Well it is official! The TradersHelpingTraders.net site is up and running and my new manual, The Truth About Trading Support and Resistance – How to Trade Commodities Like a Pro is now available.

Even though the *unofficial* announcement was last week the response so far has been great! Many of you have already picked up a copy of the manual and your reviews have all been fantastic (thank you)!

If you would like a copy of the manual you can pick one up by visiting Traders Helping Traders.net website and following the *subscribe* link. Here you can purchase the manual for $97 or you can get it FREE with a 3 or 6 month subscription to the trading newsletter and during-the-week trade updates.

This really is the better deal, because when you subscribe you not only receive the manual and the weekly market newsletter, but you will also receive the audio commentary on the markets as well as a download of my Gecko charts chartbook.

 Several of you have told me that that not having to re-create the charts from the newsletter has been a real time saver for you and that the audio segments are just plain cool (thanks again).

By subscribing you will also receive our newest feature, the mid-week Market Alerts. The Alerts are sent out to notify you (via email) when the markets are offering a good trading opportunity during the week. Many of you have written to tell me how much you appreciate this latest addition (you’re welcome). ;-)

If you want to check out the site and all its features you can still do so this week before it becomes password protected. The user name during the trial period is “subscriber” and the password is “guest”. Both are case sensitive.

I hope you will take the time to subscribe and become a member. Shaggy and I worked very hard to keep the pricing as reasonable as possible so that everyone could afford to join the site and benefit from the information therein.

Hope you enjoy this week’s issue.

Erich

• Exchange: CBOT
• FND 11/28/03
• LTD 12/12/03
• Option Expire 11/21/03
• Contract Size: 5000 bushels
• Point Value: 1 ct = $50

While it took a couple of sessions for corn to give us the break out we were looking for it did happen eventually. However once the market broke out it took very little time to reach our target at 248 (247 ½) and while the bears had their way last Friday the short and long term outlook for corn still seems quite bullish.

This Week:

This week’s hurdle is the resistance at 248. The market has already shied away from this level last week and might take a day or two to muster up enough strength to make another run at it.

The market has pretty good support below it at 240 – 241 and I would not expect prices to go much lower than that. Once the market is above the 248 resistance look to 257 ½ as the next target.

You could enter the market on a breach of the 248 and manage to keep stops fairly tight by placing them below support at 244. This would have just under $200 at risk with a possible $475 reward or about 2 ½:1 risk/reward.

A riskier alternative is to place stops below support at 247 once the market gets above 248. The momentum required to get the market over the 248 hump should be enough to keep it there; therefore you might be able to get away with the much closer stop.

This scenario has a mere $50 at risk with the same $475 reward, or a 9 ½:1 risk/reward; but remember it is a much riskier trade than the first scenario. The long term outlook has corn testing the resistance levels at 260 and 262.

Click here for the Market Minutes Audio Commentary on Corn

• Exchange: NYBOT
• FND 11/20/03
• LTD 12/08/03
• Option Expire 11/07/03
• Contract Size: 50,000 lbs
• Point Value: 1 point = $5

Well, that was quite the week for cotton, don’t you think? The market did as we had hoped and sent prices higher; however the market moved a little too fast and actually compressed about two of trading into one.

Cotton is one of the few markets that can make a straight line to your target without ever looking back, which is exactly what happened last week. This week however has everyone scratching their heads wondering if the rally is over.

This Week:

If prices can break below Friday’s low, look for the market to give back a little of last week’s gains. While there is some support around 5795 and 5710, I would think that the market would try to find the support at the bottom of last week’s gap at 5650.

You could have a nice little trade by entering short below last Friday’s low and trading it back to the support at 5710 ($800) or all the way to the 5650 support ($1100).

From here things could get a little choppy however as the bulls and bears try to sort things out. I wouldn’t be surprised to see prices rally again from 5650 and re-test the 6090 barrier of last week; however we’ll have to see how the market reacts at 5650 first.

Long term direction for the market still looks to be down with a target of 5180 looking like a possibility at this time.

Click here for the Market Minutes Audio Commentary on Cotton

• Exchange: CBOT
• FND 10/31/03
• LTD 11/14/03
• Option Expire 9/26/03
• Contract Size: 5000 bushels
• Point Value: 1 cent = $50

As expected Bean prices continued to rally last week until they were in a position to test the current contract high. Last Thursday we sent out a Market Alert to notify you of the opportunity to short beans on Friday. The market responded beautifully and dropped like a rock making for a $1000 day. I love it when that happens! ;-)

Friday’s session actually raises an important trading principle about opening range and how you should deal with it. Avoiding opening range had a lot to do with the success of the bean trade, as entering during opening range would have whipsawed you before the day was over.

