MBWealth's Commodity Blog » federal reserve

Commodity Bull Market is here to stay 6/7/11

Matthew Bradbard — Tue, 07 Jun 2011 20:28:30 +0000

Clearly the Fed has no clue and if this is a market with NO inflation I’d hate to see a commodity market with inflation. Crude fights back in late dealings to close marginally positive in today’ sessions. My opinion is this price action was position squaring and light buying ahead of Bernanke’s speech today and OPEC is on the docket tomorrow. Furthermore the strength in the distillates could have aided in Crude’s action as well. We will likely be looking for long exposure in Crude in the coming sessions and have advised hedgers to have some exposure on their fall contracts. Inside day in natural gas as we are still looking for a price reduction in the coming weeks. We’ve advised bearish plays expecting a 5-8% break. Stocks fail to hold onto their gains and will settle near their lows as this correction does not appear to be done. Though we feel there is more risk to a price reversal and we see limited downside…trade accordingly. The dollar posted a four week low but being were oversold we do not see much more downside and instead see a sideways consolidation around these levels. The Pound, Swissie and Euro remain in bull mode but we would trail stops or lighten up as we’ve seen a sizable acceleration of late. Aggressive clients were advised to scale back into longs in the Loonie; our suggested plays are purchasing call options or getting long futures and selling out of the money calls 1:1. Live cattle were higher by 1% while lean hogs positive by 2% in today’s session. We have advised bullish plays in both meats thinking we can see both hogs and cattle appreciate from current levels. To take it a step further live cattle should be bought with both hands for those capitalized investors willing to stay with the trade for several months as just a 50% Fibonacci retracement would be approximately $4,000 per futures contract. Flip a coin in gold…we cannot get a pulse and feel better on the sidelines with a slightly bearish bias. We continue to trade both sides of the silver market with prices sideways again today. A settlement above the 9 day MA at $37.25 or below the 20 day MA at $36.15 should signal the direction of the next leg. Sugar broke out to higher levels today…shorts should have cut losses. We see a triple bottom in cocoa around 2850 and think we could get a bounce from here. We’re suggesting bullish plays in September via futures and options. Cotton was down the daily limit again today…fade rallies. Once we exit out clients out of cocoa we should have some bearish plays likely after Thursday’s USDA…stay tuned. Corn and soybeans pared yesterday’s losses but we still think further price reduction is coming…trade accordingly. Wheat cost just over 1% so clients wheat/corn spreads were hit from both sides today. Stay the course for now but this trade could get ugly as we’re down approximately $1,250 per. Bernanke’s ramblings help add a bid to the Treasury complex today…on new highs cut losses as fighting the Fed will cost our clients money. I just thought these morons were smarter than that…in my opinion this is a bubble but the timing of when it will burst and from what level is beyond me?

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Trading on Inflation 1/26/11

Matthew Bradbard — Wed, 26 Jan 2011 21:13:32 +0000

Maybe inflation is not a concern but one can trade it as commodities look to be more expensive in the coming sessions and coming weeks to months. The 100 day MA has supported Crude futures the last two sessions; in March at $86.20. As voiced in previous posts we suggest scaling into longs in futures and purchasing bull call spreads thinking we could see the recent highs visited very soon. Add to the position on a settlement above the 50 day MA; in March at $89. The distillates are outpacing Crude on this acceleration higher; a possible trade idea could be buying either RBOB or heating oil against a sale in Crude. We’d suggest still holding off on natural gas purchases as we feel there is too much risk probing longs at current levels. The Fed’s inaction did little to discourage bulls in the stock market as 1300 in the S&P and 12000 in the Dow look likely in the coming sessions. We would suggest looking for an exit door in the Loonie on the next set back being metals and energies could move north from here. As for the Pound and Euro we still like bearish exposure with targets of 1.5400 and 1.3400 respectively. Lean hogs were limit higher today on demand news from Korea…buy dips. We will be looking to re-establish our bullish stance in live cattle….expect trade ideas in the next few sessions. Has the metals correction run its course? We advised clients to lighten up on their gold shorts and be ready to buy more silver on follow through strength tomorrow. As of this post gold is higher by 0.80% and silver by 2.60%. Grains were higher by 1-2% today but we’ve yet to re-establish bullish plays for clients. Yes several months from now we feel prices will be higher but we feel a correction will come first…trade accordingly. Treasuries are waffling to and fro and I cannot get a good feel if we should be long or short the long end of the curve so I suggest moving to the sidelines. Sugar was higher by 4% today, technically it looks like we may see a test of the old highs but we will be absent with clients as I do not trust the current move. Cotton was higher by the daily trading limit again today. We’ve yet to get clients short again but it is on our radar. Continue to fade rallies in coffee as we suspect $2.00 in the coming months.

Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Don’t forget the Fed 1/25/11

Matthew Bradbard — Tue, 25 Jan 2011 21:18:30 +0000

In case you were not aware the FOMC is meeting today and tomorrow so stay alert as even inaction can be a market mover. We’ve advised aggressive clients to scale into longs in Crude futures and to gain bullish options exposure; today some clients bought May $95/100 bull call spreads. The 100 day MA held today just above $86 and the trend line comes in just below that level. Natural gas has lost 7% in the last two sessions and we feel there is more downside to come…stand aside for now. My gut tells me the indices are over due for a set back but the jury is still out. My suggestion is play a break out above 1300 or below 1275 as that should determine the next leg higher or lower. On a settlement below the 20 day MA we have an interest in getting clients short the S&P. Continue to sell rallies in the Loonie and Cable; the Pound is down 1% today as of this post. Aggressive traders could also start scaling into shorts in the Euro. 11 positive days in a row…I smell a correction back to 1.3400 in the coming weeks on a dead cat bounce in the dollar. In the coming sessions on a trade lower in live cattle lets see if the trend line supports; about 110.50 in April. Given the opportunity we suggest being a buyer closer to 108/109. It appears that the selling is slowing in gold and we should be close to turning higher. Trail stops down on shorts as we feel a settlement back over $1350 this week or next should shift the momentum back to the bulls. Silver was lower by another 1.8% today as longs hold on. Our timing was less than perfect but being we suggested only a small allocation clients are not fretting just yet. When prices turn we will be looking to build on their long position. We maintain that a further correction is coming in corn and soybeans; today corn lost 1.72% and soybeans were lower by 2.15%. Aggressive traders could lightly get long 30-yr bonds and/or 10-yr notes with stops below the recent lows. We did not act for clients but see this as a viable trade. Clients were advised to book profits on their May cocoa longs today. We were a bit tardy but were able to get some clients short July coffee today via put options. My suggestion is to gain bearish exposure and sit for a few weeks as we feel a 7-10% correction is coming…trade accordingly.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

FOMC down…what’s next 12/14/10

Matthew Bradbard — Tue, 14 Dec 2010 21:17:36 +0000

The Federal Reserve meeting today was a non-event. Inside day in Crude oil with prices trading slightly lower. Unless we get a surprise in tomorrow’s inventory report we’re still anticipating a 2.5-4.0% reduction in pricing. Natural gas has retreated just over 7% in the last four sessions dragging prices back below the 20 day MA. It appears we could see a probe of $4 but we’ve been fooled before several times in this market. The only exposure we wish to have with clients is a futures spread long February and short April. Aggressive traders could try to pick a top in the indices but you would be bucking the trend. Some of our clients have recently purchased March ES put spreads expecting a 3-5% depreciation in the coming weeks. We would suggest all currency traders that were previously long the Euro, Pound or Swissie to book profits and move to the sidelines or at a minimum tighten up stops if in futures. Nothing notable in livestock; we would like to be long lean hogs and live cattle with clients but would prefer a long entry from lower levels…stay tuned. Two sided trade in metals today with palladium and platinum higher, copper unchanged and gold and silver slightly lower. As far as our silver traders we advised to exit their March $25 puts at a slight profit and they know are short March $28 puts. On a trade higher we will look to offset the put and in case of a break lower we placed sell stops under todays low. In my opinion the next few days action will be largely dependent on outside markets, a move $1-2 higher or lower would not surprise me. We have lightened up significantly on client’s longs in corn thinking we are close to an interim top. A new trade idea today was to establish bearish exposure in March CBOT wheat. We’re anticipating a 25-40 cent break from today’s close. Cocoa held the 50 day MA today advancing 1.75%. If we see an additional 2-3% move clients will be looking for an exit door on their longs. Sugar gained nearly 1% today on a new high tomorrow clients should be out of their March call options…stay tuned. Without any freeze damage in the next few evenings in Florida we may opt to fade rallies or buys puts in January or March OJ…stay tuned.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Capital Deployment 8/26/10

