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Category: Commodity Trading

Investment is a game of money of securing future money by taking a risk today. Trading therefore comes with a list of rules to play by. Commodity trading in particular offers tremendous potential for becoming a completely different asset class.

However, before investing in any kind of commodity, you must do an in depth research and also ask your broker as many questions as possible. Through this category archive we provide you as much information and valuable insights into the world of commodity trading.

We at Cannon Trading are here to help you with your commodity trading needs. You as a trader should select your commodity trading advisor only after performing a due diligence on him/her. We in fact do that for you. This way, you get only the best advice to help you with your commodity trading.

We’ve got the information that you might need at every step of commodity trading, and you’ll find it all right here in the commodity trading section of our blog. Read up, and read on to get equipped!

Market Movers: Precious Metals Surge, Dollar Slides, and New Home Sales September 25th 2024

Posted on September 24, 2024 by Ilan

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Movers and Shakers

By John Thorpe, Senior Broker With Equities quietly trading in a consolidation phase, Interest rates following, the precious metals ,once again found footing and surprised many traders with their mid-day upside move, Gold higher by $36.00 @ 2689.00, Silver up $1.50 into the $32.50 /Troy OZ range.. The US Dollar @ 100.10 continuing it’s 2.5 month long slide, flirting with 14 month lows of 99.22. Metals should gain additional strength if the dollar falls below that number on a closing basis. Todays Headlines Updated: September 24, 2024 6:12 am Churning hurricane threatening US production, continued Middle East tensions, and Chinese stimulus measures have helped crude oil prices trade higher on Tuesday. Updated: September 24, 2024 7:00 am China’s central bank announced its largest stimulus measures since the pandemic. The bank will lower interest rates and additional funding. However, analysts say very week consumer and business demand for credit will have little response to lower interest rates, and the lack of fiscal stimulus measures will leave the central bank’s response to fall short of jump starting the economy and beating back deflationary environment. Updated: September 24, 2024 7:55 am Redbook Weekly US Retail Sales Headline Recap **Redbook Weekly US Retail Sales were +5.2% in the first three weeks of September 2024 vs September 2023 **Redbook Weekly US Retail Sales were +4.4% in the week ending September 21 vs yr ago week Updated: September 24, 2024 8:00 am Case Schiller 20 US Metro-Area Home Prices Recap **Case Schiller 20 US metro area home prices for July Y/Y: +5.9% from the year ago month **Case Schiller 20 US metro area home prices for July M/M: +0.01% vs prior month Updated: September 24, 2024 9:02 am Richmond Fed Manufacturing Index Headline Recap **Richmond Fed September Manufacturing Index: -21.0 ; prior -19.0 **Richmond Fed September Manufacturing Shipments Index: -18.0 ; prior -15.0 **Richmond Fed September Manufacturing New Orders: -23.0 ; prior -26.0 **Richmond Fed September Manufacturing Employees: -22.0 ; prior -15.0 **Richmond Fed September Manufacturing Prices Paid: +3.36 ; prior +2.45 **Richmond Fed September Manufacturing Prices Received: +1.57 ; prior +1.87 **Richmond Fed September Service Sector Index:-1.0 ; prior -11.0 Updated: September 24, 2024 9:09 am Conference Board Consumer Confidence, Present Situation, Expectations Index Headline Recap **Conference Board September Consumer Confidence Index: 98.7 ; prior revised to 105.6 from 103.3 ; expected 102.8 **Conference Board September Consumer Present Situation Index: 124.3 ; prior revised to 134.6 from 134.4 **Conference Board September Consumer Expectations Index: 81.7 ; prior revised to 86.3 from 82.5 Tomorrows Movers and Shakers New Home Sales Released On 9/25/2024 10:00:00 AM For Aug, 2024 d5630393 2c73 4ce0 b0be 7493161efe7b US new home sales data for June will be updated Wednesday morning at 9:00 am CT. Analysts expect new home sales month-to-month at a 0.640 mln unit annualized pace, up +3.4%. The prior month’s sales were -11.3% at 0.619 mln unit annual rate. Micron Technology reports after the close

Daily Levels for September 25, 2024

Economic Reports

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* 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 here in 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 judgement in trading.

