I suppose some degree of commerce would grind to a halt if telephone solicitors weren't able to call people at home during dinner hour. But that doesn't make it any more pleasant.

Now Steve Rubenstein, a writer for the San Francisco Chronicle, has proposed "Three Little Words" based on his brief experience in a telemarketing operation that would stop the nuisance for all time. The three little words are "Hold On, Please." Saying this while putting down your phone and walking off instead of hanging up immediately would make each telemarketing call so time-consuming that boiler rooms would grind to a halt.

When you eventually hear the phone company's beep-beep-beep tone, you know it's time to go back and hang up your handset, which has efficiently completed its task. This might be one of those articles you'll want to e-mail to your friends. Three little words that eliminate telephone soliciting.

Good Ideas: When you get ads in your phone or utility bill, include them with the payment let the companies throw them away. When you get those pre approved letters in the mail for everything from credit cards to 2nd mortgages and junk like that, most of them come with postage paid return envelopes, right? Well, why not get rid of some of your other junk mail and put it in these cool little envelopes?

Send an ad for your local chimney cleaner to American Express. Send the pizza coupon to Citibank. If you didn't get anything else that day then just send them their application back! If you want to remain anonymous, just make sure your name isn't on anything you send them. You can send it back empty if you want to just to keep them guessing!

Eventually, the banks and credit card companies will begin getting their junk back in the mail. Let's let them know what it's like to get junk mail, and the best of it is that they're paying for it. Twice. Let's help keep our postal service busy since they say e-mail is cutting into their business, and that's why they need to increase postage again.

Seems like a good idea, doesn’t it? ;-)

Hope everyone has a safe and happy holiday weekend, and I hope you enjoy this week’s issue.

After a brief rally last week, corn continued to decline this week before finding support at 246 ½. This low completely fills the double gap of last July while settling the market near the 61.8% retracement level of the May to mid-September uptrend. While volume over the last few sessions has been increasing we continue to see a decline in open interest indicating that the downtrend might be losing momentum. If this is the case we could anticipate a bounce next week with a possible resumption of the long term uptrend.

If the market attempted another rally this week, look for corn to challenge the 50% level at 255 ½. Once above this level things could be a little choppy as resistance is spaced every two cents or so with the most congestion found in between 260-265. Above here there is a little room until we encounter more resistance at 270. Increasing volume and OI will be necessary if a bull trend is to break through all this resistance.

While corn is technically in a short term downtrend the market is currently hovering around the 38.2% level at 245 ¾ with additional support just below this level at 243 ½. Coincidentally 243 ½ is also the 61.8% retracement of the 2000-2002 uptrend on the monthly chart as well. Any continuation of the downtrend will need enough momentum to breach these various support levels. If the market can continue lower the next support seems to be at 239 ½. As always, watch for increasing volume and OI to ensure that the downtrend has some strength to it.

Cotton spent most of the week continuing the current downtrend. While the market is heading lower falling volume and stagnant open interest are failing to produce a stronger bear trend. Cotton is currently trapped between the 50% and 38.2% retracement levels. The market is sitting on fairly solid support on longer term charts which might halt the downtrend and even cause cotton return to higher prices in the future.

If the market is to continue lower it will need to build up more momentum than it has now. Below here there is immediate support at the 38.2% level of 4174. If cotton does manage to post a strong close below this level it is conceivable that it could continue to decline and test the support at 4075 and eventually 4030.

The last few days of trading have seen cotton build support at 4250. The weekly chart also shows cotton sitting on the 61.8% retracement of the uptrend that started last November. If the current support holds, look for cotton to test the recent highs at 4380. Above here the next upward resistance can be found between 4425 and 4465 which could make trading a little choppy. Beyond here the market has a little more room to move until encountering more resistance at 4610.

Beans treated us well last week by completing the 50% retracement of the May to September uptrend. The market made a slight bounce off the retracement level before running into resistance at 535. Since the market is near the 50% retracement it could go either way next week; however declining volume and open interest suggest that the current downtrend is not as strong as it originally was. The weekly and monthly charts are also trading near the 50% retracement further hinting that a bullish reversal might be around the corner.

In order for beans to continue higher the market will need to post a reasonably strong close above the resistance at 535. Above here the next barrier will be the retracement level at 537 ½ as well as the resistance at 543 ¾ - 546 ½ range. There is more resistance found higher at 552 ½ and then again around 560.

