 Seasonals for August | |
This issue is devoted to an examination of some seasonal trades for the month of August. As always, these historical patterns are based on facts and not theory. They show what the indicated markets have done between the dates listed. There are no guarantees of profit but there IS a vast amount of history that has gone into these patterns.If you believe in history as I do, then you will see why I am so fond of seasonals. Remember that seasonals require timing and risk management if you want to use them as part of an overall trading system or method. | |
COWS (Corn, Oats, Wheat, Soy Complex) | |
The grain and soybean complex markets have come back to life after having declined to test technical support levels on a daily and intermediate-term basis. As noted last week, this decline has brought the bears out in full force. And yet, my technical work clearly continued to suggest that these markets were undervalued, likely to rally, and still some of the best areas in which to "invest" for the intermediate to longer term. The commodity bull fever and bullish domino effect to which I have referred in many of my reports is still likely to develop in this complex, pushing all markets higher, sooner rather than later. The hotline has given specific recommendations in wheat and soybean meal consistent with my expectations and forecasts. Soybean Complex My bullish forecasts for soybean meal and soybeans remain in effect. Beans rallied to resistance and turned lower again to intermediate-term support, continuing a pattern that has been in effect for many weeks. The hotline will recommend additional longs in the bean complex if and when prices decline to short-term technical support and then give buy triggers. Should any of the soybean complex markets CLOSE ABOVE their May, June or July highs on a WEEKLY basis, then I will be even more confident in my forecasts of a major bull market. | Corn: My indicators gave short-term buy signals. The hotline recommended a long position Dec. futures. This trade should have been closed out at a small profit and then entered again and closed out at a profit. My indications and projections remain bullish. The recent decline in prices to intermediate-term support has held well as predicted. The trend remains higher for the intermediate-term. Wheat: Commercials accumulated large long positions in wheat over a long period of time which I told you would have bullish consequences. Another buy recommendation was given via the hotline. This trade shows an open loss, however, I am confident that it will turn positive. The May high in Dec. wheat futures is a very important resistance level which, if penetrated on a weekly closing basis should portend a much larger rally. Oats: I have been bullish on oats for many months, and I remain bullish. Volume remains too thin for recommendations. The market is still a reasonable risk vehicle for new traders. The technical behavior is reliable. Note that if I recommend a position via the hotline, then it will be at limit orders only. DO NOT USE market orders due to the very low trading volume in this market and, as a result, price fills could be exceptionally bad given the thin trading volume. |
Meat and Livestock | |
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The forecast I have given you, based on my analysis of the cycles and trends, strongly suggests that the largest rallies are yet to come in the meats and that the upside moves could be very large. I expect new all time highs in cattle and hogs. | Cattle I expected the decline to suppor to be followed by a major rally. The short-term trend is bottoming after a retracement to important short-term technical support levels. Seasonals are also ideally bullish in August. I remain bullish. Hogs As noted in the last few weeks, the ideal seasonal tendency is bullish. The hotline recommended a long position that should be followed up accordingly. |
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Metals | |
Several weeks ago I noted as follows: "The recent declines in all metals are considered normal and reasonable. Based on the ideal seasonal patterns ... I believe that the ideal time to buy gold for the seasonal will be in August. By the time late August has arrived we should see new buying opportunities, especially in gold." This is still my advice. In spite of the supposedly bullish news backdrop, precious metals could decline prior to the start of this seasonal, however, they should end the year on a very strong note. I believe that we are on the verge of what could be the strongest seasonal move of the year. BE PREPARED! Copper: I DO NOT and have not recommended long-term short sales because I do not see technical signs of a major top as of this writing in spite of large corrective declines. I believe that copper prices could test or exceed all time highs by the end of the year, before making a long-term top. When the long-term top is made in copper and the other metals, the severity of the subsequent decline in prices could be one of the largest declines over the shortest period of time in copper market history. Gold: My long-term advice has been clear, concise and unhedged. A correction down was expected. I told you to wait for an intermediatetermBUYrecommendation in the event of a large decline to