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Daytrading by Ambush Update for Wednesday February 27, 2008
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Reporting trades from 2/26/08.
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1: MARCH 30 YEAR T BOND
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USDH8 O=115-30  HI=116-10  LO=115-14  CL=116-00

The PPI rose more than expected in January, though recent data
revisions and the release of the more influential Consumer Price
Index from last week helped keep a lid on today’s trade. The
Consumer Confidence Index for February was much weaker than
anticipated. This also tended to offset some of the effect of the PPI
data.

Rising inflation levels weigh against the case for more Fed rate cuts
while weak economic indicators support the case. A couple of minor
housing-related reports also favored bonds. We ended the day only
up 5 ticks but with almost a full point of range.

From the RTH open at 115-30 Bonds traded down to test 115-16 and
turned like a banshee. I bought 115-18. When we hit 116-00 it became
quickly apparent the run was spent. I watched for most of the next
lackluster 5 minutes and decided to exit on an OB play … sorta’. I
exited at 116-00 for 437. I sold 115-29 and exited at 115-25 for
$125. We moved right back to 116-00 where the whispers turned
weak almost immediately. I sold 115-29 and exited at -21 for $250.
I tried to buy as the retest to -18 was close enough to -16 I thought.
I wasn’t quick enough. I would have had to buy about -23 or so.
It would have turned out fine if I had but the rules say -21 is
the highest I can buy at that setup. I bought 116-03 and exited
at -07 for $125. I next sold 115-29 and exited at B/E. I sold
-29 again and exited at -23 for $187. We ended the day right
back at 116-00.

For Wednesday we’ll watch 115-16, 116-00 and 116-16 for first
action.

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2: MARCH CANADIAN DOLLAR
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CDH8 O=10104  HI=10220  LO=10098   CL=10205

The U.S. Dollar broke a very strong support number and was on
the lam all day. Very strong German economic reports and some
other news supportive to the EC put the Dollar at a disadvantage.
With a bigger than expected Canadian budget surplus noted in the
headlines this morning and commodity prices providing the currency
with an aggressive lift in the prior session, it wasn’t surprising to
see the Canadian add to its gains of late.

We hit no numbers I was ok to trade today. I am licking my chops
to sell a failure at 102 anything. I have set an alarm for 10200
and will sell it regardless of the hour IF I’m awake. I can now buy
retests at 10000 and 10070 as they fail to move lower and turn
back north … should that happen.

All the weekend numbers for tomorrow, Tuesday

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3: MARCH SWISS FRANC
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SFH8 O=9204  HI=9300  LO=9204   CL=9300

The Swiss has almost acheived the status of most prefered currency.
Just about everything that could recommend the Swiss is in place so
today came as no surprise. The Weekend Edition pretty well nailed
this scenario. I bought 9207 and exited at 9297 for $1125. It was
a pretty easy all day climb.

Stay on the weekend numbers which is a pretty unlikely scenario
at the moment. We are in an area of no structure. Barring a pullback
into our numbers we are confined to the sidelines.

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4: MARCH MINI RUSSELL 2000
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ERTH8  O=710.20    HI=724.00    LO=706.50   CL=716.80

It’s pretty clear at this point the market is looking for positive
spins and ignoring anything they don’t like the looks or sound of.
I sold 707.70 right after the RTH open. I exited at 706.10 for
$160. I bought 706.50 and exited at 712.90 on an OB play off
our 713 number. We made $640. I did a couple of B/E trades
and then bought 713.50 which I exited at 719.90 for $640 again.
I did 2 more B/E trades and then sold 721.50 and exited at 722.90
losing $140. We added 2 more B/E trades before selling 721.50
once again. I exited at 717.30 for $420.

All the weekend numbers are in play. The high today at 725 looks
an awfully lot like a top. Watch for pullbacks from there.

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5: MARCH MINI $5 DOW
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EYMH8 O=12520   HI=12740  LO=12520 CL=12699

I bought 12560 on the break above 12550. I held it thru much of
the day. As we broke above 12700 I vowed not to let it back up
and break back BELOW 12700 without exiting. I did so at 12697
for $685. That was my one trade for the DOW today.

Stay on the Weekend numbers. 12750 or thereabouts might be a
high from which we’ll see some pullbacks.

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6: APRIL GOLD
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GCJ8  O=940.30    HI=953.20    LO=928.90    CL=949.90

I sold 938.50 and exited at B/E. I sold 938.50 again and exited
at 939.00 losing $50. I bought 941.60 and exited at 945.50 for
$390. I didn’t get any more numbers today.

I’ll play 940/950 tomorrow if given the chance.

