I love Las Vegas. My wife and I usually visit Las Vegas at least once a year. For the last few years we’ve made a habit of driving down the coast to the north Baja to spend a few weeks there on vacation. Then on the way home we usually end up doing a detour through Vegas.

I remember the first time we went there. My wife was not really interested in going as she thought Las Vegas would be too “commercial”. Once we were there however, we both fell in love with the place. Now we’re addicted to Vegas, and we’re not even big gamblers. That is just one of the great things about Las Vegas; you don’t have to be a gambler to have fun there.

Las Vegas is a fun town! While Vegas has become more family orientated in recent years it is still primarily a playground for adults. You can get, or do, almost anything you want, anytime of the day or night. Feel like a pastrami sandwich at 2:17 am? No problem! Want to sleep till noon? Sure, why not! Want to try your luck at the tables or go on a rollercoaster ride? Why not do both?

If you’ve never been to Las Vegas you should make a point of going at least once in your lifetime. Rarely have I been to a place that makes you feel so welcome wherever you go. Everybody treats you like a big spender…even if you’re not. The extravagance and the elegance are not to be believed. Pictures can’t do Las Vegas justice.

I remember on our first visit we spent a week there and only managed to visit six hotels/casinos. There was just way too much to see and do to visit them all! That is why we’re heading down early this week so that we can see more of the sights before the Gecko trade show next weekend.

Since Tom, Kirk and I are all attending the trade show next weekend we will not have a regular issue of the ezine next week. In its place however Kirk Kristian has graciously given us permission to send out a copy of the Wheatland Watcher, a special publication that is usually reserved for Wheatland clients only. The March issue of the Watcher has some interesting trade recommendations in it that I’m sure you will find educational and helpful.

I’ll see you again on March 23rd. Until then, Viva Las Vegas Baby! Enjoy this week's issue!

-Erich 
ErichTHT@hotmail.com

While the corn market did not do anything too aggressive last week, now that it is March the market is taking on a bit of a bullish flavour. With the sky-rocketing cost of fuel, fertilizer and natural gas many analysts believe that this could promote fewer corn acres and more soybean acres this spring. Meanwhile corn export sales sailed to 10-month highs...bringing new life to this winter's sluggish market.

Technically speaking the market is tangled up with the resistance at 241 and seems unable to free itself from its grasp. There is more resistance again at 243 and 245 which could cause the market to chop around a bit for the next few weeks.

This Week:
Seasonal, fundamental and technical indicators are all calling for higher corn prices…the only question right now is when? I think we might see the market retreat a few points early next week, but prices should not get anywhere near the lows of the week before. Corn will probably find support somewhere around 235 if prices do indeed take a dip.

I would expect prices to rally for most of the week however. Once above the current resistance corn will have to deal with resistance at 245 and again at 252 ½. The first upside target is the 50% retracement at 266.

I’m sure I’m not alone when I say “I don’t know what’s holding this market up!” Cotton prices continued the overall uptrend last week probably more out of inertia than anything else. There had been no fresh news to give any direction to this market, and most traders had anticipated that prices would consolidate after recent failures to make new highs or break.

The market is fairly overbought and is running into some pretty substantial long term resistance, but in spite of this it has not given us the reverse we have been waiting for.

This Week:
Not too much has changed for cotton since last week. It still looks to me like the market is running on borrowed time. There is significant weekly resistance just above the highs at 5910 followed by another bout of resistance at 6000, assuming the market can make it that high.

There is plenty of possible support below the market once a reversal is underway; however it appears that the most significant levels of support could be found at 5630 followed by support at 5440 before reaching the 50% retracement level at 5368. If the market breaches the 50% retracement, look for support once again at 5240.

Speculation that more soybeans would be planted this year relative to other crops caused bean prices to retreat a little more than expected last week. The market managed to do slightly better than a 50% retracement of the last uptrend before finding support at the end of the week at 558.