support. The hotline recommended a high risk long position as the market declined to support. The long was closed out at a profit when resistance was hit. A major buying opportunity could come by late August (as noted last week)with a potentially HUGE seasonal rally to follow into late September. | This will, I feel, be the most likely time frame for the next potentially explosive move in gold - a move that could very well give us a test of the recent highs or, in fact, new highs for the move. Get ready! But don’t jump the gun. PLEASE NOTE:UNLESS YOU CAN AFFORD TO RISK AT LEAST $50 ON A POSITION IN GOLD. DO NOT TRADE THE FUTURES. TRADE STOCKS INSTEAD if the rise in futures is too high Silver: Long-term investors were advised to hold positions in silver and silver mining stocks with trailing stops to lock in profits. My long range target of $10 or higher was achieved. I told you to "be prepared for even larger intraday price swings". The coming seasonal rally in gold should boost silver as well. We have only seen the tip of the iceberg in volatility. NEW TRADERS or those with small accounts: STAY out of this market or trade stocks, or ETF’s i nstead of futures if you can’t handle the risk. Await buying opportunity at long term support that could be tested by mid to late August. See gold commentary. Platinum/Palladium: My forecast has not changed. The corrections down were expected and correctly predicted. Platinum and palladium are still in major bull trends. The corrections were overdue given the dominance of large traders and hedge funds in metals. I do not see any triggers that point to a long-term top as of this writing. Don’t trade these markets unless you know the risks and can handle them financially and emotionally. IMPORTANT NOTE: Traders who are not sufficiently capitalized to trade these highly volatile futures markets are advised to trade stocks as an alternative. There are many stocks and ETF’s. The same technical tools I use for futures can be applied to stocks. STAY AWAY FROM HIGHLY SPECULATIVE POSITIONS. |
Currencies | |
| Aussie $The market bottomed and rallied to test resistance in sympathy with the metals. The odds are that a short-term top has been made or is in the process of developing. Eurocurrency and Swiss Franc Both markets rallied to projected long-term resistance areas and topped as expected. A bearish short-term pattern has developed. A very broad test of resistance is developing consistent with my bullish forecast on the dollar. Japanese Yen The Yen is positioned for an approximate 7- year cyclical low which may have been made. I expected a MAJOR rally in the Yen vs. US dollar over the next few years. This move appears to have started. The increase in Japanese interest rates from zero is yet another indication that theYen has likely bottomed. | BrPound The market has made an 8.1-year cycle top almost exactly as predicted. Longterm trend is down. A short-term low was made as predicted. I expected a shortterm top, and it has been made. Seasonals are ideally bullish which is why the market is now rallying,however, the rally should fail at resistance very soon as the US dollar resumes it’s bottoming process. US Dollar I am long-term bullish on the US dollar. A short-term low has been made. A buy recommendation was given via the hotline. Follow up as recommended. Canadian $ I believe that the Canadian dollar can test the 93 level or higher. I advised you to expect a short-term top. That top has been made, the trend is down and the seasonal is ideally bearish. |
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Tropicals | |
Cocoa: The long-term trend remains bullish. The short-term trend turned very bullish after which prices COLLAPSED in the most severe decline I have seen in many years in this or any market. This, however, has not changed my bullish view of the long-term and intermeidate-term trends. Traders who followed the rules of my trailing stop methodology should have been stopped out at profits prior to the collapse. Get ready to go long again but do not take action as yet since there are no timing triggers of a low. Sugar: My next target is in the 23-25 area. I advised you to be careful of a downside correction. That correction developed and may have made its low in the last week. The hotline recommended a long position which, in spite of early weakness, has come back up very strongly. Large price swings and the expectation of large moves require the use of large stops. DO NOT trade this market unless you can risk $2500 minimum. The hotline will give updates on the current long recommendation. The current hotline intermediate-term long position shows an open loss, but there is no change in my forecast or expectations. The sugar market remains in a long term up trend that is now giving initial indications of support and possible short-term lows. | Orange Juice: My forecasts has been as follows: "I DO NOTsee any significant technical indicatio ns of a top as yet. Thisis a primary bull market that could easily go to record highs by the end of this year. My long-term bullish forecast remains in effect. Readers of this newsletter know that I turned bullish on OJ long before the start of this bull market." I also advised you that there was a good chance OJ could climb to all time highs before 2006 is over. This is prime time for weather markets based on hurricanes and tropical storms. The market has substantiated my expectations. Coffee: My long-term cycles have been telling me that coffee was overdue for a significant rally that could take prices much higher in 2006 and beyond. I told you that the recent decline was setting up significant bullish price / momentum divergence which is, in my view, a valid precursor to a bottom. Although I expect big rallies in coffee I caution you that the price swings will be large as well. Coffee is a high risk, high volatility market - NOT FOR BEGINNERS or those with a small amount of risk capital. The large price swings and the bad price fills can destroy you in this market. A buy has been triggered. This could be the start of something big. |
