Thursday, April 28, 2011

Futures levels

We’ve promised our readers to add some future levels to the newsletter as we’ve started trading them more this year.    We had always imagined commodities to be more “difficult” and thought of them as more “risky”.  The truth is that we have found them to be easier to trade than stocks this year.  It’s still early and we don’t want to mush things, but so far so good.   Yes, the leverage can be dangerous but we haven’t been in the business for 14 yrs without learning a few pointers about risk management.  Stops are stops.    We find commodities to be “cleaner” and technically easier to read.    So are we going to give up on stocks?  No.  Of course not.   Our modus operandi this year has been the following: when we have good set-ups in stocks, that’s our priority (for example tomorrow we finally have a few alerts that we really like and stocks will be our focus).   When we have no good alerts (like earlier this week) then our attention wanders off to futures.
Our field of opportunity has now increased, and that’s never a bad thing.   What we have always been very good/disciplined at is not trading unless there is something with an “edge” to trade.   If there’s no edge, we won’t be involved.  If we could ever point to a “secret” of being successful at daytrading,  that would be it.
Here are the futures that we currently have on our radar:

Copper is hanging on to the lows of the trend-line — not what you want to see if you’re a bull.  A break of the trend-line would be a decent opportunity for a short as most likely that area will be filled with stops.

Nothing in corn for us to do until a) gap fill near 693 and then support at 660

Crude too extended from any base for us to be involved long and no interest in shorting.

Gold too extended from base for us to be involved (even though we have been waiting patiently for junior gold miners to set up long for a while — much less extended there $GDXJ) and no interest in shorting.

Silver– as you know we were looking for a short in silver (and mentioned the symbolic 50 last weekend).  Silver retraced 10% from its highs and for us the short trade is over.   We never short the second test of a high so no interest there in shorting 50 either.   We would be interested in silver long if it can consolidate the recent move and set-up long under 50, but a base that would satisfy us would take weeks.  The silver trade is over for us for now.

Soybeans coming into a level of interest — through trend-line down could be a decent short (and then overshoot support long)

Wheat interests us on the trend-line as a long (first test).

$ES_F not extended enough for us to go outright short without a reason but if the dollar can pick up we’d be probably be involved dark.

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