#Equities, #Consolidation phase, #Interest rates, #Precious metals, #Gold, #Silver, #US Dollar, #Crude oil prices, #HurricaneHelene, #Middle East tensions, #Chinese stimulus, #Redbook US Retail Sales, #Case Schiller US Metro-Area Home Prices, #Richmond Fed Manufacturing Index, #Service Sector Index, #Consumer Confidence, #New Home Sales, #Micron Technology

What to Watch for After a Fed Rate Cut: Market Reactions, Opportunities, and Risks

Posted on September 23, 2024 by Ilan

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What to look out for after a FED rate cut

September 23, 2024 by GalTrades.com Powel said at the Jackson hole meeting, “The time has come for policy to adjust,” The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook and the balance of risks.” It didn’t matter if we got a .25 or .50 basis point rate cut, earnings growth will determine if the market can keep going up. The market made new all-time highs, but only one MAG7 stock made new all-time high, META. That means the rally is broadening, a positive point for the market. The S&P is currently trading at a forward P/E of 21 which suggests that a lot has been priced regarding the bull thesis. Valuations are high and that should be noted. How much higher can the market go up? remains to be seen. “don’t fight the Fed” or “don’t fight the trend” are statements to sustain near-term bullish momentum. Aside from the FED cutting rates, the economy still appears to be on firm footing. Next week the earnings and economic calendar is relatively light, outside of next Friday’s PCE report, but perhaps this can be conducive for recent bullish momentum. In the absence of news, the path of least resistance is higher. Yes, we are still in the midst of bearish seasonality, but the technicals look encouraging. Going forward bad news is good news because the FED will need to lower rates on bad news, unless the news is disastrous. As long as the SPX can remain above July’s prior all-time closing high 5,667, we should see continuation. An SPX close below 5,667 could introduce concerns of a false breakout to all-time highs, which would likely introduce some additional selling pressure A positive point: 76% of the S&P 500 stocks are above there 50 Day Moving Averages and 76% are above their 200 Day MA. Year to date the two top performing factors were momentum and growth which were up 29/27 % respectively. The two worst preforming groups were yield and value stocks. In the last 3 month that flipped. Dividend and value stocks get an uptick when rates come down. I see analysts calling for the small caps to go up with rate cuts. The action on Wednesday didn’t show that. It may be wise to react as opposed to jumping in now. It would make more sense for mid-caps to go up prior to small caps as there are more profitable companies in mid-cap sectors. Statistics show post-election the markets usually end higher. And in the past when the FED has cut rates in a soft landing, or no landing markets ended up higher for the next 6 to 12 months almost 100% of the time. Cyclical, mortgage, auto loan rates and small cap stand to benefit from rate cuts. Rate cuts can ignite small caps and value stocks. The IJR index contains a higher % of companies which are profitable as opposed to the IWM Russell 2000. Bull market indicators usually benefit capital market plays, stocks such as; CBOE, IBKR, BLK, GS. Rate cuts should help the homebuilders XHB ETF. If Fed rate cuts can bring short-end bond yields down to more normal rates, then banks wouldn’t have to overcompensate at the long end and longer-term loans like mortgages could come down. That would put more money in the pockets of everyday Americans and help fuel all sectors of the stock market — not to mention the benefit lower rates have on valuations. Commodities and oil prices are down, rates are coming down. That’s all good for companies and the consumer. Energy companies as opposed to the price of oil. historically this sector has been one of the best sectors going into a rate cut. What we didn’t have in the past is a slowdown in China, that narrative should put a lid on appreciation. There may be some individual names that are exceptions. FINISH ARTICLE HERE

Daily Levels for September 23, 2024

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Weekly Newsletter: Learn about Tick Size, Copper System, Sugar Chart + Trading Levels for Sept. 23rd

Posted on September 20, 2024 by Ilan

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Cannon Futures Weekly Letter Issue # 1209

In this issue:

Important Notices – Heavy Fed Speaking, Active Data, Few Earnings
Futures 101 – Tick Size & Minimum Fluctuations
Hot Market of the Week – March Sugar
Broker’s Trading System of the Week – Copper Swing Trading System
Trading Levels for Next Week
Trading Reports for Next Week

Important Notices – Next Week Highlights:

The Week Ahead

Heavy Fed Speak Week, active data and a few earnings highlight the week ahead.

