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- Exited my short position in Eurodollars
- Entered a long position in Palladium
After my most profitable week ever last week things continued along nicely this week with another solid gain as the rout of the bond market continued. I’ve had 10 green days in a row now which is my longest ever positive streak. The big challenge now is to try and keep the gains made by maintaining discipline in regards to both trade identification and trade/risk management.
Below are my comments on my open positions, closed trades for the week and follow up of recent trades.
Weekly Comment: Eurodollars traded back down to the bottom of the range early this week allowing me to exit my position. Price held the bottom of the range for the rest of the week.
ZN – 10 Year Note
Trade: Short 2 contracts of December 10 Year Notes
Average Entry Price: 129 11.5/32
Risk: 129 11.5/32 risking $0
Target: 123 3/32
Weekly Comment: The Notes continued lower this week posting a new low 4 out of 5 days this week and the downtrend appears to be getting stronger.
PA - Palladium
Trade: Long 1 contract of December Palladium
Entry Price: $695.65
Risk: $687.65 risking $800
Target: $832.95
Weekly Comment: Palladium broke through the 61.8% retracement of the recent range on Tuesday and re-tested this level on Wednesday (where I entered) before moving higher again to finish the week back at the September highs.
CL – Crude Oil
Oil was lower on Monday before recovering to finish the day slightly higher and suggesting a short-term bottom might be in place. Prices then rallied sharply on Tuesday back towards the 200 SMA where I would have got stopped out anyway if I was still holding from last week. Oil backed off from the 200 SMA later in the week but finished the week with a bullish full bodied candle.
ZL - Soybean Oil
Soybean Oil traded down through the 40 SMA on Monday and I would have been stopped out anyway if I was still holding from last week. Prices were unable to regain the ground above the 40 SMA for the rest of the week despite multiple attempts to trade above this level.
HG – Copper
Copper continued to be volatile this week trading in large ranges and posting a number of indecisive candles with long upper and lower shadows as it attempts to establish a base after the strong rally. I am happy to wait until Copper settles down a bit before looking at potential re-entry points.
Below are my comments on other opportunities I am watching and other markets of note.
CT - Cotton
Cotton was sharply higher this week breaking out of the symmetrical triangle on Wednesday and continuing higher to finish the week just above the 61.8% retracement level of the recent range. I may enter a long position if prices can break this level with a close above 74.
HE – Lean Hogs
April Hogs traded lower early in the week before bouncing strongly off the 20 SMA on Wednesday. Prices drifted back lower to finish the week near the 20 SMA. I continue to monitor Hogs for any further weakness and am looking to enter a short position if prices can break the 61.8% retracement of the recent uptrend at 58.05.
SB – Sugar
Sugar traded sharply lower this week breaking the 61.8% retracement level of the recent uptrend. If prices can trade down to the 200 SMA which is approaching the recent July lows I may look to enter a long position.
GC – Gold
Gold continued to drift lower this week but found support on both Thursday and Friday when prices traded down towards the $1,200 level posting candles with lower shadows.
DX - US Dollar Index
The US Dollar continues its strong upward momentum posting a higher close each day this week and testing the March 2015 highs. If prices can surpass this level the target may be 107.
It was a quiet week with the Thanksgiving holiday and reduced trading hours. With this in mind I was reluctant to enter any new positions this week.
Below are my comments on my open positions and closed trades for the week.
ZN – 10 Year Note
Trade: Short 2 contracts of December 10 Year Notes Average Entry Price: 129 11.5/32
Risk: 129 11.5/32 risking $0
Target: 123 3/32
Weekly Comment: The Notes appeared to be trying to form a base around the 126 level early in the week but prices continued lower to finish the week at new lows. I’ll use a very tight trailing stop to start next week as I look to roll into the March contract before the end of the month.
PA - Palladium
Trade: Long 1 contract of December Palladium
Entry Price: $695.65
Exit Price: $737.25
Trade Comment: I went into the week with a plan to close out the position at the close on Wednesday in preparation for the roll into the March contract given that volume was likely to be lower at the end of the week with the reduced trading hours. I viewed the August highs at $748 as the best case level to exit the December contract but I failed to enter a limit order at this price earlier in the week because I was too focused on exiting on Wednesday and I missed the opportunity to exit at this price on Tuesday. I entered a limit order at this price on Wednesday but the market did not reach that level again. I also had a stop order below the market to exit on any weakness and this order was triggered on Wednesday when prices went lower to test the recent highs at $728.
