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The Energies Review October 24, 2011

2011-10-25T21:02:00.000-07:00

By Daniel Cronin

What a crazy week it was in the energy markets as crude rallied in the early part of the week to the resistance of $89.50 but fell big on economic uncertainty to $85 along with the stunning news of Qaddafi's death. The flat price is now higher on the Sunday night session to over $85 in Dec CL as this market just does not want to give up. Every time it gets knocked down it keeps getting back up and the $89.50 level is in jeopardy this week. The Euro/USD is looking to creep back up and break the resistance of $1.39 and if it does I believe Crude will try and test $90. The equities markets have broken the old high of 1225 and I believe this could have more to run on the upside. The DOE numbers will be very interesting so look for these coming out on Wednesday. For right now crude is stuck in a bit of range but I believe the price will have look to try and climb higher with all of the major resistances being breached.

Source: Pitguru.com

who Has Gold

2011-03-30T19:10:00.001-07:00

News outlets have been all abuzz with the gold acquisitions of countries like China and Iran, and speculation over the size of Libya’s gold reserves. The potential motivation for buying gold, as well as the possibilities over what to spend it on, fuel stories that range on hot button topics. Is the US dollar so weak that oil producing nations are moving to precious metals as currencies? Will the availability of gold prolong the crisis in Libya and give Gaddafi a lifeline? Moreover, who else has gold in significant quantities?

Past performance is not indicative of future results.

***chart courtesy of Gecko Software

The global recession appears to have brought another round of exploration of gold as an alternative asset, however, the official purchases of gold for central bank reserves have remained somewhat muted. The idea behind a limited gold holding is that other assets are a better investment, offering interest payments over time. To put it blandly, gold holdings take up space, are clumsy and awkward to hold and move easily, and don’t offer interest payments. Creative ideas like leasing gold may offer some returns, but usually not at the rate some banks are pursuing.

So which countries were holding the most metric tons of gold heading into the close of 2010? According to the World Gold Council, the United States led the pack with over 8,100 tons. Germany came in with over 3,401 tons. The rest of the notable holdings are shown in the following chart:

Prior to the civil rebellion, Libya was holding a reported 143.8 tons of the shiny stuff. And the trick with gold holdings is that they cannot be seized or frozen by foreign entities. If they could be sold, the Financial Times is estimating that the gold holdings in Libya could fetch over $6 billion, and pay a private army or mercenaries for “months or even years.” Unlike other central banks that may hold their gold in international vaults in New York, London, or Switzerland, the bullion of Libya is reportedly in country, and available to the embattled leader. The other boon seen for Gaddafi is the same that other investors strive for – gold’s value cannot be set by other governments, and its appeal is universal. Of course, like other investors, moving nearly 150 tons of gold would not be an easy task. If the International Monetary Fund reports on transactions as small as 10 tons, can someone quietly buy upwards of $6 billion worth of gold without anyone noticing?

If nothing else, current unrest and persistent economic troubles have highlighted the opportunities in precious metals as asset preservation, in times of uncertainty as well as potential inflationary hedges. The latter is sought when it appears that central banks are pushing the envelope with stimulus programs. Iran is another news focus, allegedly adding to their gold reserves in an effort to protect their holdings and shift financial assets away from the US dollar. Unfortunately, the same table from the IMF doesn’t show Iran’s holdings. The basis for many news stories about these transactions appears to be from a Bank of England official and a note on Wikileaks.

Iran would not be alone in increasing holdings, potentially as a movement of assets away from the US dollar. Since the first part of the year 2000, several nations have added to their coffers rather than emptying them. Russia has added 366 tons. India picked up 200. China loaded up on 659 additional tons. Saudi Arabia squeezed in 180 more. Switzerland, France, IMF, and the Netherlands were among the ones shedding tonnage over the last decade.

Summary

Besides central banks, ETFs and other investment holdings have increased since the onset of the financial crisis in 2008. So potentially Gaddafi, Iran, China, Russia, and other countries are feeling the same thing that other investors are. Gold can be a good idea to add to your holdings when things get shaky. Precious metals appear to be an even better idea when things get messy. Governments can’t manipulate them. Central banks can’t add more at will. And if fiat currencies continue to weaken or you are placed in a situation where a universal currency is required, gold seems to fit the potential bill. It isn’t unusual then to see that a variety of buyers exist for gold.

Financials Review on Feb 22, 2011

2011-02-22T20:24:00.000-08:00

Trouble overseas and the question is, what will happen to the global production of oil? Libya is seeing air force pilots defect and New Zealand had a large earthquake which has negatively affected the country's currency. Let's talk numbers so it is easier to see why traders might be fearful this morning. Libya creates an estimated 1.8 million barrels of crude a day which is 2% of the world global output. The other kicker is Libya sits on the biggest oil reserves in Africa. Investors may become concerned due to raw materials growing and of course the word some are fearing, inflation. When consumers have to pay more at the gas pump they have less money to spend on essentials. The U.S. Dollar Index and gold could see buy orders over the next few days if the events overseas worsen. This could put pressure on the stock market today. (1)

Over the past 21 months Wal-Mart has posted drops in sales and is blaming dollar stores as to why they are losing money. Sales overall have risen 2.5% to $115.6 billion which did not meet the expectations of Wall Street.(2) Home Depot beat sales and quarterly profit estimates as more and more people took on maintenance improvements. Net income rose over $240 million from last year at this point. (3)

Today the Case-Shiller 20-city Index is forecasted to come in at -2.2% and consumer confidence is expected to grow from 65.6 to 67.0. Wednesday existing home sales are forecast to be 5.40m which is up from the last announcement of 5.28m. Thursday initial claims will be announced and are forecast to be the same as the last announcement of 410k. Durable orders are forecast to grow to 3.6% which is revised from -2.5%. New home sales are expected to be 310k and forecasts might come in higher at 335k. Friday, there will be a GDP estimate that is expected to be raised by 0.2% to 3.4%. Michigan sentiment is forecasted to 75.5 up from 75.1 when last announced. (4)

- Frank LaMantia, Financials Guru

1 http://finance.yahoo.com/news/Libyan-turmoil-hits-stocks-as-apf-1471605558.html?x=0&sec=topStories&pos=main&asset=&ccode=
2 http://www.cnbc.com/id/41702728
3 http://www.cnbc.com/id/41702997
4 http://biz.yahoo.com/c/e.html

Grains Review on Jan 13th

2011-01-13T20:16:00.000-08:00

Calls: Following WASDE the beans and corn trades touched limit twice before backing off slightly on the close. There was plenty of selling into the rally early with front end corn vol dropping by a whopping 18% to 34% basis Feb. March dropped by 6.5% on the day due to a lack of follow though once we touched limit. Also, this report offered a great exit for entrenched longs looking for an exit early in the year. The report offered no momentum for wheat after raising world stocks leaving the trade in the dust as compared with row crops. Outside momentum helped all session with talk of an Argentine farm sector strike starting on Jan 17th and running for 7 days. This is in protest of changing export parameters for corn and wheat. This is another brilliant political move by Kirchner that I think will blow up in her face. Bull spreads carried the day in corn and beans with the N/Z and N/X (beans) widening on the day. Paper was an aggressive seller of the N/Z 100p CSO for 20-cents. This is a bullish play commercials should love. Overall it was a day of many exits with few fresh positions put on. The strangest and most interesting one was in Beans with ADM buying 3,000 SN 23.00 calls for 8-cents. This smells of fund business going through a commercial. Heading into the afternoon, the trade is waiting for further word concerning the Argentine strike possibilities with confirmation seen late in the day. The strike is a no selling stance by farmers for corn, beans and wheat between Jan 17th-24th. This helped the market into the overnight with corn continuing to lead the way with oil losing to meal but this looks short lived due to production problems in Malaysia and India looking to eliminate their palm import tax. Heading into the day session export sales were nothing to get excited about and macros are having only a minor impact so far with both the Euro and crude chopping on either side of unchanged. This is a big pullback for the Euro so watch this factor closely.

Beans are called 6-8 Higher to start moving above the daily contract high and into no man's land on the weekly chart. The only comparative year is 2008 but I think the market actually has a major world production and consumptive problem. Indicators on the weekly chart remain in the upper end of the range with no overt signs of weakness. Corn is called 8-10 Higher breaking above contract highs with indicators turning positive following a week long pullback. A perfect picture for bulls, I think. Wheat is called 6-8 Higher holding the most upside ground to gain. There is nothing to stop the wheat except a lack of excitement. I favor KC and Minni over Chicago and ride this horse all season long. Meal is called 2-3 dollars Higher breaking above contract highs yesterday and continuing this overnight. There is no reason to be bearish from a technical standpoint. Indicators are at the upper end but they have been for weeks. Oil is called Flat/Mixed looking for momentum for crude and palm oil. A break above 59.10 is needed to spark fresh interest.

