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johntrade

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About johntrade

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  1. Though it has gone through many revisions since the inaugural use, the Continuous Commodity Index (CCI) has aimed to provide an accurate representation of commodity price trends. Contract specifications refer to the CCI futures on ICE Futures US. Contract Size: $500 x Index Price Quote & Tick Size: Quoted in index points, to two decimal places. (e.g.,300.05, 300.10, 300.15).01 = $5; tick size is .05 = $25 Contract Months: January, February, April, June, August and November Trading Specs: Futures trade on ICE US from 2:30 am to 2:45 pm next day Daily Price Limit: None as of publishing; please consult exchange for additional details on limits. Trading Symbols: CI CCI Facts The Commodity Research Bureau first developed an index based on commodity prices in the middle part of the last century. Originally, it was composed of twenty-eight commodities. The current representation of the CCI contains seventeen. They include: • Crude Oil • Heating Oil • Natural Gas • Corn • Soybeans • Wheat • Copper • Cotton • Live Cattle • Lean Hogs • Gold • Platinum • Silver • Cocoa • Coffee • Orange Juice • Sugar #11 This kind of index may be more difficult to understand than a basket of stocks since the active contract for each commodity changes. The change occurs when the nearby futures contract expires. For this reason, this kind of index may have to be rebalanced. The original CRB index was also heavily weighted towards commodities in the agricultural sector. Now, the balance is relative to the following chart: Key terms for this market include: Commodity Index - a fixed-weight or weighted index of the prices for select commodities. The index may use futures or spot market prices. Key Uses CCI futures may be incorporated into strategies to hedge cash market positions, diversify holdings, or as a means to trade a directional bias on the possible future price trends for commodities. Key Concerns Since commodity prices are the constituents of the index, the CCI may be influenced by some or all of the same things which will cause fluctuations in commodity prices. These could include – but are not limited to – events or fundamentals like the following: • Industry reports • Inventories or supply reports for specific commodities • National or global recessions • Weather issues • Crop reports • Central bank meetings or policy changes • US dollar movements _________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc .
  2. The Dow Jones Industrial Average (DJIA) is a widely recognized name in finance. Following his nineteenth-century roots in publishing, Charles Dow’s first stock averages creation included nine railroads and two industrials. Today, the DJIA is an index of 30 companies. While exploring the history and components of the DJIA this newsletter will refer to specifications for the futures contract traded on the CME. Contract Size: $10 x DJIA ($10) futures price Tick Size: Minimum fluctuation is 1.00 index points=$10 Contract Months: March, June, September, December Trading Specs: Trades open outcry and Globex (electronic) per the following schedule: Electronic: Mon -Thurs: 3:30 p.m.-8:15 a.m. (daily maintenance shutdown from 4:30 p.m.-5:00 p.m.) Sun: 5:00 p.m.-8:15 a.m. Central Time Open Auction: Mon-Fri: 8:30 a.m. -3:15 p.m. Central Time Daily Price Limit: RTH: Successive 10%, 20%, 30% limits (downside only) ETH (overnight): 5% up or down Please consult exchange for additional details on limits. Trading Symbols: DJ, ZD Globex Past performance is not indicative of future results. ***chart courtesy of Gecko Software DJIA Facts The DJIA is a widely recognized stock market index and was named for Charles Dow and ones of his associates, Edward Jones. In the company’s overview, it indicates that the DJIA serves “to provide a clear, straightforward view of the stock market and, by extension, the U.S. economy” as the thirty component companies represent a diverse group. The current components and their weights are: On June of 2009, Cisco and Travelers replaced Citigroup and General Motors. Changes have been made historically most often due to mergers. Other reasons for changes include the shifts in technologies over time. Although the term “industrial” contributes to the name, the DJIA is meant to represent the broad market. Former components include Goodyear, Sears Roebuck & Co, Bethlehem Steel, Woolworth, Eastman Kodak, Honeywell, and many other recognizable names. Calculating the index involves totaling the component stocks’ prices. The divisor for the average is not straightforward since it has to be adjusted to accommodate stock splits or other fundamental changes. This helps maintain continuity. According to the website for the indexes, "Over time, the divisor has been adjusted several times, mostly downward (it stood at 0.125552709 at the end of 2008), which means that it has become, in effect, a multiplier." The DJIA is often the subject of criticism since it is price-weighted and not all the components may be open for trading at the same time. The worst and best days according to the DJIA website were as follows: Past performance is not indicative of future results. The worst and best years were as illustrated: Past performance is not indicative of future results. Key terms for this market include: Averages Committee - As of March 2010, when Dow Jones Indexes became part of CME Group Index Services LLC, the Managing Editor for the Wall Street Journal, the head of Dow Jones Indexes research, and the head of CME Group research are the ones who select components of the DJIA. Price weighted - For an index, this refers to the components being included based on their quoted prices. Key Uses As a benchmark index, the DJIA can be used by fund managers, speculators, analysts and rating companies as a performance standard against which they can