FuturesTechs Blog

We have had our new website available for around 1 month now and we are starting to gain momentum for our new “per end user” offering. Private Investors, CFD and Spread Bet traders are starting to sign up and see the value of our service.

In recent days we’ve seen some interesting moves in the markets:

Gold Futures have turned over and after a plethora of sell signals yesterday we went Bearish this morning, just before the market sold off sharply.

Brent Crude Oil Futures has seen a big sell off but we’re certain this is merely a buying opportunity.

We have remained Bearish in the short term on Equity markets but our patience is being tested on this, particularly in the DAX Future, never one to willingly play the game!!

Interestingly today’s early high/failure in the S&P 500 Futures could be key and suggests that the market can head lower in the short term.

Login for a free trial to see our thoughts on these movements in more detail.

So to a question we’ve been asked a few times of late: Where did we appear from?

We have been servicing professional traders for 8 years now. The company formed in March 2000, soon after the closure of the LIFFE Floor. The traders who congregated on the LIFFE Floor headed up to different offices around this time, and suddenly they needed an edge, they needed information. I always had a string of traders who used to come and have a chat about the charts when I was based on the Floor, and so it was a natural progression to turn this into a daily commentary. I started by sending out a daily report on Bunds and T-Notes, and it grew from there. We grew with the Industry. Proprietary trading accounts for a good percentage of the daily Volume on exchanges like LIFFE and Eurex.

We wanted to expand our horizons beyond this arena, though, so it was a choice of Banks and Hedge Funds or Private/Retail Customers. Which way to jump!? We have found over the years that “bean counters” at the Institutions can cause problems for services like us, because they see a lot of free technical analysis being provided by the large brokers vying for their business. “Why pay for something that you can get for nothing?” -they say.

So we came up with the idea of a Members website where the reports can be viewed securely, on a “per end user” basis, which allows us to significantly reduce the price without upsetting our existing professional clients who pay for a “Site Licence” and the ability to distribute the reports amongst their traders.

We encourage you to take advantage of the chance to utilise this professional trading tool in your daily trading routine.

There’s plenty going on around the traps this week. Let’s just go through a few highlights:

Oil is the one getting the headlines, with ICE Brent Crude getting up to $135 before selling off hard today. The NYMEX WTI* has done a similar thing; selling off $5 from a high just above $135 over the course of today.

As of this moment we wouldn’t be calling a top in this one despite this volatility. As we said last week, one swallow doesn’t make a summer. The lack of reaction to last week’s Doji Candlestick pattern proved that!

Saying that we might not be far away from a capitulation (it’s certainly starting to feel that way), but trying to pick the top of a market like this is a dangerous and foolish game.

Equities looked toppy last week, as we flagged in the Blog, but it took a few days before we turned over, although the DAX Future held key psychological support at 7000 today, and the FTSE Future is holding support at 6139.5, the last higher low.

But it’s Debt markets that are catching my eye this week. We have seen a sell off of 90 ticks in December ‘08 Short Sterling Futures. In simple terms that means a swing of rate expectations for December of almost a full percentage point. In other words this week the market has decided that there’s little chance of more rate cuts from the MPC, a sign that maybe things are settling down a bit. This is a quite spectacular move for a contract that is usually pretty “steady as she goes!”

For those of you who are finding trading things like the DAX and Oil a little precarious and volatile you can often put good directional trades on in these Interest Rate Futures, as the Central Banks try not to cause too many surprises; flagging their intentions with their rhetoric as they go along, and guiding the market if expectations are going awry.

Many professional traders trade huge amounts of size in these contracts every day. The equivalent in Europe is the Euribor, and in the US it’s the 3 month Eurodollar Futures. They are among the most actively traded Futures contracts in the world.

Check with your Spread Bet provider how wide their spreads are on these products. They should be quite tight, because they don’t move about quite as much as things like Equity Indices, Gold and Oil.

Let’s finish up by clearing up some confusion: We produce a report each day on NYMEX WTI.

NYMEX is the name of the Exchange where it is traded; the New York Mercantile Exchange, one of the few remaining “open outcry” Futures Floors (due to be taken over by the CME Group). WTI stands for West Texas Intermediate. This is the Benchmark Crude Oil in the US, and is also known as “Light Sweet Crude”.

Happy Trading,

Cheers,

Clive.

The brave new world for FuturesTechs is welcoming new traders into the fold. Whereas we’ve traditionally catered for Professional Traders and Brokers, with our new “per end user” website we can now be accessed by a wider audience.

But a question we’re being asked quite a lot by new subscribers is “What is the Bund?”, amongst other things! (Bobl, Schatz, Euribor, Short Sterling, GasOil, to name but a few!).

We have been writing Technical Analysis in the Bund Future right from the start. It is one or original reports from 2000 when we first set up. It has an interesting history actually, because Bunds were traded on the LIFFE Floor until about 1999, at which point they suddenly migrated to the DTB, now called Eurex, which was one of the early pioneers of Electronic Trading. As it was one of the biggest Futures contracts in the world at that time (and still is today) this was quite a coup, and can be classed as the death knell for Floor traded Futures, not just in London, but around the world.

