Chat with Joe Ross
Chat log from: Wednesday, June 18, 2008
Live Chat with Joe starts Wednesday at 8.00 PM U.S. Central Time! |
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| JoeRoss | Good evening, morning, afternoon or whatever it is where you are. |
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| Rory | Hello Joe, Hello everyone. |
| JoeRoss | Anyone make any great trades today? |
| JoeRoss | I guess not, huh! |
| pedro | Hi Joe! |
| JoeRoss | I was busy all day tutoring a trader from Africa. |
| Rory | Just doing Andy's spread trades Joe but sometimes a bit hard to get into the spreads. |
| JoeRoss | Rory: True! Sometimes it is hard to get in, but if you can't just let it go by. |
| pedro | I shorted the S&P using the Camelback technique! |
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| Rory | How is your hang seng going, Joe? |
| JoeRoss | I'm still scaling in as it goes lower. |
| JoeRoss | I intend to have quite a few shares. |
| JoeRoss | It's a 12-18 month trade. But I also can day trade it when I have time. |
| Rory | I ordered your book on spread trading, looks educational, Joe. I need to learn something! |
| JoeRoss | Thanks, Rory. I like that book. Next step is to take the spread online seminar. That's what I taught today to the student in Africa. He's gonna do well with spreads. He's a real intelligent guy. |
| JoeRoss | Hi walkegra. Welcome. We haven't seen you before. |
| pedro | Joe, do you typically recommend entering spreads one leg at a time? or enter a Market Spread order.... |
| JoeRoss | Ken are you also new? |
| JoeRoss | pedro: I leg in all the time. |
| Ken_TX | Yes, first time. |
| JoeRoss | Welcome, Ken. |
| Ken_TX | Thanks. |
| JoeRoss | Don't be shy about making comments and asking questions. That's what drives this chat. |
| walkegra | Hello Joe. It has been a long time since I joined a chat session - maybe 3 years ago. |
| Ken_TX | OK |
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| Rory | I am not that smart Joe, so I had better read the book first; limited budget but thought I might order the Sushi bar? |
| JoeRoss | Well, walkegra, you're here now, so dig in and participate. |
| JoeRoss | Hi maple. |
| maple | Hi Joe. |
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| JoeRoss | Hi sb |
| sb123 | Hello. |
| JoeRoss | I get a kick out of your avatar, sb. |
| pedro | Joe, are we seeing the top on oil? It seems to be forming the /\/\ |
| JoeRoss | pedro: There's a good chance that's what's happening. |
| pedro | The reversal bar on the 16th I thought would get things started... |
| pedro | Is the Volume important on a reversal bar Joe? |
| JoeRoss | I'm sad to say that high oil prices have the irrational goons in Congress creating a slew of bills to regulate futures trading in crude oil. |
| maple | Joe, does one of your methods typically suggest entry on a stop as well as a take profit target and a suggested stop loss? |
| JoeRoss | pedro: Yes it is. |
| pedro | Is this the first time throughout your trading years you see this happening joe? |
| JoeRoss | maple: The answer is that a couple of the methods take entry on a stop. They all have profit targets and a stop loss point. |
| JoeRoss | pedro: Something similar tried to happen in the 1970s. But instead of kicking the futures, Pres. Nixon put on price controls. |
| maple | Thank you. |
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| JoeRoss | If you live in the U.S. be sure you watch parts 1 & 2 of the following video: http://www.youtube.com/watch?v=i8z7NC5sgik But don't do it now. Do it later. |
| JoeRoss | I will repeat the link later for anyone who comes in then. |
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| JoeRoss | By now you should know that if you click on a link, it takes you out of the chat. |
| JoeRoss | What I do is bring up a 2nd iteration of IE, so I can click there without knocking myself out of the chat. |
| Rory | Just learnt that one Joe! |
| JoeRoss | Howdy Joy. |
| Joy | Hi Joe, how are you? Hope you have had a nice evening! |
| Joy | I should say Howdy :-) |
| JoeRoss | Joy: I have had a non-stop day since 4:15 AM |
| marsh | Howdy Maam, Joy. Welcome to Texas. |
| Rory | Hi Joy. |
| Joy | Joe: You never get a day off! |
| maple |
How does one enter an FX trade? Also, have been looking at the IB and do not see some of the pairs mentions in you. Do you know if the offer the ones treated in your new forex method? That is he ones mentioned in the forex method. |
| maple | I don't know if IB has those pairs but I think they probably do. |
| Joy | Howdy Marsh! I feel like a cowgirl! |
| Joy | Hi Rory, good to see you again! |
| JoeRoss | I had 4 days off in Florida (well almost) 2 days were mostly travel, but it got me away from the screen. |
| pedro | It's been raining a lot in Florida! |
| Joy | I hope Joe did not get wet! |
| JoeRoss |
maple: Forex stealth was developed by a student in Germany. And the curry blend, has changed so much. It seems there is always at least one of the currencies in the curry blend that is tradable. |
| marsh | We need some of that midwest rain down here in Texas. |
| JoeRoss | pedro: It rained a lot while I was there, but none of it affected me. |
| pedro | Joe, I wanted for you to see Sep, BP.... is it in a trading range?... which technique would best fit a market like this....(for learning purposes)..... |
| marsh | I've heard that the Texas cotton crop is ruined by the hot wind. |
| marsh | Cotton prices may go up. |
