The problem is that I’m usually pretty busy and am not able to wait around all day for the cable guy. The last time he was scheduled to come by I called the office the day before to let them know I would be unavailable between noon and 2 pm and to have the installer come before or after that time. “No problem” is what they told me, yet when I got back from my appointment I had another nice note from the installer letting me know that he had been there at 12 noon!

Now, I know what it’s like trying to keep a schedule. For many years I had a delivery business where customers were always trying to pin me down to a certain delivery time. And while I might not have been able to give them a specific time, I could usually give the customer a two hour window when they could expect to see me. What I don’t understand is why can’t I get the same kind of service from the cable company? Surely a multi-billion corporation dealing with the latest technologies has the ability to coordinate a simple service call with their customers, don’t they?

The whole ordeal has almost brought me to the point of cancelling my cable service. After all, like the Bruce Springsteen song says: there’s 57 channels and nothin’ on. Except for the odd “good” program it seems that the airwaves are chock full of weird talk shows, brainless sitcoms and stupid reality TV shows anyway. I can actually feel my IQ dropping as I sit and watch some of these programs. Some evenings I spend more time flipping through the channels than watching any program in particular…when I get to have control of the remote that is. ;-)

The other afternoon the cable guy and I finally hooked up. I told him my ordeal of getting the cable jack moved from one part of the house to the other and how I was ready to call the cable company and pack the whole thing in. He listened sympathetically about my plight and then proceeded to tell me about the cable company’s latest special on digital tuners. It seems that if you purchase a digital tuner and agree to a small additional monthly charge, you can get another 50 channels, plus four movie channels!

I don’t know if it was my weakened condition brought on by the relief of finally getting my cable jack moved, or if it was the thought of getting a “really good deal”; but it’s funny how your mind works: a person’s mind is able to rationalize nearly anything if you’re not careful. Almost immediately I began calculating how much money I was going to save by not having to rent videos anymore and how convenient it was going to be to have all those extra channels to watch. It was more than I could bear and before you could say “I love cable TV”, I ended up agreeing to the purchase of a digital TV system as well as the small monthly charge that accompanied it.

So now I am the proud owner of a digital TV system and have 120 channels and four movie channels for my viewing pleasure. However it seems that all I really have is a bigger selection of weird talk shows, brainless sitcoms and stupid reality TV shows to choose from. ;-)

Hope you enjoy this week’s issue.

After briefly testing support at 272, corn continued its downward slide last week until it finally encountered long term support at 260. While many traders believe that corn has shifted from a bullish to bearish bias it should be noted that the long term charts still show corn to be a bull market and prices possibly could continue higher in the long term.

In the short term however we might see corn continue lower likely retracing as far as the 50% retracement of the last uptrend at 255 ½. If the market closes below the 50% level it will interesting to see if it has the momentum to continue further downward to fill the double gap formed during mid and end July. Filling the gap would eventually see the market trading around 240.

If the market does not close below the 50% retracement at 255 ½ then we might expect corn to bounce and possibly continue its uptrend. A close above the first resistance at 269 could be seen as a renewed uptrend after a cleansing pullback. Above 269 the next resistance is found at 272 and then again at 276 and 280 before the market can fill the gap below 282 ¼.

Either way the market will be very sensitive to any bullish or bearish news in the coming week.

After just passing under the 50% retracement, cotton rebounded until it encountered upward resistance from September 2001 at 4480-4490. This also corresponds to the 61.8% retracement of the May to July uptrend. The market wants to continue higher but the lack of increasing volume and open interest is keeping this a bear market for the time being.

In order for prices to continue higher cotton will need to close above Friday’s high of 4490 and ideally above the nearby resistance at 4510. From here if the market is to continue higher it will need to surpass more resistance at 4570 and again at 4610.

A more likely scenario might be that cotton will succumb to the resistance at 4510 and once again reverse to test the 50% level at 4330. If the market can post a strong close below the 50% retracement it could continue lower to test the next support at 4250; otherwise the market might continue to channel between the 50% and 61.8% retracement levels. If the market has enough downward momentum it might even go as far as retracing the weekly 50% at 4030; however that is more probable long term target.

Last week was an indecisive one for this market which saw beans range just enough to fill the gaps above and below the previous Friday’s trading range. While the market has technically completed a 123 top formation, given the significant long term support that is holding up the market right now, it is unlikely that we will see a trend reversal at this time.