compare their own performance or the performance of others. The DJIA futures contract has also been used to accommodate a range of both speculator and hedger trading strategies. Key Concerns For the futures contract on the DJIA, the commonly watched factors which may affect trade include economic reports or events. This may include the following: • Retail Sales • Unemployment Claims • Personal Income • PPI • CPI • New Home Sales • FOMC Meetings & Member commentaries In addition to weekly and monthly reports, corporate earnings and activities such as mergers and acquisitions may affect price and volatility. There are nearly countless national and global events that can be considered in relation to how they may affect member shares and the overall index value. ________________________________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  3. Treasury notes are debt obligations issued by the US Treasury. They are often viewed as a way to speculate in or hedge against future interest rate changes and are globally valued markets to use when trying to manage risk of the same. 2-year Treasury Notes Contract Size: One U.S. Treasury note having a face value at maturity of $200,000. Price Quote & Tick Size: Points ($2,000) and quarters of 1/32 of a point. For example, 109-16 represents 109 16/32, 109-162 represents 109 16.25/32, 109-165 represents 109 16.5/32, and 109-167 represents 109 16.75/32. Par is on the basis of 100 points. Minimum tick size is one-quarter of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), including intermonth spreads. Contract Months: March, June, September, December Trading Specs: Trades open outcry and Globex (electronic) per the following schedule: Electronic: SUN – FRI: 5:30 p.m. – 4:00 p.m. Central Time Open Auction: MON – FRI: 7:20 a.m. – 2:00 p.m. Central Time Daily Price Limit: None as of publishing date, but it is wise to consult the exchange. Trading Symbols: TU, ZT Past performance is not indicative of future results. ***chart courtesy of Gecko Software 5-year Treasury Notes Contract Size: One U.S. Treasury note having a face value at maturity of $100,000. Price Quote & Tick Size: Points ($1,000) and quarters of 1/32 of a point. For example, 119-16 represents 119 16/32, 119-162 represents 119 16.25/32, 119-165 represents 119 16.5/32, and 119-167 represents 119 16.75/32. Par is on the basis of 100 points. Minimum tick size is one-quarter of one thirty-second (1/32) of one point ($7.8125, rounded up to the nearest cent per contract), including intermonth spreads. Contract Months: March, June, September, December Trading Specs: Trades open outcry and Globex (electronic) per the following schedule: Electronic: SUN – FRI: 5:30 p.m. – 4:00 p.m. Central Time Open Auction: MON – FRI: 7:20 a.m. – 2:00 p.m. Central Time Daily Price Limit: None as of publishing date, but it is wise to consult the exchange. Trading Symbols: FV, ZF Past performance is not indicative of future results. ***chart courtesy of Gecko Software 10-year Treasury Notes Contract Size: One U.S. Treasury note having a face value at maturity of $100,000. Price Quote & Tick Size: Points ($1,000) and halves of 1/32 of a point. For example, 126-16 represents 126 16/32 and 126-165 represents 126 16.5/32. Par is on the basis of 100 points.; minimum tick size is one-half of one thirty-second (1/32) of one point ($15.625, rounded up to the nearest cent per contract), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract). Contract Months: March, June, September, December Trading Specs: Trades open outcry and Globex (electronic) per the following schedule: Electronic: SUN – FRI: 5:30 p.m. – 4:00 p.m. Central Time Open Auction: MON – FRI: 7:20 a.m. – 2:00 p.m. Central Time Daily Price Limit: None as of publishing date, but it is wise to consult the exchange. Trading Symbols: TY, ZN Past performance is not indicative of future results. ***chart courtesy of Gecko Software Treasury Note Facts The United States Treasury has been responsible for federal finances for over two hundred years. The means through which it takes on debt are securities sold both domestically and to foreign investors. Treasury notes are issued in terms of 2, 3, 5, 7, and 10 years. Auctions for notes are held every month and a tentative schedule of upcoming auctions may be viewed online. Chart data courtesy of treasury.gov When discussing Treasury notes, the term “yield” comes into focus regularly. When the note is purchased at par, the yield is equal to the interest rate. Usually, if the price of the note goes down, the yield goes up while a higher price reduces yield. Yield curves may also be important and are often cited in analysis of economic conditions. These are constructed from the yields for various maturities placed on a graph. A “normal” yield curve is one in which longer-term yields are higher than shorter-term. This is usually ascribed to the perception of higher risk or rising rates for longer term investments. An “inverted” yield curve has the opposite structure, with shorter-term yields higher than longer-term. This may often be associated with falling or anticipated fall in interest rates. Flat yield curves may also be present if a forecast of little difference exists between the yield rates for different maturities. It is important to note that the futures contract delivery date is not associated with the maturity date of the Treasury note. Key terms for this market include: Coupon Rate – the stated interest rate for a bond or note when it is issued, so-called because some bonds had coupons on them to detach for interest payment redemption. A bond or note with an 8 percent coupon rate would have an 8 percent interest rate. Yield Curve – the shape of the line on a graph plotting the interest rates of different maturity debts. There are three kinds of yield curves: normal, inverted, and flat. Key Uses Other than speculator participation within futures markets, Treasury note contracts may also be used for hedging a portfolio of non-US