Fundamental: Argentine weather is looking at bit wetter through the weekend with the southern and central regions favored over the far northern regions. BA and surrounding areas look to receive .50-1.00" with 70% coverage through Monday. This will help overall prospects but the north remains too dry for anyone to be comfortable. Brazil remains in good shape overall with only the far south of any concern at the moment.

Open interest shifted as follows: Corn +27277, Beans +12701, Wheat +3633, Meal +8310 and oil +9485. Rebalancing is a major factor right? I feel the population of new ETF's and fresh allocations from CTAs is the major factor. Add commercial fund money and this looks to continue, not abate. Commodities are a hot topic that will continue to garner media attention potentially pulling more money into the trade. It's a beautiful circle.

China bought 40 TMT US bean oil yesterday for second quarter delivery.

Pakistan has sold between 200-2500 TMT of wheat to Bangladesh and Myanmar. This is their first sales in three years due to floods and drought ravaged crops. This is a mildly bearish impact but Pakistan will not export to anyone not abutting the country so the world impact is minimal.

The 6-10 day maps continue to show below average temps in the Midwest but there is ample coverage following the recent snows to cause no worry. The worry still lies in the HRW regions with no precipitation expected with the current 3-4-days system moving through the northern half of the US. This only adds to woes for farmers in that region. The trade impact is minimal today due to this being a known factor but it offers no relief for shorts nor any threat to those long KC versus CHI.

Jordan tendered for 100 TMT Hard milling wheat. Bad timing I think.

Following yesterday's WASDE report the corn stocks to use ratio is down to 5.5% (Thanks MaryAnn). This is shockingly low forcing more and more corn users to sweat against shorts July forward. If Argentina continues to show problems I believe corn has no choice but move higher due to world supply concerns. The corn carryout at 745 million is the lowest in 15 years...want to get short this? I don't.

Palm oil traded 44 Higher overnight on production concerns. Couple this with India talking of eliminating their palm import tariff and you can start to paint the tight world situation that I talked about in the preWASDE report. The US is swimming in oil but the world is not, the world will win.

Talk has Chinese crush margins back to even and possibly turning positive shortly. This is a major swing from the talked about 20/tonne loss just a month ago.

Export sales came in as follows: Corn 439.2 10/11 and 68.3 11/12 with 613.7 TMT shipped. Beans 495 10/11 and 180 11/12 with 950.2 TMT shipped. Most of the sales and shipments were, of course, to China. Wheat 147.3 10/11 with 27.9 11/12 with 613.7 shipped. Meal 26.2 TMT sold with 278.2 shipped (none to China) Oil 7.5 TMT sold and 57.2 TMT shipped with 29 TMT heading to China.

Overall disappointing but the trade was still in holiday mode. I look for these numbers to pick up dramatically in the coming weeks.

Options: Yesterday the market learned how volatile cereal options can be with an amazing drop of 18% in CG options. This was due to a lack of follow through following WASDE with March taking a 6% hit now sitting at 39%. May was down 3% lower with deferreds down about 2%. This is a solid drop but still expensive enough to make buying it scary but I would not sell any vol. If you want to own vol, look to beans. Following yesterday's drop, SH vol is down to a scary low level of 31%. This is 8% under corn or wheat in March with July sitting at only 32%. I like looking at owning upside calls in beans and straddles with vol ownership advised. Corn bulls may want to simply buy calls or invert 1X2 call spreads looking for an explosion. There is no slope so buying call spreads is not advised.

The following chart includes my observations:

***chart courtesy Gecko Software
Past performance is not indicative of future results.

MACROS:Are mixed but support from a surging Euro following good bond sales in Spain and Italy helps the upside momentum. Crude remains choppy with metals on the sideline so far. Cotton is 200 higher with sugar inching its way higher helping even more.

Gold is trading 4.20 Higher sitting at 1,390.00.
Crude is trading .20 Lower sitting at 91.66 as of 8:25 CST.
The Euro is .0148 Higher against the USD trading at 1.3276.
The Yen is .22 Lower against the USD trading at 82.74.

Daily Wisdom: A peace is of the nature of a conquest; for then both parties nobly are subdued, and neither party loser. - William Shakespeare

- Matthew Pierce, Grains Guru

James Mound’s Weekend Commodities Review

2010-12-13T22:46:00.000-08:00

Financials

The S&P500 has developed an interesting multi-pronged technical setup on a daily chart that indicates a strong decline to 1203, possibly as low as 1184 in the near term. I believe the stock market rallied based on the Obama extensions of the Bush tax cuts, but overall the market will find weakness in global economic concerns and a reversal in premature bond selling. As money migrates back into the U.S. dollar from a continued exodus in Europe it is more likely funds will pour into bonds than an overbought stock market. Expect a dollar run to 83, a 3-5% drop in stock prices, and a decent bond retracement to 126 over a relatively short time frame. The euro and pound remain sells with the Canadian and Aussie dollar worthy of long term shorts. The Japanese yen remains a bull bright spot amid a sea of bearish foreign currency plays, with money moving to Japan as it leaves Europe and investors lack alternatives. I continue to stand by my forecast that:

Grains

Corn, wheat and soybeans have all developed congestion patterns near the highs, not altogether a bearish indicator but rather a suggestion that momentum and upside volatility have subsided. My expectations for declines in the stock market and energy sector are likely to hit the grain sector as well, given the lack of fundamental influences in grains this time of year and the overall psychology that global economic weakness means declining grain demand. Put plays are recommended across the board.

Past performance is not indicative of future results.

**Chart courtesy of Gecko Software's TracknTrade

Meats

Cattle is testing key trend line support and should fail this week. Hogs remain choppy and avoidable for the time being.

Metals

Gold and silver remain near the highs with choppy intermittently volatile trade lacking clear near term direction. Get short heading into the last few weeks of 2010 as a liquidation event is expected in both markets in the near term. Copper offers a fundamental long term sell ahead of a China slowdown causing panic selling in that market.

Softs

A short covering rally in coffee appears underway, however this move (possibly to 230) is expected to be short-lived and worthy of a put play on a further move up. Cocoa has established a likely near term top and is a sell with straight long puts. Cotton is attempting to pull off the miraculous feat of new highs after such a dramatic collapse. This is unlikely to occur, mainly on a technical level as it is very rare to see epic highs followed by an extreme retracement followed by a rapid return to the highs. Instead, look at this as the market setting a secondary top for a less volatile selloff ahead. OJ is a short with puts. Sugar is a sell using bear put spreads. Lumber remains a cycle buy on dips.

Soybeans Futures History

2010-11-24T23:12:00.000-08:00

Although there are several claims to the origin of soybeans, most believe its roots can be traced back to Asia. More specifically, the history of soybean use for human consumption goes back at least 5,000 years in the Chinese culture. Soybeans were proclaimed as a “sacred plant” by Chinese Emperor Shennong. If anyone was to claim a particular crop as sacred it’s Shennong. His name directly translates to “divine farmer” and he’s often referred to as the Emperor of Five Grains for his contribution to Chinese agriculture.

Fast forward a few thousand years to the early part of the 1930s; the U.S. is recovering from the Great Depression and the droughts of the Dust Bowl. At the time, Ford was doing more than building cars. A little known fact about Henry Ford is that he was one of the biggest proponents of soybeans’ uses. His financial contributions to the research of soybean applications directly assisted in the development of products like soymilk and soy-based fibers. Soybean markets were growing, and a proper place to trade them was becoming a growing need.

In 1936, the Chicago Board of Trade (CBOT), the first formal futures exchange in the United States, launched its futures contracts for trading soybeans; the first of its kind. Another product of 1936 was the Commodities Exchange Act that banned futures trading on non-designated exchanges. By consolidating soybean trading under one roof, the soybean futures market grew. These developments solved two large issues facing producers and consumers of soybeans. Having a futures exchange allowed for buyers and sellers of soybeans to meet and trade their goods resulting in proper price discovery. The futures market gave an accurate price reference for those who needed one. The other major issue that existed before exchanges was the lack of accurate supply and demand data. This resulted in supply gluts and shortages because producers weren’t able to properly assess demand needs. Formalized futures exchanges not only consolidated trading, but they also consolidated market data.

