SOYBEANSTo the left is a soybeans futures chart. Notice how well the combination of seasonal highs and lows, and commercial positions at those points in time, signal price moves.
Most recently, the seasonal low in the first quarter of this year, has not produced a rally. This seasonal low, also occured at a time when the commercials were heavily long the market. "Well, see what I mean, this stuff doesn't work." That could very likely be a quote from any detractor of this approach.
As I stress repeatedly, these fundamental things are tools as a staring point for a trade, not absolute trigger mechanisms. Clearly, at this point we are in a downtrend in price, and there has been no rally attempt at all yet.
If you notice the last time times these 2 tools were lined up Feb of 04 and June of 05, something else accompanied them, that is not present yet in our current setup. This was a trend change. What this would translate to in today's setup is that we need an upside breakout of the downtrend before looking at the long side. Now, since we are close to the normal seasonal high, the oddss of a big long side upmove are diminished. Yes, it could happen.
This is where timing comes in. There are a number of ways of timing an entry once the fundamentals are setup. These are beyond the scope of this blog. For those who like to study things, this is a good starting point for you. Remember, my basic premise in trading is to line up as many things in one direction as I can. If I cannot do that in one market, I find another place where I can. Soybeans at this point do not have all cyclinders go, so onward.
3 comments:
Chris, so you trade all kinds of futures, not just bond futures? But the service we pay for is limited to bond futures.
Love your blog. Check it every day.
Yes poway, that is true. I feature the bond futures because that is the market that I get the best and most consistent returns. As a result, it has the best likelihood of continued success for clients. The 80% win/loss rate I get there is rivaled by very few if any people.
I do not get too caught up in the allure of a particular market. I want to be where I know the money will be made consistently.
I am working constantly on getting the trading systems I use in other markets to the level of the bond and S&P results. If I do that, I will incorporate them into the service. I want clients for life, not just short periods of time. So, I want them to have the best odds for success right from the get go.
I feel by covering the other markets here at times, and in the newsletter, I can give people broad exposure to futurs.
I have traded every commodity market there is except eggs. I just for some reason couldn't get too fired up about egg speculation!!!! LOL!
Also, I met someone this weekend who had expressed a specific interest in Soybeans, so I put this up for her just to give here a brief overview of that market. She is interested in learning about commodities, and has read the Rogers book.
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