On Thursday/Friday I had an order well below the market in the March contract at $715 in case there was a sharp move on low volume. This was despite my thinking that it was unlikely that prices would head this low. I viewed the recent highs at $729 as a more reasonable possibility but decided not to enter an order at this level as I wasn’t really looking to re-enter the position until next week when normal trading hours resume. Prices were supported at the $729 level as expected on Thursday/Friday and I didn’t get into a position at this level and therefore missed the rise late on Friday which saw prices close at new highs. I’ll try and re-enter around this level again next week.
Weekly Comment: Palladium continued higher this week posting new highs for the move. Prices are now in the vicinity of the 61.8% retracement of the range from the September 2015 highs to the January 2016 lows. If prices can surpass this level I may look to add to the position.
Below are my comments on other opportunities I am watching and other markets of note.
ZL - Soybean Oil
Soybean Oil prices exploded higher on Wednesday after an announcement about the use of renewable bio-diesel which is supportive to Soybean Oil prices. The move saw the 61.8% retracement level of the recent range surpassed as well as a re-completion of the head and shoulders bottom pattern. By the time I saw the price rise it was too late to enter within my risk parameters. I’ll be looking to enter a position on any weakness.
HG – Copper
Copper rallied again this week after the recent consolidation. Prices surpassed the 61.8% retracement of the recent range on Thursday/Friday triggering a new buy signal. I was reluctant to take a position on Thursday/Friday during the Asian session due to the limited trading hours in the US. I’ll take another look at Copper next week and decide whether to re-enter.
SB – Sugar
Sugar continued lower this week heading closer to the rising 200 SMA which has almost risen up through the July lows. I had an order at the 200 SMA at the end of the week but it has not yet been triggered. I will keep trying next week.
CT - Cotton
Cotton traded back into the symmetrical triangle range this week trading back down to the 20 and 40 SMA’s. If prices can break the 61.8% retracement level at 74 I may look at entering a long position.
CL – Crude Oil
Oil surged through the 200 SMA on Monday and continued higher initially on Tuesday briefly trading above the 61.8% retracement of the recent range before turning lower. Prices finished the week with a bearish full bodied candle closing well below the 200 SMA and negating any buy signals. I am now neutral where Oil is concerned leading into the major OPEC meeting this week.
GC – Gold
Gold continued its bearish momentum this week trading sharply lower again but held the 61.8% retracement of the recent uptrend range to finish the week.
DX - US Dollar Index
The US Dollar continued higher early in the week surpassing the March 2015 highs. This level was tested again on Thursday/Friday but held.
Below is my updated tracking sheet for November with the key metrics I am currently following.
November was the best month I’ve ever had. The election created some strong trends and I was lucky enough to catch a few of the biggest trending markets during the month. Adopting a trend following approach often results in getting chopped around a lot waiting for trends to materialise but when they do is the time to capitalise as these are the periods that can make or break your year as a trend follower. I am happy I could capitalise on the strong trends in November but the challenge now after making these gains is keeping them. Maintaining patience and discipline will be key in December.
The disappointing aspect of the month was the additional risk I took to generate the returns. I had 3 trades where I extended risk outside of my usual risk parameters 1 of which created a big winner with the other 2 bringing losses of -3.25R and -2.5R. This is not sustainable long term and I will be looking to keep trades within my risk parameters again moving forward.
- Rolled my short position in the 10 Year Notes from December to March
- Rolled my long position in Palladium from December to March
- Entered and stopped out of a long position in Sugar
Below are my comments on my open positions and closed trades for the week.
ZN – 10 Year Note
Trade: Short 2 contracts of March 10 Year Notes
Average Dec Entry Price: 129 11.5/32
Dec Exit Price: 125 26/32
Mar Entry Price: 124 4.5/32
Risk: 127 22.5/32 risking $0
Target: 122 16/32
Weekly Comment: The Notes were higher early in the week before trading lower again on Wednesday and Thursday to post new lows. The Notes finished the week on a positive note but there is no evidence of any changes to the downtrend at this stage.