Matthew Bradbard — Thu, 26 Aug 2010 20:14:31 +0000

Finally it looks like the smart money is recognizing the opportunity in a non-correlated asset class, i.e. COMMODITIES. Crude oil has appreciated 3.7% off yesterday’s lows which we feel will serve as an interim low. Our upside targets on October are $75.85 followed by $77.50. Crude oil, RBOB and heating oil were higher by 1.50-2.25% today. Natural gas prices have been oversold now for almost two weeks but in that time frame prices have come down another 50 cents. I cannot stress enough how past performance is not indicative of future results but if you look at the price action in 2009 and compare it to 2010 it is frightening similar. Last year prices bottomed in early September and then rallied over 50% inside of two months. Disappointing economic numbers were shrugged off by the stock market today; we expect a bounce from here. We anticipate a 30-50 point jump in the S&P and 250-400 points in the Dow. Based on the technicals alone sugar prices could drop an additional 5-8% in the coming week…trade accordingly. November lumber gained 3.19% today; we have a target in November at $240-250. If you missed it yesterday some clients put on a small position in short 10-yr notes via December put options. Silver appears to be a taking its breath for its next surge higher…in my opinion. Clients will remain long December futures and December call spreads. On a trade to $19.75 if you have multiple positions we would recommend lightening up. Impressive exports helped grains bounce today; corn 2.9%, soybeans 1.5% and wheat 1.2%. The wheat chart is ugly and we still expect a further break; another 25-40 cents. We remain bullish corn but would feel more comfortable if prices came down 20-25 cents. Clients do not want to miss the next leg up but if buying we recommend a smaller allocation at these levels. We recognize the trend line since the June 30th low has held and the trend remains up and we may not get the correction. Currencies could go either way so we will be in cash and not adding to open positions. On a GDP number below 2% the dollar should rally and the European currencies and the commodity currencies would likely get hit as well. That would be my prediction from the sidelines.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Russia keeps things Interesting 8/5/10

