April 4th, 2004  - Volume 2, Issue 14
- R. Thomas Loge' -

Inside this Issue:

• Opening Comments
• Trade Review
• New Trades
• Educational and Q&A
• Asher's Stats

A very hectic week with the new house demands fouling up the works. The complexities and demands to do anything just keep getting more and more difficult. Why is it that YOU have to be the expert in every field any more to keep from getting screwed. The lender presented us with doc's to sign. $500 more per month in payments than we were told. So I had to go to war.

Where are the ethics in business anymore? The mantra now seems to be screw all your customers until they go get smart enough to catch you. The phone company, health insurance, banks, carpet cleaners … everyone buries you in so much small print it is next to impossible to figure out what they are doing or what your options really are. What ever happened to someone explaining, listening and recommending the bets product for you? Very demoralizing to grasp what the world is like today. What we appear to be passing on to our children makes me embarrassed.

The Trade Review section only follows any trades left open or suggested in Thursday's Daily Update. Please refer back to the previous week's Daily Updates.

June 30 Year TBonds

The non farm payrolls were strongly above estimates and sent the bonds plummeting. I thought the action at the open was ripe for a sell as we tried 4 times to move above 113-14 and failed. Those of you who attended Wednesday's webinar will remember we discussed the 113-16/18 line. Once it showed me an inability to challenge it I sold one at 113-12 with a stop at 113-17.

Then came the report … Forget trying to roll anything, it was just in free fall. When we broke 109 I just threw in an order to buy one at market … I got filled at 110-05 and it took 2 hours to find out my fill price. I'm not happy about almost a point and a half of slip but under the circumstances I'll walk away … silently. I might add, with $3218. A third of my closing costs on the house.

Obviously as a trader I love when this happens. As a teacher I really fear these kinds of moves. It is very easy to observe these kinds of things and get a very wrong impression of the reward side of things. These moves are clearly just luck and an aberration to be sure. But as Erich writes opening his daily updates with the quote from "the great one" relating if you ain't takin' shots you're not gonna' score. Don't let this undo the grasp you're beginning to feel about tight management and grinding it out $200, $300, $400 at a time.

Every once in a while you'll catch a shooting star but it is NOT the norm and you must accept that fact or risk great peril.

June Swiss Franc

I was so preoccupied with the bonds with so much at stake that I missed the break of 7850 which would have been a very nice sell, indeed. We wrote about this number in TT from last week with a target at 7750 which the market touched providing an opportunity to grab $1250. I sure hope some of you non bond players were able to capitalize on our work.

June Canadian Dollar

We were stopped out in the night at 7636. I got back in on the short side just after the open selling 1 at 7634. The drop that followed was pretty dramatic. As we went thru 7580 one of our strong roll points I moved the stop to 7583 and got stopped right there for $510.

 April Gold

Sold 1 at 428.20 with a stop at 431.10. The $290 risk was a bit more than I intended. Within an hour we were breaking 420 where I rolled the stop to 421.10. Stopped out just a minute later for $710.

May Wheat

I again bought one as it found 4.07 about an hour after the open. Touched 4.06 ½ and started to rise giving us an in at 4.07 ½. I followed the exact same roll points as yesterday and again got stooped out on the final roll to 4.15 ¼ as we broke 4.18. This time we got a little closer fill to the stop. Out at 4.15 even for another 7 ½ cents or $375.

June Eurodollar

The payroll report did it's number on the EDM4 as well sending it rocketing lower. We'd discussed a target of 98.50 and I'd suggested a roll to 78 on a move thru 76. On the move to 98.68 I brought the stop to 70 and got tagged there … gain of $312.

May Cocoa

The 1500 area has been a focus from last week's TT and also a couple of the daily updates this past week. Hopefully you were paying attention to it. I tried to sell 1 on the first break and couldn't get it done. COK4 went to 1485 and bounced right back to the 1500 line. It tapped on 1503 several times and could not break it. I sold 1 at 1501 with a stop at 1507 for $60 risk. At 1480 I rolled to 87 and at 1460 to 67.

June 30 Year TBonds

After our Friday windfall I'm suggesting we be very careful with our trading. Not just here in the bonds of course but in currencies, metals especially and to some degree the grains … any market that is affected by the US Dollar and interest rates … which pretty much means EVERYTHING. It is not at all unusual to see snap backs after huge moves like this as traders and analysts doing a more thorough assessment of the data that drove the markets.

I'll be in no hurry to do anything on Monday … extra cautious. Friday's close at 110-30 leaves right on and in close proximity to several substantial R&S lines. One exists from 110-29 to 111-03. There is another of significance at 110-25/23. A failure to break 111-03 can be sold as it breaks back below 29 with a stop at 03. If this scenario plays out be wary of the 110-25/23 level.

Use it to roll stops to B/E and I would bail on a move back above 28. This trade has risk of $187. A move up thru 111-03 can be bought with a stop at 110-27 for risk of $218. Roll the stop to B/E at 111-09. 111-16/19 might be as much as you'll get from this one so be very tight at that level … a stop no lower than 111-13. This trade only produces an RRR of about 2:1.

Not the best scenario for sure but one I will do, regardless, because of my perception of the odds attached to it. A move to the 111-16/19 area that fails can be sold or the break of that level can be bought. The stop for the sell is 21 and for the buy is 13. roll to B/E 5-7 points above the entry price. A move to 110-25/23 that fails can be bought with a stop at 110-21 or 19. Use the R&S areas we've discussed above as rolls/targets.

June Swiss Franc

Although not a real strong area, 7750 can be a play. A test there and subsequent failure gets bought with a stop at 7741. Roll to B/E above 67. Keep the stop placed no more than $200 back of the market as it moves up and look to get real tight at 7815 and bail at 7850 on the very first sign of weakness. A move back up near or to 7850 that fails gets sold with a stop at 7859 or 57. Roll to B/E at 7841.

Keep it trailing from there back about $150-180 down to the target of 7750. This trade carries RRR of about 10:1. A break above 7850 can be bought with a stop at 7843 or so … odd numbers remember and never a 5. The target is 7940-60. Roll to B/E at 7865 and to 73 as we go thru 89. This trade has risk of about $87 and RRR at 11:1 or so.

June Canadian Dollar

A return to 7640 is a drop dead sell with a stop at 47 or 51. Roll to B/E at 30. The target is 7560 area. For RRR of about 11:1. Caution and tight stops are called for at 7610 and 7580. You can also buy a test of the 7560 area that fails with a stop at 7551 or 47 for risk no greater than $130. The target is the reciprocal number of 7640.

May Sugar

I'm leaving this market alone for a bit and just sitting on my options. I'll pick up the commentary when we get into next week. May Wheat My focus remains on 3 levels … 4.00; 4.07 and 4.22. A break of 4.00 can be sold with a stop at 4.02 ¼. Roll to B/E at 3.98. The REAL target is 3.72 but as a practical matter 3.91 is probably as good as we'll get right now so play it as such.

Keep the stops trailing no more than 2 ¾ cents. A test of 4.00 that fails can be bought with a stop at 3.97 ¾. Roll to B/E at 4.03. An advance to 4.07 demands a tight roll of the stop … no less than 4.05 ¼ I'd say. A break above 4.07 ½ is a buy with the stop at 4.03 ¼. A test of 4.22 ¾ or anything near it that fails can be sold with a stop at 4.23 ¾. Use the numbers above for roll points/targets.

These are all pretty significant R&S levels so stay on your toes. The numbers I've given you cover a pretty sizable range but that has been the story in wheat of late so anything or anyone of the lines could come into play.

June EuroDollar

I'm just going to watch tomorrow. I'll use the Daily update to let you know what I may be interested in doing for Tuesday. Expect a snap back so if you are still holding a short take some protective action … roll stops tight. 98.75 is a very strong number. I would not want to hold a short above that level preferring to exit, take my spoils and look for an appropriate new entry in the next couple of days.

May Cocoa

A move to or near 1400 … anything inside of 1415 that fails and begins to rise is a buy with a stop at 1393 at most for risk of $220. I will probably use 1401 as a stop if the fill is above 1408. Roll to B/E above 1419 and be aware of the power of 1440 we talked about last week. Roll tight there. The target is 1500 and the Resistance at 1460 and 80 must be respected with tight stops as we arrive there.

May Cotton

I cannot do anything until 6400. Use the suggestions of last week as guidelines for action at 6400 … IF we see it.