As with corn and wheat markets, the rising cost of fuel and fertilizer has more farmers thinking about devoting more acres to the hardy soybean plant this spring. The added supply might continue to stifle bean prices in the future. However prices are going to need a real good reason to continue lower as there is some significant support found just below the current market at 554 and again at 546.

This Week:
It seems as though beans found their footing the end of last week and we can probably anticipate higher bean prices next week. Look for the market to test (yet again) the resistance at the upper end of the trading range at 578. Once above here the last resistance holding prices down would be the contract highs at 588. Long term upside target is the resistance at 650.

Don’t be too surprised though if the market chops around a little longer until the Prospective Plantings Report comes out at the end of the month. This report will give traders a better idea how many acres are committed to each of the grains this year and should give the impetus to their summer direction.

Just as we expected, the support at 7390 caused the market’s decline to pause toward the end of last week. Prices rallied slightly hinting that there might be a pullback next week, but a full reversal is doubtful as March is normally a very bearish month for cattle.

This Week:
I think we could see the bulls step up next week and try to rally prices a bit. I would expect the resistance at 7620 to cause an uptrend some difficulty however. Once the downtrend resumes the 50% level at 7338 is still the first target after which the market should find support at 7200.

For more commentary on the cattle market check out the Pick of the Letter section.

Participants in the cocoa market have been keeping a close eye on the ongoing talks between Ivory Coast government officials and rebel leaders. While the negotiations continue the longer term outlook remains slightly bullish with potential supply problems from major producer Ivory Coast expected to emerge as the year progresses.

Most of the recent decline in cocoa prices so far have been the result of large fund selling; however the market found support this last week as the traders who were short began to cover their positions.

Current support at 1940 also coincides with the 62% retracement level of the quick little downtrend of the last couple of weeks as well as the 38% retracement of the uptrend on the weekly chart which began last December. Nifty, eh?

This Week:
While we were expecting a bit of a pullback move last week the market did not give it to us and instead ranged aimlessly for most of the week. The ranging has actually formed a bit of a pennant formation which we could trade from this week.

A topside breakout would see the market test the resistance just above the triangle at 2115. There is a fair amount of resistance here and could potentially be enough to stop the rally. If the market breaks through however, it will continue higher to the resistance found just below the gap at 2180. The resistance here should be enough to cause the market to resume the downtrend.

While I favour a bullish pullback move next week, we could nevertheless see cocoa break through the bottom of the pennant; however I wouldn’t trust a short position until the market closed below the 1940 support. Once the market is under here it should find support again at 1770 on its way to 1710.

The sugar market thrashed about a bit last week as the market lacked any significant news to help determine direction. Technically speaking the market is in the process of forming a 123 top formation with the final leg of the possibly forming this week.

This Week:
Look for sugar prices to continue to rally early next week. Resistance at 790 should slow the rally down and will probably send prices lower again. If the bulls are really aggressive however they might push through the 790 barrier but should be stopped when they encounter more resistance at 797 and 809.

Downside target is the 50% retracement level at 698 once the downtrend resumes. Support just above the 50% level at 716 will need to be watched however as it may cause the market to rebound again.

World tensions continued to drive the Swiss Franc higher last week after spending a couple of weeks trapped in a small trading range. The market stopped just one point shy of the weekly resistance at 7555 last Friday. Friday’s range was also an outside day with a bit of a volume spike which might hint of lower prices in the near future.

As well as contending with substantial weekly resistance the Swiss Franc is also extremely overbought and is showing signs of divergence on indicators like RSI. All these factors lead me to believe that the Franc will be giving up a rather substantial retracement in the near future.

This Week:
While the Franc might be topping out soon it is unlikely that prices will plummet to the 50% level overnight. Look for the market to form a topping pattern this next week, likely finding support at 7350 or 7265 before attempting a slight rally again.

The first downside target for a reversing market would be the substantial support at 7220. This level might be enough to cause a resumption of the bull trend, especially if things heat up again in the Middle East. If the 7220 level fails then it is almost certain the market will find the 50% level at 7121.

