Techniques For Capturing Sizzling Gains
The summer BBQ season is upon us and the meats are
sizzling. A look at TradingMarkets Momentum-5
List from the Futures Indicators page tells you this: August feeder cattle
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But how do you capture gains such as those that took feeders to a contract
record and lives to a three-month high?
Both contracts have recently exploded leaving telltale
poles from which they’ve etched flags. Two ways to exploit momentum are to buy
the breakout of a (bullish) flag or to enter on an Off The Blocks.
Here are the breakout pivots on the dailys for flags.
For an Off The Blocks entry, you go long a Momentum-5
market on the breakout of its opening 5-minute bar. The principal underlying
this strategy is that momentum begets momentum. If a momentum market gaps down,
a sign of short-term weakness, entries are delayed, working to keep you out of
markets on down days or until the momentum continues. For the complete lesson on
this strategy, see my article on the Subject in the Futures Education
section.Â
Grains were mixed as traders looked at weather, crop
reports and exports. July wheat
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expected news of a boatload of exports to Jordan. Lowered wheat crop projections
also supported prices, leaving basis July 5 higher at 264 3/4.0
Corn
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and
soybeans
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low of 189 1/4 and beans slipped 8 to 439 1/4.
Rounding out the mixed finish in the grains, soybean oil
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staged a solid reversal to make good on its Turtle Soup Plus One Buy
signal, ending .2100 higher at 14.7400.
Three down signals from the
Market
Bias Indicators Page hinted that stock index futures could sell off. Today
we had a Connors VIX Reversal II, A Connors VIX Reversal VI and a TRIN Thrust
signal all pointing down. Three or more of these signals pointing down give a
strong collective indication that stock index futures will reverse or sell
off. Nasdaq 100 futures
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112.00 at 1856.50.Â
Inflation figures out of Italy were a negative for
euro FX futures
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hemming in the European Central Bank in its maneuvering room to continue cutting
interest rates. Swiss francs
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the year, ending down .0008 at .5619. Both euro FX
futures and Swiss francs are on the
Implosion-5 List.