government securities or other interest rate risk. They are also used in trades intended to capitalize on changes in the yield curve. Key Concerns Interest rates or the forecasted changes in interest rates can have a profound effect on the futures price of Treasury notes. Daily Treasury yield curve rates are available on the US Treasury’s official website. Inflation or the possibility of inflation may also influence prices. The commonly watched factors which may affect trade include economic reports or events. This may include the following: • Retail Sales • Unemployment Claims • Personal Income • PPI • CPI • New Home Sales • FOMC Meetings & Member commentaries During the recent global recessionary period, there has been some discussion about China’s concerns over the safety of their assets in terms of their US holdings. These kinds of discussions may also impact futures prices. ____________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  4. This official currency of Switzerland and Liechtenstein is the only remaining European currency bearing the name franc or frank. It is often represented by the abbreviation or currency symbol CHF. The Swiss Franc has its roots in the Helvetic Republic of the late eighteenth century. The following contract specifications will refer to the Swiss Franc/US Dollar contract from the foreign exchange futures listings from the CME Group. Contract Size: 125,000 Swiss Francs Tick Size: $.0001 per Swiss Franc increments ($12.50/contract). $.00005 per Swiss Franc increments ($6.25/contract) for CHF/USD futures intra-currency spreads executed on the trading floor and electronically, and for AON transactions. Contract Months: March, June, September, December Trading Specs: Open outcry is 7:20 a.m.-2:00 p.m. and Globex hours are Sundays: 5:00 p.m. - 4:00 p.m. Central Time (CT) next day. Monday - Friday: 5:00 p.m. - 4:00 p.m. CT the next day, except on Friday - closes at 4:00 p.m. and reopens Sunday at 5:00 p.m. CT. Daily Price Limit: Consult exchange Trading Symbols: SF, 6S on Globex Past performance is not indicative of future results. ***chart courtesy of Gecko Software Swiss Franc Facts In the world of investment, Switzerland is often thought of as a kind of haven for investors and as such developed an economy which is deeply dependant on foreign investment. This relatively small nation also relies on specialty industry and trade for individual livelihood. Marked by low unemployment rates and a low budget deficit, the Swiss economy has also been perceived as one of the world's most stable. Zurich and Geneva have been ranked by Mercer Consulting as having among the highest quality of life in the world. The main industries of Switzerland include: * Machinery * Chemicals * Watches * Textiles * Precision Instruments As the destination for over 20 percent of exports and the source of over 30 percent of imports, Germany is by far the main trade partner for the Swiss. The US, Italy, France, the UK, Austria, Spain, and the Netherlands are the other trading partners. Domestic food production supplies approximately 60 percent of the food consumed in Switzerland. High import tariffs and domestic subsidies protect the agricultural industry. Power generation is mostly from hydroelectricity (56%) and nuclear power (39%). Since the early twentieth century, Swiss banknotes have been issued by the Swiss National Bank. This central bank is also responsible for the monetary policy of Switzerland. The bank also manages the approximately 1145 tons of official gold reserves of Switzerland. Their governing board is composed of three members. Information for the bank - as well as monetary policy details - can be found on their official website. Key terms for this market include: CHF - the ISO representation for Swiss Franc currency. Landwirtshaft - agriculture, the sector of the eonomy considered the primary sector which employs less than 10% of the population. Industrie - industry, the secondary sector which employs around 40% of the population. Dienstleistungen - services, the tertiary sector which employs nearly half the population. Key Uses Besides the obvious implications and uses for currency, the Swiss Franc has investing applications as well. As a financial instrument, Swiss Franc futures are often used as a means to hedge currency exchange risk. Key Concerns Several factors within a nation can have a significant effect on the currency exchange rates and the relative importance of each is the subject of debate, however, it is important to be aware of some of the key fundamentals. In addition to these concerns, Swiss Franc's specific image as it relates to foreign investment may also falter if the perceived degree of banking secrecy is altered under external political pressures. Inflation: It is generally believed that countries with consistently lower inflation exhibit a rising currency value while countries with higher inflation may see currency depreciation. Interest Rates: High interest rates may attract foreign investors and that can lead to an exchange rate increase while the opposite scenario is possible in a country with low interest rates. Overall Economic Conditions: Everything from a country's balance of trade to the size of their deficit or surplus can serve as a barometer of the condition of the country and the likelihood of default. Investors look for countries with stronger economic foundations and the better the economic foundation of one country versus another may increase the value of the country's currency. Sovereign credit ratings from places like Moody's or Standard & Poor's can impact the perception of a nation's growth and stability. Perception: The so called "flight to quality" exists within foreign currencies as investors will often seek what they perceive as "safe haven" currencies during times of political or economical instability. _______________________________________________________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or Futures