| Joy | True Marsh - I read the dry weather in western TX is impacting cotton futures. |
| marsh | Texas is one of the leading cotton producers. |
| pedro | CAD is also on a long trading range since Jan 11... between 96.81 and 101.77. |
| JoeRoss | pedro: For BP, it would be a good idea to sell option strangles right now. |
| pedro | Good I just ordered your Futions and Optures book... will need to learn! |
| maple | I like the idea of the Stealth because of the time interval mentioned--from five till seven EST 4-6 CST PM. |
| JoeRoss | Where I live we have had an unusual amount of wind. I guess it's affecting Austin, too. |
| pedro | Joe, I must say that I was amazed with your call 2 weeks ago on Corn.... it has been going gangbusters!!!! Do you believe it can still go much higher???? |
| JoeRoss | pedro: I think it can still go higher. But maybe the Congress will try to regulate the grains as well. |
| sb123 | When you say regulate ...what r u implying?? |
| JoeRoss | I posted some interesting stuff in the TE Forum this morning under the latest thread about oil. |
| sb123 | Keep prices from going too much higher?? |
| JoeRoss | sb: Congress has quite a few bills being presented to regulate the trading of crude oil futures. One of their stupid things was to raise margins, but they have dropped that idea. |
| marsh | I'm joking, but they could forbid long orders. |
| JoeRoss | I have not read any of the bills, but it's almost certain one of them will make it through and into law. They want to limit the amount of trading that can be done. |
| JoeRoss | Of course, they will be killing the very people who need those markets to hedge. |
| marsh | American mutual funds cannot go short. |
| marsh | Whatever they do will probably have the opposite effect. In other words, prices will go up. |
| JoeRoss |
What Congress and the media do not seem to understand is that commodity prices are zooming higher because of the Fed's loose money policy. There is at least $250 billion kicking around out there looking for a place to protect against the falling dollar. So that money has been going into commodities, but most of it is going in through ETFs. |
| JoeRoss | marsh: Exactly. These are politicians, they know nothing about economics. |
| JoeRoss | If you were a manufacturer in another country and you had scads of dollars, what would you do with them? |
| marsh | All politicians know is how to line their pockets with "campaign contributions". |
| JoeRoss | Every day you are losing money as the dollar falls. You don't want to buy U.S. debt coz interest rates are so low. |
| JoeRoss |
So you take those dollars and you stuff them into commodities and commodity ETFs hoping that the rise in commodity prices will offset the loss in the dollar. That is why China and India, as well as others are stockpiling oil. Their massive buying is driving prices higher. |
| Joy | Joe: How about foreign companies buying off American companies and assets cheap? |
| pedro | Do you think we will see a squeeze of all these speculators loading up on ETFs once the smart money shorts the market? |
| JoeRoss | So the commodities and the commodity ETFs are being used to hedge against the dollar. |
| pedro | How long have commodity ETFs been in existence? |
| JoeRoss | Joy: That, too, is what they are doing with all those dollars. They are buying up our national assets.. |
| JoeRoss | pedro: If the U.S. govt. had any sense at all they would send an army of traders into the oil market and short the hell out of it. The real price of oil is about $70/barrel. |
| Joy | Sign us up as the army :-) |
| JoeRoss | $50 to extract the oil and $20 for profits. The could use the PPT to bring oil down to $70 and then buy up huge amounts of it. But the govt. isn't that smart. |
| sb123 | I like that idea joe...you make a good point. |
| pedro | I would love to get a great short position.... |
| JoeRoss | pedro: ETFs are all a recent phenomenon. Only a few years old now. |
| walkegra | I don't understand. Will a price increase in an ETF increase the price of the underlying commodity? |
| pedro | I think it just another repeat of the stock market craze + Housing meltdown.... |
| pedro | All these ETFs will be liquidated when oil starts plunging! |
| JoeRoss |
Of course the public always gets in too late, and most of them will take it on the chin when oil goes down-- probably to about $80. (I'm guessing). |
| Rory | Joe, it seems to me oil is usage brings the price down and people just use more! |
| JoeRoss |
walkegra: When people buy shares in an ETF, they push up the price of the underlying because the ETF buys the commodity. For example GLD the gold ETF. They buy and store physical gold. |
| pedro | ETFs are long only? |
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| JoeRoss | The increase is not in the ETF, it is in what the ETF is about -- the underlying commodity. |
| JoeRoss | pedro: You can short an ETF. |
| JoeRoss | ETFs are the American Stock Exchanges answer to the futures market. |
| Sherri | Hi everyone misjudged the time, excuse me. |
| JoeRoss | Hi Sherri: Long time no see. |
| pedro | What advantage is there with an ETF? |
| marsh |
Isn't it called "the tail wagging the dog"? That's what they said about the 1987 stock market crash, when index options and futures controlled things. |
| pedro | Is it more diversified? |
| JoeRoss | pedro: No expiration date, so no contract rollover is required. |
| JoeRoss | pedro: Yes it can also be more diversified. |
