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Welcome back folks again,
we're dealing with commodity.
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So it's very important.
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You read the disclaimers here and
understand and remember that I'm not a
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CTA and not a commodity trade advisor.
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Everything we discuss here is only
referring to a paper trade capacity only.
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Okay, welcome back.
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ICT mentorship, June, 2017, commodity
trading lesson number two, we're going
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to talking about relative strength
analysis and we can see professional
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accumulation and distribution.
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Okay.
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When we deal with commodities, there's
two main camps or groups of markets
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that make up the commodity market.
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And it's the agricultural
and the financial market.
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The first in the
agriculturals are the grains.
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And I'm going to, I'm going to tell
you the ones that I like to follow,
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and there's other grains, obviously
like oats and such, but I'm not
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going to concern myself with that.
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Um, for the grain mark.
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We have corn wheat and soybeans, and
they trade on the struggle board trade
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and an exchange for the green markets.
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And there's other grains that
can be traded like canola and
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boats and something like that.
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But, uh, they're very thin markets, but
these are the three that I historically,
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as a commodity trader back in the
early nineties, there's are the three
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I ex like started the follow-up.
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Out of the live stock sector
of the agricultural markets.
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We have feeder cattle, lean hogs, and
live cattle out of the foods area.
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We have cocoa orange juice, which
is kind of thin, but I include
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it when it's really, um, a freeze
like in Florida, if there's a.
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An issue with the crop down in Florida.
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There's a really, it's a really fun
market to be trading in, but otherwise
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aren't used as kind of thin, but
include it because it is one of my
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favorite students to watch for that
very reason, uh, coffee and then sugar.
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And in the fibers, we have cotton.
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Now there is lumber market,
but it's kind of thin as well.
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And other financial instruments,
we have the debt instruments,
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which is the 30 year treasury.
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10-year treasury note and
five-year treasury note,
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the currencies, the calm Dalles here.
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We see Aussie dollar Canadian
dollar Japanese yen, British
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pound Swiss, Franc Euro dollar
and New Zealand dollar the metals.
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We have gold, silver,
and high-grade copper.
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Now there are two other metals,
palladium and platinum that I did
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follow early on in the nineties.
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But I just fell out of, uh,
interest in, in, in these are the
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three metals I like to follow.
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And the energies, obviously
we have crude oil.
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So when we look at the commodity market
as a whole, this would be your basket of
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commodities to follow now much like Forex.
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There's a nice sample size to choose from
which one you want to be trading and which
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one you may want to be a specialist in.
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Um, I liked the treasury bond in the
currency markets and dabbled in gold
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and silver and copper when there was a
real strong tendency to, for it to move.
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And the agriculturals I liked soybeans.
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And feed your cattle and
live cattle and on a seasonal
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tendency, I like to lean hogs.
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I traded cocoa, orange juice,
coffee, sugar, and cotton.
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So when we look at the commodity
market and we look for relative
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strength analysis, relative strength
analysis is basically factoring.
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Your analysis around the most important
market to be following right now when
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you're bullish and the most important
market to be found when you're bearish.
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And there's really two simple ways
to, um, come to the conclusion
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of what that is, as you know, the
dollar index is like the king.
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Okay.
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So the greenback is the king.
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So what the dollar does sets
the tone for everything.
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Especially when it comes to commodities.
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So if we look for the dollar index
to be trading higher, that's going to
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put pressure on the commodity prices.
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If the dollar index is going to be
trading lower, that's going to allow
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and insight higher commodity prices.
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So when we look at this, I want you
to think in terms of that scenario.
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So when we look at institutionally
sponsored rallies, what we're
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actually looking at is a market
that has failed to go live.
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At a time when the dollar index
would be expected to go lower.
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So in other words, if the dollar is
making some important high, or maybe
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even a topping formation that may be
a precursor to a bullish commodity
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market and the commodities that you'd
be looking to be long in our commodity
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that fails to make a lower low,
which is basically an SMT diversions.
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So what we see here is.
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Uh, I diagram on the right hand
side is underlying price strength.
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Now this is what you want to classically
see when you, when we buying commodities,
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where what you're seeing is, is when
the market tends to trade higher
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energetically as a leader market, it
establishes the underlying direction.
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That's opposite to the dollar index.
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Now these markets are extremely
profitable and our aim is to focus
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on these particular commodities
to trade because they're going
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to be the strongest upside move.
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Short-term highs are gonna be
seen, broken and declines are
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going to be shallow in nature.
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Every time price makes an upswing or
it makes a up closing candle they're
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typically much larger than those
that close lower or any short-term
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swings that move lower in price.
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The key is you only focusing on
the commodities that fail to make
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a lower low they're basically
diverging with the dollar and day.
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So if we see that we know that there's
a professional accumulation or in this
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case, institutional sponsorship for
buying, if the institutions step in and
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because they're going to be buying a
whole lot more because their institutional
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volume is much larger than a speculator
would be like you and I, that will
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facilitate the market rallying higher ed.
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Showing unwillingness to go lower
because it's a large degree of buying
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coming in while there's the supply
and demand factors that coming into
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force with the commodity, they're not
going to permit price to go lower.
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So it will fail to make a lower low when
the dollar index makes that higher high.
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You have to understand what the dollar
index should be doing as a whole
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though, because it may not be so clear.
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Just by looking at higher highs
and lower lows and commodities,
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when one diverse, it doesn't
necessarily mean that there's a trade.
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You have to have the analysis on your
dollar index, because that's going
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to set the tone for a prolonged move.
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If the dollar spent a weekend,
that's going to provide.
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At least the intermediate term basis for
the commodity market as a whole to rally,
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but not every commodity is going to rally.
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This is what ferrets out these
strong moves and which is why we say
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it's relative strength, analysis,
relatives, relatively speaking, a
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commodity that fails to make a lower
low, like this it's stronger because
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it has failed to make a lower low.
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So when the dollar drops.
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Or shows weakness, this particular
commodity, whatever, whichever
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one, it would be that creates
this condition of scenario.
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That's the one we would be looking for.
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Bullish ideas.
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Now as we just discussed in the beginning
of this teaching, I broken down the
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agricultural sector and the financial
sector of the commodity markets.