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The Daily Update is a publication of Daytrading by Ambush

http://www.daytradingbyambush.com
tom.mostlikely@verizon.net

Copyright (c) 2008 daytradingbyambush

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RISK DISCLOSURE!

Trading commodity Futures and options on futures involves
significant risk. You must consult licensed professionals or your
own advisors before trading to determine if it is suitable for you.

Nothing contained herein is a solicitation to trade or a recommendation
of a specific trade. You must consult your broker or advisor before
making any trade to insure current prices, margin requirements and
other factors determinant to suitability. By reading this publication
you agree to make no trade relying in whole or in part on the comments
of the writers. You agree before doing any trade contained herein
to consult your charts and advisors to verify all information and make
your own decision.

Hypothetical performance results have many inherent limitations, some
of which are described below. No representation is being made that
any account will or is likely to achieve profits or losses similar to those
shown.

In fact, there are frequently sharp differences between hypothetical
performance results and actual results subsequently achieved by any
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One of the limitations of hypothetical performance results is that they
are generally prepared with the benefit of hindsight. In addition,
hypothetical trading does not involve financial risk and no hypothetical
trading record can completely account for the impact of financial risk
in actual trading.

For example, the ability to withstand losses or to adhere to particular
trading program in spite of trading losses are material points which
can also adversely affect actual trading results.

There are numerous other factors related to the markets in general
or to the implementation of any specific trading program which cannot
be fully accounted for in the preparation of hypothetical performance
results and all of which can adversely affect actual trading results.

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Reporting trades from 2/25/08.
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1: MARCH 30 YEAR T BOND
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USDH8 O=116-30 HI=117-02 LO=115-16 CL=115-27

The unwinding of long position was greater than I’d anticipated
but it just shows how biased we are tothe downside at the moment.
Inflation talk seems to be the idea that holds traders attention
right now. It’s as if the market is collecting asking “what recession?”
Talk about a split personality.

We tested 116-16 early and then started a climb into the RTH open.
I could’ve jumped in about 116-21 or so on the continuation angle
but I chose not to. I wanted to see either 116-16 again or 117-00
to initiate anything. We got the 117-00 and I sold 116-29 which I
exited at 116.02 for $843. I bought 116-03 and exited at B/E. I
next bought 116-03 and got stopped at 116-11 for $250. I sold
115-29 and got stopped at 115-19 for $312.

I think we need to be careful tomorrow. The PPI and consumer
sentiment numbers could set the market in motion. I don’t think
it will be enough to be scary as hey priced a whole bunch of
inflation into the market today. Just be on your toes with any
open trade.

For Tuesday we’ll watch 115-16, 116-00 and 115-00 for first
action.

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2: MARCH CANADIAN DOLLAR
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CDH8 O=9956 HI=10037 LO=9956 CL=10026

I bought 9955 and hung on for a little pop to 9980’s. I let it ride
a bit after we got there but finally put in an OB order the sell if
80 was broken. It didn’t take long, which is sorta’ the point, idinit?
I was gone at 9978 for $230. I sold 9975 and exited at B/E. The
break above 9975 was very appealing but I said no buys so I let
it go to my very big disappointment. I sold the failure at 10000
at 9995 but got stopped at 10010 on a nasty little spike. I had my
stop at 10003 but they filled me at 10 for a $150 loss. I sold the
failed double top at 10040 at 10035 and closed the trade at 10011
on an OB play for $240.

All the weekend numbers for tomorrow, Tuesday

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3: MARCH SWISS FRANC
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SFH8 O=9191 HI=9209 LO=9180 CL=9188

After sinking throughtout the night the SF started a sustained up
move about 3 am. By the time RTH arrived we’d already put on 50
points from the origin and were stting on 9200. I watched it tap
on 9208 and 09 for close to an hour. I sold 9207. I exited at 9192
for $187. I sold 9195 a gain and exited at 9187 on an OB for $100.

Stay on the weekend numbers

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4: MARCH MINI RUSSELL 2000
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ERTH8 O=695.50 HI=712.50 LO=692.90 CL=710.60

I seriously don’t understand how the stock market can manage to
gain under the current circumstances. I’m sure the news that some
derivative insurers got help and retained glossy ratings was cause
for celebration but the hangover is gonna’ be a bear - pardon
the pun. Maybe the narket is sayingit is happier dealing with inflation
as opposed to a recession.

