Market Update: Metals, Energies, and Currencies
Tuesday, May 04, 2010
by Judy Crawford of Zaner
Bookmark and Share
(TRADES FOR WEDNESDAY, MAY 5, 2010)
GENERAL COMMENT: It appears that the majority of markets are finally starting to follow through with the major top formations they have been suggesting on their long term charts. I pointed out long ago that in a recession, after the first major sell-off, markets rally back to test the previous highs (failing to do so) and then start the next major wave down. In the current recession the first sell-off was obviously in 2008. As pointed out before, what we saw in 2009 should be the major rallies back to test those highs prior to starting their second major wave down. It now appears that the second major wave down could be starting. Today's action further suggests that.
I have also pointed out that the crash in 2008 started with the Dollar bottoming and then having a major rally. The other currencies collapsed - all of them sooner or later - and the other commodities followed along too. That stage could now be set. The Dollar is over 83.000 and should try for 90.000 at least. In this process, if history repeats itself, the other commodities should have major sell-offs to finish the natural process of a recession.
The Market Update is designed to not only help you learn how to trade but also improve your trading approach. By reviewing technically all the major markets as well as give trade suggestions that include the reasons for the trades, you are able to follow and/or compare my work with yours. Or, if you do not have the time, as many don't, simply use my guidelines for placing your own trades.
EMOTION is your enemy more than any market will ever be. My Market Update employs a trading plan that a trader can understand and trades that have reasons so that a learning process evolves - helping you combat emotion and establish discipline.
YOU'RE MISSING SOMETHING! The Market Update is published on Tuesday and Thursday. On alternate days I also publish a Trade Alert that gives suggested trades as well. To sign up for both and have the convenience of receiving all my information via email. visit my website: http://www.tradingfuturesmarkets.com/, register and submit. And you may want to request some of my free trading booklets too!
ESTABLISHING A TRADING ACCOUNT: I offer brokerage services and personal assistance for every level of trader. Open your account with me and deal directly with me - learn while you trade. Feel free to call or email me at any time without obligation. I welcome hearing from you!
Important information regarding placement of trade alert orders:
1. They are placed for the day session only.
2. They are placed on a buy stop or sell stop basis. That means the market must rally up to the stop price to go long and/or sell off down to the stop price to short.
3. All orders are good for that day only.
Sell July mini silver. Sell 17.720 stop. Protective stop 18.47. Potential projection 15.000.
Reasons for the Trade:
1. On the monthly chart, silver is forming a preliminary key reversal top this month. A trend change formation.
2. On the monthly chart, it appears to be forming a potential 1, 2, 3 top formation. A trend change formation.
3. On the weekly chart, silver is selling off from the 19.000 resistance area again. This area has produced sell-offs in the past.
4. On the daily chart, silver has been in a downtrend since the Dec. 2008 high. It has had two waves down. Today's action could be the start of a third wave down.
5. On the daily chart, silver violated the uptrend formed since the Feb. low today. That is negative.
6. On the daily chart, silver closed under the 20 day moving average today. That is negative.
CHANGE IN OPEN STOPS:
Short June mini yen from 107.20 down to 106.65.
JUL COPPER: I pointed out before a major top developing in the copper. Based on the monthly, the downtrend in copper is just starting. Its next major stopping point should be around 300.00. It should eventually go through that. Today's low 317.20. Closed 317.85, down 11.50.
JUN MINI GOLD: Last time I said it had potential to 1200.00. Today's high 1192.80 before it started to sell off. If there is follow through in this sell-off, gold appears to be forming a preliminary key reversal top this month and a 1, 2, 3 top formation. It is interesting to note that in 2008 when it sold off 300.00 approximately, the top to the market was a key reversal top. It rallied back and then formed a secondary key reversal top that started the major sell-off at that time on the monthly chart. It is still early, but it is setting up the same top formation now. The daily chart has also formed a key reversal top today. Closed 1169.20, down 14.10.
JUL MINI SILVER: Last time I mentioned that it could try for the double top formed in mid January on the daily chart. That double top was at 18.910. Yesterday's high was 18.890. Having been reluctant to follow gold's ambitious climb for some time, silver collapsed today. On the monthly chart the major top in silver in early March 2008 was triggered by a major key reversal top. That price has not been seen since. Silver then rallied until Dec. 2009 when it formed another key reversal top. The rally seen for the last three months has been an attempt to challenge that top. It appears it will not succeed. Looking at the big picture, the top in 2008 was challenged in 2009 and the market could not take it out. This year it has been challenging the high made in 2009 and is strongly suggesting it cannot take it out. If there is follow through now, for all intent and purposes, silver could go into a bear market. A trade could be developing. See Trade Alert for details. Closed 17.842, down .998.
ENERGY, CURRENCIES & BONDS:
JUN MINI CRUDE OIL: The trend line that crude violated in April has limited the upside potential. I went into that last time. It seems to have a good sell-off when it reaches that trend line. It reached it again yesterday and tried to rally over it. It backed off. Today it collapsed down to 82.05. It has some support at 82.00. Going through that will be even more negative for the market. I have mentioned a couple of times before that on the long term charts it looked as though crude had potential to 90.00. Its one problem was resistance going back to early 2008 at approximately 85.00 - 86.00 roughly that I mentioned before. So far that appears to be enough to prevent crude from reaching 90.00. The key now is 80.00. Going under that could start a major downtrend. Closed 82.74, down 3.45.
JUN MINI JAPANESE YEN: It triggered a sell last Friday. It sold off to 105.32 today and then rallied to form a key reversal bottom. Move stops from 107.20 down to 106.65. Closed 105.97, up .21.
Position: Short 105.90 (4.30).
JUN SWISS FRANC: Last time I pointed out that it had a lot against it technically so that if it could rally, don't expect much. It made new contract lows on the daily chart today and sold off to 90.67. The monthly chart has triggered a sell. Expect more sell-off. Closed 90.83, down 144.
MAR DOLLAR INDEX: It is now over 83.000 and appears on the monthly chart to be just starting a huge wave up. It will run into some resistance around 85.000. Ultimately it should try for 90.000. Closed 83.421, up 102.20.
JUN MINI EUROCURRENCY: Another new low today at 129.82. It is trying to hold the 130.00 support. It should eventually take that out. Closed 130.05, down 2.09.
JUN CANADIAN DOLLAR: Looking at the long term chart, it is the best short amongst the currencies. Watching closely. Closed 97.54, down 143.
JUN AUSTRALIAN DOLLAR: I tried to short the aussie today. It went through my price last night and collapsed. It would have been a good trade. Watching closely. Closed 90.41, down 183.
JUN BONDS: An inside day yesterday triggered a buy today and a huge rally to 120.11. That is a resistance area going back to December. Based on the long term charts there could be more to the rally - possibly the 122.00 area. Closed 120.00, up 1.09.