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Fibers | |
| Cotton: The intermediate-term trend remains bullish. Prices fell to test short-term and intermediateterm technical support. A buy recommendation was given via the hotline when my short-term trading indicators turned bullish. I believe that cotton could become one of the stronger markets over the next few years. The position recommended via hotline now shows an open profit. YOU CANNOT TRADE THIS MARKET WITHOUT A LARGE STOP GIVEN THE VOLATILITY. My bullish forecast has not changed. You should be out of the short-term long recommendation at a profit. | Lumber: A major cycle low COULD BE developing. The bearish sentiment and declines are typical of what transpires at cyclical lows. My long term cycles tell me that lows COULD BE FORMING NOW! Trading volume remains very low; much too low for hotline recommendations at this time. Although the market is not recommended as a good trading vehicle due to its low volume, the fact remains that seasonals are extr emelyreliable in this market. As of this writing there are no indications of a major low, although a short term low is developing. Await a buy trigger. |
T Bonds / TNotes | Stocks |
My belief that interest rates were likely to stabilize or decline BEFORE they move to higher levels has been validated in part by the current up trend. This appears to be happening given the current short-term rally. The recent bottoming process in futures suggests that this could be the start of a more extensive rally in an otherwise bearish market. Seasonals in futures are ideally bullish at this time of the year, which continues to point to a posible short-term rally before a continued decline. The hotline recommended a shortterm long position in TNotes which should have been rolled into the Sep contract as recommended and then closed out at resistance. An intermediate-term cyclical low is due at any time now and daily sentiment was very low prior to the recent bottom. This has, in the past, been a precursor to lows. I will recommend longs if and when prices pull back to short-term technical support levels. Seasonals in all interest rate futures are bullish at this time of the year. | Prior to the most recent decline in stocks I WARNED you that stock markets all over the world were in trouble and that bearish divergence would eventually take its toll. Although prices have rallied in recent days, the current trend remains sideways to bearish. My trend projections and timing indicators strongly suggest that following the current short-term rally, stocks could trend lower until late October to be followed by a strong year end rally and possible 4-year cyclical low. I expected rallies to resistance and failures when resistance levels have been hit. The hotline recommended a very shortterm trade in Dow Jones futures on the long side which should have been closed out at a profit. The odds continue to favor a declining trend in spite of short- term recovery rallies within the current bearish trend. |
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Petroleum Complex | |
Natural Gas: For a number of months now, I have been telling you that the approximate 3-4 year cycle in natural gas futures was due to bottom this year. I also told you that "this low COULD be developing now." There are some things to consider: 1. In order for a major bull market to develop I need to see the weekly indicators turn bullish. This has not happened as yet although the short-term trend HAS turned bullish. The weekly indicators could easily turn bullish at the end of this week. ’. | 2. The daily chart indicators have given short term buy signals. that have resulted in a large move up. As a n alternative tonatural gas futures, which are very risky and volatile, you might consider long positions at the right time in some of the many natural gas stocks. This could very well prove to be one of the best relatviely conservative investments you can make in the energy sector. Crude; Heating Oil; Unleaded Gas: I advised you to BE PREPARED for a decline. I told you that "it’s possible that we will see $50 before we see $100." This is still my forecast. Note, however, that seasonally this is often the strongest time frame of the year so enter short positions with EXTREME caution if signals are present. |
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Jake Bernstein’s Weekly Commodity Trading Letter
Started by
TTHQ Staff
, Aug 10 2006 09:17 AM
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Posted 10 August 2006 - 09:17 AM
