"CIT, TFF and disaggregated COT charts now available inside the members vault!"
Floyd's daily reports are now provided in a webinar presentation style format. This allows for Floyd to discuss the markets and review the charts and data in a more powerful and efficient manner! Examples are provided directly below! Just click on the links inside the table to view each example!
Example of written report below.
June/July 2005 IMPA buy setup
in FULL review
7/6/05 report (early in trend higher) Hogs - Up again today on the recent IMPA buy setup (which is complete now). Many aren't long yet however which is fine in my opinion. Terry provided an excellent post on the message board regarding the current situation here with this setup. As Terry and others have pointed out already, patience is crucial in this business. Based on the quality and content of the posts on the message board I really don't think I need to add much here. All criteria has been satisfied. Now its just a matter of finding a reasonable entry that fits YOUR individual risk tolerance. And you can enter at anytime now that the criteria has been satisfied. However, it is important to understand that the logical stop is fixed (at the contract lows). To succeed you don't want to mess around with lowering stops or using improper stops simply to reduce monetary risk. All that will do (in the long run) is get you stopped out more frequently. Therefore, if the current proper (logical) stop posses to much risk at this point, I would simply wait for a lower risk entry (via a pull-back to or through the 18dma and/or a pattern formation). The pull-back method was demonstrated in the Hog hotpage trade of Jan. 2004. You can review that in the old reports (beginning sometime in early Jan 2004).
7/13/05 report (pull-back decent) Hogs - Up nicely today following the recent pull-back through the 18dma. This market is fully setup now (for an IMPA buy). The logical stop remains at the contract lows. We are back above the 18dma, and this is the 2nd day back above it as a matter of fact!! In addition note the "W" forming here. This is something you see quite frequently after a pull-back through the 18dma following an IMPA buy where the market is coming off contract lows. So far this looks very decent. I recommend you continue to stay with the program (those long).
Lets review the charts and see where the price was during July 6th and July 13th.
Now lets review the commercial participants and other participants in detail!
More notes below:
Funds provide the FUEL for the new trend to begin in June/July 2005.
* Some spikes and dips in the price line on the net-com UCL/LCL graphs reflect differences (gaps) in price from contract to contract during roll-over. Back-adjusting of price to remove gaps is not necessary in these graphs because the indicator lines are derived from the COT data only and not from price. The price is provided for reference only. Removing the gaps via backward adjusting does increase the price/net-com correlation coeff, but also sacrifices actual contract prices. This can be advantageous however since a higher correlation coeff reinforces the validity of the indicators and thus increases confidence.
Since futures contracts have relatively short lives, building histories requires stringing several contracts together. When differences in price exist from contract to contract, the difference can show up in a trading indicator or in back testing. This often results in confusion. However, in order to have an accurate true technical representation of what a trader would experience it is necessary to backward adjust the data to remove the false gaps (dips and spikes). There is a downside to this however. The downside is that old prices will not always accurately reflect the actual prices that occurred in history. HOWEVER, this is cosmetic only because the structure is what is most important and the structure is fully intact. See example explained below.
The daily price graph is backward adjusted to remove the false gaps caused by contract roll-over. This adjustment is necessary to preserve actual price structure in the way a trader would experience it. If for example you bought hogs at 56, and sold at 58 while rolling into the next month at 68, this would mean you locked in a profit of 2 full points at the time you rolled (58 minus 56) and then you are long again at 68. The fact that you exited at 58 and entered the next month at 68, a full 10 point increase has absolutely no baring on your trade or the trend. All that happened is that the price from one contract to the next was substantially higher. A trader does not benefit or suffer from this. Thus if you exited at 70 after buying on the roll at 68, your profit here would be 2 full points as well. IF a person however did not take into consideration the difference in the contract prices, it might appear that a trader who entered at 56 and then rolled and finally exited his position at 70 had a much larger profit than what actually occurred (in reality). Some system developers will not adjust to remove the gaps and their testing as a result is not as accurate.
* Fund positions are un-liquidated contracts. When extreme this provides fuel for a trend reversal and/or new price trend. Notice the positive correlation with price trend. Hence funds are the smart trading money.
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HYPOTHETICAL TRADING RESULTS CAN BE UNRELIABLE
Futures trading involves risk and may not be suitable for all types of investors. Trading is a very risky business, and people do lose money trading futures contracts and options on futures. There are NO implied guarantees or promises of success made on this web site anywhere.
Floyd makes no guarantees for success. Past performance is not a guarantee of future profits or future success. The markets are volatile and constantly changing. To survive in this business, you must learn to respect risk and learn to contain it! We do this using specific rules and methods for handling risk. First however risk must be recognized and acknowledged! All types of futures trading is risky! No trade is risk free and trading is not Floyd's only means of income!
Floyd Upperman is a registered commodity trading advisor, successful businessman, private investor and futures trader. He is recognized throughout the world by a growing audience of professionals for his work with the U.S. government Commitments of Traders (COT) report. Floyd is a registered Commodity trading advisor (CTA) and president of Floyd Upperman & Associates, a professional Commodity Trading Advisory Service. NFA# 0281183
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