Trading, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  5. Pork bellies - the streaky meat from the underside of a pig - are the source of "American style" bacon. Since the ancient Chinese started preserving and salting pork nearly 1500 BC, it is likely pork is one of the oldest preserved meats. Nowadays, the belly may be flash frozen and stored. These contract specifications refer to the CME contract. Contract Size: 40,000 lbs Price Quote & Tick Size: cents per pound; minimum fluctuation is $.00025 per pound ($10 per contract) Contract Months: February, March, May, July, August Trading Specs: Floor trading is conducted MON-FRI 9:05 am to 1:00 pm CT; Globex trading MON 9:05 a.m. - FRI 1:55 p.m. Central Time. Daily trading halts 4:00 p.m. - 5:00 p.m. Central Time Daily Price Limit: $.03 per pound above or below previous day's settlement price; expandable to $.045 per pound Trading Symbols: PB; GPB on Globex Past performance is not indicative of future results. ***chart courtesy of Gecko Software Pork Bellies Facts A larger percentage of hog production occurs in the Midwestern United States and the largest individual state production falls to Iowa, North Carolina, Minnesota, and Illinois. Early access to the eastern coastal cities of the United States via the Erie Canal may have helped create this farming trend. Although pigs are often said to have large appetites and consume everything in sight, today's farming practices tend towards careful diets which result in leaner meat. Most of the feed for hogs will contain corn or soybean meal, likely linking this market closely to grain markets. A large percentage of the thiamin in the average person's diet comes from pork. Globally, exports, production, and consumption are distributed as follows: ** Data courtesy of USDA ** Data courtesy of USDA ** Data courtesy of USDA In the US, the per capita consumption of pork compares to beef and chicken as illustrated in the following graph: Key terms for this market include: Farrow - a word to describe a litter of pigs or the action of producing a litter of pigs. Bellies - the boneless cut of meat from the belly of swine Key Uses Pork bellies are a food product for bacon or other dishes. Pig fat may even be used for various household items such as weed killers, crayons, antifreeze or chalk. Key Concerns In addition to the following variables, if you are trading any pork product, you will also want to be aware that the USDA issues a Quarterly Hogs and Pigs report that details domestic hog inventories, as well as the birth rate (a farrow is a litter of pigs or, as a verb, means to produce a little of pigs) and litter sizes for breeding sows. Cold storage reports will also detail monthly supplies of pork bellies. Feed Costs: Higher feed costs - particularly corn - can typically affect the weight and rate at which a farmer will take hogs to market. If farmers were to bring more hogs to market at lower weights to save on overall feed costs, this may increase supply and possibly depress prices. Domestic and International Demand: Like other meats, there are regional and religious preferences which can impact the demands for pork. Certain advertising campaigns can work to increase consumption and any health concerns associated with one type of livestock can possibly result in a substitutive demand for another. Trade agreements and available markets for US exports are also of fundamental interest as well as the recent suggestion that increasing wealth in developing nations also increases the regular consumption of meat. Adverse reactions may exist when topics such as Swine Flu (H1N1) make headlines. _______________________________________________________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  6. Feeder cattle futures, like live cattle, provide an opportunity for industry professionals to participate in fair price discovery and possibly try to hedge their interests against feed grain and cattle price changes. The CME Feeder Cattle contract is cash-settled. Contract Size: 50,000 lbs Price Quote & Tick Size: cents per pound; minimum fluctuation is $.00025 per pound ($12.50 per contract) Contract Months: January, March, April, May, August, September, October, November Trading Specs: Floor trading is conducted 9:05 am to 1:00 pm CT Mon - Fri; Globex trading Mon 9:05 a.m. - Fri 1:55 p.m. CT. Daily trading halts from 4:00 p.m.-5:00 p.m. Daily Price Limit: $.03 per pound above or below previous day's settlement price Trading Symbols: FC; GF on Globex Past performance is not indicative of future results. ***chart courtesy of Gecko Software Feeder Cattle Facts Mature cattle, ready to be placed on a feedlot, are referred to as feeder cattle. They generally weigh less than live cattle (animals ready for slaughter) - anywhere from 650 to 850 pounds. The feedlots are often larger commercial operations which bring in feeder cattle to replace the animals sent to slaughter. These feedlots may buy the cattle from individuals or the animals will ultimately belong to an individual who will pay the feedlot for the feed bill. Feeder cattle are classified according to age, sex, and weight, among other things. Grades range from choice or good down to utility or inferior. Prime cattle are a smaller percentage of animals which appear superior in quality. They are normally from a long line of beef cattle ancestry and have the details which suggest top quality meat. Heifers are usually female cattle less than three years of age. Steers are likely males castrated before maturity, and a cow is a female which has given birth to one or more calves. There are other fine tuned labels such as stag, heiferette, or bull. Cattle less than a year old are calves. Yearlings are between one and two years of age. Over eighteen months old, and they are short-yearlings. Key global cattle data may be found in the following charts: *Data courtesy of USDA.gov *Data courtesy of USDA.gov Key terms for cattle include: Prime Beef - In the US, this is a grading term that is designated