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So we have a basket of commodities
that we can follow in two
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divisions, one, the agricultural
markets, things that are grown or.
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Okay.
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And then we have the synthetics,
the things that are manmade or
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created or manufactured or drawn
from the earth that don't breathe.
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Okay.
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Like oil and energies.
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So by having these two divisions
in the commodity markets, we have
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a nice basket of choice to make.
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If there's a bias to the market as
a whole, for the commodity market
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to go higher, that means that
the dollar index should be going
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lower or expected to go lower.
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Not every commodity's going to go higher.
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The ones that fail to make that lower, low
that's the one we were really focusing on.
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Okay.
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So that's really the heart of this
teaching, but as we saw, there's
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different groups of commodities,
like the livestock, and then there's
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the grains there's currencies.
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When we see those.
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Little groups of types of markets.
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Like again, all the meats like feeder,
cattle, live cattle and lean hogs.
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Those three make up the livestock group.
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One of those meats may fail
to make a lower low when the
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dollar is starting to go lower.
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And when it does that,
it's showing leadership.
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For instance, it could be the live
cattle market and feed your cattle
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may not have that higher, low form.
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It may make a lower low, like it's
being described here graphically
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on the discharge and maybe lean
hogs makes a lower low as well, but
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live cattle makes that higher load.
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We just showed in the previous
slide, institutional sponsorship
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behind that particular commodity
would send live cattle much.
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And a lot more magnitude and speed
because you can see that they're buying
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that one up the other bit, um, meats
or other commodities and other groups
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that may not show those evidences of a
higher, low when the dollar is weakening.
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That would be seen as this and you
would be seeing a sympathetic rally.
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Okay.
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And what we're seeing is you typically
a commodity that makes a lower, low, but
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starts to trade higher sympathetically.
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So we have sympathetic price strength.
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Now this is going to be a market
that tends to trade higher and
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sympathy to the leader market that
establishes the underlying direction.
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While these markets are
potentially profitable.
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Again, our aim is to focus on the
leadership markets for the strongest one.
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Now short-term highs are seen, broken
and declines are shallow in nature.
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And the upswings and up closing
candles must like we saw with the
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institutionally sponsored rally.
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They're typically going to be larger than
those that close, lower or move lower.
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So if you're trading a commodity
that has the characteristics that
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are being described here, you're
not actually buying the relative
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strength leader on the buy-side.
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You're actually buying a sympathetic.
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Rally or a, the six sister of the group.
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Okay.
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And not that you can't make money doing
that because you can see that many
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times there's moves will be moving
in sympathy and moving in tandem, but
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at a lesser degree in terms of speed
magnitude, and it will be more lethargic.
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It may get to object that
you trade and reach for, but.
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Not as strong and as quick.
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And it's sufficiently that you would
be seeing it with the leadership.
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Obviously the opposite is seen here.
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Uh, institutionally sponsored decline
is a market that tends to trade lower
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energetically as a leader market and
establishes the underlying direction
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opposite to the dollar index.
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These markets are extremely profitable
and our aim is to focus on these markets
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as they will be the strongest downside.
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Short-term Lowe's are going to be seen
broken and rallies are going to be shallow
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in nature, downswings in price and or
the down closing candles are typically
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much larger than those that show with
closing higher or upswing in price.
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The key on this again, much like we
saw with the institutional sponsor
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rally is the focal point of the
failure swing to make a higher.
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00:12:40,740 --> 00:12:44,370
When the dollar index is bullish
and it's about the rally, that's
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gonna put underlying pressure
on commodities as a whole.
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Not all the commodities are going to drop
the ones that fail to make a higher high.
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They're going to be
leadership on the downside.
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So they're going to be showing
underlying price weakness.
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Okay.
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Much, like we saw with the sympathetic
rally, we have a sympathetic decline.
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This is a market that tends to
trade lower in sympathy to the
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leader market that established
the underlying downside direction.
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While these markets are
potentially profitable.
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00:13:16,395 --> 00:13:19,605
Again, our aim is to focus on
the leadership market for the
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00:13:19,605 --> 00:13:24,735
weakest declines, just like we
saw with the sympathetic rally.
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We can see short-term lows are being.
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And rallies are shallow in nature.
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The downside swings and down close
candles are typically much larger than
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those, the close higher or the moves
higher, just everything reversed.
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When we saw for the slide
for the sympathetic rally.
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Basically what we're seeing is
price weakness in a sympathetic
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nature to the leadership.
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00:13:47,730 --> 00:13:51,750
Again, I'll use this analogy,
uh, say the soybean mark.
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Was the leadership issue on the downside.
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It failed to make a higher high while
the grain complex should be moving
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00:14:00,594 --> 00:14:05,994
lower as a whole say, wheat makes a
higher high in corn makes a higher
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00:14:05,994 --> 00:14:10,944
high, but soybean makes that lower
high, well, soybeans is going to
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00:14:10,944 --> 00:14:12,415
be the outperform on the downside.
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00:14:14,035 --> 00:14:17,484
Doesn't mean that wheat and
corn won't decline, but it
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00:14:17,484 --> 00:14:18,775
will be doing so in a separate.
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Fashion, like we're describing
here again, when we focusing on the
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00:14:23,115 --> 00:14:29,025
weakest of the commodities, the self
short, and the way you determine
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00:14:29,025 --> 00:14:30,825
that is by looking at their highs.
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All right.
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00:14:39,265 --> 00:14:42,805
So actually let's go through
the commodities as a basket
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and we'll start ferreting out.
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00:14:44,515 --> 00:14:49,345
What we see generally when the dollar
index is giving us indications that
230
00:14:49,345 --> 00:14:50,515
it wants to move higher or lower.
231
00:14:52,079 --> 00:14:59,130
First area of business is the, the
middle of 2000 sixteens summer.
232
00:14:59,280 --> 00:15:06,270
We saw the dollar rallying up into
January, 2017, making a high, and
233
00:15:06,270 --> 00:15:09,300
then we saw post January, 2017.
234
00:15:09,300 --> 00:15:11,550
We've been seeing continued
weakness on the dollar.