15 years after trading soybean futures markets began, the CBOT introduced futures on the soybean complex: soybean oil and soybean meal. Options on soybean futures products were released in 1984. These different products have all developed and grown in their own rights. They are widely used by spreaders, hedgers, speculators, and commercials. The historic development of futures markets are the reason that people trading soybean markets today have the versatility and choice to pick which financial vehicle suits them best.

(Soybean. Columbia Encyclopedia, Sixth Edition. 2001-07. Accessed Feb.25, 2009)

(Jane Reynolds, Phil Gates, and Gaden Robinson (1994). 365 Days of Nature and Discovery. Harry N. Adams, Inc., New York. p. 44. ISBN 0-8109-3876-6. )

(CBOT: About CBOT: History)

Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results.

The Bullion Report : The Gold-Silver Ratio

2010-11-17T19:06:00.000-08:00

The gold-silver ratio is among the many tools and topics that investors take a hard look at when it comes to precious metals. There are several moments in time that the ratio was made a permanent force by government decree. Even in modern trading, the ratio has a home in certain trading strategies. With both markets playing with record highs, it is worth explaining and exploring the ratio between these two markets.

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

The gold-silver ratio is pretty straightforward math – to determine the ratio, look at how many ounces of silver it takes to buy a single ounce of gold. If gold were trading around $1,000 an ounce and silver around $20 an ounce, the ratio would be 1,000 over 20 or 50:1. The result is that a higher ratio is seen as a signal for cheaper silver versus gold and a high ratio signals more expensive silver. Older references regarding the mining resources for silver suggest that there is roughly 16 times more silver to be mined than gold, which sets up the older ratio valuations from countries like France, the US, and Great Britain. Today, the values for both metals are obviously constantly changing, but adherents to trade strategies based on this ratio look at historical references for potential trading opportunities.

Coinage acts in the United States during the 18th and 19th centuries placed the gold-silver ratio in the neighborhood of 1:15 or 1:16. When the bimetal standard was dropped, this shifted and the ratio has drifted high and low in subsequent generations. Events like the Great Depression, the implementation of Bretton-Woods, post-war prosperity, dropping of the gold standard, the Hunt Brother’s manipulation, and other price extremes in precious metals have been cited as significant shifts in the ratio.

Trading strategies based on the gold-silver ratio look at these previous ratio levels as possibilities for extremes which might present opportunities. Basically, if it takes fifty ounces of silver to buy one ounce of gold at one point, an investor who thinks the ratio may expand would look to sell or be short silver-related assets. There is still a substantial level of risk in the trade, and it would be based on the ability to correctly identify an opportunity in the ratio and the potential for a future shift. Trading the ratio can be done through various investment outlets. Some bullion bugs trading the ratio may do so without regard to the actual prices. In the same example, if an investor believed the ratio would expand from 50:1, they could convert 50 ounces of silver to one ounce of gold. If the silver price dropped and the ratio grew to 100:1, the same investor could convert that ounce of gold to 100 ounces of silver.

Using an average price for each precious metal, a chart of the gold-silver ratio over time might look a little like this:

Past performance is not indicative of future results.

To ratio traders, the suggestion of this chart is that extremes run the gamut from around 16:1 to nearly 100:1. The last decade has frequently produced numbers around 50:1 or 60:1. Therefore, any divergence from this could be viewed as a potential trade.

Summary

The gold-silver ratio is obviously another tool that can be employed by investors looking for particular signals when trading precious metals. The current analysis suggests that when compared to the rest of the decade, a ratio above 50:1 means greater opportunities in long silver positions. However, the extreme volatility seen as of late might mean the ratio has room to expand. There are also the recent lawsuits regarding silver price manipulation to consider. Most importantly, the current recession has yet to push towards a tangible recovery. This means that silver could still be highly susceptible to larger price movements to the downside as it is used in both industry and investment. The precious metals investment expansion could still see strong demand this year and next. The manufacturing industry might not. That means there is a possibility of a fundamental weakness in silver markets that needs to be accounted for when looking at the gold-silver ratio. If gold can retain its strength or outperform silver at any time, the downside pressure in the silver market might easily deliver another spike in the gold-silver ratio.

For your FREE gold trading kit, call (866)258-5997.

It means that the silver coins of the United States at whatever ratio is fixed, and I want the present ratio that we have now, 16 to 1, maintained precisely as it is. -Richard Parks Bland

Disclaimer: The prices of precious metals and physical commodities are unpredictable and volatile. There is a substantial degree of a risk of loss in all trading. Past performance is not indicative of future results. © 2010 Berkshire Asset Management, LLC

PitGuru.com’s Weekly Grains Review for Nov 8th, 2010

2010-11-08T18:14:00.000-08:00

Friday saw a messy session with wheat and bean oil leading the way higher on relationship buying ahead of the report. Oil share widened on Chinese demand talk and possible production concerns coming out of Indonesia following the recent volcanic activity. There is no wipeout talked about but the light ash cover is coating leaves restricting photosynthetic activity. This is a concern for total production in a time of tightening global food oil supply. Wheat recovered from chart lows versus corn with protective buying seen in options. The WZ 750-800 call spread was bought all day with the WZ 750-775 call spread bought a couple thousand times. The most interesting play is in corn options with paper buying the CH 10.00 calls, the CK 11.00 calls and the CZ11 10.00 calls. This is obviously a gamma and slope play with delta a mute point with calls this far out of the money. Outside of this the market is seeing puts bought in bean oil as players start looking for the downside technical correction. Owning put vol covered is a smart way to play the put slope inversions with long futures helping counter the upside delta move. All in all a very supportive week with the market inching closer to key strike prices as the Dec option expiration approaches. Heading into the weekend the trade is asking itself, what comes next? What happens if the USDA lowers corn yield below 154? What if John Macintosh is correct and corn yield is 148? Is China’s recent absence from the bean export market the first piece of evidence that they are now covered through March? Will the USDA raise bean exports 50 million bushels and if so, where do they get the extra beans? Do they borrow from the “residual” sludge fund or are they going to raise the yield? Bean ending stocks, though larger than last year, are still too low to be comfortable making the trade jittery.

The weekend offered little fresh information leaving the trade erratically choppy heading into the November report. Early strength was seen in the wheat market with this trade seeing a 20-cent range overnight after weekend weather did not offer any relief to the US plains or NW Australia. The macro situation overnight was slightly weaker with nothing dramatic but a slight contraction erased early overnight gains in grains. All markets ended slightly lower with bean oil losing the most following a contraction in palm oil. The USD is gaining versus the Euro on growing concern over Irish debt levels with this looking to continue into the day session.

The day ahead of the report is usually a protection day. This is when traders with naked length or shorts look to buy options as an insurance policy for immediate movement. Look for hefty action in Dec options again today, following the action the market saw on Friday. With the information currently at hand the trade is looking for a drop in overall corn yield, no change to a minor increase in bean yield with world wheat numbers expected to fall again. Overall this report should offer plenty of opportunity for the trade to change their bias if they want to. The “spin” following the trade will be interesting in that pundits are polarized at the momentum concerning the actual impact fundamentals will have versus the impact of the USD. I am a fundamental trader so I feel this will be fundamentals will win the day, if not tomorrow then the market has to wait for the final numbers on the WASDE report come January.

The market looks to open slightly lower to start the day with a weaker crude market and a sizable (100+) move in the USD over the Euro. All factors look bearish heading into the report but do not get enamored with bearish sentiment until we get tomorrow’s numbers behind us.

I am currently in Cartagena Colombia at an international conference of wheat producers and consumers. Following the conference I hope to have a better idea of what the actual world producers are looking for concerning protein, production and overall producer sentiment. From early indications I estimate that the world crop will be big but overall quality is a concern making the wheat versus corn spread a feature following the WASDE report.

World production numbers are going to be closely scrutinized. Focus on Argentina, Brazil, Australia, Russia and look for possible changes in the Chinese numbers. The USDA is currently 16 MMT above private forecasters concerning Chinese corn production so I think this a possible bomb about to go off. The direction of the impact following the grenade is yet to be seen but I have to believe that the upside is the path of least resistance for corn and all agricultural markets due to growing world consumption and questionable weather patterns. The La Nina effect is stated to be the largest in 70 years. If this is true, the Latin American crops are in for a tough struggle as planting approaches completion.