by the US Department of Agriculture. It refers to meat that has the highest qualities of marbling, and is young and tender, juicy and flavorful. Feedlot - A feeding operation where cattle or other livestock are 'finished' before slaughter. Normally, the animal feeding operation has entry-level weights for animals, anywhere from 650 to 850 pounds for feeder cattle. Key Uses Feeder cattle are destined for feedlots to be monitored and fattened for slaughter. Most feedlots will employ a nutritionist to determine the feed needs of the animals on the lot in an effort to produce the most desirable combinations of muscle and fat. Meat from cattle will be graded according the the USDA standards, and will fall somewhere in the following ranges: Key Concerns In addition to the following variables, if you are trading cattle, you will also want to be aware that the USDA issues reports that may impact the futures market including Cattle on Feed and Livestock Slaughter. These reports (and others) may be found in the economics and statistics sections of the USDA website. Feeder cattle auction summaries from various states may also be a valuable source of pricing information. Weekly summaries may be found here. Possible Trends - Cattle population and the number of calves may impact prices and the time of year may also be perceived as important. Import and Export - Restrictions and trade agreements can often impact the quantity of imports and exports to and from various countries. Health Issues - Concerns over red meat consumption and possible links to colon cancer or saturated fat values are often weighed against beef as a rich source of linoleic acid and B vitamins. As health news comes and goes, domestic consumption or demand may be impacted. Mad Cow Disease - Otherwise known as bovine spongiform encephalopathy, Mad Cow scares can wreak havoc on the cattle industry and breakouts can lead to massive slaughter and burn campaigns. Since the BSE prion cannot be destroyed by cooking, the panic of spread can easily affect both demand and supply of cattle. Foot and Mouth Disease - The virus that causes FMD in livestock and other cloven-hoofed animals is highly contagious and causes blisters on soft tissue in the mouth and on the feet. Although it does not have an impact on human health, infections can have significant impact on the number of livestock. Feed Costs - Higher feed costs can typically affect the weight and rate at which a farmer will take livestock to market. Since cattle are fed a combination of roughage, grain and protein supplements (soybean meal is a popular protein source), prices for corn, alfalfa, soybean, and even wheat can impact choice of feed and affect the feed-to-meat conversion - as well as the number of days on the feedlot. _______________________________________________________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  7. This market is based on the longest maturity bond issued by the US Treasury. It is often viewed as a way to speculate in or hedge against future interest rate changes and is valued globally as a market to use when trying to manage risk of the same. From their debut in the 1970s on the CBOT, Treasury bond futures have become a popular and liquid market. Contract Size: One U.S. Treasury bond having a face value at maturity of $100,000. Price Quote & Tick Size: Points ($1,000) and 1/32 of a point. For example, 134-16 represents 134 16/32. Par is on the basis of 100 points. Minimum tick size is One thirty-second (1/32) of one point ($31.25), except for intermonth spreads, where the minimum price fluctuation shall be one-quarter of one thirty-second of one point ($7.8125 per contract). Contract Months: March, June, September, December Trading Specs: Trades open outcry and Globex (electronic) per the following schedule: Electronic: SUN - FRI: 5:30 p.m. - 4:00 p.m. Central Time Open Auction: MON - FRI: 7:20 a.m. - 2:00 p.m. Central Time Daily Price Limit: None as of publishing date, but it is wise to consult exchange. Trading Symbols: US, ZB Past performance is not indicative of future results. ***chart courtesy of Gecko Software 30 Year T-Bond Facts The United States Treasury has been responsible for federal finances for over two hundred years. The means through which it takes on debt are securities sold both domestically and to foreign investors. The 30 year Treasury bond is the longest maturity of these investment options. When they mature, the Treasury can either pay the cash owed plus interest or issue new securities. Major foreign holders of US treasuries are detailed in the following graph: The key characteristics of a bond from either a government or corporation are: * The face value * The coupon rate * Maturity * The issuer In the case of T-Bonds, the face value is $100,000, the maturity is 30 years, and the issuer is the US Treasury. The coupon rate is the fixed interest rate for the payments which will be paid to the buyer of the bond and is set when issued. The price of the bond is not necessarily the same as the face value. Usually, the price may vary throughout the life of the bond. When the price is higher than face value, the bond is selling at a premium and when it is lower, it is termed as selling at a discount. Normally, bond price is inversely related to interest rates. If interest rates go up, the price of bonds normally falls and vice versa. This notion is due to the relationship of the bond's interest rate as compared to the prevailing interest rates. When discussing T-Bonds, the term "yield" comes into focus regularly. When the bond is purchased at par, the yield is equal to the interest rate. Usually, if the price of the bond goes down, the yield goes up while a higher price reduces yield. Yield curves may also be important to note and are often cited in analysis of economic conditions. These are constructed from the yields for various maturities placed on a graph. A "normal" yield curve is one in which longer-term yields are higher than shorter-term. This