Light Earnings, by largest Market Cap

Wed, Micron Technologies After the close
Thursday, Accenture pre-open, Costco after the close

Fed Speak schedule

Mon. Goolsbee 9:15am CDT, Kashkari Noon CDT
Tues. Bowman 8:00am CDT
Wed. Kugler 3:00pm CDT
Thu. Collins 8:10amCDT, Powell 8:20am CDT, Williams 8:25 CDT, Treasury Sec. Yellen 10:15am CDT

Big Economic Data week:

Mon. S&P PMI Flash
Tues. Case-Shiller Home prices, CB Consumer Confidence, Redbook, Richmond Fed.
Wed. Building Permits, New Home Sales
Thur. Jobless Claims, Core PCE Final, GDP Final, Durable goods, Pending Home sales
Fri. Personal Income, Retail and Wholesale Inventories, Michigan consumer sentiment

How to Rollover on the E-Futures Platform video below

Futures 101: Tick Movements: Understanding How They Work

Minimum Price Fluctuation

All futures contracts have a minimum price fluctuation also known as a tick. Tick sizes are set by the exchange and vary by contract instrument.

E-min S&P 500 tick

For example, the tick size of an E-Mini S&P 500 Futures Contract is equal to one quarter of an index point. Since an index point is valued at $50 for the E-Mini S&P 500, a movement of one tick would be

.25 x $50 = $12.50

NYMEX WTI Crude Oil

The tick size of the NYMEX WTI Crude Oil contract is equal to 1 cent and the WTI contract size is 1,000 barrels. Therefore, the value of a one tick move is $10.

Summary

Tick sizes are defined by the exchange and vary depending on the size of the financial instrument and requirements of the marketplace. Tick sizes are set to provide optimal liquidity and tight bid-ask spreads.

The minimum price fluctuation for any CME Group contract can be found on the product specification pages.

Questions? We are happy to help!

- Hot Market of the Week – December Gold
Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.

FREE TRIAL AVAILABLE

March 2025 Sugar

March sugar has shifted its formation back to the topisde and activated upside PriceCount objectives in the process. The chart accelerated to its first upside count to the 21.85 area. It would be normal to get a near term reaction form theis level in the form of a consolidation or corrective trdae. IF you can sustain further strength, the second count projects a possible run to the 23.26 area.

PriceCounts – Not about where we’ve been, but where we might be going next!

The PriceCount study is a tool that can help to project the distance of a move in price. The counts are not intended to be an ‘exact’ science but rather offer a target area for the four objectives which are based off the first leg of a move with each subsequent count having a smaller percentage of being achieved. It is normal for the chart to react by correcting or consolidating at an objective and then either resuming its move or reversing trend. Best utilized in conjunction with other technical tools, PriceCounts offer one more way to analyze charts and help to manage your positions and risk. Learn more at www.qtchartoftheday.com

Trading in futures, options, securities, derivatives or OTC products entails significant risks which must be understood prior to trading and may not be appropriate for all investors. Past performance of actual trades or strategies is not necessarily indicative of future results.

Broker’s Trading System of the Week

With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.

Balance Cont. v.22

PRODUCT

HG – Copper
SYSTEM TYPE

Day Trading

Recommended Cannon Trading Starting Capital

$25,000.00

COST

USD 150 / monthly

Get Started

Learn More

The performance shown above is hypothetical in that the chart represents returns in a model account. The model account rises or falls by the average single contract profit and loss achieved by clients trading actual money pursuant to the listed system’s trading signals on the appropriate dates (client fills), or if no actual client profit or loss available – by the hypothetical single contract profit and loss of trades generated by the system’s trading signals on that day in real time (real‐time) less slippage, or if no real time profit or loss available – by the hypothetical single contract profit and loss of trades generated by running the system logic backwards on back adjusted data. Please read full disclaimer HERE.

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Daily Levels for September 23rd 2024

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Trading Reports for Next Week

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Trading Reports for Next Week

First Notice (FN), Last trading (LT) Days for the Week:

www.mrci.com

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

Weekly Newsletter: FOMC next Week, Bonds Outlook & Trading Levels for April 29th

Posted on April 26, 2024 by Ilan

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Cannon Futures Weekly Letter Issue # 1191

In this issue:

Important Notices – FOMC & NFP Next Week
Futures 101 – Understanding Volume
Hot Market of the Week – June Bonds
Broker’s Trading System of the Week – ES intraday System
Trading Levels for Next Week
Trading Reports for Next Week

Important Notices – Next Week Highlights:

- FOMC Rate Announcement Wed.
- Heavy Earnings, AMZN and AMD Tues, AAPL Thur. all after the close
- Heavy Data, Chicago PMI, Consumer Confidence, Construction Spending, ISM Manufacturing PMI, Jobless Claims.
- NON FARM Payrolls to cap off the week on Fri. , preopening
- Higher than average volatility in Cocoa, Coffee, Silver, Gold & Copper.

