Canadian Dollar “Loonie Looking For Breakout”

      The Canadian Dollar on a weekly chart has formed a nice symmetrical triangle, but who is going to win the fight? The fundamentals are going to be the determining factor. There are two ways you can look at the Canadian economy.

      For the bulls, international investors bought C$10.7 billion in securities. Is this a pre-warning to the bears that the Canadian economy is better than any other G8 countries. Canada’s inflation record this year is better than the other group of seven industrialized nations. Consumer Prices advanced 2.2% in May from a year earlier, compared with US at 4.2% and the UK at 3.3%.

     Economists are looking at peak inflation in the first quarter 2009 between Jan and March. At a rate of 4.3%. After March they looking for slow down to 2.9% going into the following quarter.

     Now for the bears, if reports come out worse than expected would be good to drive the Loonie down and also better than expected reports in the US and UK. A continued stalling in export and home sales will also drop the Canadian Dollar.

     Canada is the second biggest crude reserves behind Saudi Arabia, and is the second largest wheat exporter. If crude and wheat continue there downward move will drive exports down.

     For a trade recommendation I am looking at going for a reverse ratio spread. This spread is initiated by selling an at-the-money put and call, and purchasing two or more out of the money puts and calls. You would like two obtain a credit or at worse break-even on the debits vs. the credits. You do not want to hold the position any longer than 30-45 days left and you want at the least 3 months left at time of entering.

     Sell the December 9900 put for 222 or $2220.00 and buy two 9550 puts for 95 or $950.00/each. At the same time sell a 9950 call for 222 or $2220.00 and buy two 10300 calls for 99 or $990/each. The options have 137 days left. For money money management or exit strategies please contact me at jimmy@transworldfutures.com .

Past performance is not necessarily indicative of future trading results. Trading advice is based on information taken from trade and statistical services and other sources which Transworld Futures believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder.Futures trading involves substantial risk of loss and may not be suitable for all investors.

To contact Jimmy Tintle email is jimmy@transworldfutures.com or reach him by phone at 1-877-843-4519. Transworld Futures offers a wide variety of trading tools, webinars, and simulated trading. We also various types of accounts from deep discount online trading to managed futures, and FOREX accounts.

Market Recap 1-25-08 Rouge Trader Excites Markets All Over World

     This rouge trader from the Société Générale named Jérôme Kerviel was the market mover for the week. As the US markets were closed on Monday the futures brokers all over the world were in a major panic. Wednesday morning we all find out that one man once again can collapse a market with one fell swoop of fraudulent trading. The US Federal Reserve states that they did not know anything about the rouge trader before the Tuesday morning interest rate cut. Is it hard to believe that with all the political economics all over the world that the US did not know when the Société Générale knew and was trying to get out the positions with out moving markets. Or was the US just covering for the Société Générale. All right that is enough on the political thinking. Let’s see how the markets reacted to this drop on Monday and Tuesday. Well the DOW did a 600 point turn around, Gold went from $855.00 all the way back over $900.00 & the USD went from the .7700 mark all the way back down to under 7600. It would be pretty amazing if all futures brokers had there clients in on the right side of those moves. This next week will be the one to watch to see if the US Federal Reserve cuts rates another 50 basis points on Wednesday.

     The meat spreads from my previous blog. If you were in you should be looking to liquidate positions going into February. Even though we were looking for a slower world economy the food and energy sides should stay strong for another few years. February break for the grains do not look like they will last long enough to really work this year. My end of the month outlook will explain more into the grains and meats than this week.

     Sugar, is it still on its way to .1400. If you look at the mid summer to late year movements of sugar there is very little. Speculators are all over the sugar now with volatility going from a .0020 swing to .0070. That is a 300% increase in volatility. Looks like we may be forming a solid trend going into the end of January but only if it can hold a few days of solid gains. How the markets move and change make outlooks on the markets a bunch of nonsense if you don’t change with them. Remember,Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading commodity futures, options and off exchange forex.

Mid-Week Market Recap “The Sleeping Giant”

Normally don’t blog for a mid-week recap but with all the markets moving “limit up” and “limit down” all in the same week is just amazing. Futures brokers all over, probably are grabbing onto their hats for a wild grain train ride. Just to recap my previous post, we saw corn “limit up” on Monday, which took it to that $5.00 level. Then the past two days we saw it test $5.00 yesterday and break through this morning touch $4.96 and now back above. Tomorrow will be the key day to either confirm a reversal or it just a break with a good buying tail. ” Beans In The Teens” saw it on Monday, then on Tuesday with a close in the teens. Wednesday we open up and “limit down” now bouncing around that $12.75 level in the afternoon. In order for the reversal in beans there are a few key factors, 1.) Rain, Rain, Rain in South America, 2.) Hedge funds to stop buying and then lastly any close below the $12.50 would pretty much confirm a top has been posted.. If you follow the Elliot wave method you are looking at wave #4 to wave getting ready to start. 25% Fibonacci Retracement will bring us back to $12.18 which there is also a gap on the chart right there also. Most of the time the markets will come back and fill the gaps, but might want to wait till the top is confirmed and it rains in South America.
  Gold futures brokers are having a fun time with these hedge funds, looks like the fund managers either went over margin and the exchange is going to raise again or they just figure they can take profits here. My theory on this is a little of both, to many fund managers trying to make sure they make enough to cover their losses in the markets last week. After two days of gold hitting the $915-$916 area with no good bullish news coming out they figured taking profits are a good thing these days. If we can not hold the $890.00 level we might be looking at a 50% retracement to $850.00 before looking $900.00 again. The big guys came out and said that gold will average the $915.00/ounce this year. If that holds true and the volatility is the same as 2007 we may look at a range from $800 to $1,000.00.
  S&P 500 may be looking for that 3 yr bear trend to a 62% retracement to 1110. It will have a few key stops on the way, first stop if we close below 1370 on a monthly chart will be 1276. Not much consolidation on that way down, but once we hit there we will be on slow boat down to the 50% level at 1192. If we cannot get enough support at that level we will be looking at the 62% retracement at 1110. If history repeats itself we had a 10yr bull market to 2000 and then a three year bear market to 2003. Now we are just finishing a very good five year run to 2008, now another three year bear, if not less. May only reach that 38% or 50% retracement before the turn around. All this is just nonsense if we don’t break that first stop at 1370.
  My following for the week will be the sleeping giant. ” SUGAR ” All other markets for the year of 2007 have been quite noisy in there movements. The last month of 2007 was just the awakening of sugar. This is where we will probably see sugar running to new levels do to the up and coming Brazilian Real. Also, it being tied into the ethanol. Crude reached new highs and sugar was quiet, crude holding or maybe even slipping a little and sugar will be free to run to that 50% retracement level of 1359. Futures brokers and futures speculators are going to have fun this up coming year. This is the end of the Mid – Week Recap but remember,Past performance is not indicative of future results. Trading futures and options is not suitable for everyone. There is a substantial risk of loss in trading futures, FOREX and options.