September Dow Jones U.S. stocks continued higher today after AIG Inc. said it expects to repay the government debt and increase the value for shareholders. If that alone wasn't enough to keep the three-day rally going, there was evidence that the U.S. commercial paper market had expanded last week, suggesting the economy may be growing again. This was the second week the commercial paper market has shown growth during the month August.
The market is slowly recovering from the three-day correction. Although the long-term cycle is still bullish, how the market reacts over the next two days will tell us if the market has a chance at the 10880-target objective or if the market is going to fail. I am currently waiting for a new pattern before taking a new position.
September Japanese yen - After reaching the downward sloping median line support on the August 6th reversal swing date, the market reversed and began to trade up to the downward sloping reaction line. This line should prove to be a resistance level where the Yen will most likely begin a short-term correction. A two or three-day pullback to 1.0520 would set up a potentially bullish swing pattern and possible TR pattern (Trend reversal). I will wait for the new pattern before entering a new position.
October Crude oil - Oil traders were caught by surprise after an EIA government report showed that U.S. inventories declined the most in more than a year. The decline in stocks was caused by lower imports and the increased production from refineries. I had been looking at this market as setting up a bearish pattern, but the pattern was never confirmed. Instead, Crude rallied off the upward sloping action line support and traded above the prior swing pivot high and closed beyond the downward sloping reaction line. This price action suggests the market will resume the longer-term upward trend with a target objective of 84.00. Buy a pullback to 72.60, with the stop loss under 69.70.
September Corn - Long from $3.35 ¼ - Last trade @ $3.18 1/2 - 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 before trading higher and triggering the buy signal. Hold the long position, with the stop loss at $3.03.
September Coffee - Take a look at this coffee chart. The reaction cycle unfolded perfectly between July 10 and August 10. Time and Price met on the August 10 reversal date, right at the upward sloping centerline. Since then, Coffee has fallen over $1.40 and is coming up on another potential reversal date on August 18th. The market is trading inside the buy zone, but hasn't given a buy pattern yet, but I'll keep watching.
October Heating oil - Energies resumed the long-term upward trend, after the EIA government report showed a draw down in available supply. Technically, Heating oil closed below the 20-day SMA on Monday, but reversed and closed above the 20-day SMA on Wednesday. This double reverse pattern is a bullish pattern and suggests a resumption of the upward trend into the September 9th reversal date. Buy Heating oil on a pullback to 1.8950, with a stop loss at 1.8625.
December Gold - U.S. gold futures drifted lower in quiet trade, as the dollar edged higher against the euro. Due to the lack of any news, traders continue to look to the dollar for direction. Gold traded above Wednesday's high, but turned lower at the 20-day SMA and closed lower than the open. The market is looking heavy with a bearish reaction swing forming under the SMA (simple moving average). Sell Gold at $932.10 stop, with the stop loss at $946.50.
December Cocoa - Wednesday wide range day completed a 5-wave continuation pattern. Thursday's inside day pattern was not unexpected, as it is typical market action for a market to have one or two narrow range bars after a wide range day. This will allow the market to rest and build energy for a test of the previous high and set the stage for the next leg of this bull market. Buy Cocoa at 2925 stop, with the stop loss under the swing low.
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Reversal Dates for the week of August 17 - August 21, 2009.
Monday- Hogs, Unleaded gas, Eurocurrency, Cocoa
Tuesday- Corn, T-Notes, T-Bonds, Coffee
Wednesday- British pound
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)
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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