Futures 101 : Understanding VOLUME

Volume is reported for all futures contracts. It is calculated by counting the number of contracts that have been bought and sold over a given time. You can track volume using different time intervals like daily or intraday.

When a futures contract is traded, whether bought or sold, it counts towards volume for that contract.

For example, a trader closes a short position in the E-mini S&P 500 (ES) futures contract by buying one contract in the ES, so volume will increase by 1.

Traders often use and interpret the rise or decline of volume in a futures contract to help make trading decisions.

Volume can give important information to traders such as:

Indicate the price levels at which traders are more or less interested in trading a futures contract
During the roll, indicate to traders when to switch to trading the front month futures contract as volume decreases in the expiring contract
Identify the times of day when a futures contract is most liquid

Price Levels

When volume changes as price of a futures contract moves towards certain levels, this can indicate to a trader that a change in direction may occur. Some traders may use this information to indicate whether to buy or sell at those key levels.

Contract Roll

During the futures rollover, traders pay attention to the contract that is taking the higher levels of volume. Traders use this information to determine when to start trading the next month contract. As volume decreases in the expiring contract, trading will shift to the next available month contract.

For example, say the June ES (E-mini S&P 500) futures contract is about to expire and September will become the new front month. On the Thursday of rollover week, watch how the June contract starts to lose volume and the September contract begins to pick up volume. When the September contract has more volume than the June contract, it is time to switch to the September contract.

Active Periods

Traders typically prefer higher volume times to trade, as it means that more traders are actively interested in buying and selling. When volume is high, the bid-ask spread is typically smaller, orders are filled faster and less gaps may exist between ticks.

For example, markets can have lower volume between the hours of 12:00 p.m.-2:00 p.m. ET, before major economic releases; conversely, market often see higher volume around the open and close of the trading day.

Traders also can look at average daily volume over a longer time period, such as a few weeks or months, to see if the markets currently are in a lower or higher volume than is typical.

Summary

What volume can’t show however, is whether traders are buying or selling, or opening or closing a position.

For example, if the ES contract is trading at 2375 and suddenly pushes down to 2360 while volume increases, the volume that comes into the market could be from traders opening new long positions at key levels of support. That could indicate a bullish sentiment. Volume also can be generated by liquidation of exiting long positions or opening of new short positions, a possible bearish indication.

A spike in volume at 2360 doesn’t necessarily mean that buyers are coming into the market and that the price will bounce.

Volume data is readily available for each futures contract and for the market as a whole. Although traders may use volume in different ways to interpret how to trade, volume can be an important factor to help inform your trading decisions.

Hot Market of the Week – June Bonds

Hot market of the week is provided by QT Market Center, A Swiss army knife charting package that’s not just for Hedgers, Cooperatives and Farmers alike but also for Spread traders, Swing traders and shorter time frame application for intraday traders with a unique proprietary indicator that can be applied to your specific trading needs.

FREE TRIAL AVAILABLE

June 30 Year T-Bonds

The June 30 Year T-Bond break found temporary stability at its second downside PriceCount objective recently. Now, the chart has resumed its slide into new lows which, if sustained, would project a run to the third count in the 109^20 area.

PriceCounts – Not about where we’ve been , but where we might be going next!

Broker’s Trading System of the Week

With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.

Pluton Mini S&P

PRODUCT

ES – Mini SP500

SYSTEM TYPE

Intraday

COST

USD 110 / monthly

Recommended Cannon Trading Starting Capital

$10,000

Get Started

Learn More

Would you like to receive daily support & resistance levels?

Yes

Select

Daily Levels for April 29th 2024

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Trading Reports for Next Week

First Notice (FN), Last trading (LT) Days for the Week:

www.mrci.com

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Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

PCE Tomorrow!  + Levels for April 26th

Posted on April 25, 2024 by Ilan

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The U.S. GDP experienced a modest increase of 1.6% in the first quarter, marking the slowest expansion in two years. This news prompted a downturn in U.S. stock markets. But should investors be concerned about this figure?

Ben Laidler, the Global Markets Strategist at eToro, appeared on Wealth! to shed light on the implications of the GDP data for investor portfolios.

