September Dow Jones - Long from 8620 - Last price @ 9235 -U.S. stocks traded lower after Morgan Chase & Co. cut its rating on U.S bond insurer MBIA Inc. and concerns that bank earnings won't improve in the second half of the year.
In the past issues, I have talked about the Dow Jones futures testing overhead resistance with the 9455 target objective in sight. However, today's price action makes me believe that the Dow Jones could have more of a correction before it is able to resume the upward trend. Therefore, exit at the market and stand aside to form a new swing pattern signal before taking a new position.
September Crude oil - Long from 67.35 - Closed at 69.65 - Crude oil futures are trading lower even though China imported a record high 4.62 million barrels per day in July, up 42% from June. But that news was not enough to overcome pressure from a lower stock market amid caution about the economic recovery, a stronger dollar and building inventories.
Crude oil futures have posted three lower closes and reached the 20-day SMA as well as the 38.2% retracement level on the August 11th reversal date (swing trade day). This price action has formed a potential bullish reaction swing that, if confirmed, would trigger the next leg of the bullish cycle with a target objective of 74.50. However, time is running out for the September contract, so any new positions trade signals will be in the October contract. Buy October Crude oil at 74.55 stop, with the stop loss under the August 11th low.
December Cotton - The news just got a little more bullish. It seems China may consider increasing its import quotas of cotton by almost 40 percent because of decreasing stockpiles, causing a potential domestic shortage of supplies. China is the world's largest consumer of cotton.
As you know, I was looking at a sell for the Cotton, but the confirming pattern never materialized. Instead, the market posted two consecutive closes above the swing pivot high (63.02) and above the downward sloping reaction line, setting up a bullish reaction swing pattern. Buy December Cotton at 64.20 stop, with a stop loss at 62.25.
September Corn - After a seven-week downward slide, Corn bottomed on July 22nd, just shy of the downward sloping parallel line. Corn then rallied off the swing low and quickly reached the down sloping median line, where it reversed and resumed the downward trend. The market finally stopped inside the 60% buy window, where it closed as an outside day. This price action has set up a potential bullish TR pattern (Trend reversal swing trade strategy pattern) and identified $3.35 ¼ as the trigger price for a long position. Buy September Corn at $3.35 ¼ stop, with the stop loss under the $3.04 swing low.
November Soybeans - Soybeans completed a 5-wave continuation pattern between early June and mid-July. This type of continuation pattern typically appears in the center of a longer-term reaction cycle and suggests there is more upside potential for the current bullish cycle. After a fast and furious $1.30 rally off the bullish TR pattern (swing trading strategy pattern), Soybeans hit resistance at the downward sloping parallel line where it has formed a potential bullish reaction swing. The market dipped into the August 11 reversal date (swing trade date), trading at a low of $10.05 before turning higher and closing near the high of the day. The pattern is bullish and there should be one more upward leg before the cycle is completed. The Crop production and Supply/Demand report is due to be released Wednesday morning at 6:30 CST. This could be the trigger needed for the market to break out of the recent consolidation and confirm the bullish swing pattern. Buy November Soybeans at $10.50, with a stop loss under Tuesday's swing day low.
September RBOB Gas - The strong upward trend paused after trading above the June 16 swing high price of 2.0585, where it posted two lower closes and formed a potentially bullish TC pattern under the upward sloping center line. A trade above 2.0855 will confirm the bullish swing pattern and trigger a new buy. A confirmation of the pattern would set up a price swing towards the target objective of 2.2000, on or before the August 17 swing trade date.
December Cocoa - The heavy rainfall has stopped, so Cocoa drying has resumed in southwestern Nigeria. The sunny climate over the past 10 days is providing adequate weather to dry the cocoa beans with high moisture and bring the moisture content down to international standards for market. This news triggered heavy selling in the December Cocoa futures, pushing the market below the 20-day SMA and close to the (C) swing low. A trade below the low pivot (2791) will trigger a sell signal and confirm the bearish TR pattern.
Reversal Dates for the week of August 10 - August 14, 2009.
Monday- Soybean oil, British pound, Japanese yen, Cocoa, Coffee
Tuesday- Soybeans, Crude oil, Australian dollar, Cotton
Wednesday- Hogs, Soy meal, Heating oil, Silver
Thursday- Gold, S&P, Dow Jones
Due to the volatility of the markets all trade suggestions are subject to change, at anytime during market hours, without notice.
*(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)
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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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