PA - Palladium
Trade: Long 1 contract of March Palladium
Entry Price: $771.65
Risk: $701 risking $0
Target: $835.45
Reasons for entering the trade:
Technical: Prices surpassed the 61.8% retracement of the recent corrective range and also surpassed the 61.8% retracement of the range from the September 2015 high to the January 2016 low.
Fundamental: Supply deficits are expected in 2016 and 2017.
Weekly Comment: Palladium continued higher without me early in the week. On Thursday I finally bit the bullet and decided to get back in as it appeared that the market wasn’t going to give me a dip to re-enter. My rationale was that my price target was had not yet been met and the fact that I was having to pay up to re-enter was a good sign of a bull market. I was very quickly punished for my lack of patience with prices falling straight after I entered and trading back down to re-test the 61.8% retracement level of the range from the September 2015 high to the January 2016 low where my entry had been waiting previously.
SB – Sugar
Trade: Long 2 contracts of March Sugar
Entry Price: $0.1943
Exit Price: $0.1907
Reasons for entering the trade:
Technical: Prices intersected with the rising 2000 SMA for the first time since the bullish trend began.
Weekly Comment: Sugar continued lower this week intersecting with the 200 SMA on Thursday where I entered. Prices broke through the 200 SMA on Friday trading below the recent lows and triggering my exit.
Below are my comments on other opportunities I am watching and other markets of note.
ZL - Soybean Oil
Soybean Oil was lower at the start of the week trading back down to re-test the recent highs. Prices held the recent highs and rallied strongly on Thursday trading up towards the 161.8% extension level. h
HG – Copper
Copper rallied sharply on Monday trading back up to the recent highs but were unable to close near this level retreating quickly and trading back down through the 61.8% retracement level on Wednesday before recovering slightly to finish the week back near this level. Volatility remains high in Copper and I will continue to wait for a base to be formed before contemplating re-entering a long position.
CT - Cotton
Cotton’s range remained inside the symmetrical triangle this week with prices being supported at the 40 SMA. If prices can break the 61.8% retracement level at 74 I may look at entering a long position.
CL – Crude Oil
Oil surged higher on Wednesday after OPEC agreed to cut output sending prices up sharply through the 200 SMA. Prices followed through on Thursday and Friday to surpass the 61.8% retracement level of the recent range. I may look at entering a long position if prices test the $50 level again this week.
NG – Natural Gas
Natural Gas gapped up through the 200 SMA on Monday and rallied strongly on Thursday to trade above the 61.8% retracement of the recent range but prices were unable to hold above this level on Friday.
GC – Gold
Gold broke down through the 61.8% retracement level of the recent uptrend on Wednesday. If the break is credible the target may be $859.
DX - US Dollar Index
The US Dollar paused this week consolidating around the March highs. At this stage, there is no evidence of the break of the recent uptrend.
Below are my comments on my open positions for the week.
ZN – 10 Year Note
Trade: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Risk: 127 22.5/32 risking $0
Target: 122 16/32
Weekly Comment: The Notes gapped higher to open the week after the Italian referendum but were unable to surpass the 125 level. The Notes moved lower later in the week to finish the week at a new weekly closing low.
PA - Palladium
Trade: Long 1 contract of March Palladium
Entry Price: $771.65
Risk: $730 risking $0
Target: $835.45
Weekly Comment: Palladium traded down through the 61.8% retracement level of the range from the September 2015 high to the January 2016 low early in the week but held at the 20 SMA and the previous highs at $728. There is no damage to the uptrend at this stage but a close below $728 will make me rethink the position.
Below are my comments on other opportunities I am watching and other markets of note.
SB – Sugar
Sugar rallied in the middle of the week to reclaim the ground above the 200 SMA but failed to finish the week above the 200 SMA.
ZL - Soybean Oil
Soybean Oil reached the first target at the 161.8% extension level on Tuesday and retreated from this level to finish the week lower.
