December Dow Jones - Short from 9675 - Dow Jones futures tumbled early Wednesday, after an unexpected contraction in a gauge of business activity spurred concern the economy is struggling to recover. However, after the early session drop, the Dow Jones futures recovered most of the loss before the close. The stop loss was lowered to the entry price after the early session drop and the short position closed at 9675.

However, Wednesday's recovery was short-lived, as the Dow Jones tumbled again on Thursday after a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast, once again causing concern the seven-month rally in equities has outpaced prospects for an economic recovery.

Thursday's price decline stopped right on top of the descending centerline support, suggesting a possible rebound on Friday. Although the market is showing signs of losing momentum, it has not formed a confirming pattern. Therefore, I look for the Dow Jones to continue trading sideways into the October 7th reversal swing day. How the market trades into the reversal swing date will tell me a lot about the next market direction.

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December Japanese yen – The Yen is struggling to get past the descending red reaction line. The week began with the Yen trading sharply higher on Monday, but momentum quickly faded and the Yen gave back all the daily gains, finally closing below the ascending centerline. Since then, the Yen drifted below the centerline and tested the reaction line on the September 30th reversal swing day. The chart is not providing a conclusive sell pattern yet, so I will give the market a couple more days to set up a new pattern.

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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.

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December Canadian dollar – After trading in a choppy sideways consolidation pattern over the past several weeks, it tried to breakout on September 17 when it traded to a new high. The breakout failed and the Canadian dollar reversed and traded sharply lower over the next six days…trading below the previous pivot low in the process. The subsequent corrective rally reached the 60% sell window (9347) at the same time as it reached the descending parallel reaction line. Sell Canadian dollar at 9215 stop, with the stop loss at 9375.

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November Crude oil – I guess the reversal swing date on September 29th was a lot stronger than I anticipated. I was looking at the formation as a possible TC swing pattern (Trend continuation) that could trigger another sell signal, if Crude oil traded below the low pivot point and the descending centerline. However, it seems the Crude oil had traded right into area of confluence where the descending centerline was crossed by the ascending reaction line. This price area proved to be a strong support and acted as a launching pad for the subsequent $3.90 one-day rally in November Crude oil. The pattern from August 8th thru September 29th appears to be forming a five-wave continuation pattern that portends a possible breakout to the upside. Before that can happen, I look for a two or three-day pullback to 67.70 to form the final stage of the TR swing pattern.

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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 –Long from 16.47 – position closed @ 16.65 – Silver fell short of reaching the 60% sell window before momentum began to fade, so I elected to exit the long position for a nice gain. Silver appears to be forming a bearish TR swing pattern that could set up a significant sell-off in the market. I will stand aside to wait for a new pattern confirmation before taking any position.

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December Gold –Gold traded to a high of $1,011.10, taking out the previous high of $1,010.80 on a projected reversal swing day. The new high pushed Gold briefly inside the 60% sell window, before selling pressure took the market lower. This price action has set up a potential TR swing pattern. This pattern typically appears at significant highs and lows and could be followed by a significant selling opportunity. A trade below $992.70 will confirm the TR swing pattern and trigger a sell signal. Sell Gold at $992.30 stop, with a stop loss at $1,011.50.

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November Soybeans – Short from $9.10 – In the last update, I talked about the chart pattern wasn’t giving a definitive direction, but the market could break in either direction. Not much has changed, except for the fact the Soybeans did trade low enough to trigger the sell at $9.10 before pulling back into the consolidation pattern. Hold the short position, with the stop loss at $9.40.

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