Monday’s low of 557 saw the market rebound off of weekly resistance in this area. Friday’s low at 560 ¾ also coincided with support found on the weekly and monthly charts. If support at these levels holds beans will likely push higher to test the upward resistance at 577 before challenging the current contract high. The increase in prices should be accompanied by increasing volume and open interest, otherwise the uptrend could be short lived causing beans to continue to range as they did last week.

If the market does manage to break below the 560 ¾ and 557 levels the next support is to be found on the daily chart at 547. The next barrier past here is the 61.8% retracement at 537 ½. This level also corresponds with resistance around the 536-538 range on the weekly charts. If the market manages to trade this low then the status of the long term uptrend would have to be reassessed

Cattle rallied as high as 7268 last Monday before stalling and channelling for the remainder of the week. The market is resisting going lower however it has not found a reason to go higher either. Last week’s trading saw the market build pretty solid support at 7182-7185. We could use this low in combination with Monday’s high of 7268 to bracket the market and trade it as a channel next week.

While a break below the channel could see the market give back some of its recent gains, it is more likely to be a pullback than a full blown reversal. A close below 7180 could see the market pull back as far as 7100, but a downtrend is unlikely to continue past 7075 in the short term as there is a fair amount of support in this price range.

A strong close above Monday’s high of 7268 could see the market continue higher to the next resistance at 7310. Above here there’s more resistance at 7380 and long term resistance again at 7480. As always look to see that there is increasing volume and open interest to give the market the momentum it needs to reach these levels.

Cocoa continues to delight and amaze setting yet another new high last week. The market slightly exceeded are target and got as high as 2124 before halting. While volume figures are still increasing, open interest fell off slightly indicating that there could be some bullish profit taking. Friday’s range was small hinting to the possibility of a pullback next week; however Monday’s trading should set the tone for the week to come.

Thursday and Friday’s highs have formed a bit of upward resistance at 2124. If Monday’s trading closes below Thursday’s low of 2080 you could probably expect to see the market pullback to the mild support at 2023. If the pullback was strong enough the market may even retreat as far as the firmer support at 1996. Cocoa has not shown any signs of serious reversal so you might want to watch your short positions closely as the market might decide, as it has done in the past, to channel instead of pulling back.

Cocoa is locked in a strong uptrend. If the market closes above the resistance at 2124 there does not seem to be too much holding it back from the next long term resistance at 2170. There is more resistance here than has been encountered thus far, but if the market closes above this level the next stop seems to be 2300.

Sugar posted substantial gains last week getting as high as 684 before encountering long term resistance. The weekly chart shows sugar at the neckline of a rounded bottom formation. In order for the market to continue higher it will need to post a close above Friday’s high. If the resistance is too much for the market to overcome we should see the market give back some of its recent gains.

In spite of increasing volume and open interest the market closed very near to its low on Friday indicating that a pullback might be just around the corner next week. There is support to be found around Friday’s low of 652 which is echoed on the weekly charts as well. A close below here would see the market approach nearby support at 637-642 and again near 625. This is also very close to the 61.8% retracement of the last uptrend at 622. If the downtrend is strong enough it could see the market eventually retrace to the 50% level at 602.

If the support at 652 holds then sugar will challenge the recent high at 684. If the market has the momentum to exceed this level and post a strong close above 684, it is pretty clear sailing until the next resistance at 716.

After making a big bounce off the 50% retracement of last month’s uptrend at 392 ¼, wheat rallied briefly only to decline again in the latter part of the week. Like many of the other grain markets, wheat has technically completed a 123 top formation; however given the bullish pressure on this market a long term trend reversal seems unlikely at this time.

The first test for the resumption of the uptrend will be for wheat to close above resistance at Friday’s high of 405 ½. Above here the next resistance is to be found on the weekly chart around 416-419. Once the market closes above this level it should be able to continue upwards and challenge the current contract high.

If support does not hold look for wheat to first test the 38.2% retracement at 380 ¾. Below here the next support levels are found at 373, 369 ½ and 362. As with the other grain markets, if wheat manages to trade this low it might be necessary to reassess the status of the long term uptrend.

Silver made some nice gains last week before stalling against the 61.8% retracement of the last downtrend on Thursday. The long term will probably see this market continue higher; however the inability to get beyond the 61.8% level last week might cause the market to pullback slightly before trying again.

