December Dow Jones – Short from 9675 – last price @ 9670 – Dow Jones futures retreated after an unexpected decline in consumer confidence overshadowed a smaller-than-forecast drop in home prices. Traders were disappointed by the reports and concerned that the economy’s rebound will be slower than originally thought. This disappointment may dampen buying enthusiasm and could lead to more selling in the near future. Without a constant flow of positive news, the Dow Jones will struggle to get past the current technical roadblock and retest Friday’s low. For now, hold the short position, with the stop loss at 9862.
December Japanese yen – It sounds like a possible flip-flop from Japan's finance minister. It was just yesterday and he said that he did not want to intervene to stop the appreciation of the Yen, but today hedged on that statement when he said the government could step into the foreign exchange market. Finance Minister Hirohisa Fujii told reporters that If (exchange rates) move abnormally, we could take appropriate measures for our national interest. Although he did not specify what measures could be taken, he was widely believed to have meant a market intervention.
Spurred by his earlier statement, the Yen shot up to a new eight-month high (1.1341), but lost most of the gains before Monday’s close. The sellers continued to have control on Tuesday, as the market dropped another 65 pips before the close. The market is falling into Wednesday’s reversal swing date, where it could set up for a short-term corrective rebound. However, the true signal will come after a two-or three-day corrective rally into the 60% sell window.
December Eurocurrency – The EC traded lower for the fourth day in a row and dipped below the 20-day SMA, after Russia said it will maintain the share of U.S. Treasuries in its international currency reserves, reducing concern central banks will diversify away from the greenback. While the long-term trend is bullish, the EC failed to follow through on a breakout of the 9/17-9/21 bullish swing pattern. This price action is setting up a possible TR pattern and a possible trend shift. If this is true, a rally off today’s low could reach the 60% sell window that begins at 1.4712. Therefore, I believe the best plan of action here is to wait for a corrective rally into the sell window on or before the next reversal swing day of October 6.
November Crude oil –The Crude oil is forming a bearish swing pattern on the sloping reaction line support. Monday’s higher close is the second consecutive higher close leading into Tuesday’s projected reversal swing date and is a strong confirmation of September 24th as the swing pivot low. Over the past three months, Crude oil has been trading in a very choppy, sideways pattern, so I have had to look for very short-term swing trades. However, the last breakout was out of a 3-wave continuation pattern and seems to be following the classic reaction cycle. This would suggest the current reaction swing is setting up another sell pattern and, if confirmed, a test of the July 13th low of 61.38. Sell November Crude oil at 64.97 stop, with the stop loss above the swing high.
November Heating oil – A bearish reaction swing pattern has formed on the descending centerline. This pattern follows the recent 3-wave continuation pattern completed on September 21. (This type of continuation pattern typically appears in the center of the reaction cycle and would project a move down to 1.6000). Sell Heating oil at 1.6855 stop, with the stop loss at 1.7455.
In an active Futures market, price patterns and signals are constantly changing; many times, changes occur between updates of this report. To keep abreast of any intra-day changes to the recommendations in this swing trading report, go to my intra-day Swing Trading Blog at www.reversaltracker.com/blog. In this blog, I post charts with new signals or any changes to existing signals that occur during the day. Make sure you check it out!
December Silver – Robert Kiyosaki, author of “Rich Dad, Poor Dad,” recommends investing in real estate and commodities, but he tells Dan Mangru of Newsmax TV that silver is now his top investment. “If you’re afraid of inflation, which you should be, I would think silver is the No. 1 investment today.” Kiyosaki also tells Mangru why he likes real estate, “I like real estate for one reason: debt.” Investors get no leverage buying stocks, but they do when buying real estate, Kiyosaki points out. “To protect against inflation, do what the Chinese are doing,” he says. “The Chinese are buying commodities: copper, oil, gold, silver, land.”