is usually ascribed to the perception of higher risk or rising rates for longer term investments. An "inverted" yield curve has the opposite structure, with shorter-term yields higher than longer-term. This may often be associated with falling or anticipated fall in interest rates. Flat yield curves may also be present if a forecast of little difference exists between the yield rates for different maturities. It is important to note that the futures contract delivery date is not associated with the maturity date of the bond and normally the deliverable bonds will have at least 15 years before maturity. Key terms for bonds include: Coupon Rate - the stated interest rate for a bond when it is issued, so-called because some bonds had coupons on them to detach for interest payment redemption. A bond with an 8 percent coupon rate would have an 8 percent interest rate. Yield Curve - the shape of the line on a graph plotting the interest rates of different maturity debts. There are three kinds of yield curves: normal, inverted, and flat. Key Uses Other than speculator participation within this futures market, the 30 year Treasury bond contract may also be used for hedging a portfolio of non-US government securities or other interest rate risk. Key Concerns Interest rates or the forecasted changes in interest rates can have a profound effect on the futures price of Treasury bonds. Inflation or the possibility of inflation may also influence prices. The commonly watched factors which may affect trade include economic reports or events. This may include the following: * Retail Sales * Unemployment Claims * Personal Income * PPI * CPI * New Home Sales * FOMC Meetings & Member commentaries _______________________________________________________________________________________ Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or http://www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Options DO NOT necessarily move lock step with the underlying futures contract. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
  8. The Weekend Commodities Review Is $4 a gallon gasoline enough to stop you from driving your car? How about $40/gallon? How about $400/gallon? How about $40,000/gallon? When would you think about carpooling or taking the bus or train to work? When would you buy a Prius or quit your job for one that allows you to telecommute? When does a plane ticket get too expensive to take that vacation with your family? The reality is that commodity price is based on supply and demand, but often overlooked is that supply and demand is also affected by price. This is especially apparent when prices hit extremes like the examples below. These extremes can often cause dramatic cycle shifts in the supply and/or demand structure of a commodity. Here are some examples: Crude oil hit $11 then never looked back as it ran to the highest price on record of $147 a barrel. From there it was so stretched to the opposite extreme that the same type of thing happened on the way back down – to $35. Rice reached epic price levels in 2008 as a global grain shortage sparked a massive panic, more than doubling the price of rice in a matter of months. That price peak lasted only a moment as supplies hit and the panic eased, helped by a global credit crisis and economic meltdown. Cotton hit one of the lowest levels in history, nearly 40 cents, before a global subsidy effort stabilized prices and began a cyclical supply shift that helped rally cotton to over $2.10 - the highest recorded price for cotton in the history of the futures contract. The coffee market is also no stranger to this cyclical price expansion; as it has been below $.50 only a few times in its futures contract’s history and each time rebounding to more than $2 pricing. A good example of price affecting demand is the frequent talk of $4 gasoline prices at the pumps in the United States being a demand-shifting price point. While there is limited evidence that $4 is some magical price point, it is important that the market analyzes when demand may shift due to price. Equally important is to identify when a market may be able to produce more to offset the demand spike or supply shortage that caused a major price spike. This supply input can just as easily cause a major cycle shift in a market. The point is that cycles in commodities can and do occur because of price extremes, and whether it is $4/gallon for gasoline or $4,000/gallon for gasoline there comes a point in which demand changes because a commodity is too expensive. There also comes a point in which producers find ways to supply more because of high prices. On Tuesday I will be releasing a report that identifies three markets that I believe are simultaneously hitting cycle shift highs and I feel are set to collapse during the 2nd quarter of 2011. Hint: One or more of these three markets begins with the letter C…can you guess what one (or more) of them are? In the report I will go over why these markets are at a turning point and specifically how to trade them. I also include a 2011 grain market outlook, commodity wall calendar, and a third special bonus gift. Order before midnight Tuesday to get half-off on pre-production ‘early bird’ pricing. Click here for the details. There is risk of loss in all commodities trading. Please consult a broker before you trade for the first time. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Educate yourself on the risks and rewards of such investing prior to trading. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. Strategies using combinations of positions such as spreads and straddles are no less risky than taking straight long or short futures or options positions. It is important to note that options and futures markets are separate and distinct and do not necessarily respond in the same way to similar market conditions. Option prices do not move in lockstep with changes in the underlying futures market price. *Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.
