December Dow Jones - Short from 9675 - last price @ 9733 - Dow Jones futures traded higher on Monday, as several merger deals bolstered investor confidence. Takeovers in the drug and technology industries added to evidence that mergers and acquisitions are rebounding from the slowest pace in six years. However, the rally stalled after reaching the 61% retracement of the last downward swing. The market will need more positive news to push it past this technical roadblock. On the other hand, if the market stalls at this level, it would suggest a loss of market momentum and retest Friday's low. For now, hold the short position, with the stop loss at 9862.
December Japanese yen – Japan's new Finance Minister has made it clear that he does not want to intervene in the yen, but he may be increasingly tested, as the rising yen makes life harder on exporters after last week's report that exports were down 36% in August from a year ago…the 11th consecutive month of decline.
The Yen shot up to a new eight-month high (1.1341) on the statement by Japan’s Finance Minister, but lost most of the gains before trading began in the U.S, as it drifted down to 1.1185 during the daily session. The early morning price surge pushed the Yen up to the sloping reaction line target objective before the heavy selling took over and dropped the market back to the daily lows.
December Eurocurrency – The reaction is still bullish, with the market now testing the support at the 20-day SMA. So far, the support has held and the market appears poised for another run at the recent high (1.4844) posted on September 23rd. However, there is a fly in the ointment here. The EC did fail to follow through on the 9/17-9/21 bullish swing pattern, after it posted two closes above the swing high and failed to follow through. This price action suggests a possible trend shift. If this is true, a rally off today’s low will hit resistance inside the 60% sell window that begins at 1.4723. 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.
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 and stopped at the ascending parallel action line. The market has formed a potential three-wave continuation pattern, but needs a trade above $1,001 to confirm the “double cross” pattern and trigger a buy signal with a short-term rally to $1,010.00. Buy Gold at $1,001.50 stop, with a stop loss at $984.50.
December Corn –Long $3.30 – last price @ $3.38 3/4 – Reports are circulating that Argentina, the world’s second- largest corn exporter, may plant the smallest crop in two decades, as the government delays plans to lift a ban on exports. President Cristina Fernandez de Kirchner has yet to make good on a Sept. 10 pledge to allow overseas shipments of corn, prompting farmers to plant more soybeans. The Argentina government does not restrict soybean exports and they’re cheaper to plant. Chart patterns remain positive and still suggest a test of the recent high of $3.47 ¾. Hold the long position and raise the stop loss to $3.21.
November Soybeans – Brazil, the world’s biggest soybean producer after the U.S., may harvest a record soybean crop next year, as farmers shy away from planting corn. Dry, warm weather is also pressuring Soybeans, on expectations that drier weather will accelerate the harvest of a bumper crop.
Overnight, Soybeans traded to a high of $9.37, triggering the buy stop at $9.32. The market had reached the 20-day SMA and stalled. Because of the changing technical picture, the stop loss was raised to $9.17, where the exit was triggered near the close. The early morning rally was stopped by the 20-day SMA and market turned lower, trading as low as $9.12 ¾. This formed an “outside day” with a lower close. The pattern appears negative and portends one more drop in the November Soybeans. Sell the Soybeans at $9.10 stop, with a stop loss at $9.42.
December Soybean meal – Long from 282.50 – Closed at $282.50. Due to early market action, it was recommended to close the long position at $282.50
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.