Sunday Morning

Sun Aug 29, 2010 6:47pm

Commentary

It looks to me like we’re in a correction phase. Stock indices lost their embedded status on Friday, which implies to me that a short term correction back up to these indices respective 18-Day Moving Average of Closes is a reasonable probability. I see the same thing happening in currencies as well. Bonds and notes are doing the same, but instead of rallying they are in a price break phase that could take them down to their respective 18-Day Moving Average of Closes.

The Bank of Japan has called an emergency meeting to be held on Monday, to consider what to do about the surging Yen. The will probably result in an even easier monetary policy than is now in place in Japan. The idea behind this is this. If Japanese rates are significantly lower than those of other countries, the theory is that that would reduce the attractiveness of the Japanese currency and cap its rise

Trade Recommendations

YGZ10 (December Mini Gold) + .6 at 1238.5. Medium Risk Traders; buy long at 1222.5. If filled initially use 1211.6 stop. Take 50% profit at 1251.3 and move your stop up on your remaining long position to breakeven including commission.

YMU10 (September Mini Dow Jones) + 17 at 10158. Lower Risk Traders who followed my recommendation went short near 10096 on Friday and should have been stopped out at 10107 for a loss per contract of 11-points or $55..

Definitions of Initial Dollar Risk:

Low-Risk Definition:
A Low Risk Trade is defined as one having an approximate initial dollar risk of $0 to 150.

Medium-Risk Trades Are Broken Down Into 3 Categories:

Lower-Medium Risk:
A Lower-Medium Risk Trade is defined as one having an approximate initial dollar risk of $151 to $250.

Medium-Risk Trade:
A Medium-Risk Trade is defined as one having an approximate initial dollar risk of $250 to $350.

Higher-Medium Risk Trade:
A Higher-Medium Risk Trade is defined as one having an approximate initial dollar risk of $351 to $500.

High-Risk Trades:
A High-Risk Trade is defined as one having an approximate initial dollar risk of $500 to $600.

All dollar-risks are calculated with no allowance for slippage of fills, gaps in the market and commissions.

NEW RECOMMENDATIONS:
New Buy Recommendations are highlighted in Green.

New Sell Recommendations are highlighted in RED.

Every New Trade Recommendation includes a specific entry point, recommended placement of a stop(s) and updates on the profit objective(s).

Stops on Futures Contracts

An initial Stop Order Price is typically provided and is part of the original trade recommendation. A 50% profit objective is also typically provided. If the profit objective is achieved, instructions on what to do with the remaining contract will be provided. You should be sure to cancel your original Stop Order and place another Stop Order following the written recommendation.

Stop Orders on Option Contracts

Some futures contracts that have “Option Contracts” do no accept straight stops on Option Orders. Others do. You have to check which ones do with the Ira Epstein & Company Margin Department, or your mentor from the Futures Academy to find out what market takes what. If stop are accepted, fine. If not, if the price where a recommended stop should be placed is hit and the market does not accept a stop order in that market, once the price is hit, place a market order to get out once that price is hit. We will look at Time and Sales along with fills that other customers receive to alert you to where fills came in for markets where Stop Order in options are not taken.

Contracts Per Trade Recommendation

The Futures Academy teaches that you should, if you are able to, enter with a minimum of 2 contracts per trade recommendation. That is why we so often mention “Take 50% profit at__and move stop on remaining (long or short) to breakeven including commission”. If we are wrong before a profit is seen, you are at risk on initially on 2-contracts, not one.

DISCLAIMER Futures and Option trading involves substantial risk and is not a suitable investment for all types of investors. This Futures Market Report is strictly the opinion of its writer. Information is obtained from sources believed reliable, but is in no way guaranteed. The author may have positions in the markets mentioned including at times positions contrary to the advice quoted herein. Opinions, market data and recommendations are subject to change at any time.

Past Results Are Not Necessarily Indicative of Future Results