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December 20th, 2019 Newsletter

Coffee breaks higher, we take a look at weekly chart along with some factors moving this market. An educational trading article on using tight versus wide stops when trading futures.

December 20th, 2019 - Issue #993

In This Issue

1. Day Trading 202: Tight Stops? Wide Stops? Which One Should I Use?
2. Hot Market Report: Is Coffee Brewing Ahead of the New Year?
3. Economic Calendar

Happy Holidays! Markets will have modified trading hours on Tuesday, most are closed Wednesday for Christmas. Have a safe and nice holiday!

1. Day Trading 202: Tight Stops? Wide Stops? Which One Should I Use?

Entry signals are very important but just as important if not more is trade management.
By: Ilan Levy-Mayer, Cannon Trading Commodities Broker & VP


This article was published on FinanceMagnates.com back a couple years ago but is defintely a timeless article.

Today I decided to touch more on an educational feature rather than provide a certain market outlook. Many of my clients and blog readers know that when it comes to short term trading I am a fan of adjusting your trading technique/ game plan according to your assessment of the type of trading day that is developing in front of you.

Many new and advanced traders spend HOURS on looking for entry signals. Back testing historical data, creating algorithms to use and much more. I know. I am one of these traders.

Trade management consists of many factors. Some are psychological and some are more mathematical and many are in between. Some of the basic elements of trade management before even entering the trade are: What will my stop loss be**? will i use a stop loss**? What will my target be? will I use a target or just trail the trade if it goes my way?

....Finish reading rest of the article

Wide Stops? Tight Stops?

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2. Hot Market Report: Is Coffee Brewing Ahead of the New Year?

By John Thorpe, Senior Broker

Click on image below to enlarge

KC futures; Coffee futures are part of the SOFTS family which includes Cocoa, Sugar, Cotton, Coffee and Orange Juice. All traded on the ICE exchange.

Arabica coffee is the world benchmark for coffee futures contracts that trade on the Inter Continental Exchange (ICE). Arabica accounts for 75 percent of the world’s production and is mostly cultivated in Brazil (40% of the world’s total supply) and Colombia. Robusta account for the remaining 25% and is mostly produced in Vietnam (15% of global supply) and Indonesia. Other major exporters include: Peru, India, Uganda, Ethiopia, Mexico and Cote Ivoire. Robusta is the coffee bean that is popular in Europe and espresso coffees while Arabica beans are popular in the United States... Two factors are leading to a bullish stance.
1. a technical breakout about $1.10
2. bottoming technical action in the Brazilian Real/USD.
Watch the strength or weakness in the currency relationship for clues on coffee direction changes, Weather Patterns in the growing areas can not be overstated, please monitor for Drought concerns which again would provide price support. Watch the strength or weakness in the currency relationship for clues on coffee direction changes.


Weekly chart from this morning, (Dec. 20th 2019). Pay attention to the 5th wave Eliott Wave as well as the proprietary indicator marked with a blue arrow that appeared in October this year and was able to signal the possible large move up. This chart was prepared using CQG Q Trader software, which you can demo for 14 days with realtime data.
To access a free trial to the ALGOS shown in the chart along with other tools, visit and sign up for a free trial for 21 days with real-time data.

ICE Arabica Coffee Specs
Hours: 03:15 AM to 12:30 PM Central Time
Margins: $4455.00 initial, $4050 Maint. ( as of the date of this newsletter)
Point Value: full point = $375.00 ( Example: 100.00 to 99.00). Min fluctuation is 0.05 = $18.75 ( Example: 100.00 to 99.95) Settlement: Physical Delivery
Months: (Sep, Dec, Mar, May, July)
Weekly Options:YES

Some of the basic fundamentals to keep in mind when you are considering trading coffee futures:
1. Supply and Demand.
2. Brazil, Vietnam, Columbia and Indonesia are the primary producers
3. Freezes
4. Technological advances
5. the makeup of open interest thru the COT reports
6. Inflationary prospects
7. Geopolitical Stability

Our brokers here at Cannon will be happy to chat about the Coffee market, other exotic products, other futures, options, futures spreads and much more! Feel free to contact us at any time.

3. Economic Calendar

Source: Moore Research Center, Inc.

