Commodity Trader's Almanac 2010

Table of Contents

Title Page

Copyright Page

Introduction

USING TIMING TOOLS TO IMPROVE TRADING RESULTS

BULLISH TRIGGER: HIGH CLOSE DOJI (HCD)

BEARISH TRIGGER: LOW CLOSE DOJI

PIVOT POINTS: ONE OF THE BEST PREDICTIVE PRICE ANALYSIS TECHNIQUES

JANUARY ALMANAC

EURO PEAKS AGAINST U.S. DOLLAR

WHEAT TURNS TO CHAFF

GOLD RALLY LOSES ITS LUSTER

SWEET END OF JANUARY LONG S&P 500 TRADE

FEBRUARY ALMANAC

STRENGTH IN SOYBEANS

SILVER TARNISHES IN FEBRUARY

NATURAL GAS SURGES

MARCH ALMANAC

COCOA PEAKS BEFORE ST. PATRICK’S DAY

MARCH BRITISH POUND INVASION

CRUDE OIL STRIKES A WINNER IN APRIL

APRIL ALMANAC

APRIL TAX TIME TAKES A BITE OUT OF GOLD

BONDS MUST GO UP WHEN STOCKS GO DOWN

BEEF PRICES HEAD SOUTH BEFORE SUMMER

MAY ALMANAC

COPPER TOPS IN MAY

SILVER SLIPS IN MAY

COFFEE BUZZ FADES IN SUMMER

SHORT SOYBEANS FOR SUMMER

JUNE ALMANAC

HARVEST BOOSTS WHEAT

SUMMER BBQ SEASON GIVES BEEF A BOUNCE

MOTHER NATURE MAKES CORN POP

JULY ALMANAC

LAST-HALF OF JULY SHORT S&P 500

SUMMER AIR CONDITIONING HEATS UP NATURAL GAS

SWISS FRANC FOLLOWS GOLD HIGHER

AUGUST ALMANAC

AUGUST GIVES COFFEE A LIFT

TWIN COCOA CROPS CREATE TWIN SUMMERTIME TRADES

GOLD GLITTERS MID-SUMMER

CRUDE OIL TAKES A BREATHER

SEPTEMBER ALMANAC

BRITISH POUND AUTUMN RALLY

SILVER SLUMPS IN OCTOBER

JAPANESE YEN DIVES AGAINST THE DOLLAR

OCTOBER ALMANAC

SOYBEAN’S HARVEST LOWS OFFER POTENTIAL FREE MEAL

TWO-MONTH YEAR-END EURO RALLY

MASSIVE S&P 500 GAINS HALLOWEEN TO CHRISTMAS

CORN HARVEST LOWS FEED BULLS ALL WINTER AND SPRING

NOVEMBER ALMANAC

LEAN HOGS FATTEN UP BEFORE THANKSGIVING

GOLD BUGS GET A TREAT FOR THE HOLIDAYS

BONDS FREEZE UP IN WINTER

DECEMBER ALMANAC

SWISS FRANC TRADES LIKE GOLD

COPPER STARTS TO BUILD A BULLISH FOUNDATION

BRITISH POUND INVASION FADES AWAY

BUSINESS CYCLE CAUSE AND EFFECT ON SEASONAL PRICE MOVES

DIRECTORY OF TRADING PATTERNS AND DATABANK

Copyright © 2010 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey

Published simultaneously in Canada

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INTRODUCTION TO THE FOURTH EDITION

I am especially proud and excited to present the fourth edition of the Commodity Trader’s Almanac. The research put forth in 2009 had proven to be a valuable resource, and armed with this book, I am eagerly awaiting the trading opportunities that lie ahead in 2010. Working together with Jeff Hirsch and Genesis Technologies, especially Chad Noble, we have improved this book, creating a better tool for helping traders and investors become educated and prepared.

The Almanac provides a monthly overview of pertinent statistics and highlights the seasonal tendencies of each particular futures market. In total, the Almanac is designed to help point traders and investors in the general direction of the normal, natural supply/demand cycle of the market. It highlights specific strategies you may wish to employ, monthly overviews, and historical statistics.

Why is a book like this so important? Markets can turn on a dime. A case in point is the market action in 2009; what a difference a few months, let alone a year makes. Look where the stock market was in mid-2008, before traders and most economists were blindsided by the magnitude of the financial crisis. By February 2009, the stock market had descended into the abyss.

New government regulations may help give stability, but at a cost in lost business oppor - tunities. This may mute the business environment for 2010 and perhaps, affect the way the commodity markets behave. I am still expecting a volatile ride in the stock, currency, commodity, and financial markets for the next few years.

As a result of the government bailouts and increased spending, there is a potential risk for a rise in the inflation rate. I am expecting a round of monetary tightening within the next year. As a result, this could help support the dollar and, at the same time, put pressure on Treasury bond prices.

There was one aspect in my outlook for 2009 that was spot-on. I believed the global markets would continue to demonstrate excess volatility. That was an understatement. I am going to make that same prediction for 2010, as the impetus for the instability is at least as prevalent as it was 12 months ago.

Despite the equity markets downturn in the wake of a presidential election year, we did see many of the commodity markets behave within their seasonal supply/demand cycles, as detailed in the 2009 Almanac. Many of the markets we cover, such as crude oil, foreign currencies, gold, copper, grains, softs, and the meat complex, all behaved, relatively speaking, amazingly well within their seasonal price moves. I have highlighted some case studies on pages 121-125, which I believe will help you to learn how this Almanac, combined with my favorite technical tools, may help you to improve your trade selections for 2010.

The 2010 Commodity Trader’s Almanac brings to you several new features. We have added two markets: the S&P 500 stock index futures and the 30-year Treasury bonds. Hopefully, this year’s Almanac will give you better guidance on how to invest in these asset classes.

In addition, we have added a contract specifications table that also contains a listing of high-correlating stocks and exchange traded funds (ETFs) for each commodity. This should help futures traders and stock traders capitalize on these seasonal tendencies by using various securities based on the many different patterns and strategies presented herewith.

The 2010 Almanac provides statistical information on the seasonal tendencies of various markets and identifies specific trading dates and holding days for each trade. Furthermore, I am sharing some of the research from my book, Forex Conquered: High Probability Systems and Strategies for A ctive Traders, John Wiley & Sons, 2007. It will help the trader understand and identify where we are in the business cycle and what can be expected to occur in the markets. In some years, price moves can be magnified or muted due to cyclical forces from periods of economic expansion, followed by contractions or recessions.

It is important to remember to use the 2010 Commodity Trader’s Almanac as a reference guide and to compare current events against history. We have included the data that allow the reader to distinguish which years had predominantly bigger price moves and where current prices and trends are in comparison to past historic data.

I wish you a healthy and prosperous 2010!

John L. Person

USING TIMING TOOLS TO IMPROVE TRADING RESULTS

There are many methods one can employ to help initiate trades and aid in timing the entry and exit of positions, including various mechanical trading systems and manual trading tactics. Constant changing market conditions can require system traders to adapt and update the parameters for trading decisions. John often prefers the hands-on visual approach, which is more of a manual method, while employing a mechanical trigger to both enter and exit a position utilizing a specific risk management technique. The visual approach John likes to use is through the aid of a specific price graph known as a candlestick chart.

Much of John’s extensive research regarding the combination of candlestick formations and pivot points, including some of his proprietary signals, have been taught to traders at seminar courses and shared in his second book, Candlestick and Pivot Point Trading Triggers: Setups for Stock, Forex, and Futures Markets, John Wiley & Sons, 2007. We felt