Like gold, silver is sensitive to current world events. If the threat of war increases silver will likely find the momentum it needs to push higher. A close above the 61.8% at 470.25 could see silver continue on to a full 50% retracement at 479.80. There is some resistance just before this level at 477 that you need to be aware of which might cause the market to bounce early. If the momentum is strong however the market might push right through the 50% and challenge the next resistance at 482 and 488.

If the market breaks below Thursday and Friday’s matching low of 462.50 it will not have far to retrace before encountering more support at 457 and again at 452.50. There is still more support below these levels at 445 and the recent low of 440. All this support below the market makes a move to the upside more likely.

Not surprisingly, since this is a commodity newsletter, most of you trade strictly the commodity markets. What is interesting however is that a full third of you trade both stocks and commodities.

While it is not unusual for professional investors to trade in both markets it is a little less commonplace to find private traders who do so. The various trading systems available to traders usually work equally well (or not so well) regardless of whether they are applied to commodities or stocks. Like Ken Robert’s is fond of saying: a chart is a chart is a chart. However, I believe that in order for a trader to really be successful in either, or both, trading arenas you need to possess at least a general knowledge of the market place that is not available in the charts alone.

What I mean to say is that unlike stocks, where the value of a stock could theoretically increase indefinitely, many commodities follow a fairly cyclical pattern. This is due to the fact that, with the exception of the currencies and financials, most commodities are natural things that are grown or are produced, and usually follow some sort of production/seasonal supply and demand cycle. This does not mean that commodities must always follow these cycles, but to trade commodities without knowing about these natural cycles could put a trader at a disadvantage and possibly on the wrong side of a trade.

Stocks too have their own quirks that make them different from the commodity markets. The old trading adage of “buy low, sell high” while often quoted for stock trading is probably better suited to trading commodities. Many stock traders agree that the most consistent way to make money in stocks is to buy high and sell higher. However if a commodity trader tried to apply this approach to their trading they might find that they are not in the market for a very long time.

And then there is the obvious difference that while commodities represent real objects, stocks are based on the perceived value of the underlying corporation. It is impossible for a commodity to ever be totally worthless as there is a point where producers will simply refuse to supply the commodity as it is not worth their while. This is not true for stocks however as the recent developments with companies like Enron and WorldCom prove.

Similarly stocks seem to be easier to manipulate than commodities. While both markets can be manipulated to some extent by the big players, it seems that the stock market is much more susceptible to manipulation than commodities. Stock promoters are infamous for driving a particular stock into a frenzy only to have the bottom fall out shortly thereafter (remember Bre-X?). Again this relates back to the fact that commodities are real things, and given current supply and demand issues, there is a limit as to what buyers will pay and producers will sell for thereby making them much more difficult to influence.

So which is a better trading platform? Only you can answer that question for yourself. There are pros and cons to each area, but you should endeavour to learn the quirks of each market so as to give yourself the best chance of success.

Do you trade full time or part time?

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

While there is no such thing as a sure thing in trading some market formations are much more predictable than others. One such formation is the pennant, or symmetrical triangle.

The pennant formation usually forms as the market makes a tighter and tighter range resulting in a formation that resembles a pennant flag, with the larger “mast” area of the pennant on the left and the point of the flag on the right. Basically a market forms a pennant when it is uncertain which way it will go.

These periods of market indecision, or consolidation, can sometimes occur the week before an important market report is due. Other times a pennant can form just because the bulls and bears are so evenly matched that neither side has the ability to determine market direction. Whatever the underlying reason for a pennant forming all markets are capable of forming pennants and pennants can be found on daily, weekly and monthly charts.

Trading a pennant formation is as simple as going long if the prices break up and out of the pennant, or going short if prices break down and out. Similar to channel trades, one side of the trade is used as the entry order and the other side of the trade is normally used to place the exit order. When a market breaks out of a pennant formation it will usually move at least a distance equal to the mast of the pennant. This rule of thumb is helpful when trying to determine where to take profits or place stops.

There are variations on the symmetrical pennant formation known as the ascending and descending triangles, as well as the inclining and declining wedge.

A descending triangle is a pattern where prices consolidate by making lower highs while exhibiting support at the lows. This pattern usually shows downward pressure on the market and it is not uncommon to see a bearish breakout. The opposite is the case for ascending triangles where the market has a firm high but continues to make higher lows. This type of formation typically results in a bullish breakout.