235
00:15:12,329 --> 00:15:17,099
So from the middle of the summer
of 2016, to the beginning of this
236
00:15:17,099 --> 00:15:24,415
year in 2017, We would expect to
see commodities going lower while
237
00:15:24,415 --> 00:15:25,675
the dollar has been moving higher.
238
00:15:26,215 --> 00:15:29,515
And then obviously commodities from
January to the present time of this
239
00:15:29,515 --> 00:15:36,444
recording June, 2017, we should be
expecting commodities, the rally, or
240
00:15:36,444 --> 00:15:40,645
look for leadership issues to fail,
to make lower lows, and then look for
241
00:15:40,645 --> 00:15:45,385
opportunities to be a buyer as a paper
trader in those particular commodity.
242
00:15:46,275 --> 00:15:48,855
And that way you'll learn how
the commodity markets work.
243
00:15:49,725 --> 00:15:51,255
First I'm looking at here is corn.
244
00:15:51,465 --> 00:15:53,955
We're going to go through
the agriculturals first and
245
00:15:54,525 --> 00:15:55,725
corn is our first grain.
246
00:15:56,295 --> 00:16:03,375
And you can see that from the middle of
2016, we saw the decline in corn, as we
247
00:16:03,375 --> 00:16:12,185
would expect with a higher dollar and
down below the August and September Lowe's
248
00:16:12,185 --> 00:16:14,825
who can see corn kept making a lower.
249
00:16:16,960 --> 00:16:23,620
Which was underlying weakness while the
dollar index was making higher highs,
250
00:16:25,090 --> 00:16:31,420
the corn market showed a willingness
to go a higher off of a higher, low.
251
00:16:31,420 --> 00:16:36,100
So we had a failure swing going
into the latter portions of
252
00:16:36,100 --> 00:16:42,910
December, 2016, but we had extreme
weakness shown in the move down.
253
00:16:44,564 --> 00:16:49,755
But December into January, we saw
that higher, low form and the market
254
00:16:49,755 --> 00:16:55,605
went relatively sideways, small little
modest move from 360 up to three
255
00:16:55,605 --> 00:16:58,365
90, which has only a 30 cent move.
256
00:16:59,235 --> 00:17:04,004
In this case, it would be
about $1,500 per contract.
257
00:17:04,185 --> 00:17:06,944
So that's actually a very weak market.
258
00:17:07,214 --> 00:17:11,175
The green market for this,
uh, specific commodity.
259
00:17:11,895 --> 00:17:13,035
Corn was weak.
260
00:17:13,065 --> 00:17:16,155
We didn't see any kind of
leadership buying in here at all.
261
00:17:18,974 --> 00:17:21,255
The wheat market, much like corn.
262
00:17:21,255 --> 00:17:26,925
We saw this slide down from the
summer months, making lower lows
263
00:17:27,135 --> 00:17:31,155
and then making a lower low, even
in December going into January.
264
00:17:31,425 --> 00:17:34,785
So we had continued weakness on wheat.
265
00:17:34,995 --> 00:17:37,515
Disc grain stayed in a
consolidation as well.
266
00:17:38,804 --> 00:17:41,895
I failed to make any kind of
real significant rally higher.
267
00:17:42,524 --> 00:17:45,554
And its underlying weakness
was seen in price action
268
00:17:49,334 --> 00:17:50,175
soybeans.
269
00:17:51,284 --> 00:17:56,264
We saw the summer decline going into
August, but then August and September and
270
00:17:56,264 --> 00:18:00,735
October, we started seeing the soybean
market failed to make lower lows while
271
00:18:00,735 --> 00:18:03,074
we saw the dollar making higher highs.
272
00:18:03,314 --> 00:18:06,554
So there was already indications that
their soybean market was under accumulate.
273
00:18:07,440 --> 00:18:08,850
Because it was failing to go lower.
274
00:18:10,710 --> 00:18:19,140
In the second week of November going into
January, 2017, we saw soybean market trade
275
00:18:19,140 --> 00:18:23,700
down with a higher, low, and actually
talked about this during the mentorship.
276
00:18:23,730 --> 00:18:28,290
If you go back and the gerrymander,
January current of our time together,
277
00:18:28,740 --> 00:18:32,340
you'll actually see me talk about
that and mention those equal highs
278
00:18:32,340 --> 00:18:36,450
that were around that 10 80 level
in this chart and price it rally.
279
00:18:38,160 --> 00:18:41,760
And we saw relative strength
in the being complex.
280
00:18:42,150 --> 00:18:48,810
So soybeans across the drains
group was the leadership issue.
281
00:18:49,290 --> 00:18:50,610
So soybeans were strong.
282
00:18:50,880 --> 00:18:54,870
So if you were looking to be a buyer
in January, when the dollar index
283
00:18:54,870 --> 00:19:00,450
was making significant reasons to
look for a lower move in the dollar,
284
00:19:00,450 --> 00:19:05,100
that's going to allow commodities, the
rally soybeans in this case, rallies.
285
00:19:07,155 --> 00:19:10,545
About $4,500 per contract
in terms of the move,
286
00:19:13,605 --> 00:19:15,855
the next one, we're going
into the livestock group.
287
00:19:15,855 --> 00:19:21,405
Now, just like we saw in the previous
commodities, we saw the decline
288
00:19:21,405 --> 00:19:24,315
from the summer months going down
into the fall end of the year.
289
00:19:25,665 --> 00:19:28,605
But then we started seeing
some accumulation scene in the
290
00:19:28,605 --> 00:19:31,305
middle of October going into
the first week of December.
291
00:19:32,025 --> 00:19:37,024
So while the dollar index was making
higher highs, The feeder cattle
292
00:19:37,024 --> 00:19:38,495
market was failing to go lower.
293
00:19:38,524 --> 00:19:40,774
So it was already showing
signs of accumulation.
294
00:19:41,074 --> 00:19:43,835
If it's not going lower, there's
only a one reason for that.
295
00:19:44,345 --> 00:19:47,044
It means that they are on their
accumulation and they're buying it.
296
00:19:47,405 --> 00:19:50,975
Who is institutions are
large traders, big players.
