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MYERS ON FUTURES
Prepared by Steven R. Myers
Easily Seen Trends!
I still like using some old fashioned charts part of the time. They can give you a different perspective. The long-term trend overview is what is missed most often by using these instant charts that can chart the markets tick by tick. Consensus, National Futures and Financial Weekly is one of the charting services that gives you a chart with enough history in it so that you can see the long-term trend. The long- term trend usually wins out. Markets will have times where they take time out and spend time in a sideways channel or even a counter trend. You should always bet on the continuation of the long-term trend rather than a reversal of the long-term trend.
It is the long-term trend because that is the direction that the underlying fundamentals are pushing that market. This is not to say that a market cannot spend a few weeks in a counter trend. Counter trends are necessary while a market takes a rest and catches it's breath before resuming the real trend. A counter trend which is 50 percent of the previous move is one of the more common sizes of counter trends.
The problem is that this counter trend moves just far enough off the bottom that makes you wish you had bought that low tick. The rookie trader looks at what the market just did and not at the overall trend. It is best to forget trying to catch the counter-trend moves and just watch for when the market is starting to resume the longer term trend.
Crude oil is one of the better long-term examples. Crude oil has been in an overall uptrend ever since it made it's bottom around $10 per barrel. The average price of crude oil goes up a buck or two just about every year. This has been a small enough and slow enough move that most people do not even realize that it is in that type of a bull market. Bull markets do have the normal tendency to eventually start really gaining momentum. A blow-off move in most bull markets will usually move more in a short time than the whole first half of the bull market.
Crude oil is now moving into it's normal seasonal time frame for it's winter weather upmove. This year's upmove may be even bigger than last year. This commodity is also being affected by the growing third world countries. Natural gas was the strongest last year and may be again this year, but be very careful trading that huge contract.
Demand Fundamentals Make Metals Bullish
Platinum and palladium have been in an overall bull market for some time, but now the silver market is joining in. It is very noteworthy that these markets are finally managing a bull market of their own without inflation. These things are commodities and will have the normal supply and demand fundamentals.
The very best bull markets will start when there is no obvious reasons. They will also end when all the reasons are very bullish and obvious. This is why these are called the futures markets and not the present time markets. There is some of both. The front month will certainly be close to the current spot price which is determined by the demand and supply price of the spot price.
Bonds have certainly turned into a nice bull market. There is no inflation here and the economy is strong, but mostly just steady. Here again this market has been in a bull market for years on the long-term weekly charts. Ever since bonds traded under 60. They are now on a trend to trade over 120. The interest rate is under 2 percent in Japan as their economy sags. The trend of interest rates around the world does have some effect on rates in the U.S. The real thing to watch is when the short-term trend turns the same direction of the long-term trend. That is a time to be onboard. That is when you get the larger moves. What is interesting here is the fact that the S&P has not made a new high for a few months, but bonds are starting to move up by themselves. There is a possibility that most people have not realized. That possibility is that it will be very, very bullish for bonds if the S&P gets too weak. That is one of the bigger things that could eventually explode these bonds to the upside. Be long the strongest! Bonds are now a divergence market.
October 3, 1997Steven R. Myers
Myers On Futures Co.
P.O. Box 777, Summerfield, Florida
Copyright 1997, by Consensus Inc. All American and Pan American rights Reserved. editor@consensus-inc.com
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