Laidler commented, “The recent GDP figure isn’t ideal, yet it’s not as dire as it may seem. The core elements that matter to us—business investment and consumer spending—are holding strong. The observed softness is largely attributed to less critical factors, which are expected to rebound in the next quarter, specifically trade and inventory levels.

While the inflation metric is slightly unsettling, it’s best to wait for the upcoming release of the monthly Personal Consumption Expenditures (PCE) index. This will provide us with more clarity on the extent of our concerns regarding the current economic situation.”

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Daily Levels for April 26th, 2024

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Economic Reports

provided by: ForexFactory.com

All times are Eastern Time ( New York)

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

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GDP Tomorrow, Earnings Season in Full Play  + Levels for April 25th

Posted on April 24, 2024 by Ilan

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A few tips for tomorrow:

If you are trading stock index futures, note price action has been VERY choppy during the day session as most earnings come out after the close…

Coffee and Coca volatility is as high as I have seen in recent months. Large intraday and overnight moves in both, as much as +/- 8% per day!

We have GDP and home sales tomorrow.

Big pullback in both silver and gold and the key question is: Was this profit taking/ deflation of geo political fear and GOOD entry to the long side? OR…is this the near term top for both markets??
Corn daily chart for your review below.

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Daily Levels for April 25th, 2024

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Economic Reports

provided by: ForexFactory.com

All times are Eastern Time ( New York)

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

Bullet Points, Highlights, Announcements  + Levels for April 24th

Posted on April 23, 2024 by Ilan

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Bullet Points, Highlights, Announcements   

by Mark O’Brien, Senior Broker

General:

Futures traders with positions in deliverable futures contracts keep an eye on the calendar for important dates at the end of the month. First Notice Day (FND) and Last Trading Day (LTD) for many futures contracts are close at hand. Make sure you steer safely clear of receiving delivery notices for physical commodities (FND), or greatly reduced liquidity (LTD). If you’re unsure, contact your Cannon Trading Co. broker.

The economic calendar for the rest of the week is scarce with Thursday’s Q1 GDP report taking center stage.

Prospects for a fed rate cut announcement at the Fed’s 4/30-5/1 meeting, as well as its mid-June meeting have all but evaporated and many Fed watchers expect the central bank to keep its “higher for longer” mantra in place for most and possibly all of 2024.

Worries over a wider Middle East conflict have subsided and traders are discounting the risk of further escalations. Case in point, June gold lost ±67 per ounce (±2%) yesterday after posting its latest all-time record high close of $2,413.80/ounce on Friday. Iran downplayed Israel’s retaliatory drone strike against it, in what appeared to be a move aimed at averting regional escalation.

Energies:

The ±$2.50/barrel selloff in May crude oil and the ±¢9.75/gallon May RBOB gasoline futures last week likely signaled the markets do not see an Iranian supply disruption in the near future, so the markets will be given to focusing on global energy demand going forward

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Softs: 

May Cocoa futures declined sharply yesterday and today, down nearly $1,300/ton (a $13,000 per contract move) marking its worst two-day slump since February. This after a 3-day / Wed.-Fri. rally of $1,635/ton to its all-time record high close of 11,878/ton on Friday. ICE U.S. has set the initial margin requirement to $11,260 per contract.

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Daily Levels for April 24th, 2024

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Economic Reports

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All times are Eastern Time ( New York)

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Notes from a Day Trader + Levels for April 23rd

Posted on April 22, 2024 by Ilan

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The Week Ahead and Controlling your Emotions

by John Thorpe, Senior Broker

No Fed speakers this week, it is the blackout period in advance of next weeks FED meeting and rates decision.

Look for earnings to move the market this week MSFT, GOOG, META, XOM, Visa, TSLA

Last week, my colleague posted an article about FOMO just about the same time a client of mine was battling his own fear of missing out.

Of course I asked my client if , after redacting account information, he wouldn’t mind if I shared his “journal Entry” with everyone.

John,

I’ll give you an explanation of what happened yesterday. After we talked I left for my job. I returned at 2:30 and saw that I missed all the “short” activity yesterday.

Disappointed, I made the mistake of trying to catch up . I had several positive trades and then several negative trades that put me in the negative for the day.

I was active in a “short” trade, sitting at my desk. I nodded off. I don’t know how long, but it must have been enough seconds that the price action had dramatically turned “long”. Unfortunately, I nodded off with my hand on my mouse. It seems that I touched the mouse and now I discovered that I had clicked a second contract. I was hoping to recover the $1800 loss but it was too late.