Date Reports Expiration & Notice Dates
12/20
Fri
7:30 AM CST - Personal Income & Spending(Nov)
7:30 AM CST - PCE & Core PCE Price Index(Nov)
7:30 AM CST - GDP-Third Estimate(Q3)
7:30 AM CST - GDP Deflator-Third Estimate(Q3)
9:00 AM CST - Univ of Michigan Consumer Sentiment-Final(Dec)
2:00 PM CST - Cattle On Feed
LT: Dec E-Mini Dow(CME)
Dec E-Mini S&P 500(CME)
Dec E-Mini NASDAQ(CME)
Dec Russell(CME)
Dec E-Mini Dow Options(CME)
Dec E-Mini S&P 500 Options(CME)
Dec E-Mini NASDAQ Options(CME)
Dec Russell Options(CME)
Jan Canola Options(CBT)
Jan Cotton Options(NYM)
Jan Orange Juice Options(ICE)

12/23
Mon
9:00 AM CST - New Home Sales(Nov)
2:00 PM CST - Cold Storage
2:00 PM CST - Hogs & Pigs
FN: Jan Crude Lt(NYM)
 
 
 
12/24
Tue
CHRISTMAS EVE
7:30 AM CST - Durable Orders(Nov)
7:30 AM CST - Durable Goods-Ex Transportation(Nov)
 

 
 
 
12/25
Wed
CHRISTMAS DAY
 
 
 

 
 
 
12/26
Thu
7:30 AM CST - Initial Claims-Weekly
10:00 AM CST - EIA Petroleum Status Report
2:00 PM CST - Dairy Products Sales
3:30 PM CST - Money Supply
LT: Jan Copper Options(CMX)
Jan Gold & Silver Options(CMX)
Jan Natural Gas Options(NYM)
Jan RBOB & ULSD Options(NYM)
12/27
Fri
7:30 AM CST - USDA Weekly Export Sales
9:30 AM CST - EIA Natural Gas Report
 
 
LT: Dec Bitcoin(CME)
Dec Copper(CMX)
Dec Gold & Silver(CMX)
Dec Platinum & Palladium(NYM)
Jan Natural Gas(NYM)
Jan 2,5,10 Year Notes Options(CBT)
Jan Bonds Options(CBT)
Jan Wheat Options(CBT)
Jan Corn Options(CBT)
Jan Oats Options(CBT)
Jan Rough Rice Options(CBT)
Jan Soybeans,Soymeal,Soyoil Options(CBT)
12/30
Mon
7:30 AM CST - Adv Intl Trade In Goods(Nov)
7:30 AM CST - Adv Retail Inventories(Nov)
7:30 AM CST - Adv Wholesale Inventories(Nov)
9:00 AM CST - Pending Home Sales(Nov)
FN: Jan Natural Gas(NYM)
 
 
 
12/31
Tue
New Year's Eve
8:00 AM CST - S&P Case-Shiller Home Price Index(Oct)
8:00 AM CST - FHFA Housing Price Index(Oct)
8:45 AM CST - Chicago PMI(Dec)
9:00 AM CST - Consumer Confidence(Dec)
3:30 PM CST - API Energy Stocks
FN: Jan Copper(CMX)
Jan Gold & Silver(CMX)
Jan Platinum & Palladium(NYM)
Jan Canola(CBT)
LT: Dec 2,5 Year Notes(CBT)
Dec Fed Funds(CME)
Dec Live Cattle(CME)
Dec Butter(CME)
Dec Milk(CME)
Jan RBOB & ULSD(NYM)
Dec Fed Funds Options(CME)
Dec Butter Options(CME)
Dec Milk Options(CME)
Jan Lumber Options(CME)

01/01
Wed
NEW YEAR'S DAY
 
 
 

 
 
 
01/02
Thu
7:30 AM CST - Initial Claims-Weekly
9:00 AM CST - ISM Manufacturing Index(Dec)
10:00 AM CST - EIA Petroleum Status Report
2:00 PM CST - Dairy Products Sales
2:00 PM CST - Cotton System
2:00 PM CST - Fats & Oils
2:00 PM CST - Grain Crushings
3:30 PM CST - Money Supply
FN: Jan Orange Juice(ICE)
 
 
 
FN=First Notice, OE=Option Expiration, LT=Last Trade

Disclaimer: This calendar is compiled from sources believed to be reliable. Moore Research Center, Inc. assumes no responsibility for any errors or omissions. It is meant as an alert to events that may affect trading strategies and is not necessarily complete. The release dates for certain economic reports may have been rescheduled.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

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