Besides anticipating a potential for a seasonal correction in equities by the end of this week ( I am still looking for a top in S&P's near 1156-1160), traders can look at opportunities in the commodity arena. There are several opportunities during the middle to the end of March. One comes to mind is in the livestock category: Cattle prices tend to post a seasonal high in mid-March. As of Monday, the front month April contract posted a high of 98.82, which according to technicians like myself, filled a gap left on the weekly charts from October 2008. In addition, the CFTC Commitment of Trader’s report shows funds are holding a record net long position. The significance here is that these are speculators, as we close out the first quarter they have a tendency to exit profitable positions for compensation or performance fees. Monthly Pivot Resistance is targeting 96.35 as a potential high, those looking for a low risk-high reward trading opportunity may start with in the April Live Cattle market for a bearish reversal. Downside potential is closer to the 92.50 level by months end. Cocoa, Yen and Euro shorts also enter seasonal right now, however these markets have already began declines and at the present price levels do not give us a good enough risk reward opportunity. There is one market that might appeal to Futures, Forex and Stock traders that market being the British Pound. It has a strong tendency to move up against the Dollar in Mid-March, as covered in my 2010 Commodity Traders Almanac book on page 34. This currency has had it's share of trouble this year, declining from a peak high of around 164.30 in mid January to a low of 147.68 on March 3rd. This market could recover to the 154.00-155.00 level by mid April. That price level represents the current Monthly Pivot Point as well as a Fibonacci .38% retracement. Stock traders can participate in this trade by using bullish option strategies on the Exchange Traded Fund (FXB).
All the best,
John Person
Founder
Nationalfutures.com
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