1. I went back to practice simulation. First on the 15th from 9 AM and with 3 clicks I had made $2300. Then stopped while ahead.

2. Today I again started practice at 9 AM and within 2 hours made $530. Then stopped while ahead My mistakes. What do I learn from this:

1. Don’t fall asleep while trading.

2. Don’t fall asleep with your finger hovering over the mouse.

3. Stop when you’re ahead and don’t try to make money on the short price action movements.

4. Reminding again to only trade with the trend.

One of the most common pitfalls of traders in Futures Trading is the fear of missing out (FOMO).

Understanding FOMO in Trading:

FOMO, or the fear of missing out, is a powerful emotion that can cloud judgment and lead to impulsive decisions.
Recognizing the signs of FOMO is crucial for traders to maintain a disciplined approach to their strategies.

The Role of Emotions in Trading:

Emotions play a significant role in trading, influencing decisions and reactions to market movements.
Acknowledging emotions like greed, fear, and excitement is the first step towards effective emotional control.

Strategies for Controlling Emotions:

1/ Establishing a Trading Plan:

Having a well-defined trading plan helps set clear goals and guidelines, reducing the influence of emotions.

2/ Setting Realistic Expectations:

Realistic expectations prevent disappointment and impulsive actions based on unrealistic goals.

3/ Utilizing Risk Management:

Implementing risk management strategies ensures that trades are within acceptable risk limits.

4/ Taking Breaks:

Stepping away from the screen during intense market movements can provide a fresh perspective and prevent emotional reactions.

Mindfulness Techniques:

Incorporating mindfulness practices, such as deep breathing or meditation, can help traders stay focused and calm during stressful trading situations.

Learn from Past Trades:

Analyzing past trades, especially those influenced by emotions, provides valuable insights for improvement.
Keeping a trading journal helps identify patterns in emotional responses and areas for growth.

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Daily Levels for April 23rd, 2024

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Economic Reports

provided by: ForexFactory.com

All times are Eastern Time ( New York)

Improve Your Trading Skills

Get access to proprietary indicators and trading methods, consult with an experienced broker at 1-800-454-9572.

Explore trading methods. Register Here

Weekly Newsletter: Role of Speculators, Coffee Outlook & Trading Levels for April 22nd

Posted on April 19, 2024 by Ilan

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Cannon Futures Weekly Letter Issue # 1190

In this issue:

Important Notices – Israel, Iran, PCE Report & More
Futures 101 – The Role of Speculators in Futures Trading
Hot Market of the Week – July Coffee
Broker’s Trading System of the Week – NQ intraday System
Trading Levels for Next Week
Trading Reports for Next Week

Important Notices –

The situation in the Middle East will loom over the markets next week. More on that below.

Keep an eye on these potential futures market movers:

It was hardly unexpected, but Israel’s missile strike on Iran Friday may foreshadow a dangerous series of tit-for-tat retaliation between the Middle East powers – and unsettle world markets. At the same time, the limited scale of the attack and Iran’s muted response appears so far to signal a successful effort by diplomats who have been working to avert all-out war.

At the outset of Israel’s offensive last night, volatility amplified in key futures markets – stock indexes (S&P 500, Dow, Nasdaq), currencies, energies (crude oil), metals (gold), financials (30-yr. bonds, 10-yr. notes). Into late evening and on into today, there has been a virtual across-the-board drop-off in the inflated price fluctuation seen when news broke of the military action.

GDP and PMI along with homes sales, durable goods and overall a packed week with economic reports.

PCE Friday will provide additional clues as to the future of interest rates

big earnings week MSFT, GOOG, META, XOM, Visa, TSLA

Volatility in Cocoa and Coffee continues. Copper broke higher.

Trading Resource of the Week: Understanding the Role of Speculators

What Are Speculators?

Speculators are primary participants in the futures market. A speculator is any individual or firm that accepts risk in order to make a profit. Speculators can achieve these profits by buying low and selling high. But in the case of the futures market, they could just as easily sell first and later buy at a lower price.

Obviously, this profit objective is easier said than done. Nonetheless, speculators aiming to profit in the futures market come in a variety of types. Speculators can be individual traders, proprietary trading firms, portfolio managers, hedge funds or market makers.

Individual Traders

For individuals trading their own funds, electronic trading has helped to level the playing field by improving access to price and trade information. The speed and ease of trade execution, combined with the application of modern risk management, gives the individual trader access to markets and strategies that were once reserved for institutions.