  9. The energy sector had a very bumpy ride as tension in Libya mounted a full on rally to help blast crude above $100 in the earlier part of the week to above $103. The market has since seen a pullback to $95 with another rally to start the week to $99.90. WTI spreads have rallied on the back of this news with Z11//Z12 at one point above $4.00. Look for a buying opportunity in flatprice around $95 again as prices are likely to be very volatile until the tension ceases.
  10. Am I Missing the Biggest Commodities Boom in History? No. Watch out bulls – don’t go buying in here – this is the panic round; the ‘oh no I am missing the biggest commodities bull run ever’ panic – the kind of panic that gets a bull in trouble because it’s the kind of bull run that gets an early bubble burst. Remember we are in a period of testing out that rubber band I have talked about. That first stretch to the highs in 2008 was the move folks, and if you get in now you are participating in a test of market elasticity that I believe will not exceed the previous highs. Now that being said one could argue some markets have exceeded those highs already – markets like cotton and sugar. Many of those markets did not participate in the bull run that ended in 2008 and therefore are not in the same scenario as markets like oil, corn and soybeans. This is long term consolidation at its most extreme – offering huge moves within a consolidation phase that tightens from a major previous high. This is an opportunity to be contrarian and get short commodities – perhaps for many months – and capture the potential for unexpected downside volatility. Energies Crude oil has shown a willingness to congest near the highs, which is well below many analysts’ $100 price target. I do not believe $100 ever gets hit making the current level a great shorting opportunity. Play with bear put spreads over a 2-3 month time frame. Heating oil is also set for a reversal, therefore playing a short heat to long rbob spread is recommended. Natural gas remains a long term buy, playing a potential spike in this market that should cause a volatility pop for long term call options. Financials Stocks remain in bull mode, but not for long. In fact, as I write this I can feel the turn of the S&P500, maybe as early as today. This turn is upon us, likely having already set the top or very close to it. The reason behind this top is simple – overbought market conditions. When the S&P500 was at 700 valuations were stronger than the price would suggest, but as this rapid ascent to near 1300 has occurred, it has brought with it a lack of fundamental strength. Eventually the market needs to even out, allowing real numbers to catch up to price moves based on expectations. Typically this occurs immediately following an exhaustive rally, like the one that has been going on for about four months. Over the past two years there have been four identifiable rally periods, the current one being a strong vertical incline over an extended period. Past performance is not indicative of future results. **Chart courtesy of Gecko Software's TracknTrade Bonds have been choppy and does offer some potential for premium collection, although this is preferred on the put side as the market has room to rally on a stock market decline. The dollar did get bearish on a technical level last week, a last ditch effort to shakeout weak bulls in my opinion. If the dollar breaks 8679 then the momentum has clearly shifted, but until then it is a buy on this dip. The euro and pound offer short opportunities. The Canadian dollar has been a premium collectors dream as of late, offering nearly no direction and only minor technical breakouts. The short is there, along with the Aussie dollar. The yen remains the lone foreign currency to buy on dips and I continue to stand by my forecast that: The Japanese Yen futures will hit 140 before 80 or I will quit writing the Weekend Commodities Review…foreb-( Grains I continue to look for a strong technical turn in grains to signal a clear top – a turn that should occur this week! Get ahead of this decline with straight put plays in corn, wheat, rice and beans. Meats Live cattle continues to show signs of topping and is a long term put play on declining feed inputs and waning demand at these extreme price levels. Hogs remain in a congestion phase. Metals Gold and silver began to turn last week, a leading indicator of a near term slide in inflation strengthened commodities. These precious metals led the charge higher and will lead the collapse as well. Put positions in gold and silver are recommended. Copper is a strong short on an expectation for declines in China demand. Softs Coffee is testing the highs here, but upside should be limited and the downside severe when it turns. Cocoa is benefitting from a real threat of long term export problems and political mayhem in the Ivory Coast. The shocker from this weekend is a ban out of the Ivory Coast on cocoa and coffee exports, a sudden and immediate ban that could rattle the markets. This is typically when one would enter this market short, but best to wait this week for fundamental developments that may isolate this market from the commodity-wide selloff I am anticipating. Cotton is scorching higher on a short squeeze that could have legs. On a bubble this big it is nearly impossible to see when the turn will occur, but rather best to accumulate long term puts for the seemingly inevitable fall from glory. OJ is a strong short, having failed to rally amid a commodity-wide price surge. Lumber remains a cycle buy to 250. Sugar is a short with straight long term deep out of the money puts. *Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.
