Stock Options and The Housing Market
Stock option trading strategies have become a closely monitored item among many commodity managers. Once the strength of the economy, housing has become a serious liability and a consistent negative impact on stock prices. Because of this negative influence, the housing sector will continue to have a disruptive effect on stock futures.

Commodity Managers and Hurricanes
The mild start to the 2007 hurricane season has actually been on the minds of many commodity managers in futures trading. Without an active hurricane season, commodity managers are seeing orange juice futures plummet. Orange grove owners are no doubt waiting to sell futures contracts, hoping to see an upturn in prices. Additionally, speculators holding naked selling naked puts are likely to extremely nervous as a storm-free season could leave them with huge losses.

Other Weather Related Futures
With an unusually long heat wave for the Midwest growing regions, commodity managers are seeing prices continue to move upward in soybean and corn futures. These prices will continue to climb until the region sees relief from the soaring temperatures.

Wheat futures are another commodity that continues to rise. While a pricing correction may be close at hand, fears of a worldwide wheat shortage will keep the price of futures orders high. Another strong performer, coffee futures are viewed by many commodity managers as a commodity on the verge of a breakout.

Precious Metals
Precious metals like gold and silver, along with copper always occupy a place of interest for commodity managers. Futures brokers routinely monitor these metals because of their close ties with the American economy. Futures trading in copper, as of late, has been in somewhat of a defensive position. Copper is a strong indicator of the economy. It normally rises or falls based on the strength of the economy, both in the US and in the world.

Silver and Gold futures tend to inversely track the economy, especially in the US. When the economy and the US dollar struggle, gold and silver prices usually rise. To start the second half of 2007, commodity managers have actually seen the prices for gold and silver futures drop as the dollar has gained some strength.

What Does It All Mean?
Commodity managers look for any advantage they can find when trading commodities. It doesn’t matter whether they are trading in pork bellies or crude oil futures, finding trends before they occur means finding profits. This idea is true not only for commodity managers but for your garden-variety investor as well. If you can predict what is going to occur in the future, you can more profitably invest in it. The key to this knowledge is extensive research and a watchful eye on the events that affect each particular commodity.

Conclusion
Commodity managers make their living knowing what will happen at the futures exchanges before it occurs. By understanding the dynamics that affect various commodities, it is possible to foresee changes in trends and place futures orders based on solid research and a watchful eye on both the weather and the news. Seeing futures the way an expert does can help even the everyday investor to profit from futures trading.

Market Direction: The past few weeks have demonstrated definite indecision in the markets. The Dow was down 280 points one day and up 286 points the next day in early August. That type of trading environment has been persisting over the past four weeks. This makes trying to analyze the trend extremely difficult. August is usually a time to turn off the trading screens and pullout the golf clubs and fishing poles. However, the trading patterns that are prevalent in candlestick analysis can still be witnessed even when markets become difficult to trade.

DOW

Although the markets may have been very difficult to trade on a daily basis over the past few weeks, the trading patterns have still been very informative. This analysis is nothing more than exploiting signals that have proven to be successful many times over. If you had been short the markets when the signals and the patterns indicated to be, then utilizing the reversal signals at the bottom allowed for the proper time to cover short positions or start establishing long positions.

Commodity trading - The same basic rules, applied to trend analysis in the markets in general, will dramatically improve trading profits when trading individual stocks or commodities. December Cotton is a good illustration of a failure of moving averages. The candlestick signals, a derivative of a Kicker Signal, at the failure of the T-line and the 20 day moving average, allowed for the establishment of a high probability short trade. A Harami just below the 200 day moving average with stochastics in the oversold condition now becomes the area to start covering the short position. Why do commodity prices move up or down? Usually a function of supply and demand. The utilization of candlestick signals provides an excellent trading format for those investors that do not have access to large and expensive research capabilities. Take advantage of high probability trade setups that are produced by candlestick reversal signals.

Dec Cotton

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Good investing,

The Candlestick Forum Team