Proprietary Trading Firms

Proprietary trading firms, also known as prop shops, profit as a direct result of their traders’ activity in the marketplace. These firms supply their traders with the education and capital required to execute a large number of trades per day. By using the capital resources of the prop shop, traders gain access to more capital than they would if they were trading on their own account. They also may have access to the same type of research and strategies developed by larger institutions.

Portfolio or Investment Managers

A portfolio or investment manager is responsible for investing or hedging the assets of a mutual fund, exchange-traded fund or closed-end fund. The portfolio manager implements the fund’s investment strategy and manages the day-to-day trading. Futures markets are often used to increase or decrease the overall market exposure of a portfolio without disrupting the delicate balance of investments that may have taken a significant effort to build.

Hedge Funds

A hedge fund is a managed portfolio of investments that uses advanced investment strategies to maximize returns, either in an absolute sense or relative to a specified market benchmark. The name hedge fund is mostly historical, as the first hedge funds tried to hedge against the risk of a bear market by shorting the market. Today, hedge funds use hundreds of different strategies in an effort to maximize returns. The diverse and highly liquid futures marketplace offer hedge funds the ability to execute large transactions and either increase or decrease the market exposure of their portfolio.

Market Makers

Market makers are trading firms that have contractually agreed to provide liquidity to the markets, continually providing both bids and offers, usually in exchange for a reduction in trading fees. Market makers are important to the trading ecosystem as they help facilitate the movement of large transactions without effecting a substantial change in price. Market makers often profit from capturing the spread, the small difference between the bid and offer prices over a large number of transactions, or by trading related futures markets that they view as being priced to provide opportunity.

Conclusion

All types of speculators bring liquidity to the market place. Providing liquidity is a crucial market function that enables individuals to easily enter or exit the market. Though speculative trading activity generates considerable liquidity, all market players benefit. In contrast to speculators who aim to profit by assuming market risk, some buyers and sellers have a vested interest in the underlying asset of each contact. These market participants aim to offset or eliminate risk and are referred to as hedgers.

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Broker’s Trading System of the Week

With algorithmic trading systems becoming more prevalent in portfolio diversification, the following system has been selected as the broker’s choice for this month.

Boston Nasdaq B

PRODUCT

NQ – Mini NASDAQ 100

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Intraday

COST

USD 55 / monthly

Recommended Cannon Trading Starting Capital

$25,000

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Daily Levels for April 22nd 2024

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FOMO May be Your Worst Enemy when it Comes to Trading + Levels for April 19th

Posted on April 18, 2024 by Ilan

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“Mastering the Market: Strategies to Overcome FOMO in Day Trading”.

By Ilan Levy-Mayer, VP

The unpredictable fluctuations in stock index futures can prompt a discussion on a significant challenge that day traders often encounter: the Fear of Missing Out (FOMO). This phenomenon is particularly prevalent in day trading, where the rapid pace, high leverage and high stakes can lead to hasty decisions.

Imagine a scenario where a trader is monitoring the charts and notices a significant downward trend. The immediate thought might be a concern that the market is on the verge of plummeting to new lows. While this could indeed happen, the trader also has a guideline: avoid initiating short positions when the market is below the lowest Volume Weighted Average Price (VWAP) band. This rule is based on the reasonable expectation that the market may rebound before continuing its descent. However, the swift movements of the market, coupled with emotional impulses and the desire to recoup losses, can result in a trader disregarding their own rules in the heat of the moment.

So, how can one manage this internal conflict? Here are some strategies:

• Document your trading rules. Writing them down can reinforce their importance and make it easier to adhere to them.

• Implement a system of self-discipline. If you find yourself breaking your own rules, consider setting consequences for such actions.

• Accountability is key. Enlist a trusted individual to review your trades with you and hold you responsible for your trading decisions.

• Practice mindfulness. Before making a trade, take a moment to breathe deeply and count to five. This brief pause can help you maintain composure and avoid impulsive actions.

• Embrace patience. Often, the decision not to trade can be as crucial as the trades you make. By reducing the number of impulsive trades and focusing on deliberate, well-thought-out actions, you are likely to see progress and improvement in your trading performance.

Remember, overcoming the urge to act on FOMO is a challenging but essential part of becoming a successful day trader. It’s about finding a balance between being proactive and not letting emotions dictate your trading strategy.

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Daily Levels for April 19th, 2024

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