Matthew Bradbard — Thu, 05 Aug 2010 20:11:54 +0000

The move by the Ag minister in Russia overnight kept things interesting in commodities today. Aggressive traders could look at shorts in Crude oil as long as prices remain below $83 in the September contract. Some clients started to price out October and November put options today…stay tuned. We are anticipating a trade back to the trend line that has held since early July which would drag prices $4-5 lower. If our analysis is correct in Crude we would expect to see a drop in the distillates of 15-20 cents over the next few weeks. Natural gas broke the up sloping trend line today but the 100 day MA did hold. We suggest refraining from futures but still like the idea of November 50 cent call spreads. Previously purchased spreads may opt to buy back their top legs once an interim bottom is established. Tomorrow’s jobs number will determine where from here in the indices. We would continue to fade rallies in the S&P thinking we are in the ninth inning and see NO new bullish developments. The S&P has rallied 12% and I see no reason for that magnitude of a move. If you do please post a comment and let me know what I’m missing. We like the idea of December ES put spreads. Sugar lost just over 3% today; as previously stated a 10% correction looks likely. We would suggest looking for long opportunities closer to 16.25- 16.50. Weak close in December cotton today closing 2% off its high; buy December put options. Coffee looks heavy; we feel a move back to $1.50-1.55 could happen in December relatively quickly. Treasuries will wait for tomorrow at 8:31 EST before making a decision as 30-yr bonds have had a 1 basis point range for the last four sessions. We would like to get bearish exposure but have yet to make a move with clients. Live cattle failed after making a new contract high; after a setback we will be looking to get clients long again. The 20 day MA which has supported for the last month comes in at 95.90 in December. Lean hogs put an interim top this week; sell rallies. We expect to see prices track back to 70-72 in the October contract. As long as gold remains above the 100 day MA the bulls are in the driver’s seat; in December at $1190. Clients currently have NO exposure. The 100 day MA also supports in September silver at $18.15. Aggressive traders could have stops just below that level. We prefer buying December call spreads on dips. September copper closed down 1.76% today and looks heavy. If indices turn south we think a trade back to $3.20 is likely. The fact that Russia temporarily banned wheat exports all bets are off in the grains sector. Where the top is was the question I was asked today and my answer I have no idea? On a correction we will be looking for long opportunities but we suggest taking your position size down and to possibly trade options instead of futures because when prices correct we could move down twice as quick. December corn closed to $3.80 is a BUY in my opinion and we will try to be a buyer ahead of 8/12 for clients if given the opportunity. We will need to see the dollar back above the 200 day MA tomorrow to believe a rally is upon us. The 80.50 triple bottom seems to be support. If and when we get a squeeze in the dollar we expect the Euro and Swissie to get hurt the most…trade accordingly. The ECB and BoE kept rates unchanged at 1.0% and 0.50% respectively.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Day 1 of Fed 6/22/10

Matthew Bradbard — Tue, 22 Jun 2010 20:07:46 +0000

Though we expect no change in rates tomorrow volumes have dried up in recent sessions; perhaps after 2:15 tomorrow investors/traders will be back at work. Crude oil should settle lower again today; on a breach of the 9 day MA at $77.50 expect a challenge of the 20 day MA at $75.50. If our assessment is correct expect the distillates to give back as well. This could all change on tomorrows inventory report or an over reaction on the Fed decision. As we voiced yesterday we’re not advising shorts but rather to exit longs and look to re-enter from lower levels. Natural gas briefly traded below the 20 day MA; that level comes in at $4.75 in August. The 50% Fibonacci retracement level on the August contract is $4.67, the 61.8% comes in at $4.54. We’re tracking September and October call spreads but have not acted on behalf of clients yet…stay tuned. We feel an interim top was put in yesterday in indices and aggressive traders can fade rallies. Most of our clients have bearish exposure via September put spreads in the ES. Our first objective is 1075 and then 1045. Sugar remains a buy dips market as we feel there is more upside to come; with resistance in October at 16.20 and then 16.65. December cotton remains on our sell list as we expect a 5% sell off. Aggressive traders can short futures with tight stops though we prefer purchasing put options for our clients. Not me but someone is interested in our Treasuries as the auction was well bid today. 30-yr bonds traded to a new two week high; clients should get an opportunity to be a seller from higher levels in the weeks to come. The high settlement in the September contract is 124’29 which could be broken tomorrow. December live cattle failed at the 38.2% Fibonacci level and could see more sideways action. On a trade above today’s high we would likely be adding to clients longs. Sideways chop in the metals today; after yesterday’s reversal we feel that a correction is upon us. Traders should re-visit silver under $18 and gold under $1200. Clients were advised to lift their short July hedges in corn today. We’ve been pretty consistent but those that need to hear it again use this pullback to buy September and December corn as we feel the bottom is in and we could see appreciation in the coming weeks. Tighten up stop on soybeans and soy meal longs. Client’s currency exposure includes bearish plays in the Loonie and short futures in the Pound were established today. Our targets are .9550 and 1.4570 respectively.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The Fed is Delusional 3/16/10

