Our Futures Trading Results. Week 7 2022
Our results of the week
-$11,250. That's the trading result from our commodity and futures trading according to COT data in week number seven. Welcome to InsiderWeek. In this video I’m going to show to you our trades of this week and the corresponding results. Now let's start with our first COT strategy. We started into the week with a portfolio that consisted of two open positions, namely 10 long contracts in Feeder Cattle and seven long contracts in Coffee. At the end of this week our portfolio consists still of Feeder Cattle, 10 long contracts, and 11 long contracts in Corn. Let's have a look at the trades individually.
First market: Coffee. At the beginning of the week we had an accounting profit of +$25,000. Unfortunately we were not able to realize this gain. On the weekly chart you can see that we received a buy signal in the weekly trend direction. On the daily chart you can see that there was also a technical formation which is called a triangle. As the price broke out we expected that the price will continue its path to the upside. Unfortunately the trend continuation didn't happen. Furthermore we can see that the large speculators are extremely net long. This situation has even been described by Bloomberg. Accordingly if the large speculators are long a correction in the market is probable. Nevertheless the fundamental data stays bullish and thus we expect to see further increasing prices in Coffee. On the chart you can see that we closed the position during the correction. We could protect our accounting profit to the extent of +$8,006. That is our gain in Coffee. As you can see after we exited the market the price further decreased such that the deeper correction is probable. If the price turns around to the upside we will be interested to take another long trade in this market.
Next market: Feeder Cattle. As you can see we received a buy signal in the weekly trend direction. We decided to take a long trade in this market. On this chart you can see that there is a strong resistance level around the quote of 170. As the price hasn't broken out and didn't cross the resistance level yet it is quite probable that the price may move to the lower boundary. On the daily chart you can see that the price is around our entry level at the moment. For next week we have two options: Either we close the position at around break even and we wait until the price actually breaks through the resistance level of 170 or the other option is that we stay in the market and we speculate that the price is breaking through the resistance level while we are on board. What we are going to do is that at the beginning of next week we will observe this market and we will have a look whether there are actually impulse waves to the upside and if we see that we try to keep in the market. However if the price moves sideways we will be ready to exit the position and try to exit it at breakeven.
Next market: Corn. On the weekly chart you can see that we have seen an increasing trend. We used our contra COT signal strategy which is an expansion of the COT strategy to enter the market and take a long trade. On the daily chart you can see that we used the correction to enter the market we expect to see a trend continuation in the next week.
Now let's have a look at our second COT strategy - the so called champion strategy. We started into the week with a portfolio that consisted of two open positions, namely 16 long contracts in Cotton and one long contract in Heating Oil. Both of these positions are not longer in our portfolio at the end of this week. Instead we have two open positions, namely two short contracts in the 30-Year T-Bonds and six long contracts in Corn. In total the net result of the champion strategy is negative. This week we have a net loss of -$19,256. Let's have a look at the trades.
First market: Cotton. On the daily chart you can see the increasing daily trend we use the correction to enter the market with a long trade. As you can see the price went further into a correction and our stop loss was triggered. We were out of the market and now we can see that the price moved in a deeper correction. This is a warning to us that we should keep on the sideline. If the market turns around and shows a trend continuation to the upside we will be interested in entering this market again.
In Coffee we made good money in the past. As you can see we used the correction to enter the market again. Unfortunately price decreased and as a result we were stopped out. As mentioned before the fundamental data for Coffee is very bullish so we keep on the sideline. We are careful and we will see whether we can enter this market again.
In Heating Oil we can see a strong daily uptrend. We had a successful trade in the past and we used the correction to enter the market again. In order to protect our capital we adjusted the stop loss in case the price turns around to the downside and as you can see exactly that is what happened. Price turned around and went into a deep correction. However we were stopped out with a small gain. Here the same holds as for the previous markets. We keep on the sideline and the fundamental data is bullish so we will see whether the price will continue its path to the upside. We expect that because in the United States it is probable that the cold weather is continuing, increasing the demand for Heating Oil and thus pushing the price to the upside.
In the 30-Year T-Bonds we were probably a bit too early. After we were triggered price went to the upside and is not far away from our stop loss level at the moment. The probability of getting stopped out in the next days is quite probable. If this happens then the correction is very deep and too deep for us to enter the market again. In this case we would wait for the price to show us new impulse waves to the downside and then we would be interested in this market again.
And the last market to discuss is Corn. Here we can see on the daily chart that there is a strong uptrend. We used the correction to enter this market and our stop loss is at the low of Tuesday. We saw a sell-off in many commodity markets this week. In corn we haven't seen a price reduction. As a result we expect to see further increasing prices in the next week.
At the end let's have a look at the CRB index as usual. As you can see we still have new highs. As a result we are expected to take more long trades than short trades like in the weeks before. On this chart you can see the Dollar Index and then you can see the 4 year cycle the 8 year cycle and the 16 year Dollar cycle. As you can see we are currently looking at an increasing 4 year cycle up until July. On this slide you can see that there were cases where Dollar Index increased while the S&P500 meaning the stock market decreased. At the moment this effect could be pushed by increasing interest rates. Up until July we expect weak stock prices. Furthermore Brazil Real also increases together with the US Dollar. That means that commodities that come from Brazil like Cocoa, Coffee, or Sugar are expected to increase as well. Further weather effects like the transformation from La Nina to El Nino further lead to increasing commodity prices. As a result we expect to see weak stock prices and strong commodity prices.
That’s it from our side this week! See you all at the next trading plan next Sunday!
Max Schulz and
the InsiderWeek team