Silver didn’t do a whole heck-of-a-lot last week and seemed content to range between the high of 472 and the low of 462. As you are probably aware, the silver market is closely tied to what is happening in the gold market and in recent weeks gold prices have hinged precariously on the possibility of war in the Middle East. War would turn out to be very bullish for precious metals, while talks of peace should see prices decline.

This Week:
While the market did spend the week ranging, it seems to be favouring the support at 462 over the resistance to the topside. I think we can expect to see silver rally next week with prices first re-testing the resistance at the 50% level of 475. Next stop above 475 is resistance at 483 and 491 as silver tries to recapture the early February high of 500.

While I firmly believe that cattle will find the 50% retracement at 7338 in the next week or two, I felt that the firm support at 7390 was reason enough to place an exit order here and bank our profits, rather than risk them to try and gain an extra $200 per contract.

We are now flat this market and have closed out this trade with just over $1800 profit in four days. Not a bad week if I do say so myself! ;-)

The current balance on our paper trading account net of commissions is $6578.01.

Since the market is still in a downtrend I would be looking for another opportunity to short this market on the next pullback. We will probably see prices bounce off the support offered by the 50% level which will provide us with another selling opportunity once the pullback rally is complete.

Since I am out of town next week I would not be able to trade this market as I don’t want to have any open positions while I am away. However hypothetically speaking I think we could expect to see cattle pullback to about 7620 before resuming the downtrend again. In fact the closer the market got to 7620 the more inclined I would be to short it again.

After successfully completing a 50% retracement the next downside target would be the support just above the 38% retracement line at 7200.

We’ll continue our paper trading again in a couple of weeks.

-Erich

 

 

Item	Corn	S Franc	Silver	Soybeans
Ranges
Maximum	5.4	.0093	.115	.96
Minimum	1.2	.0030	.050	.50
Average	2.4	.0059	.082	.74
Median	2.2	.0056	.082	.71
Mode	N/A	N/A	N/A	.96
Highest	241.2	.7554	4.725	58.36
Lowest	229.6	.7302	4.540	55.80
Breakouts
Maximum	4.0	.0075	.080	.60
Minimum	0.2	.0004	.005	.04
Average	1.8	.0032	.031	.32
Median	1.4	.0034	.035	.40
Mode	N/A	N/A	.005	N/A
Pivot Points
R2	242.1	.7592	4.753	56.83
R1	241.1	.7544	4.720	56.57
Mid	240.1	.7511	4.650	56.12
Pivot	239.1	.7505	4.663	56.19
S1	238.1	.7457	4.630	55.93
S2	228.8	.7418	4.573	55.55
High	241.2	.7554	4.695	56.44
Low	239.2	.7467	4.605	55.80

PLUG: Calculations are performed on the Range Projector panels of SMTP/DTP. SMTP/DTP also provide: (Fib and Gann, dynamic and static) Time and Price calculators, Cluster Discovery and Analysis screens, and an "on-the-fly" Elliott wave extension calculator. 13 tools in all.

Good Entry or Good Exit…What's more important?
by Gunter Kaiseraurer

Recently I have read posts by various individuals stating that, contrary to public opinion, the entry of a trade was the least important part of a good trade. Of much greater importance to trading success was a good exit strategy.

These individuals, all experienced analysts, based their conclusions on computer studies which compared variations of entry and exit techniques. These studies apparently showed that a good exit strategy was the single significant ingredient to good trading, while entry technique was nearly irrelevant.

While I respect the work being done by these individuals, and while I find their conclusions interesting, I have to disagree, from the standpoint of a practical trader. Here is my reasoning: As has been pointed out so many times before, the three components of good trading are market analysis, money management and mental attitude. Money management is not the issue here, but the other two components are.

As every experienced trader knows, market analysis is the easiest part to learn. Give me one Saturday morning, and I can turn a raw beginner into an accomplished analyst. However, that by itself only turns him into a good PAPER trader!