  11. Precious metals are up at the top of the range this morning with Gold +10 to $1,427 and Silver +64 to $30.30 here as inflation worries continue to have buyers flooding to this market. I think precious metals have been performing brilliantly in the past year, and actually in the last ten years as Gold has gone virtually straight up from its 2000 lows of $250. From Bloomberg, "Gold has jumped almost 30% this year, set for a 10th annual increase, as central banks and governments pumped trillions of dollars into their economies to bolster growth. Concerns about the U.S. economy and the European debt crisis fueled speculation that more stimulus measures are on the way, weakening the dollar and making gold and other metals cheaper for holders of other currencies." (1) If I take a look at Silver, it seems to me this metal is actually outperforming Gold as the market is +90% this year as the cheap value once at $16 has now doubled. I think prices are headed for new highs today on the Gold and Silver front so be on the lookout for $1,430 in Gold and $30.50 in silver to be broken. The Euro/USD has now been thrown out of the equation by the precious metals as this has decoupled from a once paired trading strategy. Copper is having a sensational morning +10 cents right now to the yearly high of $4.10 and is looking to break to higher ground as the equities are called higher right now in the DOW +80 premarket. This market has been on a very nice upward trend since it touched the support of $3.60 three weeks ago and is now looking to climb to $4.25, the next resistance level. Equities are marching higher, and commodities are doing the same as well as inflation fears loom the market. - Daniel Cronin, Metals Guru
  12. The energies are slightly higher this morning as most major indices open up unchanged with the Euro gaining a bit on the USD to $1.3378. Crude Oil has seen a great flow of buying the last few weeks even as the non-farm payrolls came in under estimates with the US economy now facing 9.8% unemployment rate. Supplies are also forecasted to decline this week, "on increased demand from refiners as they boosted production." (1) Supply decrease with a positive reaction to negative non-farm payrolls is a potion for higher crude prices this week and I believe Jan Crude will break out above the $90 resistance level. To me, this market looks exactly like the market from early 2008 when Crude prices broke out to the upside as WTI spreads rallied to new highs. The back spreads are doing exactly what they did back in '08 as the Dec11/Dec12 contract now rallies to +150 and Dec12/Dec13 contract trades at +134. Remember, past performance is not indicative of future results. The strength in the back markets now pulling up the front of the curve slowly with Jan/Feb trading -38 and Feb/Mar trading -27. These spreads are meeting some resistance compared to deferred months but once these spreads flip from contago then it is off to the races for flatprice. Interesting to see how Heating Oil and Gasoline are moving at the same rate as Crude with both the Heat and Gas cracks staying relatively steady during the move higher in flatprice and spreads. Heating Oil has seen an increase in price as the season kicks into gear and Gasoline stays a bit behind hence the contango in RB to HO and the lower prices for Gas cracks. Arbs still stay weak as the Jan arb trades -2.00 with the brent flatprice and spreads being so strong right now. This is unusual to say the least in a rallying market as most of the time as the Crude price rises, the spread between the crude vs. brent will get stronger, but since brent has been so superior this reaction is not happening. The Jan arb has had a range from -290 to -190 in the last week and needs to be above -150 to break out to upside. Natural Gas prices have been having a great time here above the $4.50 level with confirmation kicking in to the upside with a breakout above $4.50 today as January NG trades at $4.56. I believe this market has room to rally up in the coming weeks and with the momentum to the upside on simply everything Natural Gas should have no problem getting to $4.75. - Daniel Cronin, Energies Guru
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