High Marks

2010-11-03T21:26:00.000-07:00

Today the markets eagerly anticipate an announcement from the Federal Reserve as it wraps up a two day meeting. The focus will fall on the full measure of proposed quantitative easing. Heading into the report, there has been little doubt that the Fed will take some easing measures and that the US dollar and metals markets will react. So far this year, gold and silver have made fresh highs, reigniting interest into the high marks of the past and the events that motivated them.

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

The fundamental focus for the last few years has been relatively narrow, falling on a handful of US dollar events and a broad picture of the global economic landscape. The housing and credit crisis precipitated reactions from the Federal Reserve that led to easing and a drop in the US dollar. Subsequent economic fallout including high unemployment and stagnant growth led some investors to the ‘haven’ of precious metals as an alternative asset. This has continued to bring some high price levels in both gold and silver.

The march to new highs in gold was nearly three decades in the making. In 1980, the price of gold topped $850 amid a climate of high inflation, high oil prices, and high geo-political tensions, specifically in Afghanistan. The price of gold tumbled following that peak, apparently bottoming out above $250 an ounce in 1999. The low came in as investors speculated that central banks would begin selling their gold reserves. Once the central banks of Europe signed their gold agreement limiting gold sales, the stage was set for a price comeback.

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

In the decade that followed, gold prices picked up steam, gathering momentum as geopolitical tensions began to rise and commodities prices picked up. Starting in 2006, the weakening dollar provided a likely catalyst for investors to move towards commodities. The subsequent price peaks in gold hit a climax in January of 2008 when gold broke that $850 price high. Each new high shook out some investors as profit taking ensued, but the market forged ahead to the $1,000 an ounce level, breaking through in March of that same year. After that, gold prices appeared to fall victim to the commodities exodus as investors began to focus on demand fundamentals and the potential for recovery. Plenty of stimulus was being poured into the global economy in an effort to restart the growth engines, and it appeared to have the potential to work.

However, gold came back after falling below the $700 level. Investment interest and demand, especially in ETFs, grew exponentially last year. That kind of hunger for the perceived haven of gold propelled the market back over the $1,000 mark and beyond. For now, gold has already managed to top $1,380, and there appears no shortage of analysts who thing the twin threats of inflation and fear could move things higher.

Gold prices have not stood alone in hitting fresh highs. Silver has also managed to break out, topping previous high marks. However, cresting the all-time peak in silver prices could be a little more challenging. The peak price in silver took place in the 1980s under the price manipulation of the Hunt Brothers. At that time, silver prices could have been faring reasonably well in tandem with gold as fundamentals like inflation and political tensions affected commodities priced in US dollars. However, the exponentially high silver spike above $50 had some help from the Hunt’s cornering the market. Once the chase had ended, the Hunts were bankrupt and many speculators suffered huge losses.

Finding a high mark in silver prices absent of manipulation, it would seem natural to take a look at the prices in 2008, when gold and other commodities were logging price peaks. In March of that year, silver prices topped $20 an ounce. This level was only recently breached again. Unfortunately, this new high comes as more accusations of manipulation come into play. CFTC commissioner Bart Chilton recently issued a statement that suggests they are looking into the potential that there were attempts to influence silver prices. (1)

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

Summary

There seems to be little doubt that the recent economic crisis and the reaction to the same have helped propel precious metal prices higher. Gold, as well as silver, have been the beneficiaries of renewed interest from investors. As a result, prices gained a great deal of momentum and hit fresh highs. Going forward, it seems that there is plenty of room for price action on both sides of these high marks. On one hand, the new peaks are likely to inspire intermittent profit taking. On the other hand, the bigger picture could spell strength and support for these markets. What it comes down to is the strength of the fundamentals behind the move. Price highs based solely on fear and manipulation face a greater challenge in finding support on the way down. Those are weaker fundamentals. Gold and silver prices would need to find strength in the possibility that investor and central bank demand for gold will remain vibrant and that the US dollar will remain in a pattern of competitive devaluation.

For your FREE gold trading kit, call (866)258-5997.

1 http://www.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-efforts-to-control-price-chilton-says.html

Gold and silver are no doubt subject to fluctuations, from the discovery of new and more abundant mines; but such discoveries are rare, and their effects, though powerful, are limited to periods of comparatively short duration. - David Ricardo

Pitguru Review for November 1st: Energies & Metals

2010-11-01T21:11:00.000-07:00

Energies

By PitGuru Daniel Cronin

Crude Oil still stuck in this trading range but after this week the market will have much better direction on where it wants to go after the FOMC meeting and the non-farm payrolls at the end of the week. Crude has been stuck between $80 and $84 for the last month now but speculation over the weekend led that the Federal Reserve will announce another round of credit-easing measures to help spur growth in the U.S helped the Euro rally and crude as well above $82 per barrel. WTI spreads have gained in recent days and so has the market down from support at $80.50. I believe the market will rise up to the resistance of $82.70 today before any news comes out, and then it’s all fair game from there. $84.50 definitely can be tested if credit ratings ease even further so keep an eye out for this number.

Natural gas has been on a real surge since the November contract came off the board. December Natural is now above $4.08 looking to test key resistance of $4.10 as this market has shot up since consecutive inventory reports have come out better than expected. This market looked to be headed to $3.00 but after the depressed November contract went off the flood gates opened up and buyers came in chomping at the bit to get a piece of the market. For now it needs to see a nice close above $4.10 to continue momentum.

***chart courtesy Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.

Metals

By PitGuru Daniel Cronin

Gold and Silver both have rallied since being semi liquidated the last two weeks as new buyers came into the market as the Euro rallied against the USD ahead of the FOMC meeting this week. Per Bloomberg, “Precious metals have gained this year as central banks maintained low interest rates and governments spent trillions of dollars to spur growth. Silver has advanced 48 percent in 2010 and palladium has surged 60 percent, both beating gold’s 24 percent rise. Precious metals have outperformed global equities, Treasuries and most industrial metals, boosting investment in exchange-traded products backed by the metals.” (1) I think an easing of the rate will surely send Gold up above $1,365 and Silver past $25.00 as these markets already have momentum behind them - another positive for them will only send these to higher heights.

Copper rallying back up to $3.80 from last week’s low of $3.71 amid the FOMC meeting as both equities and Euro rise. $3.92 is key resistance so this market will be watching out and waiting in anticipation of the Fed's next move. For now markets are trending higher but can be thrown for a loop if the Fed decides not to do anything and should unemployment rise, sending Copper back to $3.71.

1 http://www.bloomberg.com/news/2010-1...s-meeting.html

The Learn About Futures Insider for Oct 28th, 2010: Crude Oil

2010-10-28T19:13:00.000-07:00

The Learn About Futures Insider:
Crude Oil

Sometimes mythic, often controversial, crude oil has been an important component of modern times. Crude oil comes in many colors and consistencies, from hydrocarbon rich reservoirs in Texas to the heavy oil sands of Canada and Venezuela. Usually named for their region of production as well as other factors, crude oil properties can include various elements including carbon, nitrogen, oxygen, sulfur, and metals. Due to international appeal and demand, there are different tradable crude oil contracts across the globe, but for the purposes of this report, specifications willl focus on the NYMEX Light, Sweet crude oil contract.

Contract Size:1,000 US barrels or 42,000 gallons

Price Quote & Tick Size:Dollars and cents per barrel; minimum tick size is one cent per barrel or $10.00 per contract

Contract Months: All months

Trading Specs: Open outcry on NYMEX runs from 9:00 am to 2:30 pm ET. Electronic trading on Globex runs Sunday through Friday 6:00 pm until 5:15 pm with a 45 minute break each day.

Daily Price Limit: $10.00 per barrel or $10,000 per contract. If any contract is traded, bid, or offered at the limit for five minutes, trading is halted for five minutes. When trading resumes, the limit is expanded by $10.00 per barrel in either direction. If another halt were triggered, the market would continue to be expanded by $10.00 per barrel in either direction after each successive five-minute trading halt. There will be no maximum price fluctuation limits during any one trading session.

Trading Symbols: CL

Past performance is not indicative of future results.
***chart courtesy of Gecko Software

Crude Oil Facts

Crude oil is not limited to modern uses as history shows examples of petroleum products being applied for nearly four thousand years. However, there is no doubt that the volume of consumption and the variety of applications for crude oil exploded in the middle of the nineteenth century. First driven by the demand for kerosene and oil lamps, the introduction of the internal combustion engine sealed crude oil's fate and ushered in the era of oil booms across the United States. As oil quickly overtook coal as the world's leading fuel, it was only a matter of time before reservoirs began to be outpaced by demand and the first "energy crisis" hit in the 1970's. In the 1980's, increased production and lower demand led to an "oil glut".