In the last few issues, I have been talking about the short side of this market, following the sell signal I posted on September 17th. Since making the recommendation, December Silver futures prices have fallen over $1.40, coming to rest at support provided by the 20-day SMA. The market appears to be poised to make a corrective rally over the next few days. December Silver has posted a close below the 20-day SMA on Friday and is currently trading under the SMA. However, a close above the 16.45 would confirm a “double cross” pattern and trigger a rally to the 16.95 to $17.00 price range. Buy Silver at 16.47 stop, with a stop loss at 15.95. The initial target is $16.95. Remember this trade can also be done using the 1000 oz contract (NYLIF Mini Silver.)
December Gold –Gold staged a sharp sell-off after making three consecutive higher highs September 8 thru September 17. The following sell-off caused the price to drop below the 20-day SMA, where it has posted three consecutive closes. This doesn’t bode well for a continuation of the bullish trend. Right now, I suggest standing aside to wait for the October 1st reversal swing day to give a clue to the next direction.
December Corn –Long $3.30 – Corn reached a high of $3.47 early in the day session, but it was unable to muster enough energy to break above the prior swing high. As the market began to fade, I elected to exit at $3.41 and pocket a nice gain. The current market structure still suggests higher prices for the near future, but I will wait for a new swing pattern before recommending another position.
November Soybeans - Soybeans traded to a high of $9.37 early Monday morning, but stalled at the 20-day SMA. The market turned and traded lower thru most of the day, setting up a possible TC swing pattern. However, Tuesday’s price action has formed a possible bullish swing pattern…suggesting the market could break either way. So, I recommend working both orders. Sell the Soybeans at $9.10 stop and buy Soybeans at $9.41 stop. The stop loss will be placed above or below the respective pivots.
December Cotton –Cotton prices rebounded slightly, following the biggest decline in six weeks on Sept. 25. The market was supported by a report that showed falling production in China, the biggest importer of the cotton fiber. The price decline found support at the 20-day SMA and rebounded slightly on Monday. Buy Cotton at 64.75 stop, with a stop loss at 61.60.
Reversal Dates for the week of September 28 – October 2, 2009.
Monday – Soy meal, Heating oil, Japanese yen
Tuesday – Soybeans, Crude oil, Coffee
Thursday – RBOB Gas, Gold, Canadian dollar, Cocoa
Friday – Heating oil
*(TERMS YOU NEED TO KNOW)
(SAL=- Sloping Action Line) --(SRL =Sloping Reaction Line) --(RD = Reversal Date) -- (L= Long) --- (S= Short) -- (TC = Today's closing price)
Swing trading and Reversal dates
Every good trading signal needs three key elements to be considered a successful swing-trading signal. Time, Price and Pattern. When these three come together, great things can happen. If you can improve your timing or price entry, it can enhance any trading method. That is what the Reversal Dates can do for you. They will identify when the market should react, and at what price level the market needs to be for this to happen. They will even tell you what the market has to do to confirm the trade. The first thing I do is, identify Time.
The Reversal Date Indicator consists of three parts. The first is Time. This is identified by the projected Reversal date and will indicate which markets are ready to react and when the reaction should occur. The most common misconception about the Reversal dates is the idea that the market must reverse on every signal date, which is not true. Instead, The Reversal Date itself helps to identify the market’s reaction. A high percentage of the time, the market will reverse the current trend, but not always. A smaller percentage of the time, the market will form a “continuation pattern,” indicating the market will likely continue in the same direction as the prevailing trend. Often this will occur during a consolidation or after a very small correction.
Once the Reversal date has been identified, the next thing to do is monitor the price. If the market is making a new high/low, or if it is trading inside a buy/sell window, then the second component of a trade signal is in place. You now have Time and Price working together. For most traders, that will be enough, but the Reversal Date Indicator takes it one step further.
After extensive research into price patterns, I have identified specific price patterns, which occur during reversal timing. These patterns can be used to confirm the market reversals or market continuations. When, and only when, these three components are all working together, will there be a swing trade signal generated.
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