Entries by Peter Brandt

Coffee Futures are Brewing

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Coffee Futures are brewing again. Historically, the Coffee market has been a yo-yo — major Coffee bull markets followed by major bear markets, as shown by the quarterly graph. The market has been trading in an area of historical support.

Simple Trade Management

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I have absolutely no control if the next trade or series of trades will be profits or losses. However, with a proper Trade Management process, I know that I only have control over:

The patterns I identify as trading opportunities – do they meet a certain standard?
The orders I enter – is my order entry processes consistent with conducting trading as an organized business enterprise?
Leverage and sizing – (Risk Management) am I risking too much, but also, am I risking enough to make a trade matter if I am right?
Ongoing Trade Management – am I taking the right balance between protecting capital and allowing a trade to fully develop?

Gold is Pausing

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While I believe Gold has experienced a cyclic bottom, gold is pausing here. I have for several months openly expressed my opinion that the advance would be choppy at best. In recent Factor updates (premium service) I have highlighted the significant problem with the composition of open interest – the commercial interests with a record short position and the large specs (hedge funds and large traders) with a record long position. The Gold market gained way too many friends too early. I am not surprised by the lack of upside follow through in Gold. I might be interested in buying a retest of the falling wedge on the weekly graph in the 1170 to 1180 zone.

Factor Alert – Forex and other markets

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This Alert provides my current thinking on the overall technical condition of specified markets.

U.S. Dollar Index
The sustained advance from the 3 May low in the DX is EXACTLY what I would expect from a major bear trap. The shorts are trapped and the market senses blood in the water. This explains the nature of the recent rally -- not allowing shorts to cover on a reasonable break. The second chart shows that the large spec shorts (funds) remain heavily short while the commercials remain heavily long. DX should remain relatively well bid until prices reach 98 to 99. I expect major resistance at 100 to 101. Factor is fully long the Dollar Index.

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Long Term Euro Charts Point to Trouble Ahead

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For a considerable period of time I have held a very negative opinion on the Euro. The Euro currency has a complicated history. The Maastricht Treaty of 1992 obligated certain Euro nations to adopt a common currency – although it was not until Jan 2002 that currencies such as the D-Mark were officially replaced by the Euro currency mechanism. It is possible to create a proxy EUR that dates back to 1992. In fact, IMM and proxy price data exist back to the early 1970s. Several technical developments on the EUR graphs are worthy of note.