297
00:19:51,395 --> 00:19:53,495
So they're buying up feeder cattle
298
00:19:57,615 --> 00:20:00,885
and notice that we're seeing
short-term highs being broken.
299
00:20:02,550 --> 00:20:05,400
And more short-term highs being broken.
300
00:20:06,060 --> 00:20:11,340
And then at a later time in March, when
a dollar creates another intermediate
301
00:20:11,340 --> 00:20:16,290
term high and starts to sell off, we had
that February, March time period where
302
00:20:16,560 --> 00:20:19,980
the feeder cattle market trades right
back down into a bullish, shorter block.
303
00:20:20,460 --> 00:20:23,160
So we have the accumulation patterns
seen here, but early signs were
304
00:20:23,160 --> 00:20:26,610
already shown that they were
accumulating the feeder cattle market.
305
00:20:30,315 --> 00:20:33,045
Feeder cattle actually developed
a premium, which will start
306
00:20:33,045 --> 00:20:34,875
teaching later on in this week.
307
00:20:34,905 --> 00:20:41,055
But the price of feeder cattle
actually went in this case.
308
00:20:41,055 --> 00:20:41,775
Parabolic.
309
00:20:42,600 --> 00:20:46,290
And it was very strong as a result
of that because we saw price show
310
00:20:46,290 --> 00:20:48,690
signs wanting to not go lower.
311
00:20:49,230 --> 00:20:50,730
It was breaking short-term highs.
312
00:20:51,150 --> 00:20:52,410
It was under accumulation.
313
00:20:52,410 --> 00:20:55,950
And then at a later time, when dollar
index was ready to sell off again in March
314
00:20:55,950 --> 00:21:01,889
of 2017, that provided another buying
opportunity for feeder cattle notice.
315
00:21:01,889 --> 00:21:07,290
Also the last half of February going
into March, the dollar index was making
316
00:21:07,290 --> 00:21:09,660
higher highs around that 1 0 2 level.
317
00:21:11,385 --> 00:21:16,304
That last portion of February going
into March on feeder cattle, I was
318
00:21:16,304 --> 00:21:19,784
making a higher, low again, that
same accumulation pattern it's being
319
00:21:19,784 --> 00:21:23,084
seen there, but it's also occurring
in a previous bullish order block.
320
00:21:23,084 --> 00:21:28,514
So we're a blending PDRs discount
with the context that we should
321
00:21:28,514 --> 00:21:29,955
be seeing higher commodity prices.
322
00:21:30,195 --> 00:21:33,344
This one fit the bill because it
had everything in favor for it.
323
00:21:34,334 --> 00:21:37,304
What does it translate
into this move here?
324
00:21:38,280 --> 00:21:40,830
From the buy all the way to the high.
325
00:21:41,850 --> 00:21:44,580
Is there a $19,000 per contract of a move?
326
00:21:45,690 --> 00:21:46,590
Not too shabby.
327
00:21:49,139 --> 00:21:49,320
All right.
328
00:21:49,320 --> 00:21:52,440
The next one in the livestock
complex is lean hogs.
329
00:21:53,885 --> 00:21:57,365
We saw the decline from the summer months,
going down into September and October,
330
00:21:57,875 --> 00:22:00,815
and then October, November, December,
we started seeing accumulation patterns.
331
00:22:00,815 --> 00:22:06,125
Again, mark was failing to go lower while
the dollar index was making higher highs.
332
00:22:06,185 --> 00:22:09,965
We've seen clear cannulation
patterns in the lean hogs market.
333
00:22:13,715 --> 00:22:18,695
Later on in 2017, we had another
opportunity for the dollar index to
334
00:22:18,695 --> 00:22:22,445
sell off, trade up into a premium
array, filled into liquidity void.
335
00:22:24,855 --> 00:22:28,334
Price trades lower on the dollar
index, which is going to allow
336
00:22:28,574 --> 00:22:30,584
foolishness for commodities.
337
00:22:30,584 --> 00:22:36,195
Again, we can see in the lean hogs
market, the market trades back down into
338
00:22:36,195 --> 00:22:44,324
a bullish order block, and we have a
subsequent parabolic rally from the 68
339
00:22:46,064 --> 00:22:50,054
to 81 and a half cents for lean hogs.
340
00:22:50,054 --> 00:22:50,595
And that means.
341
00:22:51,450 --> 00:22:53,550
About $5,600 per contract.
342
00:22:57,149 --> 00:23:04,050
Last one in the livestock group is
live cattle price trades down from the
343
00:23:04,050 --> 00:23:06,629
summer months into October making a low.
344
00:23:06,690 --> 00:23:09,870
And then from October going into
November and December, we see
345
00:23:09,870 --> 00:23:14,040
accumulation occurring again in here
while the dollar is rallying, the
346
00:23:14,070 --> 00:23:15,639
live cattle market is failing to go.
347
00:23:16,470 --> 00:23:19,980
So they're under massive
accumulation, same scenario.
348
00:23:19,980 --> 00:23:23,730
We said earlier with the March high
in the dollar index, creating a sell
349
00:23:23,730 --> 00:23:29,820
off, there's a buying opportunity in
the live cattle market trades down into
350
00:23:29,820 --> 00:23:32,970
a bullish shorter block rallies away.
351
00:23:33,240 --> 00:23:37,620
And again, much like we saw with
the feeder cattle market live cattle
352
00:23:37,710 --> 00:23:39,300
futures were very, very strong.
353
00:23:40,410 --> 00:23:43,230
It translates to a move
of $12,000 per country.
354
00:23:46,680 --> 00:23:48,150
All right now, we're going into the foods.
355
00:23:48,930 --> 00:23:50,820
And the first thing on our list is Coco.
356
00:23:52,410 --> 00:23:56,160
Coco is clearly under
a lot of distribution.
357
00:23:56,610 --> 00:23:58,920
They had a bumper crop.
358
00:23:58,950 --> 00:24:05,400
There was no real, uh, um, shortage
of cocoa and there was no impulse.
359
00:24:06,255 --> 00:24:10,095
For the supply and demand factor
to be swung to a shortage.
