The Wizetrade Commodities Blog

Good Morning Traders,

Late last week we were seeing increasing reports that looked for a firming of the falling livestock prices.  Pork has held, but this morning with selling pressure in the equity markets and a stronger USD, we see Livestock prices declining again.

The Canadian Financial Post has an article out today that looks for the possibility of correction in the commodity markets.  Recent price increases have come on speculation of increased demand from China, but we are starting to see these orders slow, and the focus is back on Supply side gluts and weak demand.  No report on an immenent fall out, but be careful, especially on days like today where the equity markets are pointing lower goinginto the open bell.

Chicago PMI at 09:45 ET could provide a little boost to the equity traders, but may be short lived after overnight selling pressure in the Asian and Early European trading sessions.

The CME Group has initiated plans to cancel all New York Harbor (HO) Heating Oil #2 contracts beginning September 2012. See Delisting of Heating Oil. This action is being brought about by sulfur content regulation of the State of New York, but gives us all an insight as to how Global Warming legislation can impact the markets. For now, there is no substitute for good ol' #2; however I’m sure the Oil and Gas Industry will find something less polluting.

As we approach September, we see the S&P at 1000, NASDAQ at 2000ish, and the Dow at 9300.  We have bounced around at these levels but failed to push through with gains, and this has slowed the slide of the USD Index, althought still drifting lower.

Watch these levels to see if equity investors are enthusiastic enough to take on additional risk, if so the USD stands to weaken and we could break resistance on some commodity price ceilings.

Keep in mind that September is traditionally bearish in equities before we start looking for late 4th quarter movements in the markets.

I'm still watching the caps on Cocoa and Sugar.

Finally! We have lift off! Integration with MB Trading (MBT) was launched last night, and so far; so good. There is a problem with MBT maintenance from 12:00am to 12:30am. Some traders are experiencing slowness in accessing their accounts afterwards. Bill Floyd's department is looking into the fix for that problem.

 

The great news is the availability of price charts, and, therefore, the studies that accompany them. Check out the charts for yourself. Even though they may be new to you, they are tools that may or may not fit your trading style . Either way, that’s up to you. But now they are available if you want them. It just gets better and better.

I’m enjoying the pullbacks in Sugar and Cocoa as the equity investors fear that stock values are outpacing potential growth in the global economy.

 

That being said, I remain bullish on Sugar for the long haul, but I’m looking for support, and a reversal in the equity market sentiment before looking for resumption on the long side of trading Sugar.

 

You won’t need to look very hard to find articles about both increasing demand and diminished supply expected through 2010, and this gives me hope that the current equity market selling is only temporary, as we wait for the next wave of buying pressure.

 

That being said, September is traditionally a very tough month in the equity markets, and this could spill over into USD strength, and diminished demand affecting commodity prices.

 

So maybe we have a deeper pullback with a set up for some market optimism as we head into the end of the year.  I will let the equity investors tell me when they are willing to take on some additional risk, and then I will look for the ever popular entry after pullback on trend.

Here are some questions we ask ourselves at WTC when creating a strategy. It applies to developing a trading plan since it must be consistent with the strategy or strategies we employ. Maybe it will help you settle on the strategy that fits your trading plan. If you want to, you can send your answers to me at rsmith@wizetrade.com, and, yes, you can have more than one strategy.

 

Strategy Testing Template

 

Name: 

 

Name of Strategy:

 

 

1. In your own words, please write a detailed description of your strategy:

 

 

2. What trade style would you classify your trade strategy?

 

 

3. Typically, what type of profit potential do you see in this strategy?

 

 

4. Typically, what type of risk could occur with this strategy?

 

 

5. Is there any particular time of day that you would like to trade this strategy?

 

 

6. Are there any times you would NOT implement this strategy?

 

 

7. Which commodities would you consider trading this strategy?

 

 

8. What is your “Light Setup” for this strategy?

 

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9. For each chart, please define what you need to see to enter the trade? i.e. FAS, Angle, Angle and Separation, etc.

 

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10. Is your exit strategy based on price or charts?

 

 

11. If your strategy is based on charts, define what look you need to see to exit the trade?

 

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12. Is there anything else that should be considered when looking at trading this strategy?

 

 

Please Include at least (3) examples of your trade journal on both entering and exiting the trade, as well as your Trade Manager showing entry/exit.

 

HEADLINE: Climate Change Measure Should Be Set Aside, U.S. Senators (DEM) Say

http://www.bloomberg.com/apps/news?pid=20601087&sid=ah3CTKEw4HQc

What is happening to this country? Everyday ordinary citizens, “thugs”, “”, “organized mobs” among other tags used by congressmen and senators to identify them, are finding that Town Hall Meetings are great places to camp out and voice their opinions and views about what they disagree with. Oops! Now, lobbying groups are taking advantage of the trend to promote their point of view on the Climate Bill. I hate it when the playing field gets leveled. Read this article about the current opposition to the Climate Bill: Lobby Group tactics

Commodity currencies are taking a hit today on the back of data showing slowing of  the global financial recovery effort.

 

China’s most recent data finally reflects a little cooling amidst their efforts to stimulate the Chinese economy.  Russia reports a rapidly declining GDP.  The TARP Committee in the US reports the possibility that smaller banks will require 12 – 14 Billion in additional funds to cover troubled assets. Equity Markets are retreating from recent highs as investors weigh if the slow down in recovery will devalue stock in the absence of any evidence of continued growth.

 

Today the Japanese Yen has strengthened along with the US Dollar Index, while the Euro and Pound have remained relatively unchanged.  In the meantime, the commodity currencies have pulled back on the prospect of slower demand.

 

Keep an eye on the equity investors.  As long as they are willing to sell, the commodity currencies stand to weaken.

We are on the verge of integration with MB Trading and I am happy for it. The long process of bringing Wizetrade Commodities and MB Trading together is almost accomplished. With the integration WTC now features the lowest commissions available as well as additional tools for confirmation of the entry and exit points for all trading styles and strategies in 52 of the best markets in futures.

 

There are very few projects left to finalization of the product I thought was possible four years ago. Making WTC look and feel like all the other products with the same features and tools available to it that other Wizetrade products have is the final step.

 

I hope you enjoy it as much as I will.