US imports in the last three decades are illustrated as follows:

Past performance is not indicative of future results.
**Data Courtesy of EIA

The most well known deposits of petroleum are porous rock formations in which the hydrocarbons that make up the oil are sealed within the rock by an impermeable rock above. These reservoirs are accessed by drilling and pumping. Unconventional oil deposits of heavy crude oil exist in oil sands or oil shales which contain migrating oil or trapped hydrocarbons. Heavier crude oil deposits are often more expensive or require a more intensive process to extract the oil.

Most geologists attribute the formation of oil to the compression and heating of organic materials over extremely long periods of geologic time. However, there is an alternate theory that suggests natural petroleum was formed from deposits which may date to the formation of the earth rather than biological origins.

World crude oil supply and demand stats are highlighted in the following:

Past performance is not indicative of future results.
**Data Courtesy of EIA

Past performance is not indicative of future results.
**Data Courtesy of EIA

Past performance is not indicative of future results.
**Data Courtesy of EIA

Past performance is not indicative of future results.
**Data Courtesy of EIA

Key Terms

Crack Spread - Based on the word cracking which is the word for breaking down crude oil into products at a refinery. A crack spread is a term used when referring to the price difference between crude oil and extracted products like gasoline or heating oil.

Light, sweet or sour crude oil - Oil comes in various colors and viscosities. Light, sweet crude oil has less sulfur and is lighter than sour crude oil. Light, sweet crude oil is usually in higher demand for refining into gasoline, kerosene and diesel.

Oil sands or tar sands - are semi-solids of crude oil, sand, and water. Usually sticky, sands need to be extracted in unconventional ways since they do not flow like those deposits used with well methods. Big deposits include Athabasca oil sands in Canada and Orinoco oil sands in Venezuela.

Key Uses

Crude oil is normally taken to refineries for the hydrocarbon chemicals to be distilled into the common products consumers are all familiar with or to be mixed with chemicals to create other products including:

Diesel fuel
Gasoline
Jet Fuel
Kerosene
Natural Gas
Lubricants
Tar
Paraffin

Key Concerns

Hubbert Peak Theory - A geologist working for Shell Oil in the middle part of the last century is widely recognized as the first person to predict an oil peak. M. King Hubbert noted that oil discoveries tended over time to form a bell shaped curve. He suggested that oil production over time would follow a similar path with production in the lower 48 states peaking between 1965 and 1970. Hubbert went on to predict global oil production would peak in the last five years of the 20th century.

Using his predictive curve, it appears as though 54 of the largest oil producing nations have already passed their peak of production and are in decline. However, controversy surrounds the theory since many regions lack transparency in accounting for oil reserves. Conclusions vary from intimating that the global peak has already passed to the optimistic notion that the peak will come in 2035. Fossil fuels are defined as finite and since supply can be a major factor when considering pricing - if not the most important - the implications of the theory are boundless.

OPEC - The Organization of Petroleum Exporting Countries (OPEC) is a group of thirteen oil producing nations: Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. Created in 1960 and with current headquarters in Vienna, the stated objective of OPEC is to coordinate and unify member petroleum policies to secure fair and stable prices. Actions, statements, and policy changes from member nations can have an immediate impact on the price of oil and meetings are usually foreshadowed by media and trader speculation.

Geopolitical Tensions - Disputes and conflicts in any producing nation will naturally have an effect on oil prices . The Gulf War and the War on Terror are probable examples as they centered on top producing regions of the world. Smaller - though no less grave - incursions in or around oil pipes, oil pumps, and oil refineries in areas of Asia and Africa can also affect production, distribution, and price.

Alternative Fuels/Environmental Concerns - Controversy surrounds petroleum products and is rooted in the potential harmful effects to the environment and atmosphere. The late 20th and early 21st centuries have focused on producing alternative fuels and engines. They have also seen significant environmental issues ranging from oil spills to the impact of drilling in preserved areas. Alternately and perhaps ironically the effect of the environment on oil production is a key area for concern especially during the Gulf hurricane season when offshore platforms become natural targets and production is pared back or halted completely. The same effect can be felt during winter storms in the North Sea.

_______________________________________________________________________________________

Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.

The Bullion Report for Oct 27th: At Ease

2010-10-27T23:52:00.000-07:00

The Federal Reserve will be meeting next week and all eyes will be focused on the potential for another round of monetary easing. Speculation abounds as to the scope and depth of their actions, but most analysts are working on the assumption that at least $500 billion in Treasuries will be picked up over the next five months. Considering the global economic climate and the link between gold and the U.S. dollar, what could this easing mean for precious metals moving forward?

Past performance is not indicative of future results.
***chart courtesy Gecko Software’s Track n’ Trade Pro

Easing is a banking tool that is meant to stimulate economic activity. The Federal Reserve would aim to do this with a round of Treasury purchases. This would keep them on their current course of reducing interest rates and trying to jumpstart the money supply. With these purchases, they get excess reserves to make new money. The effect can be what the name implies – it gives the banks and the economy some breathing room.

The risks to easing run the gamut between the potential for hyperinflation and the chance that the easing will not be long or deep enough to achieve the desired stimulus results. In the present environment, both situations would likely represent a bane to the Federal Reserve and a boon to gold and other precious metals.

Debasing the U.S. dollar by increasing the money supply would likely spur additional interest in gold and other precious metal investment. After all, inflation serves to devalue a regular savings account. The trick to this, and the hope of the Federal Reserve officials who support this course of action, is that the global stage will negate the effect of this round of easing. Basically, if all the other central banks are doing it, there will be no one single losing currency. This kind of “competitive devaluation” might temper the reaction from the market. The caveat is that the increase in money supply on a global level would still be a possible motivator for investors who jump on gold as an inflation hedge.

Even if the inflation-situation does not come into play, or it is successfully combated, there is still an overwhelming amount of debt created by round after round of stimulus aimed at spurring economic activity. This has increased the demand for certain investments – like gold – amid flimsy fundamentals for other financial assets. It will probably mean more business for precious metals as investors seek havens if the stimulus fails and this second round of easing isn’t enough to bolster employment and economic growth.

It will be interesting to see what the Federal Reserve commits to, following next week’s meeting. Guesses seem to be centered on the possible commitment from officials to buy up $100 billion in Treasury debt per month for the next five months. This headline may already be priced into the markets, but recent gains in the dollar set up an interesting situation. The drop in gold prices on the strengthening U.S. currency could have set up perceived value entry points ahead of any additional official announcements. According to a story from Reuters, gold traders in India were already scooping up the metal on lower prices amid their festival and wedding season peaks. (1)

It seems unlikely that the Federal Reserve will fall short of the market expectations. Doing so at this point would bump up the dollar but it would jolt other financial markets in the process. Officials have not been working this hard for this long to rock the boat, despite some member objections to another round of stimulus. To quote Ben Bernanke’s own speech from the beginning of 2009, “The global economy will recover, but the timing and strength of the recovery are highly uncertain.” With this in mind, the effort they could be announcing next week will probably fall in line with their actions thus far. Commit to maintaining a response that adds liquidity and stimulus but keep the door open. This means giving a nudge and a wink but not committing to huge purchases right away. Look for officials to nibble at easing, not gobble.

Summary

There is probably no quick fix to housing and employment issues, but there has been strong effort to repair things since the 2007 start of the crisis. The cumulative efforts of the Federal Reserve could see results at some point, after all, employment is seen as a lagging indicator of the health of an economy. However, until there is a solid compass point that shows tangible recovery and economic strength, fear will still prevail. Fear of economic troubles and fear of future inflation issues as a direct result of continuing stimulus. This means that there is still a proverbial basket of issues from which investors can pull a potential catalyst for higher gold prices.

For your FREE gold trading kit, call (866)258-5997.