Coincidentally someone asked a question regarding opening range this week and it is addressed in the Q&A section. Please read it. It is important to respect opening range as many of the markets enter a period of greater volatility.

This Week:

This week is traditionally a good one for the bears in the bean market. The low close on Friday further suggests that we might expect lower prices next week. There is some support of note just below the market which we will need to consider before entering the market.

The support at 556 or 552 might be enough to halt the current slide and see the market form support. As a result I would probably avoid shorting the market until it manages to break the support at 552.

Entering short below 552 with stops above the 556 resistance would have approximately $300 at risk.

Once the market is below here there does not seem to be too much to keep beans from realizing 535. This would yield a potential profit of about $800 or a little better than 2 ½:1 risk/reward.

There is much more support at the 535 area however and I would expect prices to probably rally from here. Once the bullish rally resumes look for the market to recapture the current highs as it attempts to reach the long term resistance at 615.

Click here for the Market Minutes Audio Commentary on Soybeans

• Exchange: CME
• FND 08/04/03
• LTD 08/29/03
• Option Expire 08/01/03
• Contract Size: 40,000 lbs
• Point Value: 1 point = $4

What can you say about cattle? The market has been chopping around so much lately that it barely recognizes any support or resistance. Volatility is very high right now and until the market calms down we might expect more of the same in the future.

This Week:

Turning to the trusty ole Live Stock Trader’s Almanac I can see that we might expect the slide in prices, which began last week, to spill over to the next week as well.

The market has come down rather quickly however, and is sitting on a reasonable amount of support. Ideally I would like to see a smallish pullback next week, say to the resistance at 6880 as a good opportunity to enter the market short from there.

With stops above resistance at 6975 the market should have enough breathing room to prevent you from getting whipsawed.

Downside target would be support at 6560; however I would not press the market too hard as the climate could turn bullish again. In fact, given the volatile nature of the market, it might be wise to exit the market a little early as it approaches support.

Click here for the Market Minutes Audio Commentary on Cattle

• Exchange: NYBOT
• FND 08/18/03
• LTD 09/15/03
• Option Expire 08/01/03
• Contract Size: 10 metric tons
• Point Value: 1 point = $10

Cocoa did not do a whole lot last week as the market bounced around between the support at 1460 and the resistance at 1515. As a result not too much has changed for our forecast for the market this week…but with a twist.

This Week:

Cocoa is still looking to put in a bottom and it might have done so on the support at 1460. There is a fair amount of support here and it appears to be holding. The market did give us a couple of fairly bullish days towards the end of the week; however the low closing price on each day is rather discouraging. Even so, I am still bullish on cocoa at this time.

If the market can clear the high of last week at 1515 then it should be clear sailing for the bulls. The first stop is the resistance at 1670 as the market makes its way to the daily and long term resistance at 1745. Once here we might see the market stall a bit and thrash about a bit before the market likely continues with higher prices.

Another plan would be to bracket the channel that formed last week between 1460 and 1515. While I would favour a bullish breakout, a breakout to the downside would nonetheless require some serious momentum and should send the prices down to long term support at 1315 with no problem.

Since this channel is over $800 wide however, you might want to consider placing stops in the middle of the channel once either order is filled. While this is riskier it is the only way to maintain a favourable risk/reward ratio for the trade.

Click here for the Market Minutes Audio Commentary on Cocoa

• Exchange: NYBOT
• FND 10/01/03
• LTD 9/30/03
• Option Expire 9/12/03
• Contract Size: 112,000 lbs
• Point Value: 1 point = $11.20

Sugar has been a real bear of late…literally!

After channelling for most of last week the market continued to slide until encountering short and long term support around 620. The bears seem to be running out of room however, and we should be on the lookout for opportunities to enter the market long in anticipation of higher prices in the near future.

This Week:

While it is possible that the market could continue searching for a bottom this week, there is a fair amount of long term support on Friday’s low at 625. Furthermore a break below 625 would see the market run into a mountain of support beginning at 615; therefore it seems that the downside potential in sugar is limited at this time.

A breakout above the resistance at 641 could be seen as an indication that higher prices should follow. The first upside target for such a move would be the resistance found at 684. This would have an approximate profit potential of $480.

With initial stops below Friday’s low there would be about $160 at risk for a perfect 3:1 risk/reward trade.

Right now the long term outlook for sugar is definitely bullish with the resistance at 720 and 768 looking like good long term targets.