360
00:24:10,335 --> 00:24:16,695
So there was lots of supply of cocoa,
which provided this consistent decline
361
00:24:16,695 --> 00:24:18,885
on the price of the cocoa futures.
362
00:24:20,085 --> 00:24:24,375
So we have no real indication that this
is under any accumulation whatsoever.
363
00:24:26,525 --> 00:24:31,205
And our analysis comes away
with Coco is very weak.
364
00:24:31,235 --> 00:24:34,055
It's not under accumulation, so
this would never meet the criteria.
365
00:24:35,400 --> 00:24:40,140
While the dollar is dropping coffee St.
366
00:24:40,140 --> 00:24:40,710
Scenario.
367
00:24:41,010 --> 00:24:45,960
Um, we saw weakness market
making lower lows in December,
368
00:24:45,960 --> 00:24:47,010
going into January as well.
369
00:24:47,010 --> 00:24:50,730
We had a nice little pop up, which
is a nice little retracement, but
370
00:24:50,760 --> 00:24:55,290
it overall kept in sync with the,
uh, the weakness that was seen
371
00:24:57,480 --> 00:24:59,160
to coffee here was weak as well.
372
00:25:02,250 --> 00:25:03,750
And sugar is our next.
373
00:25:05,685 --> 00:25:09,584
Again, we see in November going
into the middle of December,
374
00:25:10,004 --> 00:25:12,435
we see sugar making lower lows.
375
00:25:12,675 --> 00:25:17,864
Um, we have a small little divergence
at the lows that saw a rally up, but
376
00:25:17,864 --> 00:25:23,324
when we got back up into February,
March, that, uh, that found its
377
00:25:23,895 --> 00:25:26,235
weakness after coming up into a.
378
00:25:27,605 --> 00:25:28,475
Premium right.
379
00:25:29,135 --> 00:25:31,355
Or bullish or block
around that 2050 level.
380
00:25:31,715 --> 00:25:33,514
And this could not find
any more bullishness.
381
00:25:33,514 --> 00:25:36,514
So in this case, we can see
kind of like a mixed signal.
382
00:25:37,205 --> 00:25:39,065
So you could have looked
at it as weakness.
383
00:25:39,815 --> 00:25:44,554
And then the last little portion of
December going into January that higher,
384
00:25:44,554 --> 00:25:49,804
low, while the dollar index actually
made a higher high, that's a D it's a
385
00:25:49,804 --> 00:25:52,024
divergence that would be a failure swing.
386
00:25:52,625 --> 00:25:54,514
So that's why you see that move higher.
387
00:25:55,290 --> 00:26:00,000
In sugar, but then it ultimately falls
over and can't find anymore continuation.
388
00:26:00,000 --> 00:26:05,580
So I want to provide you opportunities
where in realistic terms, you're gonna
389
00:26:05,580 --> 00:26:10,140
be able to see these things, but then
you're also gonna see things that start
390
00:26:10,140 --> 00:26:12,240
off like a good move and then fail.
391
00:26:12,750 --> 00:26:15,420
And that's what real, that's what real
environments are going to be like for you.
392
00:26:19,320 --> 00:26:20,940
So in this case here, sugar was weak.
393
00:26:23,160 --> 00:26:23,310
Okay.
394
00:26:23,320 --> 00:26:24,180
We're in the fibers.
395
00:26:25,725 --> 00:26:28,395
And we only have cotton in our
basket of commodities to be worrying
396
00:26:28,395 --> 00:26:34,785
about the slide from August down in
September, after an initial rally, uh,
397
00:26:34,815 --> 00:26:39,855
trades back down into a bullshitter
block at September dollars rally.
398
00:26:40,965 --> 00:26:42,285
Cotton's not going lower.
399
00:26:42,375 --> 00:26:46,545
And you start seeing success
of higher highs, higher lows.
400
00:26:46,665 --> 00:26:50,775
Every short-term highs, finding its
way broken with no problem at all.
401
00:26:51,135 --> 00:26:53,565
And bullet shorter blocks
are supporting price.
402
00:26:53,565 --> 00:26:56,745
So we can see clearly that this
commodities under accumulation.
403
00:26:58,065 --> 00:27:00,855
So in this case here, cotton was
a very strong commodity at the
404
00:27:00,855 --> 00:27:02,175
time when the dollar is weak.
405
00:27:03,105 --> 00:27:07,965
As a result, the move to transpires
is over $8,000 per country.
406
00:27:11,310 --> 00:27:11,490
Okay.
407
00:27:11,490 --> 00:27:12,750
Now we're in their financials.
408
00:27:12,750 --> 00:27:16,920
We're looking at the 30 year treasury
bond and I'm actually going to talk a lot
409
00:27:16,920 --> 00:27:19,740
more about bonds in the bond trading week.
410
00:27:20,010 --> 00:27:23,340
So you're going to see something in
this chart that if you're a student
411
00:27:23,340 --> 00:27:25,710
of mine, obviously you're going to
know right away what it looks like
412
00:27:25,710 --> 00:27:30,930
and what we should be talking about,
but we're going to keep in a general
413
00:27:30,930 --> 00:27:36,765
terms, just for the commodity portion
of this, uh, So we see the market making
414
00:27:36,765 --> 00:27:42,645
lower lows here, underlying weakness,
and the bond market has been weak.
415
00:27:42,645 --> 00:27:44,505
We've only really traded
in and consolidation.
416
00:27:44,505 --> 00:27:49,245
Haven't really made any significant moves
higher, which has been the catalyst.
417
00:27:49,245 --> 00:27:54,705
I believe that why the markets are so
fickle right now, we've had so many
418
00:27:54,705 --> 00:27:59,235
issues with, uh, finding sustained
moves in, uh, foreign exchange.
419
00:28:01,004 --> 00:28:04,034
And it's going to be translated
by looking at the chart here.
420
00:28:04,034 --> 00:28:07,754
You can see clearly that the market
for the bonds have been range-bound and
421
00:28:07,754 --> 00:28:09,344
they haven't really moved much at all.
422
00:28:12,314 --> 00:28:15,405
And then we have the ten-year note,
same thing we see underlying weakness.
423
00:28:17,235 --> 00:28:18,524
10 years is weak as well.