As we move towards 8 or 10 billion people on the planet, there's a little less gold per capita. Each one of us will continue to be fighting over an ever smaller percentage of total resources. This is not a happy thought. - Dean Kamen

1 http://economictimes.indiatimes.com/...ow/6821101.cms

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PitGuru.com Weekly Grains Review for Oct 25th

2010-10-25T19:34:00.000-07:00

By Matthew Pierce

Friday saw a choppy lower session with both corn and beans following the script gravitating back to the highest open interest strikes at $5.60 and $12.00. This kept most of the trade subdued throughout the session with nothing exciting on the fundamental side to direct interest ahead of the weekend. There was little expected so the trade allowed options to dictate the pace. Over the weekend I saw 4364 of the SX 12.00 calls exercised with 226 puts abandoned…a good move in hindsight. In corn I saw 3016 calls exercised and 5568 puts. The puts were thought to have futures against them. These were the only two features with all other floor commodities showing only marginal interest in Nov. The overnight session was dictated by macro factors with the USD taking another dive following nothing coming out of the G20 meeting. Crude is up on extreme food oil demand with palm screaming higher making 2 year highs. Chinese markets were higher as well helping the corrective upside sentiment. The day session looks to open in line or stronger than the overnight with support from the Euro, Chinese demand, Aussie weather and now talk of standing water delaying plantings in the SW of the US HRW region.

Today’s calls are as follows: Beans are called 15-20 Higher looking at the contract high at 1235 (SF) as the first bull target. Corn is called 10-12 Higher looking to go above Friday’s high with last week’s high at 579 ½ the first upside target with the contract high at 588 offering a second level this week. Indicators remain in the upper end of the range but are still below the contract highs. Wheat is called 7-10 Higher looking to achieve the 50-day MA sitting at 702 ½ this week. Meal is called 2-3 dollars Higher looking at last week’s contract high at 340.20 as the only target. Bean oil is called 130-150 Higher leading the way on the floor looking to achieve the 50% weekly retracement level at 49.77.

Concerning weather: Weekend rains were far greater than expected in the SW region of the US with many areas that needed rains receiving them for HRW plantings. This system moved slowly across the Midwest with all harvest activity stalled. This should ease the record rate seen for this year’s harvest allowing time to catch up with the markets. There is some talk of too much rain in areas of N. TX, NE OK and SE KS but this is not a major factor yet. The benefit of the overall rains outweighs the spotty standing water. The above map shows a bearish forecast with only the far NE corner of the Corn Belt still looking at any rains to stall harvest. Looking at Australian weather, the NW’s opportunity for rain is stunted today as compared with Friday’s forecast. The forecasted rains have been pushed off to this weekend with fading confidence in the overall impact this will have. Without these rains Aussie NW production will fall to less than 50% of last year’s crop. China is looking at a very cold forecast possibly damaging their recently planted winter grain crops with wheat a serious concern. This is a short lived situation but one that deserves watching due to wheat corn relationship spread levels.

Looking ahead at this week I see commodity demand as the major factor. Chinese demand in particular is the focal point of the trade with continued rumors floating all over the trade that a major corn deal is in the works. This only enhances the availability of profit in long option and volatility plays heading into Month End. I expect to see more and more OI hitting the trade as moving into Nov due to profit potential versus a staggering US equity picture. The retail sector looks to suffer even though estimates are above last year. The 5-year trend remains low and slow not offering any incentive to join the party. On the other hand, commodities continue to gain in open interest; commodities have a real supply and demand story coupled with massive world currency issues. This train is just warming up for all late comers.

***chart courtesy Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.

Pitguru Financials Review for oct 18, 2010

2010-10-25T02:04:00.000-07:00

By PitGuru Frank LaMantia

Citigroup earned $2.15 billion compared to a loss of $3.24 billion last year at this time. It is still owned by the government but shares are being sold back slowly. Currently the government owns about 12% of the company and wants to be free of the company by year end 2011. Bad loans are down 30% for the past quarter to $7.66 billion which could mean consumers may be getting control of personal finances. (1)

This trader mentioned that buyout and mergers may jump this quarter. Not every company is struggling and when one company falls another takes its place. Survival of the fittest has been how Wall Street worked over the past 100 years. But since 2007 government aid, bailouts, and the too big to fail attitude has changed this motto. Northeast Utilities is purchasing New England Energy for $4 billion in stock and St Jude Medical is buying AGA Medical Holdings for $20.80 per share. The company is also taking over $220 million of debt but is taking over a rival company. (2) (3)

Industrial production was announced down -0.2% and was forecasted to be up 0.1%. Capacity Utilization came in as expected at 74.7%. Tuesday housing starts and building permits are both forecast to come in at 550k. On Wednesday Mortgage Applications which came in at 14.6% at the last announcement will be released; along with Crude Inventories. Many will be looking at Thursday’s initial jobless claims which are forecast to be 450k. Also leading indicators will be released and expected to be around 0.3%. (4)

Apple will be announcing earnings after the close which could propel the market overnight. IBM is also a name that one should be watching to see if the markets will take kindly to the numbers. This week earnings and language used by the Fed could give a more clear direction on where this market is headed. Obviously, the market is stagnant at technical levels previously discussed.

1 http://finance.yahoo.com/news/Citigroup-earns-215-billion-apf-1301075638.html?x=0&sec=topStories&pos=main&asset=&ccode=
2 http://www.cnbc.com/id/39718420
3 http://www.cnbc.com/id/39719414
4 http://biz.yahoo.com/c/e.html

***chart courtesy Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.

Risks and Benefits of Managed Futures

2010-05-30T20:36:00.000-07:00

Welcome to the world of cta managed futures! Before you open your first futures account, there are likely some questions you are asking…..what exactly can I gain from managed futures accounts and what are the risks for investing futures?

There is a substantial risk of a loss in all futures and options trading, no matter who is managing your money, so why try managed futures? Part of the reason some investors may decide that managed futures are a place for them to place their risk capital is that a managed futures fund may offer more diversity for a portfolio.

If you are a new trader and you have read about the risks associated with trading, but decide that despite the risks, you would like to invest in futures – what markets? Straight futures or options? Long options or short?

Some investors may see managed futures as a way to try techniques and a strategy that differs from their own portfolio efforts and knowledge base. Although, you will want to make sure that the risk tolerance level that the managed futures broker is taking is compatible with yours.

Alternately, a managed futures strategy may be implemented to try to hedge certain positions already in an investment portfolio. Correlated and non-correlated trades may offer a level of diversity that can be potentially beneficial in certain market conditions. However, there are still substantial risks of a loss, no matter what strategy is being used.

For example, an investor who has certain stock portfolios may choose to open an account with a CTA whose managed futures strategies include certain commodities such as livestock or gold, rather than putting all of their risk capital into stocks.

Click to register for free and learn more about the potential benefits – as well as the risks – associated with a diversified portfolio and managed futures!

Trading in futures and options involves a substantial risk of a loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Futures Prices as of July 6, 2009

2009-07-06T01:20:00.000-07:00

More futures prices, check out futures prices quotes & charts

Market Expert: US Recession WILL End First

2009-07-02T21:01:00.000-07:00

Market experts Andre Julian (OpVest.com - commodities Investing ) and Ron Shah give investing tips to boost your portfolio in today's market. ... recession Andre Julian Ron Shah ...

Stock Option

2009-06-01T01:42:00.000-07:00

Successful traders learn to follow a set of rules consistently. These set of rules are called a trading system. When using stock options, it is very important to use a stock option trading system.

I've backtesting several stock option trading systems and have learned to avoid commonly taught systems that result in a net loss over time. A new stock option trading system I am still backtesting involves high flying stocks Google, CME, or RTP.

The leverage of stock options can cut both ways. You can lose faster as well as win faster with stock options. Therefore, you want to get past the point of trading because of emotions or addiction and trade by your rules. Of course, your stock option trading system needs to be backtested with lots of samples to ensure you have positive expectancy.

Positive expectancy means that when you trade many times over the long run, you will have a net profit. You will be surprised that some stock option trading systems being taught or sold may have a NEGATIVE expectancy in the long run. That is, you will be trading at a net loss. They may have worked in a strong trending market a few years ago but they do not work in our current 2005-2006 slightly trending stock market.

That's why I am focusing on stocks that are expensive and that have a high intra-day range - or average true range. Google, CME, and RTP are in the $200 to $500 range. In fact, there are not many other stocks over $200 that have options besides those three. Normally, options two strikes out of the money are relatively expensive for these stocks - except during the expiration week.

