Over the next few days I'll be trialing a new idea I have for trading futures spreads, so far it looks interesting.  At the weekend I'll go back over 100 days to check consistency.


There were a couple of trades yesterday (both SIM) and both were good trades;

Up and down

NASDAQ 100 futures on top and Dow Jones futures below (with the value weighted spread in the middle)


Shorted the NASDAQ 100 Dow Jones spread again today, the trend was down.  Typical quiet Friday trading - not much - took a small profit before the close.

Does everyone understand what I'm doing here?  Red/Green marker on futures charts (black/white candles) indicates going short/long the future.  Whereas the chart in the middle, the black line is the spread between the two.  Red marker on that indicates selling the spread, green marker indicates buying it.

NASDAQ 100 futures on top and Dow Jones futures below


The NASDAQ was going up in a strong trend, I thought it would crack before the close, accentuating the difference in performance for the day between the NASDAQ 100 and Dow Jones futures.

Got into this at 5.30pm and although the spread fluctuated back and forth it didn't continue lower as per earlier in the day, got out before the close for a flat trade.  This is a new type of trading I'm exploring where I'm not using stops close to the price.  I do have stops but they are 50 - 100 points away from the price of each future, and are simply in place in case I get a power outage / phone lines go down etc.

Although the trendline was broken in the NASDAQ it wasn't in any meaningful way therefore this trade didn't act in the way I thought it might. 

Running!

Thats me covered over 4000 kilometres now, having ran 12K earlier this evening;



That's the equivalent of running from Brisbane on the east coast of Australia over to the west coast of Australia.

Commodities

Some commodities are beaten down right now;

Coffee (JO ETF)


Orange Juice;





Cotton;




Cocoa;


Charts from www.sentimentrader.com



Not many signs of inflation there...

However there there is a potential Head and Shoulders formation for the Dollar Index...

Trade idea

A potential trade idea...

This following chart covers from May 2012 and is;

Gold futures on top
Dollar Index futures in the middle
At the bottom is the notional value of a Mini-Gold future and Dollar Index future added together (achieved by going long each contract)



What's interesting here is that, were you only looking at the top two charts you could ascertain that Gold was going through a phase of outperforming the dollar from August until the start of October however by including the chart at the bottom it's more easy to discern that in fact that Gold has been outperforming the dollar since July onwards (on the bottom chart there was a lower high confirmed at the end of June).

As mentioned previously I've been considering a long in Gold futures however it would appear a more measured (and less risky) approach would be to engage the market by going long a Mini-Gold future AND a Dollar Index future.  It's nicely balanced in the sense that the notional value of a Mini-Gold contract is $83,500 and the notional value of a Dollar Index contract is $79,600.  It appears as though a higher low on the bottom chart may be about to form, suggesting an opportune moment to get into the market using this trade.  I'll watch to see how this scenario develops for now.

Dollar Index

The Dollar Index - May 2012 until now



I've been thinking for some time that it's going lower and I think that may happen soon.  I talking about going long gold futures previously, my system problems stopped me from doing it but that resolved now.

I sense we are winding up for big moves in lots of markets soon.  Broadly dollar down, gold and commodities up, equities up and bonds down.

Markets