The market is still in a short term downtrend however and if the resistance at 535 ½ proves too much for the market look for it to once again test the 50% level at 520 ¾. Once the beans can close below here look for them to test support found at 514 ½ and 407. If volume and open interest turn around the bear trend might gather some momentum and maybe even test support at the 38.2% level of 504. Just below here the next target would be the gap from late June above 494.

What a week for cattle. This market continues to cooperate as we nail it for the second week in a row! After the uptrend paused briefly at the resistance near 7100, cattle continued higher Friday pushing as high as the next anticipated resistance level at 7188. Since the market now has its head and feet firmly against resistance and we can use these support and resistance levels to determine where the market wants to go next week.

The only blemish in an otherwise strong bull trend is the declining volume of the last few days. Although prices and open interest were both rising, the falling volume would indicate that the trend might not be as strong as it appears. There is a fair amount of resistance associated with Friday’s high of 7188 as well as more resistance just slightly higher at 7200. If cattle can push through these levels it will likely challenge the resistance near the recent high at 7250. Beyond here the next resistance seems to be at 7310.

If cattle breakdown below Friday’s low they won’t have too far to go before they find support. Just below the low of 7100 there is significant support at 7075. In fact there is a cluster of support around the 7040-7050 area. If the market can continue below this level then it should come to rest against the support at 7015.

Chugga-chugga Ooooo-ooo! The cocoa train just keeps chugging along decimating all previous resistance levels in its path. The market continued to climb higher last week setting another new high on Friday at 2405. The market did close down on Friday but this might be due to thinner markets going into the holiday weekend than a true reversal signal. There is some 20 year old resistance above and below Friday’s range so we can use those levels to bracket a trade for next week.

While there is a substantial amount of long term resistance associated with the low of 2310 the market has been advancing for several weeks now without a pullback. If the market can post a strong close below 2310 there would not be too much support left to hold it up. There is some mild long term support at 2170 followed by more support around 2124-29 on the daily but that seems to be all that is in the way of cocoa retracing to the 50% level of the last two month uptrend at 2059.

This market has incredible momentum right now and it seems much more likely that the bull trend will continue further. A close above the high of 2405, and preferably above the long term resistance at 2410, would indicate that the bulls are still in full control. The next stop is resistance at 2414 followed by 2450. Beyond here resistance thins out once more with the next likely levels being 2488 and maybe even 2500!

Bam! <insert Emeril Lagasse impression here> Sugar made a nice move to the upside last week reaching our anticipated high of 717 (actually we predicted 716) before stalling. From here sugar declined until it found support on Friday at 685. Volume and open interest have since fallen off indicating that a pullback might be around the corner for next week.

If sugar can manage to close below the support at 689, or better yet below 685, we should see the market pullback to the next support around the 660-670. There is a fair amount of support here so sugar will need quite a bit of momentum to break through and challenge the next support level at 651 which coincides with the 61.8% level on the weekly chart. Just below here is another support range at 638-645. The last line of support before the market could retrace to the 50% level at 619 is found at 625.

The market is technically still in an uptrend, both short and long term; therefore it is possible that after pulling back, sugar could once again gather momentum to challenge the recent highs. The current high coincides with the 38.2% retracement level on the weekly chart which is why the market is having a hard time getting above it. With a close above 717, look for sugar to test the next upward resistance at 728 and beyond here resistance at 740. Sugar can be tricky so make sure increasing volume and open interest confirm the continuation of the bull trend.

Not too much changed for the Swiss Franc last week. The Swissy briefly dipped below the support of last week’s channel to test the support at 6669. After hitting support it promptly returned to the comfort of the channel where it remained for the rest of the week. The market is pretty undecided right now as to which direction it wants to go, but long term charts seem to indicate that the market wants to head higher.

Next week you can probably expect the Swissy to continue to trade within the larger range that has trapped this market since August. If the market can get above Friday’s high look for it once more to test the top of last week’s channel at 6814. If the bull trend has some strength to it the market might even climb as high as 6848.

There is some support just below Friday’s low at 6725. If the market can get under this level you should see it test the bottom of the channel at 6700 and maybe even repeat last week’s low of 6669.

The bears took total control of the silver market last week pushing it as low as the support at 428, just one point shy of the 427 support we identified last week. The bulls made an appearance on Friday, but it is hard to say if the higher close was due to the start of a bullish pullback or the result of thinner markets.