As I said above the Bund Future is one of the biggest contracts in the world, regularly trading over 1 million lots per day. It is the benchmark for 10 year Bonds in Germany. Even though Europe “became one” in 2002 the financial markets, still to this day, reference the Bund for transactions in the European money markets.

The 5 year Bond Futures is the Bobl, and the Schatz tracks the 2 year part of the curve. All three trade very good Volume each day and are excellent contracts to look at if you are accessing the market directly. By definition the shorter dated contracts have less volatility.

When choosing a contract to trade (direct to the market as opposed to Spread Betting) Volume and Volatility are the two things you need to look for. Volatility is specific to your needs: For some people the DAX Future is a rampant animal that they would never dream of trying to tame. To others it’s a perfect challenge and the Volatility is welcomed.

But Volume is important because you need to be able to get out of a trade if it’s going against you, and if you trade something that’s very thin you may have trouble doing this.

So to new visitors of our Members area I urge you to have a look at these products and discover if there’s something there that suits you.

Most spread betting firms have quotes for these contracts, and the spreads will likely be reasonably close, because one of the things the Spread betters base the size of their spread upon is their ability to “trade the other side” if they want to.

We posted a large red candle yesterday in ICE Brent Crude Oil and if you combine the 9th and 12th May on the Daily Candlestick Chart you get a Bearish Engulfing Pattern. Does this means we’ve seen a top? Hang on a second! The phrase “One swallow doesn’t make a summer” springs to mind!

If anything a bit of a pullback in Brent Crude and NYMEX Crude wouldn’t do any harm to the Bulls, as it’s not healthy to go up in a straight line. The buyers are bossing things right now and we don’t think any pullbacks will last long (4 days of weakness at the end of April were taken back in just 2 sessions).

On the other hand Equity markets look like they’re struggling, and the old adage of “Sell in May and go away” is being rolled out left right and centre.

The “full version” of this phrase is “Sell in May, Go away, come back on St. Leger’s Day”. St. Legers day is a horse racing festival in September, by the way! (It’s held in Doncaster, a place that will be feeling rather down in the dumps come September because they’ll still be playing League 1 football after Southend United beat them in the Play-offs this Friday).

I digress! Back to Equity markets: The Eurostoxx 50 Future is one of our favourite benchmarks. It’s a great contract to trade, with lots of volume, decent enough volatility, and no horrible periods of illiquid trade. We have broken trend support in this one today (13th May) and if we close below 3760 we’ll look for further weakness going forward. 3674 is our first target to the downside. Once we get through here 3545-75 is the next area of support to target.

We are planning to try out adding a few Individual Equity recommendations to the members area of our website, including daily technical analysis on Vodafone (far and away the most actively traded stock in the UK) and a “pick of the day” from elsewhere in the FTSE 100.

We were cheered by last Thursday’s rally in Equity markets, where the technical charts gave breakaway signals on several markets. Since then many Equity markets have held key support levels and we continue to move higher.

We are now at levels not seen since January in markets like the DAX Futures (next target gap resistance at 7342.5), the FTSE 100 Futures (there’s an upside gap at 6337.5) and the S&P 500 Futures (with another gap at 1451.20 that we’re targeting).

In the meantime the “hot” story right now is Oil, which is making new all time highs almost by the day. Goldman Sachs came out with a target of $200 for a 6 month to 2 year view. This was the same chap that targeted $100 a few years back which was met with guffaws at the time. Say no more.

Technically there’s been very little in the way of sell signals in Oil in recent years. At FuturesTechs I think we’ve been Bullish more or less non-stop since $30!!

Our next short term target area for the ICE Brent Crude Oil contract is £123.37-65. We use Elliott Wave projections to come up with these targets.

Gold and Silver are getting close to giving fresh sell signals so we’re watching this situation closely.

Our sell trade in Soybean Futures hasn’t gone exactly to plan although we are yet to close above our stop level of 1305.

Hope you’re having a good week, and if you’re in the UK I hope you’re enjoying this bout of fine weather!!

Cheers,

Clive.

We’ve posted a sell recommendation in CME Group Soybean Futures today, so thought we’d add it to this page for all to share!

Sell Soybeans (July ’08) @ 1263, stop at 1305, target 1125 then 1050

There’s been a huge press for the soft commodities of late and things had started to look severely overdone. While Corn Futures are still just a few ticks off their all time highs, we topped out in Soybeans a while ago, back in early March in fact. Most of March was spent heading lower but then we rallied, taking back 61.8% of the losses seen in March. We’ve kept a close eye on things since this failure, and now that we’re below 1300 and 1285 we want to be short again, looking for a fresh test of the 1121.4 low set on April 1st. Below here we have an uptrend support line on the longer term charts that comes in at 1042, so we’ve set our second target here.

We’ve set our stop above 1300, but you could use 1285 as a reference to stop out of you need it to be tighter.