Monday Morning
Mon Aug 30, 2010 11:35am
Commentary
The Commerce Department reported to that that the savings rate for U.S. households fell in July to the lowest level in three months as spending outpaced income. Consumer spending rose 0.4% in July while personal income increased 0.2%. Bond and note futures rallied sharply off this report as investors found disappointment in the report.
The “big event” of the week will probably be the employment data to be released on Friday. Early talk is to expect job loss in the neighborhood of 100,000 jobs.
Japan held it’s emergency meeting the early result is exactly what was not suppose to have occurred. In the meeting the Bank of Japan said it would expand its current ¥20 trillion quantitative-easing program to six months from its current three-month time frame while at the same time increasing the amount of funds available by ¥10 trillion. The end result is so far a sharply higher Yen since speculators don’t believe the proposed measure is enough to stop the rise of the Yen. The problem with trying to guess on what meeting like this will actually produce has to do with logic versus outcome. Logically, the call for an emergency meeting to stop the Yen from rising should have put the Yen down, not up. That’s why I think chart action and trading discipline make for a better trading game plan than “logic”.
I am not at all surprised in the lack of “trade setups” taking place right now. It is very common as the summer comes to an end and the Labor Day Holiday approaches. Don’t let the quiet markets break your trading discipline.
Trade Recommendations
YGZ10 (December Mini Gold) + .6 at 1238.6. Medium Risk Traders; buy long at 1222.5. If filled initially use 1211.6 stop. Take 50% profit at 1251.6 and move your stop up on your remaining long position to breakeven including commission.
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