Click here for the Market Minutes Audio Commentary on Sugar

• Exchange: CME
• FND 09/15/03
• LTD 09/15/03
• Option Expire 09/05/03
• Contract Size: 125,000 SF
• Point Value: 1 point = $12.50

The week before last, we pointed out that the Franc was trading at a crossroads and that the current trend would depend on whether Friday’s low held or not. As it turns out the low did hold and the market continued its bullish rally through last week. The trend does not seem to have as much strength to it as it did earlier and while we might see higher prices for the next few days we may see the market topping out soon.

This Week:

Look for the bull trend to continue and the market to re-test the current highs at 7842. This is a significant resistance barrier, both long term and short, so the market will require a fair amount of momentum to exceed it. While this would not normally pose a problem for the Franc, current momentum seems to be waning so we may see the market top out soon.

Having said that however, don’t count the Franc out just yet. The market is (in)famous for its strong trends. A break above the 7842 resistance should see the market continue higher to the next resistance level at 8100.

We will have to see how it reacts to 7842 before we will know for sure…but it does seem that the current trend is weak and almost over.

Click here for the Market Minutes Audio Commentary on the Swiss Franc

• Exchange: COMEX
• FND 11/28/03
• LTD 12/29/03
• Option Expire 11/24/03
• Contract Size: 5000 Troy oz
• Point Value: 1 cent = $50

Silver made a move towards the end of last week when it broke above the resistance that had formed at 455. This was one of the markets that were featured in the new Market Alerts from last week.

This Week:

Look for the rally that began last week to continue this week as well. Look for the market to continue to resistance at 469 - 470 before possibly pausing. Trading could get a little choppy around here so it might be a good place to exit and re-enter later.

The near term outlook for the market is still quite bullish and we could probably see the market trading near the 484 resistance in the next week or two.

Entering above the 470 resistance with stops below mild support at 466 could have a decent 3:1 risk/reward trade if the market should continue to 484

Click here for the Market Minutes Audio Commentary on Silver

This week we will look at the cotton market again, but this time with an eye towards shorting it for a short term trade.

We will use Friday’s range to help determine where our entry and exits should be. We will place the orders outside of the highs and lows in order to make the market come to us before engaging our order.

Because the market could be trading a little choppy we will simultaneous trail a stop loss above the previous day’s high and use a profit exit to try and maximize profits.

• Entry: Short from 5869
• Stop Loss Exit: 5956
• Risk: $425
• Profit target: 5653
• Potential Reward: $1100
• Risk/Reward Ratio: 2 ½:1
• Degree of Risk: Moderate to High

This post is neither a solicitation to trade nor a recommendation of any strategy. Always consult your broker or advisor before attempting any trade. Commodity trading involves substantial risk of loss.

Week's Question:
I’ve heard a lot of talk about “opening range” but I don’t know what it is or what I’m supposed to do about it?

Answer:
This is a very important question and I’m glad you brought it up.

Opening range is the first 30 to 45 minutes of trading, depending on which market you're trading. Because of the unpredictable price swings that can occur during this time period many traders try to avoid trading during opening range.

These traders believe that the market is more unpredictable during the opening minutes as it reacts to news from that morning or the night before. Once opening range subsides however, then the true market direction becomes more evident and the market should begin acting more predictably. Generally speaking, the more volatile the market is, the more you need to avoid opening range.

While there are occasions when your trading plan might require you to trade during opening range, it is usually a good idea to avoid it if you can. In most cases it is safer to give the market time to “settle down” before placing your order.

If you are trading with close stops, as I normally like to do, then avoiding opening range becomes much more important. If you enter the market too early with a tight stop loss order then the likelihood that the market may whipsaw you increases. It is entirely possible that the market may fill both your entry and stop loss order in a matter of minutes during opening range.

Likewise if you are day trading, opening range is more important to you as well. As a day trader you need to find the true market trend for that day before you commit to the market with a contract. By entering the market too early you also run the risk of being on the wrong side of the trade and getting whipsawed.

Day traders also need to contend with closing range which is the last 30 minutes of trading. While usually not as violent as the morning counterpart, most day traders also avoid being in the market at this unpredictable time. Some more experienced day traders (such as Marsh Jones) have developed a "Trading the Open" strategy which works very well for them.

Opening range does not adversely affect everyone however. For instance, if you are able to trade with looser stops, have a longer trading time frame or if you are trading with options then opening range will hold less significance for you; however these are the exceptions and the not the rule.

In most cases you will be better off to wait 30 to 45 minutes for opening range to subside before you place your orders to enter the market.

Erich