Let's look at a stock option trading system I'm still backtesting:

On the Monday before option expiration, buy three strangles on Google, CME, or RTP that are 2 strikes out of the money for that expiration. For example, on Monday, May 15th, with expiration Friday on May 19th, Google is at 400. Buy the 420 call and the 380 put. If it is not earnings month, the strangle should cost around $300 to $350.
You'll have to watch the price quote most of the day for Tuesday, Wednesday, Thursday, and even Friday.
Try to estimate based on chart patterns whether a certain time is close to the high or low for the day. Better than that, if the price of the total strangle is profitable by $100 or more per strangle, sell one. The normal intra-day range for these three stocks swings enough to cause some profit.
Repeat step 3 on Wednesday and Thursday. Many times a year, there is a news event that can cause a $10 to $30 move on a single day. These are the home runs you are looking for that will more than cancel the strike outs of the relatively inactive days.

This stock option trading system has precise definitions for entry and relatively precise definitions for exit. Trade like a robot one week a month. I've traded this system a few times and have gained more than 50% twice and lost 50% once. In future articles I will present the detailed backtesting results of this system.

Steve Burke

Forex and Foreign Exchange - Trading with Strategy

2009-05-24T23:16:00.000-07:00

Trading successfully is by no means a simple matter. It requires time, market knowledge and market understanding and a large amount of self restraint. ACM does not manage accounts, nor does it give market advice, that is the job of money managers and introducing brokers.

As market professionals, we can however point the novice in the right direction and indicate what are correct trading tactics and considerations and what is total nonsense.

Anyone who says you can consistently make money in foreign exchange markets is being untruthful.

Foreign exchange by nature, is a volatile market. The practice of trading it by way of margin increases that volatility exponentially. We are therefore talking about a very 'fast market' which is naturally inconsistent. Following that precept, it is logical to say that in order to make a successful trade, a trader has to take into account technical and fundamental data and make an informed decision based on his perception of market sentiment and market expectation. Timing a trade correctly is probably the most important variable in trading successfully but invariably there will be times where a traders' timing will be off. Don't expect to generate returns on every trade.

Let's enumerate what a trader needs to do in order to put the best chances for profitable trades on his side:

Trade with money you can afford to lose:
Trading fx markets is speculative and can result in loss, it is also exciting, exhilarating and can be addictive. The more you are 'involved with your money' the harder it is to make a clear-headed decision. Money you have earned is precious, but money you need to survive should never be traded.

Identify the state of the market:
What is the market doing? Is it trending upwards, downwards, is it in a trading range. Is the trend strong or weak, did it begin long ago or does it look like a new trend that's forming. Getting a clear picture of the market situation is laying the groundwork for a successful trade

Determine what time frame you're trading on:
Many traders get in the market without thinking when they would like to get out, after all the goal is to make money. This is true but when trading, one must extrapolate in his mind's eye the movement that one expects to happen. Within this extrapolation, resides a price evolution during a certain period of time. Attached to this is the idea of exit price. The importance of this is to mentally put your trade in perspective and although it is clearly impossible to know exactly when you will exit the market, it is important to define from the outset if you'll be 'scalping' (trying to get a few points off the market) trading intra-day, or going longer term

This will also determine what chart period you're looking at. If you trade many times a day, there's no point basing your technical analysis on a daily graph, you'll probably want to analyse 30 minute or hour graphs. Additionally it is important to know the different time periods when various financial centers enter and exit the market as this creates more or less volatility and liquidity and can influence market movements.

Time your trade:
You can be right about a potential market movement but be too early or too late when you enter the trade. Timing considerations are twofold, an expected market figure like CPI, retail sales or a federal reserve decision can consolidate a movement that's already underway. Timing your move means knowing what's expected and taking into account all considerations before trading. Technical analysis can help you identify when and at what price a move may occur. We will look at technical analysis in more detail later.

If in doubt, stay out:
If you're unsure about a trade and find you're hesitating, stay on the sidelines.

Trade logical transaction sizes:
Margin trading allows the fx trader a very large amount of leverage, trading at full margin capacity (in ACM's case 1% or 0.5%) can make for some very large profits or losses on an account. Scaling your trades so that you may re-enter the market or make transactions on other currencies is generally wiser. In short, don't trade amounts that can potentially wipe you out and don't put all your eggs in one basket. ACM offers the same rates regardless of transaction sizes so a customer has nothing to lose by starting small.

Gauge market sentiment:
Market sentiment is what most of the market is perceived to be feeling about the market and therefore what it is doing or will do. This is basically about trend. You may have heard the term 'the trend is your friend', this basically means that if you're in the right direction with a strong trend you will make successful trades. This of course is very simplistic, a trend is capable of reversal at any time. Technical and fundamental data can indicate however if the trend has begun long ago and if it is strong or weak.

Market expectation:
Market expectation relates to what most people are expecting as far as upcoming news is concerned. If people are expecting an interest rate to rise and it does, then there usually will not be much of a movement because the information will already have been 'discounted' by the market, alternatively if the adverse happens, markets will usually react violently.

Use what other traders use:
In a perfect world, every trader would be looking at a 14 day RSI and making trading decisions based on that. If that was the case, when RSI would go under the 30 level, everyone would buy and by consequence the price would rise. Needless to say, the world is not perfect and not all market participants follow the same technical indicators, draw the same trendlines and identify the same support & resistance levels. The great diversity of opinions and techniques used translates directly into price diversity. Traders however have a tendency to use a limited variety of technical tools. The most common are 9 and 14 day RSI, obvious trendlines and support levels, fibonnacci retracement, MACD and 9, 20 & 40 day exponential moving averages. The closer you get to what most traders are looking at, the more precise your estimations will be. The reason for this is simple arithmetic, larger numbers of buyers than sellers at a certain price will move the market up from that price and vice-versa.

by Nicholas H. Bang

Futures Prices as of May 15- 2009

2009-05-14T23:25:00.000-07:00

Metal And Softs

Financials

Currency Rate

sources: Commodity Investing at Opvest.com

FX - Trading Tips

2009-04-20T02:19:00.000-07:00

Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
The main forex influencer is global news and events. For example, say an ECB statement is released on European interest rates which typically will cause a flurry of activity. Most newcomers react violently to news like this and close their positions and subsequently miss out on some of the best trading opportunities by waiting until the market calms down. The potential in the forex market is in the volatility, not in its tranquility.
Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
Over-cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
Independence - If you are new to forex, you will either decide to trade your own money or to have a broker trade it for you. So far, so good. But your risk of losing increases exponentially if you either of these two things:
Interfere with what your broker is doing on your behalf (as his strategy might require a long gestation period);
Seek advice from too many sources - multiple input will only result in multiple losses. Take a position, ride with it and then analyse the outcome - by yourself, for yourself.
Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller). The best advice for trading during off peak hours is simple - don't.
The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
Exiting Trades - If you place a trade and it's not working out for you, get out. Don't compound your mistake by staying in and hoping for a reversal. If you're in a winning trade, don't talk yourself out of the position because you're bored or want to relieve stress; stress is a natural part of trading; get used to it.
Don't trade too short-term - If you are aiming to make less than 20 points profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
Don't be smart - The most successful traders I know keep their trading simple. They don't analyse all day or research historical trends and track web logs and their results are excellent.
Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.

The second and final part of this report clearly and simply details more essential tips on how to avoid the pitfalls and start making more money in your forex trading.

Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.
Focus - Fantasising about possible profits and then "spending" them before you have realised them is no good. Focus on your current position(s) and place reasonable stop losses at the time you do the trade. Then sit back and enjoy the ride - you have no real control from now on, the market will do what it wants to do.
Don't trust demos - Demo trading often causes new traders to learn bad habits. These bad habits, which can be very dangerous in the long run, come about because you are playing with virtual money. Once you know how your broker's system works, start trading small amounts and only take the risk you can afford to win or lose.
Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.
Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However, the long-term trends are not unimportant; they will not always help you though if you're trading intraday.
The clues are in the details - The bottom line on your account balance doesn't tell the whole story. Consider individual trade details; analyse your losses and the telling losing streaks. Generally, traders that make money without suffering significant daily losses have the best chance of sustaining positive performance in the long term.
Simulated Results - Be very careful and wary about infamous "black box" systems. These so-called trading signal systems do not often explain exactly how the trade signals they generate are produced. Typically, these systems only show their track record of extraordinary results - historical results. Successfully predicting future trade scenarios is altogether more complex. The high-speed algorithmic capabilities of these systems provide significant retrospective trading systems, not ones which will help you trade effectively in the future.
Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.
Risk Reward - If you put a 20 point stop and a 50 point profit your chances of winning are probably about 1-3 against you. In fact, given the spread you're trading on, it's more likely to be 1-4. Play the odds the market gives you.
Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.
Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.
Determination - Once you have decided to place a trade, stick to it and let it run its course. This means that if your stop loss is close to being triggered, let it trigger. If you move your stop midway through a trade's life, you are more than likely to suffer worse moves against you. Your determination must be show itself when you acknowledge that you got it wrong, so get out.
Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.
Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).
One cross is all that counts - EURUSD seems to be trading higher, so you buy GBPUSD because it appears not to have moved yet. This is dangerous. Focus on one cross at a time - if EURUSD looks good to you, then just buy EURUSD.
Wrong Broker - A lot of FOREX brokers are in business only to make money from yours. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.
Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.
Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media or others.

source: ezinearticles.com

Metal Prices as of April 20

2009-04-20T02:03:00.000-07:00

sourse: OpVest.com

Futures Prices as of April 15

2009-04-15T03:15:00.001-07:00

for more futures prices as of April 15, take a look to:
Option Investment Charts and Quotes

Futures Prices as of March 31-2009

2009-03-31T20:33:00.000-07:00

b/c I don't have much time to post all update price today. So, if you are looking for other futures prices please go to
Option Investment Charts and Quotes

How To Earn a Fortune By Trading Forex Online

2009-03-25T20:42:00.000-07:00

The benefits of online FOREX trading are limitless. Equipped with sufficient know-how, it could magnify your income a hundred times without you having to leave the comforts of your home or office table.