424
00:28:18,524 --> 00:28:21,645
And we only saw a consolidation
transpired since then.
425
00:28:23,925 --> 00:28:24,824
And five-year notes.
426
00:28:24,824 --> 00:28:27,645
We actually saw weakness and
then further weakness in March.
427
00:28:28,695 --> 00:28:30,105
And we've consolidated since then.
428
00:28:30,105 --> 00:28:33,375
So nothing's really happened that, that
instruments and again, interest rates
429
00:28:33,375 --> 00:28:34,875
are what makes the markets go around.
430
00:28:35,025 --> 00:28:39,555
So if we're a currency trader,
that's going to put a damper.
431
00:28:39,735 --> 00:28:44,055
If you will, on how we see sustained
moves in the currency markets,
432
00:28:48,185 --> 00:28:49,145
taking the currencies.
433
00:28:49,385 --> 00:28:49,565
Okay.
434
00:28:49,565 --> 00:28:51,125
The first on our list is the Australian.
435
00:28:54,585 --> 00:28:55,515
Looking closely.
436
00:28:55,845 --> 00:28:59,985
Look at the highs on the dollar
index going into January, we made
437
00:28:59,985 --> 00:29:03,675
a higher high and in the dollar
index, we made that failure swing to
438
00:29:03,675 --> 00:29:05,595
go lower on the Australian dollar.
439
00:29:05,805 --> 00:29:09,255
If you go back in the January
month, you actually see me talk
440
00:29:09,255 --> 00:29:11,055
about that very particular thing.
441
00:29:11,595 --> 00:29:15,045
There was weakness seen
in the dollar index.
442
00:29:15,870 --> 00:29:16,680
At those highs.
443
00:29:17,100 --> 00:29:21,570
And we saw cumulation come in on
the Australian dollar at those lows,
444
00:29:24,270 --> 00:29:29,670
incidentally, Australian dollar
was strong with a differential.
445
00:29:29,670 --> 00:29:33,300
So the interest rate differential
was a bonus for this one.
446
00:29:33,300 --> 00:29:36,150
So that's why we saw this nice
extrapolate and move to the upside.
447
00:29:38,980 --> 00:29:40,570
The next one on our
list is Canadian dollar.
448
00:29:41,170 --> 00:29:42,820
And this one here had basically an equal.
449
00:29:43,980 --> 00:29:50,129
And it started off with basically a modest
bullishness to it, but finally gave up
450
00:29:50,129 --> 00:29:55,470
the ghost in February and roll right back
over and followed suit with the dollar
451
00:29:55,470 --> 00:30:00,570
index, which again is kind of weird
because the dollar index and Canadian
452
00:30:00,570 --> 00:30:03,149
dollar moving together makes it difficult.
453
00:30:05,909 --> 00:30:06,120
All right.
454
00:30:06,120 --> 00:30:09,780
So we have the Japanese yen next
again, look very closely at the
455
00:30:09,780 --> 00:30:10,860
dollar index we made that higher.
456
00:30:11,669 --> 00:30:15,570
Going into January, but we have
the higher, low in a Japanese yen.
457
00:30:16,409 --> 00:30:22,169
That's the accumulation that's seen by
way of institutional sponsored rally.
458
00:30:23,580 --> 00:30:27,030
So we can see the market was making
short-term highs, breaking those
459
00:30:27,030 --> 00:30:30,990
short-term highs in order blocks that were
bullish were being supporting in price.
460
00:30:31,889 --> 00:30:33,540
So yen in this case was very strong.
461
00:30:34,169 --> 00:30:37,800
So this was our leadership issue
as well for the currency markets.
462
00:30:37,800 --> 00:30:40,080
So it's Australian dollar and yen.
463
00:30:44,460 --> 00:30:45,840
Can we have the British pound here.
464
00:30:45,930 --> 00:30:47,760
This one has been lethargic.
465
00:30:49,350 --> 00:30:53,460
Uh, we have a slightly lower, low
going into January from October, no
466
00:30:53,460 --> 00:30:55,050
real cumulation in this pair at all.
467
00:30:55,320 --> 00:30:58,830
Until we got around that March time
period, when March creates the high
468
00:30:58,860 --> 00:31:02,550
in the dollar index, then we saw
the opportunity for the cable to
469
00:31:02,550 --> 00:31:04,710
start rallying from that 1 22 level.
470
00:31:05,310 --> 00:31:07,710
But overall, the Powell
market has been with.
471
00:31:10,520 --> 00:31:10,640
Okay.
472
00:31:10,640 --> 00:31:14,600
The next one here is the Swiss
Frank and look closely again,
473
00:31:14,600 --> 00:31:16,430
you'll see that failure swing.
474
00:31:17,330 --> 00:31:20,090
So we have institutional
sponsors at rally higher, low.
475
00:31:20,090 --> 00:31:25,460
When the dollar index makes a
higher high weakness in the dollar
476
00:31:25,460 --> 00:31:29,960
index should see the foreign
currencies rally, their calm dolls.
477
00:31:30,020 --> 00:31:30,950
They should go higher.
478
00:31:31,340 --> 00:31:34,820
In this case here, we see the Swiss
Franc do that very thing and go home.
479
00:31:35,845 --> 00:31:39,405
At the March time period, when we saw
the dollar index create a high, we
480
00:31:39,405 --> 00:31:43,635
had another intermediate term low on
the Swiss Franc and it rallies again.
481
00:31:44,265 --> 00:31:50,055
And then in may last month where
we saw the dollar and index trade
482
00:31:50,055 --> 00:31:52,035
up and close its fair value gap.
483
00:31:53,205 --> 00:31:58,725
As a premium array, the Swiss Franc
creates a turtle suit long and closes
484
00:31:58,725 --> 00:32:02,325
in its fair value gap seen in the
month of March and then rallies.
485
00:32:04,535 --> 00:32:08,375
So we have a very strong,
so it's shrunk as a result.
486
00:32:08,675 --> 00:32:14,615
So we have the Australian dollar,
the Japanese yen and the Swiss
487
00:32:14,615 --> 00:32:16,925
Frank as our leadership issues.
488
00:32:18,205 --> 00:32:19,235
And we have the Euro dollar.
