believe the U.K. economy is stabilizing. Overnight the December British Pound took out the October high at 1.6689 and now appears ready to challenge the July top at 1.7043.

Global demand for higher yielding currencies is keeping pressure on the U.S. Dollar and Japanese Yen. The December Japanese Yen is up slightly however as the Yen still maintains a slight interest rate advantage. Technically, the Yen is trading inside of a retracement zone at 1.1164 to 1.1101.

Demand for higher yielding currencies is fueling a rally in the December Swiss Franc. Last week the main trend turned up in this market. With upside momentum building, don’t be surprised if this pair returns to the high for the year at .9971.

Last week’s bearish Canadian unemployment report helped weaken the December Canadian Dollar which may be why this currency is not participating in a big way in today’s flight to higher risk assets rally. The chart pattern suggests that this market could accelerate to the upside if last week’s high at .9439 is violated. .9458 is the first upside objective. This is followed by a retracement level at .9505.

December Gold rallied to a new all-time high because of the weaker Dollar. Now that this market has pierced the $1100 barrier with conviction, look for this price to become short-term support.

Last week’s bearish unemployment report pressured December Crude Oil because of supply concerns, but the overnight rally in equities and the Euro are helping to give this market a boost this morning. Speculators are also betting that a hurricane near Louisiana shuts down refineries. This action would tighten up gasoline supplies.

Please do not hesitate to contact us at 1-800-971-2440, with any questions.

www.brewerfuturesgroup.com

futuresblog@brewerfuturesgroup.com

DISCLAIMER: Futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as “spread” or “straddle” trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in this correspondence is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted.

Capitalogix Weekly Trading Commentary

Howard Getson — Mon, 09 Nov 2009 15:16:45 +0000

11/9/09

The best thing I can say about the market is that the current lack of sellers is giving investors a good long chance to take their bullish bets off the table.

Unemployment is above 10%, and at its highest level since 1983. Here are a few economic signs.

What about the Market?

The chart below shows an upwards sloping trend channel on a chart of the S&P 500 Index.

Notice that the early part of the up-trend stayed above the channel’s mid-line (indicated by the blue solid line); and
Notice the second half of the up-move stayed above the bottom portion of the channel (indicated by the green solid line) until recently;
Also notice that the market is recently rebounded to test the underside of this line. I highlighted that portion with an orange circle. This chart pattern is often called “kiss and say goodbye” because a failure to jump back above the lower trendline, back into the upward sloping channel, is often a sign seen at market tops.

On the other hand, jumping back into the upward sloping channel would be a bullish sign.
Bob Prechter Calls a Major Top Using the Elliott Wave Pattern.

If you are looking for Top-Calls, then Bob Prechter is not shy. He says: “Stocks are topping out, commodities are topping out and the dollar is making a bottom”.

Prechter is a high profile market commentator who uses Elliott Wave as a framework for understanding the market. So, I thought this might be an interesting time to re-visit this technique.

The premise is that the market doesn’t affect sentiment. Rather, it is the other way around; collective sentiment affects the market. And that while markets change, human nature doesn’t … consequently, predictable patterns play out over and over again. Prechter calls this “Socionomics”.

While I now look at Elliott Wave more as a way of understanding what the market has done (rather than a great predictor of what it will do next), I do believe it is helpful in getting a sense of the next likely swing.

Here is a chart that shows the basic sequence and an example of the sentiment causing the move.

The next chart shows that a similar sequence often happens in both directions.

All this reminded me that I have a piece of software called the Advanced GET, which uses a pretty clever algorithm for identifying some of the simpler Gann and Elliott Wave trading patterns. So I dusted-it-off, fired-it-up, and started playing around.

Looking at a weekly chart of the Russell 2000 Index, it’s very easy to envision a five wave sequence as follows.

Note that the wave five target is beneath the recent bear market lows. And that the wave four pullback takes us back to the top of the downwards sloping trendline … and seems to have pretty clean Elliott Wave size, slope, and timing.

Again, I don’t trade the Elliott Wave. Yet it fascinates me, and is something that I do pay attention to as a framework. Add to all this that the daily chart of many US equity indices are stalled at their 50-day moving averages and kissing the bottom of their recently broken up-trendlines, and I’m certainly going to be wary of a pull-back here.