It will also maximize your profit as there is no need for expensive advertising or internet promotion. Nor do you need a huge space such as a store or a warehouse where you will have to pay lease or rent.

Online FOREX trading services are easily available. With some providers offering training ebooks or simulations and some others with specialized software that can teach the patrons, who can then opt for sale and purchase strategy.

To begin your career in FOREX online trading, you would need a bank account with one of the brokers (there are some which offer maintaining balances as small as $300) and then you will be ready to go.

An important thing to remember about online FOREX trading is for you to buy currency when the price is near rock bottom. In a matter of seconds, the prices would rise. This is the time to make a profit, so you sell. Timing and good business intuition is crucial at this part of the trade. If done properly, you can easily earn up 50% or more of your investment!

In trading FOREX online, it is not necessary for you to monitor the movement of your trades all day. You only have to buy your trades and state the prices by which you would want to sell and then forget about it. When the best deal is reached, meaning the prices of your currencies goes up and achieves your selling rate, the system will automatically sell your trades for you.

However, like all speculative trade instruments, while being able to earn for you a lot of money, the potential to lose money is also great as FOREX trading, like all speculative financial instruments rely highly on the movement of the economy, which is volatile. As a FOREX trader, you would want to minimize your risk. So how is that done?

First, it is necessary for you to stay up to date with the economy. Read the news. Know what’s going on inside your country and around the world. Understand the global political and social landscapes.

You will also need to research. An understanding of economics is crucial. You have to understand the rules of demand and supply so you can come up with a knowledgeable decision when you start buying and selling your currencies on the market.

It will also do you good to talk to brokers and professionals in the industry. Observe how they conduct business so you learn from them. Get into FOREX forums on the net where you can get valuable tips that you can apply later on when you start trading.

Lastly, learn to cut your losses. If your portfolio keeps losing week after week, sell them. There is no use hanging on to a losing portfolio as it can only further your losses.

Online FOREX trading is the biggest money generator across all forms of financial instruments available on the investment floor. Although not the first from of trade investment, it has grown in popularity and is now the more common and preferred moneymaking tool.

In fact, FOREX today is bigger than all other markets combined with trades raking in trillions of dollars ever day on the exchange. Unlike futures or stock exchanges, FOREX does not have a trading floor.

It subsists through a network of banks, phones and the internet. Because of its accessibility, it is easy to see why it has grown so much and has not stopped growing over time.

Source: options-university.biz

Futures Prices as of March 18

2009-03-19T21:01:00.000-07:00

source: Option Investment Inc.

Futures Prices as of March 12 - 02:20 CST

2009-03-12T00:20:00.000-07:00

Source: Option Investment Inc.

Source : Currencies Rate

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TRADING TIPS (part 1)

2008-10-08T00:45:00.000-07:00

How will you trade? Fundamental traders base their trades on information external to the market. In other words, thing like; weather, strength of the dollar, cattle-on-feed reports, slaughter count, political events, etc. Technical traders base their trades on information internal to the market. Things like; chart patterns including trendlines, channels, waves, double tops and bottoms, etc. Also considered are stochastics, moving averages and the like. I'm not sure who makes the most money (that has been debated forever), but I think it is difficult to be 100% one or the other now days. There are others who do quite well using Astrology, Numerology, and just plain "gut feel". In any case... Choose your weapon, the battle is about to begin.

Fundamental trading means more than just reading the Investor's Business Daily. As a fundamental trader you must become familiar with all the factors involving your trades. If you are trading grains, you should be on the mailing list of the Department of Agriculture and several other sources. You should receive reports from all agencies and companies that will publish information such as visible supply, acreage planted, weather reports, cattle on feed and hog reports, etc. This is only an example, and you should carry it through with each "family" of commodities you trade. You must work to be informed, you can't expect to win if your not properly armed.

As a chartist, when you find a pattern, be sure it is what you think. When you have worked with charting, and believe you see an important formation (head-and-shoulders, wedge, double-top, etc.) be sure you compare it to past patterns of the same formation. You must see if the pattern conforms to other such formations in the charts of the commodity you are trading. If it does, see how often the price responded predictably to that formation. If you are right, you can come up with a VERY relative calculation of the percentage of chance the pattern will work this time.

By the time you hear the news, it's too late! You've decided to be a "fundamental" trader, and begin your research. Make sure it is true research and not just tips and hear-say. You have to count on the many reports, informational sheets and articles you gather from every source that has anything to do with your chosen commodities, but you must not be influenced by tips, rumors and "word-on-the-street". This information is usually old news, and is already "in" the market. Through your sources you are trying to be the one who gleans that "new" data before anyone else. That is what will make you successful as a fundamental trader. Remember, all good luck starts with hard work.

There's more to a chart than lines and patterns. Now you've gotten to the point of recognizing certain chart patterns. You can identify trend lines, gaps and head-and-shoulders. These are patterns that are not too difficult to trade, but what about an ascending or descending triangle, or declining or rising wedge? These formations require a great deal more analysis than just seeing the formation. These and other more advanced formations require a study of other factors such as the volume of trading, the volatility of the market and the time period it took the pattern to form. there are other factors to consider also, so don't get into the more advanced patterns until you have experience and have reviewed past occurrences of these formations.

Try trading opening gaps. If you have the heart for excitement and the capital to back it up, try this VERY RISKY strategy. Some of the more volatile commodities will either gap higher or lower on the open. Combine this with the old adage that "gaps will fill", and you have a shot at some quick profits (or losses). Check your history first to be sure that the futures you've chosen does this on a fairly regular basis (T Bonds used to be good for this). Then if the price gaps higher on the open, give it a while to settle in. Now if the price hasn't continued running up, you may want to short the market in hopes it will come back down and fill the gap it left. Don't short it until it is coming off its high for the second or third time, then you must have a tremendous amount of discipline. You MUST place your stop a few ticks above the high, in an attempt to limit your loss if the price does decide to move higher. You must also determine that if the price does fill the gap, the reward you reap will be at a good ratio to the risk you were willing to take. When the gap is filled... GET OUT! You have accomplished your goal. This is, as I said, a dangerous strategy, but it works particularly well if the gap was created by a rumor before the market opened.

Lock your profits or lose nothing with free (almost) options. Follow me closely now... Using the Treasury Bonds as an example: Assume you enter a long position in the March '99 TBond futures @ 123-00. Now if you sell (write) the 124-00 call option for 25/64 ($390.62), and buy the 123-00 put option for 35/64 ($546.70), you have set yourself up with a defined profit and loss situation. If the price goes up, you have limited your profit to a total of $843.92 (the difference between the $1,000 for the move from 123-00 to 124-00 on the futures, less the $156.08 you had to pay for the higher priced put option). You will, of course, have to subtract out your commissions too. Remember... you cannot make more than $843.92, but the good part is you cannot lose more than the $156.08 difference you paid for the option (plus your commissions of course). Not a bad trade if you are interested in generating income. This can also be done on the short side of the market, by buying the call at-the-money, and selling the put 1-00 lower. If you want to take a bit more risk, you can try to "leg" into the position, and if done right, you can get into a position where you can make a profit or lose nothing. It does take practice so be careful. (The above example was done using the actual prices of the March TBond futures and option prices on 2-12-99).

source: irfutures.com