Matthew Bradbard — Tue, 16 Mar 2010 19:33:46 +0000

You cannot have your cake and eat it too! Either circumstances in the economy are getting better and we need to start looking for an exit door or we are still in for a sh-t storm and then no action is necessary! If the Fed sees the economy improving than why leave IR at an “excessively low rate for an extended period.” Inflation subdued by what measures? Pass me what Ben and the gang are smoking. Crude gained by 2.5% today, ideally this is a one day wonder but tomorrow will tell. Talking to some big energy traders today they expect a range from $76-82. We will continue to play options for clients on rallies thinking that we will head back to the lower end of that range. It sounds like a broken record but we like scaling into longs in Nat gas at these low extremes. What will be the catalyst one client asked today to turn around prices…I do not know but this the short trade feels too crowded! Indices were sideways to up on most of the session and are still trying to digest the Feds non-action to decide where from here. I’ve thrown in the towel trying to predict a top but some of the cycle analysis that we’ve read of late courtesy of some of our clients predicts going into April it could get ugly. Sugar made fresh lows, futures traders should have been stopped at a loss when we broke last weeks levels. We are holding off on all new entries until this market bottoms. On a rally if we get one in the coming weeks we will be looking to cut losses on call options for clients. Let Treasuries rally 1 1/2-3 handles before selling! We will have an interest in 30-yr bonds closer to 120’00 and above 118’00 in 10-yr notes. Green across the screen in agriculture today with corn up by 1.0%, and wheat and soybeans by 1.60%. Corn is a buy; in options we like July and futures December. We sill think there is a possibility to see a trade close to 38.00 in May soybean oil to exit for clients; we will give it till the end of this week. Metals caught fire today likely because of the pressure on the dollar and strength in outside markets. April gold, May silver and May copper all gained virtually 2% each. We do not trust the upside and the only way we see it following through is we get a hefty break in the dollar…stay tuned. That being said the dollar index broke the 2 previous days lows and the trend line that had held since the first week of December. The Euro and Pound should benefit the most as they have been hit the hardest. The Euro could make a stab at 1.3950/1.40 and the Pound at 1.5500; next significant resistance levels.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The Fed is the 800 lb. Donkey 12/15/9

Matthew Bradbard — Tue, 15 Dec 2009 20:41:28 +0000

A hush came over the commodity market until FOMC decision. The streak has ended at 9 days with Crude pushing higher today by just less than 2%. We are fairly confident that an interim bottom was established yesterday; $68.59 in the January contract. We have clients long via March $5 call spreads expecting a $5-7 advance in the coming weeks. Natural gas has experienced a reversal of fortune and as opposed to a sell rallies market it has become a buy dips market. We will wait till 2010 to look for opportunities as we have no exposure with clients and are not comfortable in natural gas when we are away. The 25% advance in less than 2 weeks may be too much…be cautious with longs. Sugar may set back temporarily as it experienced a violent reversal today. Trail stops on futures, clients were advised to exit their March options but we advised to hold May option exposure. We expect more upside after the shakeout. Sell rallies in cocoa, we think a trade 7-10% lower is in order. Continue to play the break out in equities. We do expect a 10% correction at some juncture but we’re unwilling to place a wager for clients at this time. If recent lows in metals hold we like being long; March silver at $16.90 and February gold at $1110. A potential triple bottom in gold close to that level which could act as solid support is prices started the next leg up. Do not over commit capital…scale into longs. Corn is having trouble breaking the 20 day moving average to the upside. On that expect $4.25 and the $4.50 in March BUT if we start to roll over be willing to give back 30 cents in the futures, If unwilling tighten stops or start to look for an exit. Little change in the NOB spread today, hold the position… we think we’ve seen the worst. We continue to advise clients to scale in to short exposure in long dated Euro-dollars via futures and options. Live cattle are convincingly above the 20 day moving average and closed above the down trend line form early November. We have clients long February expecting more upside. The brutal cold weather should support a further advance. On a trade back near 88 cents we would start looking for an exit scaling out of the trade for clients. US Dollar up ahead of tomorrows FOMC decision. A clear break out in the Greenback but without confirmation on higher rates it could be short lived. Continue to sell rallies in the Cable and Euro-currency. The yen longs we hinted at are too aggressive; we suggesting taking no action.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Interest Rates-keeping your head above Zero

