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Below are my comments on other opportunities I am watching and other markets of note.
HG – Copper
Copper was weaker this week trading below the 61.8% retracement of the recent range and the 20 SMA. I’m currently looking at the 40 SMA as a potential area to re-enter 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 gapped higher at the open on Monday after a number of major non-OPEC producers also agreed to cut output with prices rallying strongly during the overnight session. Prices didn’t hold onto the gains during the day session on Monday posting a candle with a long upper shadow and prices continued lower for the remainder of the week trading back down to the 61.8% retracement level and filling the gap. I thought about taking a long position at this level but with prices struggling to rally after the positive fundamental inputs am I reluctant to take a trade.
NG – Natural Gas
Natural Gas gapped lower on Monday and traded back down to the 61.8% retracement where I have been waiting to enter. With the gap lower I was reluctant to take a long position and passed on the trade. Prices traded through the 61.8% retracement level later in the week and closed the week below this level.
HE – Lean Hogs
Hogs consolidated just below the 200 SMA for most of the week before breaking through this level on Friday posting a bullish full bodied candle. The first intersection trade works best when prices trade sharply into the level and quickly reverse. With the consolidation just below the 200 SMA I chose to pass on the trade.
GC – Gold
Gold continued lower this week after the Fed announcement and the target at $859 now looks in play. With a significant short position in the 10 Year Notes and the strong correlation between the price action of both these instruments at present it doesn’t make any sense to also enter a short position in Gold so I passed on this trade.
DX - US Dollar Index
The US Dollar broke out sharply after the Fed announcement and now looks to have surpassed the March highs on its way to $107.
A quick update today as there is not much happening in the markets at this time of year.
Trades for the week:
- Re-entered a long position in Feeder Cattle
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 bounced higher on Monday and then drifted sideways for the remainder of the week despite strong economic data on Thursday as the range and volume dried up prior to the holidays. There are no indications of a change in trend at this stage and I will continue to hold.
GF – Feeder Cattle
Trade: Long 1 contract of January Feeder Cattle
Entry Price: $1.2985
Risk: $1.2825 risking $800
Target: $1.5570
Reasons for entering the trade:
Technical: Feeder Cattle surpassed the 200 SMA after a long downtrend.
Fundamental: Cold weather is likely to prevent cattle from gaining weight and cause supply disruptions at a time when cattle inventories are already low.
Weekly Comment: Feeder Cattle confirmed the break of the 200 SMA on Monday. There was a doji on Friday as prices recovered to finished the day unchanged after initially breaking lower on the slightly bearish cattle on feed report but holding above the 200 SMA.
Below are my comments on other opportunities I am watching.
HG – Copper
Copper traded down sharply on Monday but bounced slightly when it reached the 40 SMA. Prices continued to hold the 40 SMA until Thursday when prices fell below this level. I thought about taking a long trade on Wednesday but at this time of year with very little volume around I decided against adding any further positions. I would rather wait for evidence that the uptrend has resumed again before taking another position in Copper.
PA - Palladium
Palladium continued to fall this week trading back down towards the 200 SMA. If prices break below the 200 SMA I may look at taking a short position.
HE – Lean Hogs
Hogs traded down sharply after the quarterly hogs and pigs report released on Friday showed that the hog herd is the largest ever. If prices continue lower down through the 200 SMA I may look at entering a short position.
Another short update this week as volume is still light and year end positioning clouds the price action.
Trades for the week:
- Entered and stopped out of a short position in Lean Hogs
- Exited my long position in Feeder Cattle
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
Stop: 127 22.5/32 risking $0
Target: 122 16/32
Weekly Comment: The Notes were higher this week showing the first real signs of counter trending price action since the downtrend began. I suspect this was mostly short covering to lock in profits at the end of the year rather than a change in trend. If the rally can continue up to the 40 SMA I may look at adding to the position.
GF – Feeder Cattle
Trade: Long 1 contract of January Feeder Cattle
Entry Price: $1.2985
Stop: $1.2825 risking $800
Exit Price: $1.3035
Trade Comment: I exited my position in the January contract on Friday as volume has now switched to the March contract. I intend on entering a position in the March contract early next week. I really should have exited around the open on Friday when prices rallied rather than at the close where my position could be subject to end of year adjustments.
Weekly Comment: Feeder Cattle continued to grind higher above the 200 SMA this week. Prices initially traded higher on Friday making new highs for the move after strong cash sales were reported on the Fed Cattle Exchange after the close on Thursday. The rally on Friday could not be sustained as profit taking likely came into play pushing prices lower but holding above the 200 SMA.