I began selling 694.50 on the break of 695. I exited at 696.80
losing $230. I bought 695.50 and exited at 701.70 on an OB play
for $620. I missed the sell off the break of 704. I sold 699.50
and exited at 697.70 for $180. I bought 695.50 and exited at
699.90 for $440. I missed a nice sell on the break of 700. I bought
695.50 and exited at 707.70 on an OB play as we popped above
708 and then retreated below. We picked up $1210

All the weekend numbers are in play.

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5: MARCH MINI $5 DOW
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EYMH8 O=12380 HI=12590 LO=12345 CL=12566

I bought 12362 and exited at 12496 for $670. I then sold 12496
and exited at 12400 for $480. I got busy in other markets and
missed a couple of alarms. I ended my DOW day without further
trades. There was a nice buy at 124 that ran near 12550.

Stay on the Weekend numbers.

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6: APRIL GOLD
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GCJ8 O=930.60 HI=942.50 LO=928.90 CL=935.40

I sold 948.50 and exited at B/E. I sold 948.50 once more. I exited
this one at 938.30 for $1020. I did 3 additional trades that all
ended at B/E. There were 2 sells and a buy,

I’ll play 940/950 tomorrow if given the chance.

BONDSFirst notice day in March TBonds is Friday. We’ll trade the March through the week with one eye on the Open Interest and Volume numbers. They will tell us if we need to make the move to the June contract after Thursday or before.

The Bonds gave us a nice 1-point gain on Thursday. The market launched a big move from near 116-00 very early in the morning prior to the RTH open. By the time RTH happened we were at 116-16 and we bought 116-19. The move from there was constant and without any significant retraces. We exited the trade at 117-15. On the failed double top at 117-20/19 I decided I would exit if 117-16 was violated and moved my stop to 117-15. This is a “Once Broken” play. The name is derived from the belief that once the market broke above117-16 … a number of prime importance to us in the Bonds … we would not want to continue to be long should the market retrace below that significant number.

Friday the market was quite skittish as volume was extremely light and looking ahead to a major supply increase next week on Wednesday. On Friday a FED President talked of rising inflation. On Tuesday we have the release of the PPI numbers, a major inflation tell. Watch for some unwinding of Bond positions on Monday unless the stocks are down aggressively. The bulls are firmly in control to start the week. We should see advances shortly after the unwinding. Beware of short positions, don’t avoid them necessarily, but do manage them very closely in anticipation of short runs with very quick reversals to the upside. If you’re not extremely comfortable with our short stops and tight management strategies you might consider passing on short plays altogether.

The Market ended Friday poised at the 117-00 mark. That will be our initial ambush point for Monday morning along with 117-16 and 116-16. Until we see the PPI numbers on Tuesday I think Bond traders will be holding their collective breath and be very unwilling to press Bonds very far in either direction off 117-00.

CURRENCIES

The direction of the wind changes quickly. We’ve done another 180. There is much press including the word “contagion” in stories. There is not only talk of a recession deeper than originally thought but, in fact, economic reports painting classical recessionary pictures. The WSJ and the rest of the bizrags can’t find the room to carry all the stories of the second wave of subprime. Now it’s student loans, commercial real estate and corporate bonds showing the effects. There is a continually growing stack of reasons to flee the U.S. Dollar. Rest assured there will be a flight to quality on Monday. I don’t see how the Dollar can avoid 7500 on Monday or Tuesday.

Canadian Dollar

The CD looks very vulnerable on the chart. I mean, geez, how many times can you make a run at 10100 and fail before the message gets thru the thickest of skulls. Set backs in oil and other Canadian commodity prices plus all the plague to the south don’t bode well for the Looney. I think the easiest path is down right now. Short trades are preferred; longs are suspect and demand very tight management.

Any retests of 10100, 10050 or 10000 are easy sells; likewise at 9975, 9950 9925 and 9900. I would pass on the buy at everything above 9950. There and below I will buy but enforce very tight management policy. 9880/75, 9850, 9825 and 9800 also make the ambush list. 9750 makes the list as does 9725 and 9700. From there to 9550 we are out of structure for guidance so we’ll be precluded from trading below 9700. I will sell a break of 9700 and use periodic RRR for management.

9850 is not really supported by the info on the chart. It really comes in at 9960 or thereabouts. I think that’s the way it got recorded but I believe the decisions were made based on 9850 so that will be my ambush point. I’ll chalk up the difference to poor recording secretary.

Any number mentioned is good guidance for management and stop rolling for entries above or below them. The stops as always are at the next higher 3 or 7 for the big risk takers on sells and the next lower 7 or 3 on buys.

Swiss Franc

If you followed our guidance in the Swiss you should have done well on 1 or 2 trades on Thursday. You should have been long by 9100 and out at close to 9140, Then back in about 9145 or so and out near 9200.

