Con-tango

May 1, 2006
In Views
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BRI Energy

I was fascinated by this technology.

It seems these guys are able to produce ethanol from any organic material –crops, waste… even old tires. It really sounds like Back to the Future stuff…

May 1, 2006
In Lessons, Methods
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Trend channels

As we previously saw with the channel breakout method, channels are a good source of support and resistance. But channels can also be used when prices are trending.

April 28, 2006
In Economy, Views
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In a much awaited move, the Chinese authorities managed to surprise the markets by
raising their interbank rate 27 basis points to cool their overheated 10.2 %
y/y growth in 06Q1. The usual centralized broadcast of orders to banks to
curtail specific loans was expected, maybe an increase in loan requirements or
even furthering land restrictions for real estate development; but not the free
market economic reign-in liquidity tool of raising rates.

April 18, 2006
In Views
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Ethanol is hot!!

A lot of things are hot these days; oil, gasoline, copper, gold, silver
(it’s been smoking), sugar… commodities in general.

But, issues from ethanol producers or distributors are red hot. Take a look
at PEIX, ANDE, XTHN… they’ve tripled since November, more or less. The bigger
players ADM and Cargill have also participated in a healthy appreciation of
their pps.

So what’s going on?

April 3, 2006
In Economy, Views
3 comments

Mohamed’s US dollar

“If Mohamed will not go to the
mountain, the mountain must come to Mohamed”

March 29, 2006
In Lessons, Methods
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Channel Breakout

I wanted to share with you guys the channel breakout formation setup I see in GC0604.

First, channels are a natural extension of the high (low) hooks mentioned in our previous post. Think of them this way, the more times a high (low) resistance (support) has been challenged the stronger it becomes, and the harder it is for prices to break away from the channel top (bottom).

Originating from Joe Ross’s channel breakout, I’ve set the following modified simple rules for this setup:

There are two conditions to enter a trade:

The channel is at least 40 days old, or the breakout will take a 40 day high (low).

Buy (sell) on a stop at a price set at a quarter of the height of the channel above (below) the ceiling (bottom) of the channel.

To exit the trade on a failure:

Sell (buy) on a stop at the opposite band of the channel; bottom (top) when long (short).

For our example, the height of the October – November 2005 GC0604 channel is $27.5 = $490.1 – $462.6,
then a quarter of the channel is $6.9 = 0.25 * $27.5,
the stop order is placed at $ 497.0 = $490.1 + $6.9
and the protective stop at $462.6.

Looking at this present GC0604 chart, we see a similar formation with a ceiling at $579.5 and bottom at $534.5; so we have a potential breakout trade if $590.75 is taken,
from $590.75 = $579.5 + 0.25 * ($579.5 – $534.5);
and a protective stop at $534.5.

(I would consider a $562.0 stop protection; $534.5 is too harsh for my taste…)

We’ll see what unfolds.