If Friday was an indication of a pending bullish pullback then we can look for prices to rally again on Monday. The pullback could be short lived however as there is resistance at Wednesday’s high of 440. Just above here there is more resistance at 444.50 and again at 447.50. In fact resistance is spaced very closely above 447.50. If the market can get this high it will need to overcome more resistance at 452.50 and 456.50, either of which could turn a bull trend.

If silver can close below the matching lows of 428, look for the market to continue lower testing the next support levels at 421. Below here there is more support at 418 and 414 as the market encroaches on the significant lows of 406 and 402.

I think that you could be successful in trading either, or both sides of the market. The skill comes in determining which direction the market is really going before you take your trade. So long as the market is moving in your chosen direction, either up, down or sideways, you can make money. I’ll address this a little more in this week’s lesson.

Send me your responses at ErichTHT@hotmail.com and I’ll share the results with you next week. Shaggy will also put up a survey at http://www.tradershelpingtraders.com/surveys.htm

The trend is your friend until the end when it bends. – Anonymous

I wish I knew who to attribute that quotation to. Whoever was the first to say it knew the secret to making money in the markets. Trading with trend is not just another axiom that rolls off the lips of traders, but it is the very core of successful trading. As almost any successful trader will tell you, there are infinitely better opportunities to be had trading with the trend then against it.

So, if it is such a commonly accepted truism among traders that the best way to make money in the markets is by trading with the trend, why is it that so many traders chose to take positions against the predominant market direction?

I suppose one reason is that within each of us is a rebel. It is part of human nature to go against the “crowd”. Furthermore our society embraces individualism and as a result everyone strives to be an individual. Sometimes this is interpreted as doing the opposite as everyone else. There is something romantic about being the underdog. Everyone roots for the underdog.

Traders have coined the term “contrarian” to describe the strategy of trading against the trend. This strategy is further promoted by Ken Roberts who encourages his students to buck the trend. Most people have the misconception that the crowd trades the trend, but what if I could show you that by going with the trend you were actually against the crowd and not with it? By trading with the trend you would be the true contrarian.

To make money in trading, the market has to move in your direction; a simple fact, but one that is not given enough attention by traders. I’m sure that many of you have heard that over 80% of traders lose money trading. Conversely, because trading is a zero sum game, this means that a meagre 20% of traders make all the money that the other 80% are losing. In other words, this means that the 20% of traders that are making money are trading in the same direction that the market is going.

Did a little light just go on? Read the last paragraph again if you have to. It is a very important concept to grasp. If you are not trading in the same direction as the market, you are losing money with the majority of other traders. Or to put it another way, if you are making money then you must be trading the same direction as the market and are part of the minority, not the majority.

Now does that mean that you will never lose money by trading with the trend? Of course not! Every trend ends and reverses eventually which will stop you out. Furthermore markets make regular pullbacks as a part of an ongoing trend which could stop you out prematurely. However I hope you can see that by simply trading with the trend, and not against it, you will be trading against the majority of traders and through this simple fact increase your chances of success.

You should always trade with the trend until it hurts. You should follow the trend until you can not possibly conceive how the market could go any higher/lower. And then you should trade with the trend some more. Papertrade it. I think you’ll be pleased with the results.

I am having problems interpreting charts and relating what I see to prices. For example:  decimals, without decimals, points, etc.  What reading material can you recommend to further understand point value, points, contract size, and help me calculate my profit and loss?

Answer: The easy way is to consult the part of the chart that usually gives you the $ per point, and multiply that by the number of points the market has moved, and viola! Instant profit figure.

The hard/real way is as follows: Take the contract size and divide by 100 cents to get the dollar value per cent. Then divide the result by 100 points to get the dollar value per point (huh?)

For instance, the Swiss Franc trades in 125,000 SF per contract. Therefore we need to divide 125,000 by 100 cents (per dollar), to get the dollar value per cent on the chart. In this case it is $1250 per one cent move on the Swiss Franc chart. Each one cent move on the chart is also made up of 100 points per cent, so you need to divide $1250 by 100 points (per cent) to find out the value per point, or $12.50 per point.

So for each point the SF moves in your favor, you have earned $12.50. If it manages to move a whole cent, or 100 points, you have made $1250. If it moves two cents: $2500, and so on. This method of calculation works the same for all contracts.