Matthew Bradbard — Thu, 12 Feb 2009 16:50:13 +0000

February 12, 2009
By: Matthew Bradbard

Eurodollars are deposits denominated in US dollars at banks outside the US, and thus are not under the jurisdiction of the Federal Reserve. Consequently, such deposits are subject to much less regulation than similar deposits within the US, allowing for higher margins. There is nothing “European” about Eurodollar deposits; a US dollar denominated deposit in foreign nations would likewise be deemed Eurodollar deposits. Neither is there any connection with the euro currency.

The Eurodollar futures contract refers to the financial futures contract based upon these deposits, traded at the CME. Each CME Eurodollar futures contract has a notional or “face value” of $1,000,000, though the leverage used in futures allows one contract to be traded with a margin of about $1500. Trading in Eurodollar futures is extensive, thus offering uniquely deep liquidity. Prices are quite responsive to Fed policy, inflation, and other economic indicators.

CME Eurodollar futures prices are determined by the market’s forecast for the delivery date of the 3-month USD LIBOR interest rate. The futures prices are derived by subtracting that implied annualized interest rate from 100.00. For instance, an anticipated annualized interest rate of 5.0% will translate to a futures price of 95.00. On the expiry day of a contract, the contract is valued using the current fixing of 3-month LIBOR.

As with other fixed rate instruments, if the yield rises, the price of the futures contract falls, and vice versa. If you believe that interest rates will fall, you would then buy a CME Eurodollar futures contract because you expect the contract price to rise and vice versa. If you believe rates will rise, you would sell or short-sell a CME Eurodollar futures contract because you expect the contract price to fall. This retains the normal inverse relationship between the price and the yield of interest rate securities.

Now after the brief history lesson lets get down to making some money. In the current environment with rates effectively close to 0 at 0.15% there is undoubtedly more room to the upside than downside. Economists will continue to debate over deflation/inflation, prognosticating on if there are more shoes to drop, if the credit crunch is behind us, whether the bottom is in real estate and if the stock market has overshot to the downside but the bottom line is no body knows. What I do know is that eventually things will improve and when they do the Federal Reserve will presumably raise interest rates and the Euro-dollar should react accordingly. Do not dive in head first, we may be getting in early and need to roll positions multiple times before we get the trade right, but if and when rates start to move up – which we trust will be sooner rather than later – MB Wealth will have clients exposed to take advantage. Will you be there with us?

Chart 1 is a front month continuation chart for the Euro-dollar contracts starting in mid 1999 to the present, so roughly the last 10 years. Chart 2 is the March 2010 Euro-dollar contract starting in 2002. Make your own deduction but we will be advising clients to get short outright futures looking to parlay the position in addition to purchasing long dated put options. On the charts below you will see a history of interest rates starting in 2000 plus a brief explanation of how the Euro-dollar contracts have moved relative to interest rate adjustments. We issued a Silver report in November believing it was the best trade I had seen in my career, well ladies and gentlemen shorting the Euro-dollar may be better.

