The Trading Pit
40 replies to this topic
Posted 06 March 2005 - 11:42 PM
I’m back. Different handle, (TSFKA stands for The Stoolie Formerly Known As…), different avatar (tranquility, prosperity) and a different focus – commodities.
Started a website and have been up and running for 4 months. Refined the system I used to use in Stooltrading and applied to the commodes.
The idea is to swing trade and grab points once a move has established itself. Right now, the portfolio has been long Soybeans since 512…
And Cotton since 44.90…
...among other things. Neither bull nor bear, it’s about following the tape. So right now , the thought is that this is actually going to rally, surprising most folks (don’t think the US Dollar decline is over in the long run, we just need a C wave up to complete the pattern). But I could be wrong…
The link is below.
Read the philosophy page.
Read the disclaimers.
The trades are hypothetical but done in real time.
I’ll posting here Sunday thru Thursday nights for the next little while, sometimes with specific trades, sometimes with possible trades and sometimes with no trades.
Track it and see what you think
Posted 07 March 2005 - 01:53 AM
Thanks for sharing these.
If and as you get a chance, your periodic observations on the CRB would be appreciated.
Posted 07 March 2005 - 11:31 AM
Daily CRB continious contract futures chart...
Looking a little parabolic, looks very similar to the to the soybeans chart. If you were trading this and weren't already long, the thing to do would be to wait for a correction. Everything is seriously overbought. Could it stay that way longer, sure, absolutely. But odds are, you're just as likely to get get a pullback before a further advance. Ultimately, it's going higher but nothing moves in a straight line for long.
Weekly chart. Really looks like an usnsustainable advance in the intermediate term. But because it's above all the moving averages, there's really no way to ascertain where it's going to peter out. This is where you would start sugging up your stops (again, that's if you were trading this, the individual components that make up the index are a different story).
Now for the monthly. Looks to me like we're in a fifth wave of a larger third wave up (which often can go on longer that most believe). So, a correction is lurking, it's just a matter of where. Odds are it will be a relatively flat correction (wave 2 in 2001 was sharp, rule of alternation says wave 4 should be flat), but so far there isn't any sign of the correction begining.
The bottom line is that it's in a very strong, multi-year uptrend. My only issue (as it always is) is timing. This is not a place I would enter a trade, but if I was already in, I'd be riding it with relatively tight stops. My best guess is that price will dink around here for a bit as it decides if really wants to break out to new highs before begining a sustained fifth wave advance. Hope that helps.
Posted 08 March 2005 - 01:24 AM
Soybeans. Looks like this leg is over. Actually, stopped out in the overnight session on Monday night. All in all, a pretty good trade. We'll be looking to get long again when the correction is over. Wouldn't be surprised to price run back to somewhere between 580 and 550. Been saying all along, the next rally is the real one.
Now a word or 40 about the US Dollar.
I know we're starting to look like a broken record here, but the US Dollar move just doesn't look done. Still think there's one more leg up. Couple of reasons why. It would be highly unusual for a corrective move like the one off the December lows not to have a C leg up. Not impossible, just unusual. Also, if the Dollar continues down from here, there's a pretty good chance we'd be looking at a crash. Now, not that it doesn't deserve it, but before that happens, the Fed would undoubtably reach deep into its bag of unconventional methods tricks.
A dollar crash could very easily set of a chain of severely inflationary events that would be hard if not impossible to control. Worldwide economic dislocations would almost be guaranteed. The Fed and the rest of the world's central bankers aren't ready to throw in the towel just yet. At some point they won't have much choice, but for now they probably still have a few options.
Just to be clear, whether from here or after the expected C leg up, the next decline in the Dollar will be anything but contolled and gentle. That typed, price is still holding above a pretty significant fib line. A lot of the indicators we watch are turning up.
Which is why the thought is to short Gold, Silver and a couple of the currencies, but only if target prices are hit. Just doing what the tape tells me until it tells me otherwise.
Posted 08 March 2005 - 02:05 AM
Thank you mucho.
You have provided some great info.
I bought some PCRIX (Pimco Commodity Fund) and am scaling out, hoping to reload lower.
Really appreciate the fine work.
Posted 09 March 2005 - 01:07 AM
No prob, Stinky.
Down to business.
So of course, after the big Dollar speech yesterday, price tanked. Right now, holding right at the edge of the cliff. Below 82 and it's a quick trip to the December low, which probably wouldn't hold. So it's basically do or die time for the Dollar here. We're still not giving up on the idea that a pretty big bounce is lurking, but one more big down day would pretty much seal it.
Plus, on the Dollar sensitive commodities, there are some negative divergences building.
So we're going to hedge our bets here and recommend 2 trades if the Dollar rallies and 2 trades if the Dollar breaks down.
Buy Gold and the Euro if the US Dollar cash index trades at or below 81.50
Sell Silver and the Swiss Franc if the US Dollar cash index trades at or above 82.50
The gory details here:
Looks like the Russell 2000 is rolling over. The RUT is the only index I recommend to trade, it generally "stays between the lines" better than the others. If the e-mini (June) trades below 635, a sell signal will be generated.