| JoeRoss | Congress is mistaken in thinking that futures speculators are driving up the price of oil. |
| JoeRoss | They are blaming it on the hedge funds. But there are some holes in their thinking. |
| Joy | Did I read somewhere in your writing that commodity funds are long only? So does that mean they are usually long ETFs even though you can short ETFs? |
| JoeRoss | First of all, Hedge Funds are only allowed to put 10% of their money into the futures market. |
| JoeRoss | Secondly: If speculators were driving up the price of oil we would immediately see it at the futures expiration date. |
| JoeRoss |
For example, if the true price of oil is $70, we are looking at a premium of another $60 caused by traders. But at futures expiration oil futures would have to move to the real price of oil, and the premium would vanish. But as you know, it doesn't vanish. Delivery is being made at approximately what we see in the price of oil futures. |
| JoeRoss |
So there is no speculator premium at all. The demand is coming from investors looking to hedge against a falling dollar. So they are buying everything they can get their hands on that smacks of oil. Investors includes entire nations who are stockpiling oil. They are not worried about the price, they have plenty of depreciated dollars to use to buy the stuff. |
| Sherri | Joe, since you gave me some direction on the ER, and Marsh did also, I'm getting to like it. Is it for sure the ICE or whatever they call it, won't be good to trade in in August? |
| JoeRoss |
Sherri: We don't know what happens when the ER2 moves to ICE. It could stay liquid or it could fall apart. Time will tell. We will know at the end of August. |
| pedro | But if they do it through ETFs, at what time does it roll from one contract to the next? |
| maple | Joe, do you mean the elevated price of oil would be seen only in front months? |
| JoeRoss | pedro? ETFs don't roll. They are not futures. They have not contract ending. |
| pedro | Why just oil, not gold (it has been under performing)? |
| JoeRoss | maple: Yes, that's the idea. But the demand is real. Not entirely the demand for oil, but the demand to own everything that is related to oil. |
| JoeRoss | pedro: Gold has one huge drawback: You don't earn any interest when you hold gold. |
| JoeRoss | Joy: Yes commodity funds are long only, but they hedge the downside by buying put options. |
| pedro | I didn't know that futures contracts carried an interest.... is it built in the price from one month to the next? |
| JoeRoss | pedro: futures contracts don't carry interest in the sense that you get paid interest.. Gold pays you nothing to hold it. |
| walkegra | But before you said that the real price of oil is $70. How does this square with the settlement price if there is no speculator premium? |
| JoeRoss | pedro: I think I know what you mean. Interest is a part of the carrying charges in a futures contract. Yes that part is true. |
| JoeRoss |
walkegra: The premium is not speculator premium. It is investor premium. People are driving up the share prices of everything related to oil, as well as oil itself. Nations are using their dollars to buy commodities and commodity related companies.. They no longer want to put those dollars into U.S. debt instruments. |
| pedro | Joe, any good setups in Futures worth mentioning? |
| JoeRoss | There is a huge difference between an investor and a trader (speculator). An investor wants to own what he invests in. |
| pedro | I like the AD to the downside if it breaks the low... The weekly is pointing down..... |
| JoeRoss | Pedro, Sure! Go long Dec. Cattle and short Aug. Feeder Cattle. |
| pedro | Thanks! |
| pedro | I thought Feeder Cattle has very low volume... |
| Joy |
Joe: Following through the BP option strangle you mentioned earlier before you leave for the night… most currencies seem in congestion recently. Did you pick BP, instead of another currency, because of its good range of volatility? |
| sb123 | What is the thought process behind the trade master joe? |
| JoeRoss | walkegra: Oil is now a bubble market. Oil is way, way overpriced in real terms. |
| JoeRoss | pedro: It is a thinly traded market but it works fine with spreads. |
| JoeRoss | Joy: I didn't pick BP. Someone on the chat picked it and asked about it. |
| sb123 | Joe...reasons for lc/fc spread. |
| JoeRoss |
sb: If you mean the cattle spread, the rationale is that is is totally a contrarian trade -- the spread is trading massively counter-seasonal.. The spread is not at all doing what it usually does. You can read about it in the Chart Scan that will come out this Friday. |
| sb123 | Ok....thanks |
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| JoeRoss | For those who came in later, when the chat is over in 4 minutes you need to view parts 1 & 2 of the following link if you live in the U.S. http://www.youtube.com/watch?v=i8z7NC5sgik |
| Joy |
Joe: Thank you. Last question: The grains all had close to identical patterns of up, reversal and then up this past few days. I have not studied charts long enough and am curious if the grains tend to move somewhat close to one another now because of the short-term loss of total acreage (due to flooding) and long-term corn/ethanol taking up more farm land. |
| JoeRoss | davelochen: You are just in time for the chat to end. It began an hour ago, but hi and welcome. |
| sb123 | So same may hold true for the lcv8/lcg9 seasonal trade...it's been dropping |
| JoeRoss | Joy: Often the grains move in tandem for almost any reason. |
| pedro | