Market Reviews and Opinion Reports

[jmound]

A Market Review and Opinion Report For the Week Ending September 25, 2011

Energies

The commodity crash is on - full steam ahead! Crude oil is taking it on the chin as the global outlook weakens and the dollar strengthens. Look for heating oil and RBOB to continue to fly south for the winter. Natural gas remains a buy on tightening inventories and a cyclical supply/demand shift.

Financials

Stocks collapsed last week amid the Fed’s treasury musical chairs and deepening crisis in the EU. Bottom line is the world is in a recession, growth is going to be nil, and impossible debt and government bankruptcies are here to stay. The dollar remains a safe haven, however, as investors flee the euro and the U.S. continues to make command decisions on monetary policy. The Canadian and Australian dollars are in a freefall and are strong shorts on bounces. The euro and pound should continue to experience selling but a long pound/short euro may be worth a look. The Japanese yen continues to be the beneficiary of investor currency flow out of the euro, Canadian and Aussie. This week offers the best shot since the latest intervention to see the yen breakout to the upside, but overall remains congestive near the highs. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Grains are taking it on the chin as commodities traders and funds appear to be fleeing the grains as the realization of a global demand slowdown and strong U.S. dollar punish this inflated sector. Corn, beans and rice are strong sells, with wheat a value buy against corn on a spread basis only. The report on the 30th might just be the straw that breaks the grains backs here.

Meats

Cattle began what I believe is a long term descent with a retracement of 30% or more expected. Hogs are also bearish with the rest of the commodities out there.

Metals

Hello liquidation event! The world is panicking out of metals and the liquidation has just begun. The last bastion of profitable long investing is finally seeing a mass exodus and it doesn’t matter if investors are liquidating to free up margin for other commodity and stock losses or if it is just a plain ‘ol run for the exits. When gold and silver were finally going to top it wasn’t going to be an orderly selloff – its something just like this – a meltdown selloff that leaves longs holding a bag of coal instead golden coins of money protection. There is no inflation – no growth in the world and a strong dollar means metals need to give back their inflation hedging premium.

Softs

Coffee is in meltdown mode as specs realize Vietnam is flooding the world with coffee. Sub-$2 coffee here we come. Cotton is a potential put buy but overall this is still an avoidable market. Cocoa has broken key support and should see sub-2000 prices before the year is out. Sugar and OJ remain strong sells after coming off inflated highs without fundamental merit. They both could see massive retracements.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

_________________
James Mound
Head analyst for MoundReport.com

*Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending October 2nd, 2011

Energies

Oil price volatility expansion continues amid falling prices as the stock market begins to take a back seat to the U.S. dollar/ euro currency relationship. As the euro fails oil demand will likely falter in Europe where prices remain relatively high. The overall outlook for oil remains bearish, along with heating oil and RBOB gasoline. Natural gas, however, is a spread play buy 1 to 1 against a short crude oil.

Financials

Stock volatility is expanding and is a strong indicator of a breakdown move ahead. The employment report on Friday could be the catalyst the market needs to fail miserably and I would be weary of long holdings into that report. Bonds appeared to have topped, but this may be temporary if another wave of stock market selling is ahead. The dollar remains a strong buy, anticipating a breakout move through 80 on the index in short order. Look to buy dips in the dollar or sell rallies in the euro currency. The Canadian and Australian dollars are strong cycle-changing shorts. The Japanese yen remains an impressive bull market, holding onto gains despite strength in the dollar. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

As anticipated the grain stocks report on the 30th killed the market, especially beans which had a big bear shocker of a report. Here are the highlights courtesy of www.commodinews.com:

September 30 Grain Stocks: http://usda.mannlib.cornell.edu/usda/current/GraiStoc/GraiStoc-09-30-2011.pdf

Highlights:
- Old crop corn stocks in all positions on September 1, 2011 totaled 1.13 billion bushels, down 34 percent from September 1, 2010.
- Old crop soybeans stored in all positions on September 1, 2011 totaled 215 million bushels, up 42 percent from September 1, 2010.
- All wheat stored in all positions on September 1, 2011 totaled 2.15 billion bushels, down 12 percent from a year ago.
I expect significantly more downside in grains and see the current selloff as an indicator of both the degree in which the commodity markets are currently overpriced and the velocity that they can decline.

Meats

Supply concerns have cattle and hogs surging and contradicting my bear forecast. I continue to see a top here and recommend put positions in both markets on this rally.

Metals

The chart on silver says it all – a shocking liquidation followed by a consolidation near the lows. Neither gold or silver offer anything impressive here to the upside – I would be shocked to see either market rally significantly and see any bounce as an opportunity to get into bear put spreads. Copper is a strong sell with a global demand destruction forcing prices down over the next 12 months.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade
​

Softs

Coffee continues to experience strong selling as it becomes apparent that Vietnam is having record production and the supply-side cycle is kicking in to help reverse the long term trend. Cocoa has broken key support and is a strong sell. Cotton is choppy and not worth much attention. OJ and sugar remain sells with straight puts.

________________
James Mound
Head analyst for MoundReport.com

*Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For October 23rd, 2011

Energies

Rising oil prices have been sparked by a pullback in the dollar and amazingly strong rally in the stock market. The stock market surge of over 15% in 14 trading days coincided with crude oil’s run of nearly 20% in just 12 days. While it could be argued that the chaos in Libya held as much as 35% market premium, it is unlikely that the majority of that premium remained in recent weeks, and therefore Gaddafi’s death should not be overly impactful to market prices in the near term. By some estimates Libya is producing under a third of max daily production, but the idea of getting back to that upper range is a long term goal and the market is not about to experience massive supply increases anytime soon. Oil is a sell at current levels. Natural gas remains a contrarian spread buy against oil.

Financials

The stock market broke through key resistance and had the biggest percentage gain in 14 trading days since the stock market bottomed in March 2009 (on a point basis the S&P actually rallied slightly more!). This massive 15+% move in the S&P broke through channel resistance, however this breakout move shouldn’t get the shorts to fully cover just yet. Grab some straight puts to play a volatility spike down, with a top in the S&P likely to occur below 1265.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Bonds remain a good short strangle option play as they should be range bound with the upcoming retracement expected in the stock market. The U.S. dollar has retraced a bit from the highs with the strong stock market rally, however it held support much better than the S&P held resistance. Expect a quick retest of the highs in the dollar. Puts in the euro and pound are recommended. The Canadian and Aussie dollars have congested and I would recommend waiting for fresh lows before jumping short. The Japanese yen remains an impressive bull market, surging thru pre-2nd intervention levels. I continue to stand by my forecast that:
The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Soybeans offered a nearly perfect reversal off a Mound Ladle Formationtm, suggesting significant volatility and downside should be expected in coming days. I suspect the entire grain sector will end October and begin November dramatically lower. Straight puts are recommended in beans and corn. Wheat is a spread buy against either of those shorts. Rice could see a supply shortage from the flooding in Thailand but puts are recommended on an anticipated sell the news effect.

Meats

Live cattle has shown some selling pressure below previous historic highs. I recommend puts here or short futures to play a double top. Lean hogs have momentum to the upside but should top shortly.

Metals

Congestion central is going on in metals after getting kicked around for a month, but this feels more like the calm before the storm to me. Long term deep out of the money puts in copper are worth a look if you can get them in a pretty awful option pit (think Dec 2012 $2 puts).

Softs

Coffee spiked on heavy rain damage in Central American growing regions during harvest. I do not expect coffee to resume a bull trend and see any bounces as opportunities to establish bearish positions here. Cocoa remains a strong sell with straight deep out of the money puts or short futures recommended. Cotton is avoidable. OJ and sugar are both sells with 20% retracements expected before the year is out.
____________________
James Mound
Head analyst for MoundReport.com

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[SiRentap]

oil price skyrocket..USD become weak isn't :-?

 

[jmound]

A Market Review and Opinion Report For October 30, 2011

Energies

Oil prices continued higher last week, tracking alongside a rising stock market. This week should offer a critical turning point and a bear put spread is recommended. Natural gas remains a contrarian buy flat out with calls or as a spread against short crude.

Financials

Stocks accelerated gains last week after what was already an historic short term rally. This market is on its last rally legs and buying puts should be considered the trade of the year here. Bonds remain range bound ahead of an upcoming Fed meeting, but expect some upside in bonds as the stock market reverses. The dollar took it on the chin the last few weeks, failing after a critical breakout. A resumption of the bull breakout is expected and this selloff should be bought into. The euro, pound, Canadian and Aussie dollars are all strong sells. The yen is reeling back after a surprising 3rd recent intervention by the BoJ, who is apparently acting independently this time around. It is important to note that this intervention has something the previous two did not – an off balance market ill-prepared for the timing of this intervention. The long spec positions in the yen were likely heavily increased on the recent breakout, and I believe a lot of shorts covered making a long liquidation on this intervention a strong reality over the next few days. Nevertheless the long term picture remains very bullish for the yen, and I continue to stand by my forecast that:
The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Expect beans to penetrate near term consolidation support to the downside early this week, and grains as a whole could be in for a massive November selloff. Prepare with bear put spreads and a possible long wheat/short corn spread. Rice remains a sell with straight puts.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Meats

Cattle has turned to bearish nicely in the short term and should see a solid 5-7% decline this month ahead. Hogs are also a sell with straight puts or short futures with stops above 89 on Dec.

Metals

Metals rallied last week as commodity prices rose and the dollar took a bath. This should be quickly reversed this week and it is critical for the bears to see an immediate destruction of last week’s rally to increase the odds of a near term bear collapse.

Softs

Coffee prices surged on weather concerns in Central America affecting crops, but this appears to be an excellent chance to get short with straight puts and/or bear put spreads. Cocoa’s bounce should be sold with resistance expected at current levels. Cotton remains range bound and is avoidable. Sugar remains in a downtrend off the highs, while OJ reversed and is testing critical highs. It appears OJ is developing a wide congestion pattern near the highs but is unlikely to establish prices over 210, making OJ a sell with straight puts.
____________________
James Mound
Head analyst for MoundReport.com

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

Special Report on the State of the Currency Markets For the Week Ending 11/06/2011

A currency event may be fast approaching. The recent breakout of the dollar and rapid retracement sets up a major move in nearly every currency in the world. The Japanese yen has remained stable amid the dollar volatility but the euro, pound, Canadian and Australian dollars are far from inert. Even currencies like the Mexican Peso, Brazilian Real and Chinese Yuan are all likely to experience massive price moves in the coming weeks and months. Currency volatility has the ability to take control of the world financial markets. The underlying fundamental reasons for major currency moves are often game-changers in the global stock and commodity markets.

Think about how strong of a relationship there is between currencies and commodities. Everything from gold to corn is affected by the import/export relationship of the respective buyer’s or seller’s home currency. Buying power – that is what it is all about. The Japanese government has spent decades trying to suppress their currency value against the dollar, yuan and euro to facilitate a critical export component to their economy. A strong yen weakens foreign demand for their goods and stresses their critical industries like cars and electronics. Now think big picture – the world is in economic recession and the European Union is experiencing stress due to government bankruptcy fears and economic bailouts of epic proportions. A major currency shift right now could have catastrophic impact on commodity prices. Click here for details on my forecast.

Brazil, one of the largest producers of some of the world’s most important commodities (coffee, soybeans, cattle, oranges, and sugar to name a handful), is the sleeper of the bunch. A major move in the Brazilian Real could either open up exports and flood the world with cheap commodities or, if the currency shifts the other way, could tighten the supply chain and cause commodities to scorch higher.

The United States is another major commodity producer, especially of cattle and grains, and the dollar is still near multi-decade lows. The U.S. also serves as a major importer of critical commodities such as oil, coffee and cocoa which makes the dollar a focal point of any shift in currency valuations. Imagine the dollar returning to the 2001 highs in the U.S. dollar – nearly 60% above current levels. Think about the impact that would have on the price of grains to the rest of the world. At the same time the buying power of the U.S. would be greatly increased. On the flip side if the dollar should see continued pressure and drop to fresh lows the inverse could be devastating to the world economy. The world economy is the driver of the stock market in the U.S. and abroad.

The fact is multi-national companies are the norm. The internet has made nearly every company international. A global currency shift would change the landscape for nearly every company in the world and could spell major changes in stock valuations.

Real estate is also closely tied to currency action. When the world got rocked in 2008 many Europeans used their strong euro to buy U.S. real estate. When the euro got slammed investors liquidated cash real estate holding in the U.S. because, even though the real estate holdings had likely lost value, the currency conversion was so beneficial that there was net profit on the sale.

I believe the world is about to experience a major global currency shift and I am excited to forecast the move and help you prepare for what I believe is right around the corner. How do you hedge your currency exposure? How does one leverage the moves that lie ahead to potentially profit from the action? My upcoming forecast calls for the biggest currency moves in recent history and reveals exactly how to play these moves and their critical impacts on stocks and commodities. Discover my latest forecast – Currency Cataclysm - by clicking here or copying and pasting this link into your internet browser: http://76.12.187.33/Mega_Email/2011/Q4/LandingPage/

__________
James Mound
Head analyst for MoundReport.com

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For November 13, 2011

The release of my currency forecast (Click here for details) is perhaps the most critical report I have ever put together. When currencies make major moves the world is left with little choice but to adjust the prices of commodities, real estate and stock valuations, and I believe a major currency event is fast approaching.

In fact I believe it has been in the works for over a year. Let’s take a look at what has been going on to set this fundamental situation in motion:

Greece
Greece opened the world’s eyes to the fallacy in the construction of the euro currency. Simply, a unified currency is only as strong as its weakest country’s economy, and Greece is one horribly messed up economy. The bailouts proved that every country in the constituency was too big to fail and it has setup perhaps the worst currency collapse in the world has ever seen. It is not so much about Greece, but Portugal, Italy and every other country that follows. Eventually the strongest countries will no longer be able to support the weakest ones and the euro currency will fail.

Money Musical Chairs
When the euro currency panic first began the masses desperately searched for stable economies and strong currencies to reallocate their euros. The U.S. dollar got some investor money, but the major beneficiaries were the Japanese Yen and Aussie and Canadian dollars. The yen remains on a rampage, surging about 65% in just over 4 years. The Australian dollar is up over 80% in 3 years and the Canadian dollar surged about 40% in just over 2 years following a 2009 bottom. The point is these currencies have seen huge moves as a beneficiary of this euro debacle, but the question of the day is do they have any more left in them?

Inflation Misunderstanding
Following the 2008 global financial collapse the unified effort to cut rates to virtually zero heightened inflation concerns, and the length of time this would remain the status quo became the focus. The theory was, and for some still is, that the longer rates remain this low the more dramatic the inflation impact will be later. The fallacy in this thinking is that low rates are actually making money more accessible than when rates were higher. The reality is money flow is tight, credit even tighter, and money is very hard to come by. Joe Investor is certainly not confident enough in the state of the world economy to be as loose in his spending as he was 4 years ago. Simply there is no loose money and inflation is not the risk. This realization will be a major catalyst to a monumental shift in currency valuations.

ECB Premature Rate Hike
In an effort to lead the world out of recession the ECB decided it would be a brilliant idea to hike rates earlier this year. Luckily the Fed stood strong, but at the time the policy leaders took a backseat to the ECB and the euro bounced. Well that was short-lived and reality has clearly set in that rates need to remain near zero for a long, long time to facilitate a recovery.

If my prediction comes to fruition then these events have setup a major currency cataclysm, a genuine volatility event that could change the landscape of your investments for years to come. I have written a critical currency market forecast and it will be released Tuesday evening. I encourage you to take advantage of the 60% discount provided to buyers who purchase prior to the release of the report at a price of just $99 and it includes some great free bonuses. To order or learn more visit http://futurespress.com/Mega_Email/2011/Q4/LandingpageReport/

_______________
James Mound
Head analyst for MoundReport.com

*Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For November 28, 2011

Energies

Oil prices remain heavily dependent on the stock and currency action, seemingly unable to move uncorrelated to those markets. That being said, the euro could get hit hard ahead of and following a bearish U.S. employment report on Friday. Look for heavy selling in crude oil over the next two weeks to signal a top in that market. A Monday morning rally should be sold into with bear put spreads.

Financials

My Currency Cataclysm forecast released on the 16th is well underway, with a strong dollar being a major catalyst to these moves. The stock market pressure, and likely top, is helping to put the dollar into a full-on bull breakout. It will take a long time to see the true destruction of the euro currency, and in the meantime the dollar will likely see continued foreign investment from those bailing on the euro. Friday’s employment report is perhaps the most critical report this year, with a bear surprise potentially wreaking havoc on the stock and currency markets. Bonds remain a premium collection opportunity with upside exposure that should be hedged. The Japanese yen has had some resistance form here, but to me its congestion ahead of another big move after a near term U.S. dollar rally subsides and frees up the yen to make its run to 140. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

The grain descent has begun and the markets are getting beat up on a strong dollar and weakening global demand outlook. This time of year becomes all about speculating on 2012 planting prospects and demand for harvested crops. Will there be high carryover inventory heading into the 2012 harvest? I personally do not believe it matters very much. Grains have evolved since 2008 into a demand-focused market. I believe this sector has changed dramatically from a supply-side focused market into a global demand and usage sector. If I am right then this sector represents a great opportunity – if the rest of the market participants are focused on supplies and plantings while global demand slips, then a short play will continue to fight the market psychology and offer a great downtrend over time as opposed to a sudden collapse. That being said I do expect downside shocks to the market coupled with entry opportunities on temporary bounces. I suspect a 2 steps lower and 1 step higher style selloff is underway.

Meats

Cattle is screaming downtrend, as a double top and trend line resistance has formed nicely in the near term. Two recommendations to play the downside in cattle are recommended in this week’s Week Ahead report. Get your free trial to my premium service before the offer expires tomorrow by visiting http://futurespress.com/lp/FP_BlackFriday/. No credit card information is required.

Metals

Metals continue to deflate as a rising dollar and declining commodity prices diminishes demand for the overpriced metals sector. I expect strong selling to coincide with a stock market fallout in coming weeks.

Softs

Coffee has congested and is setting up for a volatility event, with my gut calling for a breakdown below $2. Cocoa is failing and front month took a bath during first notice period, indicating a demand failure in this market. Look for sub-2000 prices shortly. Cotton is also seeing some downside after a long period of congestion – be weary of a fakeout here as normally the first move after a period of congestion following a market failure is a false signal. However, general bearishness for commodities here suggests cotton will have a tough time remaining in this price range. Sugar and OJ are strong sells at current levels.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Disclaimer: Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.moundreport.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.

 

[jmound]

A Market Review and Opinion Report For December 5, 2011

This week is a relatively quiet report week (see economic schedule at the bottom of this report), with the focus leaning more towards foreign affairs. Sunday’s move by Italy to pump $30 billion euro into their economy will probably give some false hope on Monday that this week of European crisis talks might end well. Monday’s meeting between France and Germany sets up a Friday summit that should not provide the all-important effort that will support the euro from its downward spiral. For me, the bottom line is that Germany must decide if they are willing to destroy their relatively sound financial structure to help a destined-to-fail euro currency, and summits like the one coming up on Friday create opportunities for Germany to continue to create space between them and the other EU nations so when the euro breaks they have mitigated some of the fallout for themselves.

The stock market has made a dramatic recovery but is quickly facing critical resistance near the highs of its recent move – highs that I believe should hold. Along with that rally the U.S. dollar pulled back, albeit relatively little compared to the move in the stock market, and is offering a congestion period buy. The WASDE on Friday should provide a catalyst to further selling in grains, coinciding with weakness in commodities following a tough week of Euro panic.


S&P500

The S&P has formed a nearly perfect v-shaped recovery on a deep selloff that occurred just over a week ago. The market was up approximately 10% in a week, a truly astounding move that has occurred infrequently in history. Last Friday’s market reversal off the perceived bullish employment report is indicative of the change in market sentiment. Somehow, some way, the market has begun to realize the obvious – that it is not the center of our world but rather how the world impacts us that our egocentric minds should now accept. The reality is our employment is only a measure of our economy and our economy is only a measure of the world’s demand for goods and services as compared to available supply. This means if any major component of the world economy, namely the EU, is in financial ruins then so goes the rest of the world and our economic outlook. So the focus turns this week to crisis talks in Europe, perfectly timed to the market’s technical resistance near the highs of this multi-year rally off the historic lows set in 2009. It is not often that a daily, weekly and monthly chart offers such dramatic technical resistance indicators simultaneously while heading into a fundamental event. Puts and short futures are both recommended, but a futures play here allows for an immediate impact on market selling off technical resistance. The 10% rally and previous strong market declines have pumped up the VIX a bit and options are less of a value than a few weeks ago, making a futures play a bit of a stronger approach. A stop on the futures could theoretically be placed tighter at 1271 but for the difference in point risk I feel it is worth affording the market the opportunity to take the highs out before jumping ship on a short play.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Soybeans

Grains have already turned trend bearish and the retracement in beans has already impacted the market with about a 25% pullback since September. Last week’s stock market rally helped boost core commodities, but beans lagged with under a 3% bounce, indicating a general lack of buying interest. I believe the market has the potential for another 10% selloff this month and see Friday’s crop and WASDE reports as a catalyst to the next round of selling. A short term option play here gets close to the market with nominal premium paid. The strategy would be to position short term with a put play that captures any near term downside, with the full intent of playing a longer term position after this short term play if the market goes against the trade. In general I feel a short term option play near the money can grab immediate moves but can actually hedge the entry price of a longer term trade that you are seeking an entry point for – pay 8 cents now to try to capture near term downside and if you do not get it then you likely will see a higher entry price opportunity for a longer term play.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Soybeans have been cultivated for food and other uses for nearly five millennia. Originally native to eastern Asia, the modern farming areas for this oilseed occur on nearly every continent. In the United States they were originally considered an industrial product and after their initial introduction to North America they were grown for hay. It was only during the twentieth century that America began to use soybeans as a food product. Noteworthy global distribution of production, imports, and exports is as illustrated in the following charts:

*Data courtesy of USDA/NASS​

Since soybeans are produced in large quantities in both the northern and southern hemispheres, crop news and weather is relevant nearly all year. Cultivation is most successful in climates with hot summers and plenty of sunshine – up to and over 14 hours per day – can be important to the flowering stage of a soybean plant. The complete sowing to harvesting cycle for the modern soybean varieties can take anywhere from 80 to 120 days.

__________
James Mound
Head analyst for MoundReport.com

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

Mound Currency Signals for December 12, 2011

A Brief Overview of Mound Currency Signals

MCS is comprised of three parts:

Part 1 - Trend analysis

This will cover two time periods:

The weekly outlook is my answer to the question of where the currency will be at the end of the week relative to where it started the week.

The long term outlook looks at the price trend over time. How long is long term? Well, that depends on the trend - it is as long as the longest trend in the market which could be a few months or ten years - it just depends on the market, but it lets you know my main directional forecast of the market over time. Both time periods will be addressed with a simple BUY, SELL, SIDEWAYS forecast, since markets should fall into one of those three trends.

Part 2 - Market outlook

A simple market assessment for the week that covers important trends and trend changes along with critical fundamental events affecting currencies.

Part 3 - Global economic calendar

Currency trading is based on fundamental events all around the world, so the economic calendar should be global to match. While it is hard to find every single economic event all over the world, this section will strive to cover the critical events affecting currencies on a weekly basis.

The goal of MCS is to give you a directional forecast and fundamental market awareness in an efficient report - this is not a research report but rather a reference point for making your currency investment decisions. This report can be used as a guide for both futures and FOREX traders, along with anyone trying to hedge their currency risk.

TREND ANALYSIS​

Buy or Sell indicators reference the currency against the U.S. dollar. That means if the Japanese yen is listed as a buy then it is considered a buy against the dollar. The US Dollar indicator is the dollar versus the basket of currencies that comprise the index. If you want to look at alternate pairs like the yen versus the euro currency please reference the weekly market outlook for relevant comments about comparative strength or weakness to gauge pair dominance. The currencies listed in the "Currencies" section will be reviewed week after week, but the "Other Currencies" section will change as necessary to highlight the vast alternative currency opportunities that arise.

MARKET OUTLOOK​

Week of 12/12

A slightly bullish ending to the week for the U.S. Dollar on Friday's bounce helps spark this week's anticipated breakout bull run for the dollar. The core catalyst will likely be the Fed meeting on Tuesday and a bearish turn in the stock market. Nearly all the outlooks for foreign currency have turned bearish this week as the dollar goes to test the highs at 79.87 and eventually 80.43. Even the Japanese Yen lacks a bullish bias this week as the dollar's strength is unlikely to allow any foreign currency the power to be independently bullish this week. The Mexican Peso might take a brief reprieve from its selloff, but I suspect it is either over with or short-lived. I continue to look for the Vietnamese Dong to reverse a long term bear market, but this will be a tough week, although seeing the market hold up to a dollar rally will be an interesting test in this obscure market.

Two major points from last week's EU summit. First, the idea that there is a tightening unity among the participants and that strict fiscal policy changes would work is ludicrous to me. It is ironic that merging varying economies of scale together into a unified currency is going to ultimately meet its demise because the powers that be decided that the remedy to fix it was to tighten the connection amongst those involved. The bottom line is that the monetary policy of Germany cannot be the same as the monetary policy of Greece, and that core issue with these new 'progressive' steps should backfire rather quickly. As the world begins to wrap their heads around the impracticality of this new solidarity they will likely look to leave the euro currency in droves. What happens to the strength of these new brothers in battle when the euro tanks on a panic selloff? What happens when Germany truly sees the impact of a failing euro on its economy?

The second big wow from last week was Britain's bailing on the EU. Britain's Guardian newspaper made a good point by raising the question "Will it be Splendid Isolation, or Miserable?" The reality is Britain saw what the world will soon have to accept which is no single collaboration can make effective monetary decisions for all of Europe. It feels almost like an idea before its time meeting its demise and Britain may suffer in the near term from doubt about its political decision, but ultimately the pound is likely going to be saved from this impending nightmare, and it makes the pound a long term buy against the euro. In the near term it is difficult to see the pound emerging with so many unknowns and an anticipated U.S. dollar rally.

Economic Calendar

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