489
00:32:19,775 --> 00:32:23,465
We have a higher, low
also on this currency.
490
00:32:24,845 --> 00:32:30,125
So this one here we look and see, we have
short-term highs being broken and all pre.
491
00:32:31,320 --> 00:32:35,130
Uh, Ray's being broken on the
upside and in supporting price at
492
00:32:35,130 --> 00:32:39,600
the discount, a race to every bull
shorter block, we see price being
493
00:32:40,020 --> 00:32:41,790
more accumulation and more rallying.
494
00:32:42,270 --> 00:32:44,250
So Euro was very strong here as well.
495
00:32:46,020 --> 00:32:51,030
And last in our group of currencies for
the calm dolls, we see one more instance
496
00:32:51,060 --> 00:32:53,550
of a currency that had a different.
497
00:32:54,270 --> 00:32:56,850
The interest rate differential
was a plus for this one as well.
498
00:32:57,270 --> 00:33:01,590
So in other words, if you, um,
if you buy the, uh, New Zealand
499
00:33:01,590 --> 00:33:05,580
dollar in Aldi, um, it paid you
a interest rate for, for holding
500
00:33:05,580 --> 00:33:07,080
onto it for a carry trade purposes.
501
00:33:07,680 --> 00:33:10,740
And those two currencies were
actually the leader of all the
502
00:33:10,740 --> 00:33:13,620
interest rate differentials at the
time for this beginning of this.
503
00:33:15,120 --> 00:33:19,199
And with this higher, low, which is
institutional sponsored rally at a time
504
00:33:19,199 --> 00:33:23,250
when the institutions were looking to
sell short on the dollar index in January,
505
00:33:23,820 --> 00:33:28,199
made a higher high in dollar, did not
see that lower, low we expect in the
506
00:33:28,199 --> 00:33:30,300
New Zealand with a differential as well.
507
00:33:30,600 --> 00:33:33,629
So here was Kiwi, uh, as
an upside leader as well.
508
00:33:35,909 --> 00:33:36,060
Okay.
509
00:33:36,060 --> 00:33:36,959
Moving over to the metal.
510
00:33:37,754 --> 00:33:37,935
Okay.
511
00:33:37,935 --> 00:33:41,775
We have another similar situation here
where the gold market was failing.
512
00:33:41,805 --> 00:33:45,885
And we talked about this in January to
go, was failing to make a lower, low.
513
00:33:45,885 --> 00:33:49,485
So we have institutional
sponsored rally when the dollar
514
00:33:49,485 --> 00:33:50,745
index was making higher highs.
515
00:33:51,885 --> 00:33:58,155
And as a subsequent, uh, to
that occurrence, we see all the
516
00:33:58,155 --> 00:34:02,595
bullshitter blocks providing support
the price and premium rates being
517
00:34:02,595 --> 00:34:04,785
broken as price moves higher.
518
00:34:06,885 --> 00:34:09,944
Gold in this instance was a
strong commodity to be a buyer.
519
00:34:12,134 --> 00:34:15,715
Silver start at the same way.
520
00:34:15,715 --> 00:34:20,605
Go did hire low institutional
sponsorship around.
521
00:34:21,570 --> 00:34:25,620
And price was reaching through premium
arrays will sort of blocks were supporting
522
00:34:25,620 --> 00:34:30,870
price until we got up around that 1850
level, it fell out of bed and came
523
00:34:30,870 --> 00:34:35,250
all the way back down, but trading a
bullish quarter block at that 16 level,
524
00:34:35,639 --> 00:34:39,989
which I talked about at the time of
the decline that we got down to that
525
00:34:39,989 --> 00:34:41,790
level, an interesting buying options.
526
00:34:42,614 --> 00:34:45,855
And we, since then rallied 168 points.
527
00:34:46,125 --> 00:34:53,114
So almost a 7,000 plus dollars
per contract, if you were looking
528
00:34:53,114 --> 00:34:55,935
to trade that 16 level, but
it was modestly strong here.
529
00:34:56,444 --> 00:35:01,485
And as a side note, I actually was
very, very bullish on silver, uh, much
530
00:35:01,485 --> 00:35:05,955
more than gold, uh, but for whatever
reason, it failed at 1850 level.
531
00:35:05,955 --> 00:35:07,605
And the storyline changed from them.
532
00:35:11,655 --> 00:35:11,805
Okay.
533
00:35:11,805 --> 00:35:13,845
The last metal we're going to
look at is high grade copper.
534
00:35:14,565 --> 00:35:18,105
And you can see the accumulation that
was really on their way in September, in
535
00:35:18,105 --> 00:35:19,905
October, failing to make a lower, low.
536
00:35:20,325 --> 00:35:25,425
And finally, this exploded on
the upside and copper here was
537
00:35:25,425 --> 00:35:27,345
a very strong metal as well.
538
00:35:30,555 --> 00:35:35,355
And finally, for the energy complex, uh,
in our commodity basket, we have current.
539
00:35:36,225 --> 00:35:40,965
And crude oil was failing to make lower
lows as the dollar index was rallying.
540
00:35:42,405 --> 00:35:48,495
And this particular energy was under
accumulation around the $43 a barrel mark.
541
00:35:48,765 --> 00:35:54,345
And then finally rally up and you can see
crude oil was a strong commodity as well.
542
00:35:59,175 --> 00:36:00,965
So what we've done is
we've gone through all the.
543
00:36:02,310 --> 00:36:04,890
And we use relative strength
analysis to fair it out.
544
00:36:05,250 --> 00:36:09,180
The leadership issues when the market
should be seeing commodities trade higher,
545
00:36:09,450 --> 00:36:11,040
notice that all of them did not trade.
546
00:36:11,955 --> 00:36:15,645
But we were able to go in looking
at price action, no indicators,
547
00:36:15,645 --> 00:36:16,815
node bells, and whistles.
548
00:36:17,055 --> 00:36:21,285
There's simply understanding what
the pattern looks like when large
549
00:36:21,945 --> 00:36:23,535
institutions step in and buy.
550
00:36:23,835 --> 00:36:25,005
What does that pattern look like?