HG – Copper
Copper had another strong Monday rally this week but quickly retreated for the remainder of the week trading down to the 61.8% retracement of the recent range. Volatility continues to remain high in Copper and I will continue to wait for a base to be formed before contemplating re-entering a long position.
CT - Cotton
Cotton’s range remained inside the symmetrical triangle again this week with prices being supported at the 40 SMA. If prices can break the 61.8% retracement level at 74 I may look at entering a long position.
CL – Crude Oil
Oil traded back down to retest the 61.8% retracement level of the recent range in the middle of the week but I missed it. Prices bounced from this level to finish the week back near the recent highs.
NG – Natural Gas
Natural Gas rallied strongly on Monday surpassing the 61.8% retracement level of the recent range on forecasts for colder weather. There was an opportunity to enter on Thursday when prices initially traded back towards $3.50 but I missed it. Prices rallied to finish the week at a new high for the move.
HE – Lean Hogs
Hogs rallied sharply this week trading back up towards the falling 200 SMA. When prices first intersect with the 200 SMA it may offer a good short opportunity.
GC – Gold
Gold retested the 61.8% retracement level of the recent uptrend on Monday after the Italian referendum but was unable to surpass this level and drifted lower for the remainder of the week. If the break is credible the target may be $859.
DX - US Dollar Index
The US Dollar fell sharply after the Italian referendum and continued lower on Thursday before bouncing from the 40 SMA and rallying strongly to close the week back above the March high.
- Entered and stopped out of a long position in Feeder Cattle
- Exited my long position in Palladium
Below are my comments on my open positions and closed trades for the week.
ZN – 10 Year Note
Trade: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Risk: 127 22.5/32 risking $0
Target: 122 16/32
Weekly Comment: The Notes continued lower this week after the Fed raised rates and signaled further rate rises in 2017. Prices hit the first target at the 161.8% extension level on Thursday and bounced slightly to finish the week back above this level. The trend appears to be getting stronger and I don’t see any reason to take profits at this stage.
PA - Palladium
Trade: Long 1 contract of March Palladium
Entry Price: $771.65
Exit Price: $$689
Weekly Comment: Palladium closed below the $730 level on Monday triggering an exit signal as I wasn’t willing to let this overall trade turn into a loss. I decided to give the trade one more day and continued to stick with the trade as it appeared to continue to find support each day when prices traded below the recent high at $728. Prices then collapsed on Thursday falling 4% and trading back down to the 61.8% retracement level and the 40 SMA and turning what had been a good trade into a losing trade. When prices fell below the 40 SMA on Friday I finally exited the trade something that I should have done on the first day I entered the trade after seeing the bearish engulfing candle. This was a terrible trade overall and one I’d like to quickly forget.
GF – Feeder Cattle
Trade: Long 1 contract of January Feeder Cattle
Entry Price: $1.2945
Risk: $1.2785 risking $800
Exit Price: $1.27575
Reasons for entering the trade:
Technical: Live Cattle rallied strongly on Monday closing above the 200 SMA after a long downtrend and consolidated the break on Tuesday. After the confirmation of the trade entry on Tuesday the price was too far away from where my stop needed to be and didn’t fit within my risk parameters. From this point, I had two choices, firstly I could wait until Live Cattle retraced back towards the 200 SMA where the trade fitted within my risk parameters or secondly, I could take a long position in Feeder Cattle where the price had not yet surpassed the 200 SMA and the risk was more manageable. I chose the latter option.
Fundamental: Cold weather is likely to prevent cattle from gaining weight and cause supply disruptions at a time when cattle inventories are already low.
Trade Comment: My stop in Feeder Cattle was still too close and needed to be below both the 61.8% retracement level and the 20 SMA. This stop placement would have kept me in the trade but would have been outside my risk parameters. The proper trade entry should have been Live Cattle on Thursday when prices retraced back towards the 200 SMA. Now with the strong rally on Friday I face the same dilemma as the Live Cattle trade still looks good and Feeder Cattle is only just surpassing the 200 SMA and therefore still provides a potential entry.
Weekly Comment: Feeder Cattle rallied strongly on Monday surpassing the 61.8% retracement level of the recent range. Prices hovered between this level and the 200 SMA until Friday when prices rallied strongly again to close the week above the 200 SMA.