There is a world of difference between paper trading and real trading. And the difference is the emotional impact trading has on us, when we trade with real money.

Emotions make a trader hang on to a losing trade, because he has the hope that the market will turn around and get him back to break-even, causing him to ride a bad trade into oblivion.

Emotions will keep a trader out of entering a perfectly good trade, because he is afraid of this being a losing trader.

Emotions make a trader exit a good trade, right after he entered, because the normal jiggles in price make him doubtful of his analysis and afraid of losing on this trade, thus making him miss out on what could be a long ride.

Trades are rarely entered at the low point of a V-shaped bottom. The great majority of our trade entries are followed by some form of ‘chop’, right after entry. This applies to both position trades and day trades. The time frames may be different (days, in case of a position trade, and minutes, in case of a day-trade), but the principle is the same:

What looked like a perfectly well thought-out trade before the order was placed can turn into a struggle with fear and doubt. Once these emotions surface, it becomes difficult to stick with the original plan. Many traders then take the easy way out, by escaping to the safety of being on the side lines. And there goes another good trade without them!

A carelessly placed entry almost always results in such misery.

On the other hand, take those incidences when a buy was made right at the low. What a nice and relaxed feeling, when the market goes in the right direction immediately after entry! So what, if there are some wiggles! There is a profit, even if it’s only a small profit. Now it is so much easier to keep a cool head and make the right decision.

No, I don’t believe that the exit is more important than the entry. I believe that a good entry is the MOST important factor in avoiding the emotional turmoil that afflicts the typical trader.

Those who say the exit is more important than the entry may be correct when it comes to the analysis and optimization of an automated trading system. But most of us don’t trade as if we were robots. We are all human beings; we cannot totally shut out our emotions.

Therefore, it is my belief that a trader should strive to perfect his entry techniques first, and worry about the exit later on.

Here are some tips for the newcomer, aimed at relieving trading-stress:

Use stops! Many traders trade without stops. They argue that they don’t need to place stop loss orders because they are closely monitoring the market. This may be so, but the intense monitoring required, and the ever present possibility of a quick adverse price move, create unnecessary additional stress. A well placed stop can do a lot to relieve the tension associated with a new position.

Keep your positions small! Many newcomers try to make a quick killing by using positions that are too large for their account, or trading a commodity that’s too volatile for them. A sure way to increase the stress level!

Accept yourself for what you are! There are many ways to trade the markets. But we all have different personalities, and many trading styles simply don’t fit our personality and emotional set-up. Some people are natural long-term investors; some people are natural day-traders. Find out what suits you best, and then throw away those books that try to turn you into a person you can never be.

While the cattle market is normally quite bearish at this time of the year, lean hog prices remain strong relative to cattle.

March through May marks the peak breeding season for hogs and as a result producer attention is focused on breeding efforts. Since more animals are retained for breeding purposes this means that there are fewer animals available for slaughter.

As a result March usually sees the beginning of tightening supplies which will normally last through the next few months. This annual decrease in pork supply is very bullish in supporting prices over the coming spring months.

Pork production is at its lowest from May through July and begins to reach its peak in October. With the declining slaughter driving bull spreads, this seasonal trend is normally continued right into May, if not beyond.

In fact, according to the Livestock Trader’s Almanac (www.livestock-futures.com), March is the second strongest month for hog prices behind September. March has seen increases in Lean Hog futures in 12 of the last 19 years.

Conversely October Hogs prices have declined in 13 of the last 19 years from April through the summer slaughter. Based on the proven seasonal tendency between the closer and farther out contract months we are recommending that Wheatland clients consider an intra-market Lean Hog Spread.

We suggest buying July CME Lean Hogs (LHN3) and selling October CME Lean Hogs (LHV3) on, or about, March 10th. Traders should consider holding the spread until mid-May. Profit target for the spread is $500. Risk exposure should limited to $360.