551
00:36:25,035 --> 00:36:26,235
It's that failure swing.
552
00:36:26,625 --> 00:36:30,915
It's the fact that short-term
highs are being broken and premium.
553
00:36:30,915 --> 00:36:36,495
Rays are not respecting anything
in terms of offering resists.
554
00:36:37,275 --> 00:36:41,295
It's been broken through and then all of
the discounter rays are supporting price.
555
00:36:42,495 --> 00:36:45,285
Everything that we've
shown here is reversed.
556
00:36:45,345 --> 00:36:50,685
When the dollar index is bullish and
we would be looking for bears, ideas
557
00:36:50,685 --> 00:36:54,645
and commodities, and we go through the
commodity markets and look, everything
558
00:36:54,645 --> 00:36:56,505
that we did here, just in opposite terms.
559
00:36:57,285 --> 00:37:00,315
But for agriculturals, what
we've done is we fared it out.
560
00:37:00,585 --> 00:37:05,265
The leadership from the grains, it was
the soybean market out of the livestock.
561
00:37:05,295 --> 00:37:09,855
All three of them did well, but
feeder cattle was by far the absolute
562
00:37:09,855 --> 00:37:13,455
leader, feeder cattle actually
developed a premium, which we'll
563
00:37:13,455 --> 00:37:14,955
teach later on in this week about.
564
00:37:15,405 --> 00:37:18,425
And why don't you use it as an
example as well, but the Peter
565
00:37:18,425 --> 00:37:19,945
cattle market was the upside.
566
00:37:21,765 --> 00:37:26,505
On the foods notice there was an absence
of really anything that lends well
567
00:37:26,505 --> 00:37:30,375
for a buying opportunity out of all
the foods, they were all relatively
568
00:37:30,375 --> 00:37:34,215
weak, the fibers, where are we?
569
00:37:34,215 --> 00:37:34,485
Again?
570
00:37:34,485 --> 00:37:37,575
We have lumber is in that group, but we
don't look at lumber cause it's kind of
571
00:37:37,575 --> 00:37:41,895
too thin in my opinion, uh, cotton wasn't
outperformed on the outside as well.
572
00:37:42,345 --> 00:37:45,285
Cause it was underneath a
professional accumulation.
573
00:37:46,605 --> 00:37:47,595
So we fared it out.
574
00:37:47,595 --> 00:37:49,755
1, 2, 3, 4, 5 markets.
575
00:37:49,755 --> 00:37:54,345
Out of all, the agricultural markets
are trading patterns and price action
576
00:37:54,345 --> 00:37:58,695
analysis concept helps us find where
the leadership issues are going to be
577
00:37:58,725 --> 00:38:02,505
as a buying opportunity financials.
578
00:38:03,255 --> 00:38:04,845
We didn't see anything
in the debt instruments.
579
00:38:04,845 --> 00:38:07,395
I'm up in saying this all year
long, which is the reason why the
580
00:38:07,455 --> 00:38:09,615
markets have been pretty much.
581
00:38:10,440 --> 00:38:11,550
Next to untradeable.
582
00:38:12,450 --> 00:38:17,910
Um, the currencies, we see that
Australian dollar, the yen, the
583
00:38:17,910 --> 00:38:20,460
Frank, the Euro, and the Kiwi.
584
00:38:20,490 --> 00:38:23,940
We're all upside leadership in the metals.
585
00:38:24,030 --> 00:38:25,830
All three of them did
very, very well here.
586
00:38:26,220 --> 00:38:28,380
Silver was the weakest sister of them all.
587
00:38:30,615 --> 00:38:32,595
But go was the outperformer in my opinion.
588
00:38:33,044 --> 00:38:36,254
Uh, we did have a lot of strength
on copper, but you only have one
589
00:38:36,254 --> 00:38:37,575
real opportunity to get in that one.
590
00:38:37,875 --> 00:38:41,504
So that's why I'm saying gold was
the top performer cause gold gave you
591
00:38:41,504 --> 00:38:42,705
a couple of differences to get in.
592
00:38:43,274 --> 00:38:48,555
And lastly, in our basket of commodities
is crude oil and we saw that when also
593
00:38:48,555 --> 00:38:53,085
provide a nice opportunity to be a
buyer, nothing really to compare it to
594
00:38:53,355 --> 00:38:55,845
it used to be, uh, uh, heating oil and.
595
00:38:57,150 --> 00:38:58,890
And let it gas and natural gas.
596
00:38:58,890 --> 00:39:03,060
I would look at, um, when I was actually
looking at commodities as a major
597
00:39:03,060 --> 00:39:06,029
asset class, and it was only thing I
was trading at the time, but if you're
598
00:39:06,029 --> 00:39:09,600
going to have a basket of commodities to
watch, I think this is a very good one.
599
00:39:10,170 --> 00:39:15,180
Um, it's well balanced and it gives you a
nice universe to work within, and it gives
600
00:39:15,180 --> 00:39:20,130
you an ability to work within multiple
groups, to look for leadership issues.
601
00:39:20,130 --> 00:39:24,870
And as we indicated and shown here in
this teaching, not all commodities.
602
00:39:25,725 --> 00:39:26,504
Are equal.
603
00:39:27,194 --> 00:39:29,625
They're not going to perform the same.
604
00:39:30,765 --> 00:39:33,315
You have to have tools and
concepts to go through.
605
00:39:33,794 --> 00:39:38,984
And as, as a process, eliminate the
ones that are not performing as you
606
00:39:38,984 --> 00:39:42,645
would expect in price action and
focus on the ones that are giving you
607
00:39:42,645 --> 00:39:46,725
that fingerprint, hallmark signature,
that there is huge accumulation.
608
00:39:46,725 --> 00:39:46,785
Yeah.
609
00:39:48,000 --> 00:39:49,859
And or distribution.
610
00:39:50,220 --> 00:39:54,660
So by using this concept, it
will help fared out all the
611
00:39:55,259 --> 00:39:57,060
better moving opportunities.
612
00:39:57,390 --> 00:40:01,410
When the markets are predisposed to
go in one direction or another until
613
00:40:01,410 --> 00:40:02,790
next lesson, I wish you good luck.
55101
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