HE – Lean Hogs
Trade: Short 1 contract of February Lean Hogs
Entry Price: $0.62875
Stop: $0.64625 risking $700
Exit Price: $0.64825
Reasons for entering the trade:
Technical: Lean Hogs gapped down through the 200 SMA indicating that the downtrend may be resuming
Fundamental: USDA reports last week showed Hog inventories to be much larger than expected.
Trade Comment: After the bearish report last week I was expecting prices to be weak on the open this week. I woke up during the middle of the night to watch the open and prices did gap lower through the 200 SMA at the open as expected. After gapping down prices quickly traded back up to re-test the 200 SMA and I took a short position at the 200 SMA before prices quickly started trading lower again and I went back to bed thinking I had a good entry. I woke up to find that prices had reversed back up through the 200 SMA triggering my stop and posting a bullish full bodied candle on reports of bird flu affecting competing poultry products thereby potentially increasing demand for pork.
Weekly Comment: Lean Hogs remained in the range between the 200 SMA and the 61.8% retracement of the recent of the recent downtrend all week. A break above or below one of these levels will likely indicate the next direction for Hog prices.
Below are my comments on other opportunities I am watching.
HG – Copper
Copper was lower to start the week but rallied to finish the week slightly higher. Prices continue to hover around the $2.50 level but I am looking for prices to surpass $2.64 before thinking about re-entering a long position.
SB – Sugar
Sugar was sharply higher this week trading back up to the 200 SMA on reports of weaker production in Brazil. With the 40 SMA trading down through the 200 SMA and the 200 SMA in the process of turning over this may be a good area to enter a short position but with the fundamentals still appearing bullish I am reluctant to take a short position.
CT – Cotton
Cotton traded down through the underside of the symmetrical triangle during the week before rallying strongly to reclaim the ground back within the triangle. I believe there is now a strong chance that prices will continue higher through the top of the triangle.
Below is my updated tracking sheet for December with the key metrics I am currently following.
A poor end to 2016 unfortunately. My numbers for the month aren’t great and this was mainly caused by a terrible trade in Palladium which broke every rule in the book. Otherwise my trading was fairly quiet in December and if that Palladium trade was removed from my results the month would look ok with only a minor draw down.
I’m back to a full update this week as markets begin to return to normal volume after the holidays. So many markets burst out of the gates with strong price action to start the year and I had to hold back from rushing into too many positions early in the week. I suspect the same approach may be required next week as the early year fund positioning is finalised.
Trades for the week:
- Rolled my long position in Feeder Cattle to the March contract
- Added to my short position in the 10 Year Notes
Below are my comments on my open positions for the week.
ZN – 10 Year Note
Trade 1: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Stop: 127 22.5/32 risking $0
Target: 122 14/32
Trade 2: Short 1 contract of March 10 Year Notes
Entry Price: 124 18/32
Stop: 125 6/32 risking $625
Target: 120 22/32
Reasons for entering the trade:
Technical: Prices intersected with the 40 SMA for the first time since the downtrend began.
Fundamental: Expectations of rising interest rates in 2017 have been driving bond prices lower.
Weekly Comment: The Notes rose sharply on Thursday trading up through the 40 SMA where I added to my position. Prices continued higher during the overnight session on Friday before reversing sharply to close back below the 40 SMA to finish the week. I have added a 50 SMA to the chart as it appears to fit the current price action better. I will monitor both the 40 and 50 SMA’s for a while to see which one provides a better fit.
GF – Feeder Cattle
Trade: Long 1 contract of March Feeder Cattle
Entry Price: $1.2470
Stop: $1.2260 risking $1,050
Target: $1.5170
Weekly Comment: Feeder Cattle traded down through the 200 SMA on Wednesday but continue to hold above the 61.8% retracement level of the recent range and the 40 SMA. While above these levels I still believe the uptrend is intact.
Below are my comments on other opportunities I am watching.
HE – Lean Hogs
Lean Hogs fell sharply to start the year but did not follow through finding support at the 20 SMA. If prices break the 200 SMA I may look at entering a short position.
HG – Copper
Copper rose sharply on Wednesday but was unable to follow through to finish the week. I’m looking for a break above the 61.8% retracement level at $2.63 before thinking about re-entering a long position.
SB – Sugar
Sugar surged higher through the 200 SMA to start the year and continued higher for the rest of the market. It appears that the uptrend may have resumed and I’m looking for prices to surpass the 61.8% retracement level at 21.71 before thinking about entering a long position.