And in other news, Sugar is close to a buy, Hogs are close to a sell and Copper may have hit an intermediate high on Tuesday. Wednesday will probably reslove those issues one way or another.
Posted 09 March 2005 - 12:06 PM
I don't know why they call it hamburger helper...it seems to do just fine on its own-Uncle Eddie, "Family Vacation"
Posted 10 March 2005 - 02:23 AM
Your welcome, Flocko.
Day 4. Late tonight.
We're going to hedge a few things so it took a while to figure out.
The Dollar teetering on the edge of the abyss. Somebody breathes wrong and it's over the edge.
The targets were hit for the long Gold and long Euro trade, but the entries aren't great, so I think it's probably wise to hedge the bets. How you ask? The long and the short of it here...
Oil. Looks like a correction is on the way, so I'm going to recommend hedging that one too. Probably going to have to consolidate for a bit before breaking to new highs. Plus the bullish sentiment might be a little over done.
Sugar is almost a buy...
And Hogs are almost a sell...
...but targets have to be met first.
and this one is working... so far.
Posted 11 March 2005 - 02:04 AM
Everybody is still waiting on the US dollar to decide whether to rally or tank. Could go either way. And which ever way it goes, it will be explosive. And hopefully we'll be able to go with it.
Got a nice Lean Hog short going.
And the Russell e-mini looks like it wants to give us some more.
Was stopped out of Wheat and Soybeans for some very nice profits a few days ago. Never got the correction I was expecting, so now it's time to buy the break out. Not my favorite set up, you have to run the stops too wide. But I'll hedge if needed.
Speaking of hedges, there's a bunch of them pending. Read all about it here...
Does that make me a hedgehog?
Posted 14 March 2005 - 12:46 AM
Looks like the US dollar is going to make another attempt at a rally on Monday. It's threatening a bounce. The problem this time is that Gold and Silver are at perfect reversal points where if the Dollar gets some traction to the upside, Silver and Gold could start a pretty nasty correction. It doesn't have to play out that way, but it is possible. Right now trying to hang on that last major fib line.
April Gold at a critical fib extension.
Continious contract at a critical fib retracement.
And Silver showing some significant negative divergences.
Wheat and Soybeans looking for another leg up, but probably not before a retracement/consolidation. Maybe a few days may be a few hours.
Bounce or die. That is a sell signal.
The ups and downs here...
Posted 15 March 2005 - 01:33 AM
Had some hedge trades trigger on Monday, some worked some didn't.
The portfolio is still short the Russell e-mini. Monday could have been just a retest of the triangle/trendline breakdown.
May Soybeans are up almost 14 points in the access market. This chart says Monday was just a consolidation day.
Limit down on Hogs. That's a good thing if you're short.
And then there's this. Could go either way, but it's looking like up for now.
The rest of it's here.
Posted 16 March 2005 - 11:39 PM
Ugly day. Could have been a key reversal day. Record long position, no correction since this run started, crop report on Thursday morning. It could have been traders getting out of the way or it's the start of a pretty serious correction. It's probably time to get out, so we've moved the stop up to a point that on any weakness, it will get hit. If the crop report is bearish and price opens below the stop, sell at market. That typed, in the access market price is up a couple of points from the close. Or they were, now flat. The market needs to correct. I've said all along that the next rally is the one to hold on to.
Russell 2000 e-mini. Grinding down. Bounced right at the trend/triangle line. Nothing says cover yet.
Crude Oil. Up in the face of bearish news (OPEC is going to increase production again, sound familiar?). Very bullish. Next target should be near 60. This contract expires next week so we're going to have to roll it over on Friday.
And the dollar. You figure it out
Was thinking up for a few days, now I'm thinking down. Which means up, which really means down, which really means
Looking at all the dollar related trades here...
...it makes a little more sense. If it goes up we make a trade, if it goes down we make a trade. Or three.
p.s. anybody getting anything out of all this...
Posted 18 March 2005 - 01:00 AM
Soybeans and Wheat had huge declines and then in the last 15 minutes of trading rallied all the way back. Wheat even closed up a few. Two possibilities. 1, this bullish move is much stronger than anyone believes or 2, the one day gains on the short side were just too juicy too pass up and a little bit of short covering turned into an epic squeeze. How Soybeans trade over the next few days will tell us a lot. More up and we stopped ourselves out too early. More down and we're geniuses. We'll see. Ultimately, all it did was run back and tag short term support. It was just too extended to be comfortable. It was a 45 point decline followed by a 22 point rally, all in the space of 6 hours. Tough to call. Now up about 5 points in the access market.
Russell 2000 e-mini. Pinned for option expiration. Wouldn't expect much movement on Friday. Still looks like down.
Lean Hogs. Well, that was a revolting development. Price got just high enough to trigger the hedge trade and promptly fell through the floor. Lift the hedge if price trades below 79.40. Couple of bad hedge trades this week, this looks like another one. That said, buy 6 June 78 puts if price trades at or below 79.40
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