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Monday, September 12, 2011


TECHNICAL DIFFICULTIES

I am having computer problems this morning and am trading from my laptop. As a result I am going to do something a little different today.

Below are just comments of things I observed this weekend across the board on the weekly charts. These are more along the lines of setup types of comments to then go to daily charts to find entries from.

Natural Gas - I have been talking about looking for a long entry in this market. In looking at the weekly chart there is nothing at all in the normal scheme of things that would justify a long except for a couple of little things. First, we are at the time of the year for the seasonal low to occur. We also have a significant accumulation going on with those types of indicators, diverging quite a bit against the lows. This tells me that we should be looking for some type of trend change to occur to get long.


Soybeans - The grain markets have been a bit stronger than the stock indexes but there is what I consider a big fly in the ointment, a very big Small Speculator long position. This is not something I want to see when I am looking to go long somewhere. It tells me to look for shorts in this complex somewhere. It appears to be that Soybean Oil is the weakest, so that is where I am looking within the Bean Complex. I also think Wheat is a sell candidate.


Silver - This market has the same situation as Soybeans, a big Small Speculator long position. Gold is the much stronger of the two here, so just in general if you are bullish that is where buys should be done, and if you are bearish, Silver is where your sells should be. There is a bit of a seasonal down influence toward the end of the month, so maybe that is where the sell will come in. I am not sure other than to say that this is a market I am looking for sells in.


Stock Indexes - readers know I am short in these markets right now, and harped on this move being a good sized one when it came around. We do not know if that will be true yet, but I noticed something pretty unusual in the COT data here. Even after the big decline there is a relatively large Small Spec Long position in the ES contract. I say relative because that is how you always have to look at these types of things, the absolute readings just alone do not mean nearly as much. It is a big unusual to see this and it could be quite bearish as we would expect them to be moving quickly to the short side being the band wagoners that they are. It seems hard to believe they could be bullish here, but in general when they are bullish it is bearish for prices.


There was a question in one of the threads about the COT reports, I do not recall who asked it. The answer is that yes they are released on Fridays and reflect positions from the prior Tuesday. This is not perfect, but it is not a daily indicator anyway. This information is more for bigger picture direction, so it lagging by a few days means nothing. This lag is why I have created my Synthetic indicator, which is designed to tell us with no lag what they are doing. I do not think the difference of live vs 3 days delayed means much.

I hope to be able to show some pretty pictures here in a few days, but the Geek Squad at Best Buy F.....ed up my hard drive transfer from the old to the new Tower Computer, and it is an Easter Egg Hunt trying to find anything right now. If there is any good news, I think the "conversation" I had with them will ensure that they think twice about copping an attitude with any customers when they have erred in the future.

The world is a short right now with a few exceptions, so nothing has really changed. Some markets are moving a bit away from being directly driven by stocks, but it is far from being back to the good ole days when everything traded on it's own.

4 comments:

WinnerCutter said...

Hi,

I went short Cocoa the same time you did and am up over $2,200 on one contract. I have a big problem with cutting winners. I believe I have been able to stay short Cocoa this long only because you also went short this market. Could you offer some advice on how not to cut winners? And what are some troubling signs that indicate when to exit winners? For example right now Cocoa is at 2864 and it has bounced from this area 4 times this year and I am tempted to exit right here, but I'll never know when to get short this market again unless it bounces back to the 3100 level.

Also you mentioned Wheat is a sell. Wheat has been declining for the past two weeks. Where would you get short this market?

Chris Johnston said...

2884 was the target I used, remember we are in the business to make profits, this is a good trade even if it goes on to make more without me.

There is no magic answer to exits, if you think it is really going to tank use a 3 bar trailing stop, but even if I was doing that my stop would be above Friday's high price should not get back there if it is going to continue going down

Chris Johnston said...

Wheat we need some type of a rally to setup a short entry, nada right here

sergio said...

i agree with you for natgas now at the support level..but not clear entry signs..