Chart 1

Chart of Euro dollar Historic

Chart 2

Chart of Euro Dollar in March

01/2000, 5.45	01/2003, 1.24	02/2006, 4.49
02/2000, 5.73	02/2003, 1.26	03/2006, 4.59
03/2000, 5.85	03/2003, 1.25	04/2006, 4.79
04/2000, 6.02	04/2003, 1.26	05/2006, 4.94
05/2000, 6.27	05/2003, 1.26	06/2006, 4.99
06/2000, 6.53	06/2003, 1.22	07/2006, 5.24
07/2000, 6.54	07/2003, 1.01	08/2006, 5.25
08/2000, 6.50	08/2003, 1.03	09/2006, 5.25
09/2000, 6.52	09/2003, 1.01	10/2006, 5.25
10/2000, 6.51	10/2003, 1.01	11/2006, 5.25
11/2000, 6.51	11/2003, 1.00	12/2006, 5.24
12/2000, 6.40	12/2003, 0.98	01/2007, 5.25
01/2001, 5.98	01/2004, 1.00	02/2007, 5.26
02/2001, 5.49	02/2004, 1.01	03/2007, 5.26
03/2001, 5.31	03/2004, 1.00	04/2007, 5.25
04/2001, 4.80	05/2004, 1.00	05/2007, 5.25
05/2001, 4.21	06/2004, 1.03	06/2007, 5.25
06/2001, 3.97	07/2004, 1.26	07/2007, 5.26
07/2001, 3.77	08/2004, 1.43	08/2007, 5.02
08/2001, 3.65	09/2004, 1.61	09/2007, 4.94
09/2001, 3.07	10/2004, 1.76	10/2007, 4.76
10/2001, 2.49	11/2004, 1.93	11/2007, 4.49
11/2001, 2.09	12/2004, 2.16	12/2007, 4.24
12/2001, 1.82	01/2005, 2.28	01/2008, 3.94
01/2002, 1.73	02/2005, 2.50	02/2008, 2.98
02/2002, 1.74	03/2005, 2.63	03/2008, 2.61
03/2002, 1.73	04/2005, 2.79	04/2008, 2.28
04/2002, 1.75	05/2005, 3.00	05/2008, 1.98
05/2002, 1.75	06/2005, 3.04	06/2008, 2.00
06/2002, 1.75	07/2005, 3.26	07/2008, 2.01
07/2002, 1.73	08/2005, 3.50	08/2008, 2.00
08/2002, 1.74	09/2005, 3.62	09/2008, 1.81
09/2002, 1.75	10/2005, 3.78	10/2008, 0.97
10/2002, 1.75	11/2005, 4.00	11/2008, 0.39
11/2002, 1.34	12/2005, 4.16	12/2008, 0.16
12/2002, 1.24	01/2006, 4.29	01/2009, 0.15

*January 00′ rates 5.25%

*By September 9 months later rates higher by 1.0% Euro $ moved down(left quadrant of top chart)

*Bottoming process in Euro $ as rates start to top out Summer of 2000

*Rates fall below 5% and Euro $ move up under way

*By the end of 01′ rates are below 2% and Euro $ has moved from 93 to 97 or $10,000/per futures

*Much of 03′-04′ hovers at the highs Euro $ is at 99 when rates stay at 1%

*1% for 12 months July 03′-June 04′

*Summer of 04′ Federal reserve starts raising rates and what does the Euro $ do?

*For 27 straight months the Euro $ stair steps lower

*Rates stay at 5.25% for just over 1 year and the Euro $ hovers around 94.50

*Just to review rates go from 1% to 5.25% and the Euro $ goes from 99 to 94.50 which represents $11,250/per futures

*Staring in July of 07′ the Federal Reserve starts lowering rates

*Little do we know the ramifications of easy lending,or the coming housing bubble/credit crunch

*Is the American dream really for everyone to own a home, more like the america nightmare

*Again displayed is the inverse relationship, when rates rise from 5.25% to the current 0.15% the Euro $ appreciates

*Where do we go from here?

*We expect rates to be moving higher……not overnight

*But words the Limbo made famous how low can you go?

*We are advising put options and shorting the futures.

*The key here will be allowing yourself enough time

*Only you can answer that question. We are advising currently to get short March 2010 but can customize a strategy based on your risk tolerance, available capital and time frame

For specific strategies contact us via e-mail http://www.mbwealth.com or telephone at 954-929-9997. For the most part investors reading this analysis want to be more hands on, however we suggest taking a look at our managed futures section and consider diversifying further via CTA’s with proven track records: http://www.mbwealth.com/cta/risk.html

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions. Calculations of profit and loss have not factored in commissions and fees.