In This Issue

Free Trial: MRCI

Currency Futures: Slow Mover?

Reports and Expiration Notices

February 7th, 2007 — Issue #365

Free Trial: MRCI

Sign up for a free two-week trial to the MRCI (Moore Research Center, Inc) member section and view their seasonal trade recommendations, special research reports, charts and much more!

You will receive:

1. A total of approximately 30 Monthly historical trading strategies for outrights and spreads from a variety of the major commodity markets - all at least 80% historically reliable with specific entry/exit dates!
   [→ Sample Seasonal Trade Review]
2. Futures charts and tables updated daily - many full page, "8 1/2 x 11" charts in pdf format
3. Futures & Spreads Markets Monthly Outlook
   [→ Sample Market Outlook]
4. Seasonal pattern charts - for over 40 cash and futures markets
5. Historical daily charts - nearly 6,000 charts for as far back as 1966
6. Option volatility charts - both implied and historical volatility
7. Correlation studies - evaluates up to 30 years of history against current contracts
8. Scenario analysis - statistical analysis of long-term market targets
9. MRCI Online Update - written and emailed weekly by the MRCI Team
10. Plus a whole lot more!

Sign up for a free trial to the MRCI (Moore Research Center, Inc) member section now!

Currency Futures: Slow Mover?

Some futures seem to move like quicksilver. Others may be more deliberate. Trends in spreads between them can still be spectacular.

Consider the Australian (A$) and Canadian (C$) dollars.  Deserved or not, when compared to such currencies as the Swiss franc and Japanese yen, the A$ and C$ have reputations for being more measured in their movements; against the Russian ruble and Mexican peso, positively stable. But what about spreads between them?

The two countries are similar in many ways: English-speaking, small populations on huge land masses, modern economies enormously blessed with natural resources. But one is north of the equator, the other south; one is in the Western Hemisphere, adjacent and closely tied to the United States, the other in the Eastern, well-positioned geographically to take advantage of the Asian growth engine. The Canadian fiscal year runs April-March; the Australian, July-June.

Spreads between their currencies tend to have little seasonal direction July through October.  But the seasonal pattern suggests a punctuation on November 1 before a sometimes dynamic seasonal trend begins that can favor A$ over the C$ all the way into March.  One brief but particularly reliable segment of that seasonal trend is now upon us.  In fact, the Long March Australian/Short March Canadian Dollar spread has closed more favorably toward the A$ on about February 16 than on about February 8 in 15 of the last 17 years. In only one of those years would any daily closing drawdown have exceeded 0.0036 ($360).  The minimum tic fluctuation for both CME futures contracts is worth US$10.00. The CME requires a minimum margin of $1,148 for this spread, orders for which all brokers should accept.

This year's spread established a 15-year extreme low last June when the A$ fell to a discount of -0.1751 (about 17 ½ cents) to the C$.  After narrowing for a few weeks, the spread again came under pressure but held in late September at -0.1600.  That higher low (narrower discount) launched the seasonal trend a month early, and by mid January it had reached -0.0574 --- a move worth US$10,000 in less than four months!  Thereafter, the spread corrected back out, but only to -0.0773 (or, 199 points or, US$1990).  That turns out to be January's low (its widest discount), with the spread surging again in favor of the A$ last Friday.  That low, one of a cluster of six closes (two before and four after the high) within 7 points, suggests rock-solid support for the so-far intact trend to continue.  Although penetration of that level would invite cries of "head-and-shoulders" top, the trend remains unless and until proven otherwise.

Please remember: These are NOT trading recommendations. They are intended only as potential ideas based on the market's own performance in the past, but past performance is not necessarily indicative of future results.  Futures trading involves substantial risk of loss.

Trade ideas and information courtesy of Moore Research. To access a free trial of their member section website and view their seasonal trade recommendations, special research reports, charts and much more visit MRCI.

Seasonal tendencies are a composite of some of the more consistent commodities futures seasonals that have occurred over the past 15 years. There are usually underlying fundamental circumstances that occur annually that tend to cause the futures markets to react in a similar directional manner during a certain calendar period of the year. Even if a seasonal tendency occurs in the future, it may not result in a profitable transaction as fees and the timing of the entry and liquidation may impact on the results. No representation is being made that any account has in the past or will in the future achieve profits utilizing these strategies. No representation is being made that that price patterns will recur in the future. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results. Results not adjusted for commission and slippage.

Disclaimer:

Trading commodity futures and options involves substantial risk of loss. The recommendations contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results. This is not a solicitation of any order to buy or sell, but a current futures market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!

Economic Reports and Expiration Notices

Source: Moore Research Center, Inc.

* Please note that the information contained in this letter is intended for clients, prospective clients, and audiences who have a basic understanding, familiarity, and interest in the futures markets.

** The material contained in this letter is of opinion only and does not guarantee any profits. These are risky markets and only risk capital should be used. Past performances are not necessarily indicative of future results.

*** This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts herein contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgment in trading!