Asian Interest

December 10, 2019/by Peter Brandt

(This is a short excerpt from the past weekend premium member report published Friday morning the 6th)

Osaka Dow (TSE)

The quarterly chart of the Nikkei Dow speaks for itself. Of course, there are some macro reasons why Japanese equities remain well under the late highs made in late 1980s. The daily chart is attempting to complete a small continuation pennant. Factor is long, having bought an anticipatory position on Thursday.

China A50 (SSG)

The daily chart is forming a possible ascending triangle. Factor is flat, but interested.

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U.S. mid cap and small cap stocks have taken over leadership

November 25, 2019/by Peter Brandt

Building a trade to profit from this momentum shift

Note: Members of the Factor Service have already been made aware of the ideas presented herein — many Factor members have already taken action.

It appears that the bull trend in U.S. equities is now spilling over to mid caps and small caps. These stock indexes have substantial room to play catch-up and offer attractive profit potential for futures and ETF traders.

Futures traders

The Russell 2000 is attempting to breakout from a 9-month classical charting rectangle. This rectangle has targets of 1784 and 1929. Traders can choose from the mini Russell (CME) which carries a value of $50 for each point of price change or the micro Russell (CME) which carries a value of $5 for each point of price change. For example, an advance by the mini Russell from the present price of 1626 to the target of 1784 would represent a profit of $7,900 per futures contract. Each futures contract requires a margin deposit of $3,300. This interpretation of the chart will be null and void if the Russell declines below 1579. A decisive close above 1640 is required to confirm the upside breakout.

ETFs

Futures contracts offer a much more efficient way to utilize trading capital and maximize profits — but also with commensurate risks. The Russelll ETF (IWM) is also attempting to breakout. I use a 2% breakout rule for ETFs. Thus, a close above 163.84 would constitute a price breakout. A close below 157.23 would negate a bullish breakout. With a profit target of 178.07, a purchase of 100 shares (cost of $16,384 at the breakout level) would offer a profit at the target of $1,423. The risk (using the 157.23 negation level) would be approximately $660 based on a 100-share purchase.

Obviously, futures trading is only for those traders with appropriate risk capital and temperaments. Yet, I hope the above example provides an excellent example of the benefits of trading futures vs. ETFs. While the ETF trade as laid out provides a 9% return of the capital used to buy the ETF, a futures contract offers a profit potential of more than 200% of the capital used to margin the trade.

While the profit potentials listed above are in relationship to the capital used to control the trades presented, the Factor Service believes that risk must always be measured against the total capital held in a trading account.

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Foreign Exchange Idea’s on Watch

November 25, 2019/by Peter Brandt

(This is an excerpt from the past weekend premium member report published last Friday morning the 22nd)

NZD/USD (CME)

The daily closing price chart provides a clearer picture of the possible inverted H&S bottom than does the daily bar or candlestick chart. I am interested in the long side of NZD. Read More

Stocks Keep On

November 5, 2019/by Peter Brandt

(This is an excerpt from the past weekend premium member report published last Friday morning the 1st)

S&P 500 (CME)

The S&P Index is attempting to penetrate the neckline of a 22-month continuation inverted H&S pattern. Note that a 15-week ascending triangle has been completed on the daily chart of the Dec contract. Perhaps this triangle will serve as the launching pad to complete the larger H&S configuration. Factor is long.

Down in Latin America

September 30, 2019/by Peter Brandt

(This is an excerpt from the past weekend premium member report published last Friday morning the 27th)

Mexican Peso futures

Peso futures have been in a bear trend during my entire trading career. The decline on the long-term charts has taken the form of repeated symmetrical triangles. The weekly futures chart is coiling. There are two caveats to a short side trade: Symmetrical triangles that continue past the 70% market toward the apex should not be trusted and this is an extremely negative carry trade with each successive futures contract priced at a lower price. The G6M-066 chart shows that traders constantly long the nearby Peso contracts and rolling at expiration have a positive return since early 2017. I will monitor this market but prefer the Brazilian Real.

Brazilian Real futures

I have a greater interest in the Real than in the Peso. The weekly chart displays a massive descending triangle on the futures chart, traded in terms of the USD value of the Real (and a Cup and Handle on the spot graph, traded in terms of the number of Real per one USD). Based on CME settlement data as of Sep 26, the theoretical negative carry is approximately -300 BPs annualized.