In This Issue

CCI Backs Off Sharply—A Warning to Commodity Bulls
Futures Trading Strategies
Economic Calendar

November 17th 2010 - Issue #558

CCI Backs Off Sharply—A Warning to Commodity Bulls

by Jim Wyckoff

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The Continuous Commodity Index (CCI) this week has dropped sharply and has suffered serious near–term technical damage to suggest a near–term top is in place for the index. The CCI is a basket of 17 major commodity futures prices rolled into one composite index price. It's an excellent barometer of the overall trend in commodity market prices. Last week the CCI notched a fresh two–year high and came close to surpassing the all–time record high the index scored in the summer of 2008. Price action in the CCI this week at least temporarily negated a five–month–old uptrend on the daily bar chart. This week’s price action in the CCI is also a warning shot across the bow of commodity market bulls and does suggest commodity markets did become over–extended on the upside and are now experiencing at least strong corrective pullbacks, if not having just posted near–term tops. Tuesday’s price action in commodity futures markets was very important, technically, and was a potential near–term "game changer" for many markets. Significant to serious near–term chart damage was inflicted in many commodity futures markets Tuesday. Fresh worries about the Chinese government tightening monetary policy prompted a general, sharp sell off in most commodity markets Tuesday. Importantly, how the commodity futures markets close on Friday will provide a better early technical clue as to whether this present pullback in commodities is just a significant correction in still-bullish longer–term price uptrends, or something more serious to suggest market tops are in place. Closes in commodity futures markets on Friday near the weekly lows would be significantly technically bearish to then strongly suggest near–term market tops are in place for those markets that have sold off sharply this week.

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

Futures Trading Strategies

Source: Iowa State University

Follow:

Follow These Technical Indicators:

   1) Channel Lines
   2) Key Reversal or Outside Day Key Reversal
   3) Gaps
   4) Double Tops and Double Bottoms
   5) Head and Shoulders Formation

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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!

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!