Tim Hannagan’s Grain Report

Tim Hannagan — Mon, 09 Nov 2009 15:06:44 +0000

U.S.D.A. NUMBERS NEXT

11/9/2009

Thursdays weekly export sales report came out showing 564 T.M.T. of corn was sold last week up 54% from the week prior but the week prior was a very low number. The total is neutral to pricing as 800 T.M.T is needed weekly to be friendly or price bullish. It’s much of the same we have seen the last several weeks as little to no corn is available for shipping as corn harvest is at a historical slow rate. As harvest pushes into high gear, product availability will see demand increase. Key Asian businesses did pick up with Asian sales of 290 T.M.T. versus 90 the week prior. Wheat saw export sales of 284 T.M.T. down 18% from the week prior and 49% under our four week average. With record ending stocks here were seeing hands to mouth as needed buying. Demand for wheat remains a non pricing fundamental. All eyes are on any changes in major exporter production problems. Soybean sales were 522 T.M.T. last week off 24% from the week prior but still a very good number. China was in for 290 T.M.T. of the total and look to continue being a major buyer of U.S beans thru harvest. Today Friday they bought 356 t.m.t. to show up on next weeks report . Near term we get ready for the big November 10 U.S.D.A. monthly crop report next Tuesday at 7:30 am Central time. The pre report trade estimates of the 28 major brokerage firms and private analytical firms came out late Wednesday. The average pre report trade guess for corn production was 12.962 billion bushels. This is 56 m.b. under the October report. The ranges of guesses go from 12.656 to 13.200 b. b. The market had been fearing lower estimates as October was a terrible weather month as the corn and bean growing season came to an end. Too much rain and an early month freeze and frost. Soybean production had an average production estimate of 3.262 b.b. up 12 m .b. from last month with a range of 3.150 to 3.379. The fractionally higher average may be attributed to thinking beans were far enough along in their maturity to avoid weathers worst effect. Either way it’s all a guess. Looking back the last five weeks here’s the pattern. They spent the first three weeks of October buying corn and beans as each week lent to a bullish weather pattern of either freezing temperatures, frost or excessive rain fall and flooding. The final week of October saw funds fat with profits take them pulling us back. The first three days of the this new month before crop estimates came out, we saws the fear of the potential November 10 report on Octobers foul weather bring buying back in with corn posting a 34 cent rally from Fridays low to Wednesday high. Beans a 50 cent rally and wheat in a followers roll a 40 cent rally. Then profit taking Thursday and Friday as pre report trade guesses came in not as bullish as thought having traders remove some of the pricing fear from the weeks start. Conservative traders usually sit out these reports but aggressive traders who want to approach it with risk parameters can look at options. Consider buying 1 December 3.80 corn call at 8 cents or $400 you have that much risk on a futures trade just for the opening next Tuesday. Yet, if the report is bearish you can scalp out for probably less than half the option cost on the opening. Should the report come out surprisingly bullish we could push to 4.30. Soybean traders might consider buying a January 9.70 call and sell the 10.20 call for 15 cents or $750. Cost and risk. You have 50 cents profit potential or $2,500 on a bullish report, yet if it’s a bearish report you can sell it out on the opening for even less cost than you started with. Certainly there’s more than 15 cents risk on the futures when they open Tuesday. Now, let’s look at all the possibilities off this report. If the report comes in with a cut in corn production of 250 m .b. or more. December corn will push thru the 4. 08 resistance on the charts and push to 4.30 before profit taking. If the report raises production by 100 m. b. or more than we head straight to 3.40. On beans a cut of 100 m.b. or more and January beans push to 10.70 before profit taking. An increase of 20 m.b. or more and we will drop to 9.30. Of course, any drop in prices will be looked at as a good long term buying opportunity, while a report rally only confirms further supply tightness to meet record soybean demand. Final note, harvest weather looks good for the next 7 to 12 days with normal temperatures and below normal rainfall. I m studying a new weather web site and find it to be very accurate. Give it a look at commoditywx.com

Tim Hannagan

PFGBEST Research Team
800.563.9510
thannagan@pfgbest.com

Phil Flynn’s Energy Report

Phil Flynn — Mon, 09 Nov 2009 15:05:09 +0000

11/9/2009

Getting Blown Away.

The oil market is getting blown in different directions. On one hand, Friday’s dismal jobs report would seem to suggest that demand for oil will be bad in the US. That drove oil lower on Friday. Yet on the other hand the weak jobs number means the Fed should keep the stimulus machine stimulating. In fact if we see more weak data it may even raise the possibility of more quantitative easing in the future. That would be dollar bearish and commodity bullish. That seems to be one of the reasons that oil is rallying this morning. Another reason is weather.

Hurricane Ida is a killer storm and is shutting down production in the Gulf of Mexico. Matt Rogers at Commodity Weather Group, LLC says that hurricane Ida is currently a category one storm (90 mph sustained) but is weakening rapidly as it travels northward through the central Gulf. The Commodity Weather Group says that, “While the Hurricane Center is being cautious by forecasting hurricane strength at landfall, the pronounced overnight weakening trend suggests it should enter the far eastern production region as a tropical storm at best. A combination of much cooler water temperatures and wind shear should continue to weaken the feature.”

At this point it seem unlikely that there will be any major damage to the facilities in the Gulf yet the market has to be cautious. It is hard to determine how much of the rally in oil is Ida related and how much is it is dollar related.
Yet at the same time it seems that OPEC is pumping more oil. Mark Shenk With Bloomberg News reports that, “OPEC is increasing output at the fastest pace in two years, adding to near-record inventories and threatening speculators betting on $100 crude with losses.” Shenk says that the number of options contracts to buy oil at $100 by March almost quadrupled in October and increased another 5.9 percent so far this month. As traders piled in, OPEC boosted production 4 percent, or 1.1 million barrels a day, since March amid the worst global recession since World War II. Saudi Arabia’s King Abdullah has targeted $75 oil as a fair price for consumers and producers and has the capacity to increase pumping by about 50 percent, or 4 million barrels a day, enough for all of Brazil. The prospect of more supply comes with inventories in industrial countries already the highest since 1998, when oil collapsed to $10.”

Bloomberg is also reporting that, “China, the world’s second-largest energy user, will raise gasoline and diesel prices by 480 yuan a ton from tomorrow to reflect higher crude oil costs.”

We are playing the swings! If you want to get involved just call me at 800-935-6487 or email me at pflynn@pfgbest.com to open your account today! Also check out the Fox Business Network where you can see me every day! And if you’re interested in buying gold and silver check out our link for our innovative approach. . Make sure you are signed up for my daily energy blast where we will soon be offering special extras!

We’re long December crude from apprx 7727 – raise stop to 7745!
Buy December RBOB at 19000 – stop 18800.
Buy December heating oil at 19700 – stop 19500.

Phil Flynn

PFGBEST Research Team
(800) 935-6487
pflynn@pfgbest.com

Jim Wyckoff’s Morning Trading Blog

Jim Wyckoff — Mon, 09 Nov 2009 15:01:59 +0000