August 25th, 2010 - Issue #546

In This Issue

1. Bullish Pennant Forms in Oct. Live Cattle
2. Educational Feature: Dealing With Losing Trades by Jim Wyckoff
3. Futures Market: Economic Calendar

1. Bullish Pennant Forms in Oct. Live Cattle

October live cattle futures on the Chicago Mercantile Exchange have seen prices pause and trade sideways following last week's big gains that produced a fresh contract high. This recent pause has formed a bullish pennant pattern on the daily bar chart. A push in October live cattle futures prices above the contract high of $99.97 and above major psychological resistance at $100.00 would provide the bulls with fresh upside near-term technical momentum and could also be the beginning of a bullish upside "breakout" from the bullish pennant pattern on the daily chart. Measuring implications from this particular pennant pattern, if there is a bullish upside breakout produced, show an upside target to around the $103.00 level. The cattle market bears would gain some fresh downside near-term technical momentum to suggest a near-term market top is in place by pushing October futures prices down to the $97.65 level. That would fill on the downside last week's big upside price gap on the daily bar chart. Near-term chart resistance for October live cattle is located at Tuesday's high of $99.60 and then at the contract high of $99.97. Near-term chart support is seen at this week's low of $98.70, at $98.50 and then at $98.00. Stay tuned! Jim Wyckoff

2. Educational Feature: Dealing With Losing Trades

by JimWyckoff.com

(Note: This feature is a favorite of ours at Cannon Trading, and we believe all traders need to address this issue every once in a while.)

A main tenet of success in futures trading is the ability to accept losing trades as part of the overall trading process. This is not an easy undertaking--especially since many futures traders tend to be of a more competitive nature in the first place. Traders certainly don't have to enjoy losing trades, but they must accept the fact and move on. Those who can't accept the fact that losing trades are a part of futures trading usually don't stay in the business very long.

My wife is a school teacher, and one of her favorite acronyms--ADM--can be applied to losing futures trades. "Accept" it. "Deal" with it. "Move" on. (This is a part of the important psychological aspect of trading, and deserves much more discussion than I can provide in this feature.)

I had lunch with one of my trading mentors a while back. We discussed losing trades. I askedmy mentor how many losing trades in a row he has had to endure during his long and successful trading career. His reply was 13 in a row. I asked him how he coped with that. He said that while it was certainly not easy, he knew that losing trades are a part of the business and that he was in the business "for the long haul," and that his trading methodology was sound. He added, "Ninety-percent of futures trading profits are made on 10% of the trades, which means most of the other trades are either small losers or break-even-type trades." This is an important fact for all traders to keep in mind.

My lunch meeting with my mentor was good for me because, even though we made no "break-through" discoveries on the path to increased futures trading success, we did reaffirm our own philosophies on trading and markets. My passion for trading and market analysis is fed immensely every time I talk with people in my profession, or attend the quality trading seminars.

For many of you, the futures trading arena can be more fulfilling (and more fun) if you have someone, or some support group, with which to share your thoughts and strategies. If you are passionate about futures trading and markets, finding someone who shares that passion is a great trading tool within itself!

Jim has an excellent daily newsletter where he reviews different markets, alerts you for potential trades and much more. Included is his great bi-weekly newsletter with charts and a little longer term outlook. We recommend checking out his website, educational CDROM, and services at Jim Wyckoff

3. Futures Market: Economic Calendar

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!