Trend Following Update - Volatility on the rise...

The trend following environment has been quite favorable since my last post. Trends in index futures, metals, interest rates, and commodities have been pretty steady until today.

News that Greece's credit rating has been cut to junk status, along with the Goldman hearing is sending a wave of counter trend activity across many market sectors and providing short term traders with a reason to book profits and take some risk off the table.

We are seeing a flight to quality with money coming into bonds, which is favorable for our long interest rate positions. However I wouldn't be surprised to see a drawdown in our future as the recent run has been pretty strong and steady.

If you have any questions about the markets or our strategies, please don't hesitate to contact us.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.

Trend Following Update

The trading environment for trend followers has improved over the last month. We've seen a return to long term trend activity in Metals, Index Futures, and Interest Rates, while new trends appear to be developing in Currencies and Commodities.

Since my last post we've initiated new long positions in several stock index futures markets around the globe. We've also started to buy the US Dollar, which suggests that a cyclical change could be taking place across several commodity sectors.

I was doing some research recently that suggests that we are due for a cyclical run on the short side in many markets. This US Dollar strength and commodity weakness could be the beginning of that cycle.

If you have any questions about the markets or strategies, please don't hesitate to contact me at shane(AT)wisdomfinancialinc.com or 800.854.6354.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.

Heat Map

I found this earlier in the week and thought it was pretty cool http://www.finviz.com/futures.ashx

Trend Following Update

The Trend Following environment for the most part remains choppy and volatile across a broad number of markets and sectors through February. Rangebound activity has been predominant in the energy sector, while metals and equities have started to trend higher again. The US Dollar continues to show strength which is putting pressure on commodity prices, particularly in the grain and soft sectors.

LTX Traders are finding a few bright spots in interest rates, and a few commodity markets that have been trending through the month.

Below are a few charts that highlight some of our current open positions:

Grain Sector - Short Rough Rice


Soft Sector - Short Robusta Coffee

Metals - Long Palladium


Interest Rates - Long Two Year Notes


Meats - Short Class 3 Milk



We haven't had to many exits since my last post. The Sugar market corrected sharply and stopped out our longs with a small profit. This seemed to happen right after that Reuters poll showed that Sugar was expected to reach "historic milestones" by the end of March.




Our OMX 30 position also stopped out as stock markets around the globe appear to be correcting or consolidating to start 2010.


If you have any questions about the markets or strategies, please don't hesitate to contact me at shane(AT)wisdomfinancialinc.com or 800.854.6354.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.

Trend Following Update - Entries and Exits

The trend following environment continues to be quite challenging as sector correlation remains high. I've highlighted some of our recent activity which has been mostly defensive.

I'd classify this trading environment as "volatile and choppy". Hang on...

New LTX Entries
We've only had a couple new entries for LTX recently. Most of the trading activity has been on the exit side.

One of our newest entries was a Short WTI Crude Oil position. This chart really highlights how frustrating the trend following environment has been in the energy sector over the last year.


We took a new Short position in Lean Hogs.


Exits
Our Live Cattle Short position didn't last long. This trade stopped out within a few days as prices moved against us almost from the start.


We exited several stock index positions in the past week. Our Long CAC 40 trade ran out of steam and we've moved to the sidelines.


The Nikkei has been about as frustrating as the energy sector. Our long Nikkei position moved against us as well and stopped out this week.


The Metals sector also continues to corrective action. We exited our Long Copper position recently as well.


If you have any questions about the markets or strategies, please don't hesitate to contact me at shane(AT)wisdomfinancialinc.com or 800.854.6354.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.

Trend Following Update - January Recap

January presented some real challenges for trend followers. The month started off with strong trending moves in a number of markets however, by months end several sectors posted reversals and profits eroded.

The CRB had the largest monthly decline since July 2008 and it looks like this trend could continue. We are starting to get new short signals in a number of commodity sectors as markets continue to key off of a strong US Dollar, which is pressuring commodity prices.

Grains
The grain sector continues to show weakness. Our Corn, Rapeseed, and Wheat positions are starting to gain momentum.





Meats
The meat sector is starting to show weakness again. LTX initiated new short positions in Live Cattle on Friday.


Our Milk trade is starting to show promise as it declined through the week.


Softs
Supply concerns continue to send the Sugar market higher. According to a Reuters poll Sugar prices will reach historic milestones by the end of March 2010 as a global supply shortage tightens its grip on the market. It'll be interesting to see how that plays out over the next couple months.


London Robusta Coffee is keying off of a strong US Dollar and moved lower through the week.


Metals
The Metal sector saw the largest counter trend moves on the week with reversals taking place in Palladium, Copper, Gold, Silver, and Platinum.

We stopped out of our Long Tocom Gold positions in LTX.


Palladium moved lower most of the week.


Bonds
Bond prices firmed up this week as economic data suggests that rates are likely to remain low in the near future.

Our Two Year Note position broke out to new equity highs this week.


We initiated a new long position with LTX in the Swiss Government Bonds.


Stock Index Futures
Stock Index Futures were lower around the globe.

We stopped out of our NASDAQ position in LTB.


And we stopped out of our MSCI Singapore Index trade for LTX.


Energy
We just can't seem to get a clear picture on the Energy sector lately. We're simultaneously holding long and short positions across a number of foreign and domestic energy contracts.

This week our long RBOB Unleaded Gas position stopped out.


While our short London Gas Oil position started to show some promise.


LTX is also triggering new short positions in Natural Gas.


Currencies
The Currency sector is starting to get interesting again. LTX triggered a new long signal in the Yen, and a new short signal in the British Pound.



If you have any questions about the markets or strategies, please don't hesitate to contact me at shane(AT)wisdomfinancialinc.com or 800.854.6354.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.

Trend Following Update - Weekly Recap

Trading was largely positive for LTX and LTB Traders last week as interest rates, metals, index markets, and softs continued higher.

The Grain sector was the big story of the week as the US Government forecast a substantial supply increase in grains and oilseeds. This news sent the markets tumbling and our long positions in Soymeal and Beans were stopped out.

CBOT Soybean Meal


We are starting to get new short signals in several grain markets now and have established new Short Positions in Wheat, Rapeseed, and Corn. We'll be looking for these markets to move lower over the coming weeks/months.

Corn


If you have any questions about the markets or strategies, please don't hesitate to contact me at shane(AT)wisdomfinancialinc.com or 800.854.6354.

Futures Trading Involves Risk of Loss and Is Not Suitable For All Investors. Past Performance is Not Indicative of Future Results.