CT – Cotton
Cotton surged higher on Wednesday trading up to the 61.8% retracement level. Prices traded through this level later in the week but was unable to close above this level. I’m looking for a credible break of this level before thinking about entering a long position.
ZC – Corn (New Crop)
Corn rallied this week trading up through the 200 SMA but was unable to close above this level. I’m looking for a close above $3.95 before thinking about entering a long position.
PA – Palladium
Palladium surged higher this week with prices surpassing both the 61.8% retracement of the recent range and the 61.8% retracement of the major range. If prices retrace back to re-test the 61.8% retracement of the major range I may look at entering a long position.
Crude Oil opened the year higher but reversed strongly during the session to post a bearish candle. No follow through selling was seen for the rest of the week and the uptrend appears to still be intact at this stage.
NG – Natural Gas
Natural Gas gapped lower to start the year trading all the way back down to the 200 SMA.
GC – Gold
Gold was higher this week trading back up to the 40 SMA and the 61.8% retracement of the recent uptrend. This may be a good area to enter a short position.
DX – US Dollar Index
The US Dollar fell sharply on Wednesday and Thursday but found support at the 40 SMA and bounced from this level on Friday posting a bullish full bodied candle to finish the week.
ES – S&P 500
The S&P 500 rallied strongly this week making another ATH but continues to struggle to surpass the 161.8% extension of the recent range. If this level is surpassed the 261.8% extension level at 2,433 may be possible.
Below are my comments on my open positions for the week.
ZN – 10 Year Note
Trade 1: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Stop: 127 22.5/32 risking $0
Target: 122 14/32
Trade 2: Short 1 contract of March 10 Year Notes
Entry Price: 124 18/32
Stop: 125 6/32 risking $625
Target: 120 22/32
Weekly Comment: The Notes continued higher this week but ran into resistance at last weeks highs on Thursday and Friday and were unable to close above the 50 SMA. Whilst prices remain below the 50 SMA I am happy to continue holding my full position but if prices break above the 50 SMA I will probably lighten my position.
GF – Feeder Cattle
Trade: Long 1 contract of March Feeder Cattle
Entry Price: $1.2470
Stop: $1.247 risking $0
Target: $1.5170
Weekly Comment: Feeder Cattle traded back above the 200 SMA on Monday and then moved limit up on Tuesday consolidating the break. As a result of this move I bought my stop up to break even. Prices moved lower later in the week but bounced from the 20 SMA and a finished the week on a positive note.
Below are my comments on other opportunities I am watching.
HG – Copper
Copper rallied strongly this week after positive economic data out of China with prices surpassing the 61.8% retracement level on Thursday. I entered an order back towards the 61.8% retracement level on Friday but prices didn’t quite get low enough during the overnight session to trigger my order before bouncing to finish the week strongly. I will continue to wait for a retracement back towards the 61.8% retracement level to enter a position.
ZW – Wheat (New Crop)
Wheat finished the week higher after trading both higher and lower and closed the week above the 61.8% retracement of the recent range. The USDA data released on Thursday was mixed for Wheat with record large supplies and production but the lowest crop plantings for the new crop since 1909 hence my preference for trading new crop over old crop.
HE – Lean Hogs
Lean Hogs traded down to the 200 SMA on Monday but bounced from this level and traded back up towards the 61.8% retracement level. Prices continue to trade within a range and I will continue to monitor for a break out in either direction.
CT – Cotton
Cotton struggled to surpass the 61.8% retracement level during the week and then fell sharply after the bearish USDA report on Thursday.
ZC – Corn (New Crop)
Corn moved lower most days this week but consistently found support posting a number of daily candles with lower shadows. Corn held up well on Thursday after the negative USDA reports but could not surpass the 200 SMA.
PA – Palladium
Palladium was unable to move higher this week trading down to re-test the major 61.8% retracement level on Wednesday and Friday and posting candles with lower shadows on both occasions.
Crude Oil fell sharply early in the week trading back down to test the 61.8% retracement level but bounced strongly from this level to finish the week only slightly lower.
NG – Natural Gas
Natural Gas continued lower on Monday before bouncing higher for the rest of the week and regaining the ground above the 200 SMA.
GC – Gold
Gold continued higher this week trading up through the 61.8% retracement level but was unable to close above the psychological $1,200 level.
DX – US Dollar Index
The US Dollar continued lower this week with high volatility seen on Wednesday due to Trump’s press conference but prices held above the 50 SMA.
ES – S&P 500
The S&P 500 continued to trade within the range between the 161.8% extension level and the 20 SMA this week.
