In This Issue

Using Tick Charts and Oscillators for Day-Trading

Corn in Uptrend, But MACD Produces Warning to Bulls

Economic Reports and Expiration Notices

March 25th, 2009 - Issue #473

Using Tick Charts and Oscillators for Day-Trading

by Ilan Levy-Mayer, Vice President of Cannon Trading and CTA at Levex.net

There is no perfect way to day-trade, but there are different techniques that can work well in different market environments. In this week's short educational feature, I will touch upon one method you may want to add to your trading arsenal: using tick charts and oscillators.

Please note: using tick charts and oscillators works better on choppy, two sided ways, but it is not recommended when the market has a strong trend.

Basic Principles of Using Tick Charts and Oscillators

Using a tick chart rather than a time chart.

I prefer tick charts when day-trading shorter time frames because tick charts include market volume. If you are using a 5 minute chart, for example, you may get signals simply because time has passed and certain indicators you are using adopt certain values. But at times where there is a lot of movement in the market, you won't have to wait until your time frame bar closes to get your signal, and volume becomes a bigger and more important part of your trading decision.

About Tick Charts

Tick bars are built based on volume, either tick or actual volume when available, and time is not a factor. Each bar in a Constant Volume Bar chart contains a specified volume level that is reached by accumulating the volume of each of the underlying bars. When that volume level is reached, the next Constant Volume Bar begins to accumulate volume from the underlying bars. For intraday charts, tick volume is used to determine the Constant Volume Bars.

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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!

Corn in Uptrend, But MACD Produces Warning to Bulls

by Jim Wyckoff

Click the image to enlarge.

May corn futures at the Chicago Board of Trade are presently in a three-week-old uptrend from the March low and early this week hit a fresh seven-week high of $4.03 3/4 a bushel. Prices have backed down from this week's high and now the $4.03 3/4 price level has become stiff overhead technical resistance. Bulls will have to push and close prices above this week's high to gain fresh upside near-term technical momentum to then suggest a challenge of solid chart resistance at $4.25, basis May corn. On the downside, strong chart support for May corn is located at the $3.80 area. A close below that price level would provide the bears with some fresh downside near-term technical momentum to then suggest a challenge of the March low of $3.44 1/2. The Moving Average Convergence Divergence (MACD) indicator overlaid on the daily bar chart for May corn shows what normally should be bullish posture for the indicator. The MACD line is above the trigger line of the indicator and both lines have just crossed above the horizontal "zero" line of the indicator. However, the same price posture for May corn and the same posture for the MACD indicator, at present, were in place in early January. It was at that time May corn futures hit a price peak and then trended lower into the early-March timeframe, losing around 95 cents a bushel in the process. Thus, the MACD indicator posture, at present, is an early warning signal of a near-term market top in May corn.

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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!