Market Update

As an experienced trader and instructor, I have seen trader’s opinions get in the way of actual market movements many times. Both the local and international markets are currently positioned in such a way that many traders and punters are saying they will have to fall, and fall hard.

In the Commodities Course, W.D. Gann wrote about Double and Triple Tops and Bottoms, calling them strong levels of support and resistance. Gold has made a number of these formations in recent times, as illustrated in Chart 1 below:

Gann said that Double and Triple Tops were a good place to sell and that Double and Triple Bottoms were a good place to buy.

Certainly, if you had been short on Gold out of the 28th August, 2013 Double Tops or the September/ October, 2013 Double Tops, there was indeed money to be made. Similarly, buying at the Double Bottoms in December, 2013 was also potentially profitable.

Coming up out of the December low, Gold created a Double Bottom, on the bigger picture. It has now run up to a minor double top as shown in Chart 2 below:

Note that Gold is holding around the 1250 level, making two daily swing tops at this level. If Gold had more short-term downside potential, this would be a good place for that to begin – at a Double Top on a 50% retracement as seen in Chart 3:

At times like this it is important to pay attention to the bigger picture. Gold is coming up off Double Bottoms, which has made higher swing bottoms through January. Given that there is some short-term downside it will be interesting to watch the retracement of the December to January range and to see if it is less than 50%, which will indicate a strong market.

The 1180 level is an important resistance level because it sits where two strong moves have come. A test of these levels will either create a Triple Bottom and another potential push by the bulls or a break out which will see more downside. Remember to be prepared and have a suitable plan in place to trade all directions.
So are you a neutral-minded trader, open to the potential of markets moving higher or lower? Or have you committed to a direction? If you have committed to a direction, that’s fine – you have to have an opinion to make money in trading or investing. The cautionary note is that the market is always right, so it’s better for your bottom line to agree with it than to disagree.

Plan Your Moves!

Robert Steer
Chief Trading Coach

GRAINS Update:

  • USDA monthly crop ratings reflected dryness in the Plains
  • Soybeans, Corn and Wheat all moved significantly higher overnight and broke many technical levels on all fronts
  • Winter weather has slowed grains movements in the US Midwest
  • Additional upward support from concerns over dryness in brazil also weighed in on fundamentals

SOFTS Update:

  • Coffee turning lower as investors cashed out of the market to lock in gains from a furious rally which took futures to the highest level since May earlier in the session.
  • March sugar contract climbed as the same dry conditions that boosted coffee, supported sugar as well.
  • Brazil is the world’s largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.
  • Cotton futures for March delivery traded up as frigid temperatures in key cotton-growing states in the U.S. fuelled concerns over supplies.
  • Orange-juice futures are thriving as weather forecasts keep investors focused on the potential for limited supplies of the fruit. The “frost premium,” or buying futures in anticipation of cold weather, is common in the orange-juice market at this time of year, but damage from a freeze now would be especially bad for the supply of oranges. Citrus-greening disease has reduced orange production and the U.S. Department of Agriculture has forecast that the current crop in Florida, which grows about 80% of the oranges used for domestic juice, will be the smallest in 24 years.

We have NOT included oil, gold in this report at this point. We need yor valuable feedback before making a more detailed and focussed market report. Tell us what you would like to see, read and hear about. That way, you get only the information you want that helps your trading rather than a report with jibberish you don’t need.
Please reply back with the things you would like to see.

To your trading success always!
Akhilesh Kamkolkar
Founder & CEO