The Swiss will continue to be amongst the primary beneficiaries of the flight to quality and away from the U.S. Dollar. The Swiss National Bank has been able to back away from a rate decrease which all points to higher prices. 9200 will be a hard resistance point to break and convert to support. If it does it will probably have a rather easy go to 9250 … maybe even 9300. I look for the trade to struggle with 9200 chopping both sides for a while before the bulls prevail. With the magnet tugging from 9250/9300 it may not take very long though.

Obviously, we’ll sell any retest of 9300 or 9250 as well as a break below 9200. Beware the short from 9200 it could turn very fast and head north with conviction so be on your toes with solid, tight management strokes at the drop of a hat.

9175, 9150, 9120, 9100, 9075, 9055, 9030, 9000, 8980, 8840, 8800, 8750 and 8700 are all fair game for ambushes and management triggers. Same as CD, use the next 3 or 7 as stops on sell trades and the next lower 7 or 3 as stops on buy trades. Always be aware of where you sit proposition wise; you do that by calculating the periodic RRR all the time. I rarely watch a market move more than 5 points without having a clear picture in my mind of what the RRR is at that juncture, then the next, then the next. The constant and recurring question we need always to know the answer to is what am I now risking to make what profit based on the most likely scenario.

INDICES

The Stock Markets all continue to find excuses to hold prices at recent current levels. We have some classic recession numbers in several reports. We have a huge and unexpected drop in activity in one of the FED regions, we have many additional downgrades related to insurers and Fanny and Freddie. Yet we continue to trade relatively narrow ranges in all the indices. I think only a strong hint of another rate drop will stem the tide of negatives. That isn’t likely as the opportunity to do that on Friday saw the FED mouth du jour talking about inflation threats. The path of least resistance is down and I don’t think it can be thwarted or even temporarily stemmed without pretty direct and strong commitment to drop rates again from the FED.

Mini Russell 2000

It looks like we’ll be focused around the 700 mark for the Monday morning action. I don’t think there is any doubt we have downgraded the U.S. economy this past week and thus far there has been no price in of that fact in my opinion. We could get that Monday morning but my guess is we’ll have a relatively quiet trade until we see the PPI numbers. If they support the inflation case the FED mentioned on Friday we might turn again to bull control; if not … it could start a slide lower.

Here are the ambush numbers for the Russell for the coming week: 648, 665, 672, 682, 685, 688, 692, 695, 698, 700, 704, 706, 708, 713, 717, 722, 728, 735, 740, 745, 747, 750, 752, 756, 758, 760, 762, 764, 767, 770, 773, 775, 778, 780, 785, 790, 794, 798, 800 and 802. I will not sell anything below 648 and I will not buy anything above 794.

$5 Mini DOW

I think we are less likely to se a real serious pricing in of the negative in the DOW compared to the Russell. I look for more of the same range bound trade early in the week and then we’ll see. Percentage wise the DOW should be the least affected of the exchanges. There are more multinational companies in the DOW than other indices. Here is an angle for you to play around with. Multinationals will be hurt less by a drop in the dollar and should therefore hold on to prices better than most non-multi’s. It does usually work out that the upper end of the market suffers less than does the commoners.

Let’s trade these numbers this week: we’ll start with the quad top at 13850. We’ll sell a failed retest there but not buy yet … exactly the same play at 13800. 13750, 13700, 13650 (#2 on the hit parade of strength), 13600 (mostly on its big fat round number credentials as opposed to hits), 13550, 13500 (see 13600 above), 13450, 13425, 13400, 13350, 13300, 13240 (probably is really 13250; play however you see it) 13200, 13150, 13125, 13100, 13050, 12940/50 as a range, 12880, 12840, 12800, 12650/60 as a range, 12600, 12550, 12500, 12400, 12200 and 12000. No sells below 12200. You can buy any retest at or near 122 or 120 as they fail to push lower and turn back north.

GOLD

We should get a really definitive idea of Gold’s resiliency and star power this week. With all the dollar down speculation, with all the downgrades crossing over to more sectors in the economy the bulls should have a field day with Gold. Clearly we see on the chart the tough time Gold has had building the momentum necessary to take on the resistance at 950. I think all the current circumstances come together in a way that Gold builds the fuel stores for a run higher.

Clearly the chart shows a negative tone from the last 3 sessions. I’m really concerned by the sharp break resulting from the failure at the highs on Wednesday, Thursday and even Friday. I will be careful on any buys by being prepared to exit any long plays at the whiff of a stall or break lower. I will trade 940/950 or any channel lower. I will trade a break into the 960/970 channel

Have a great week of trading.

Tom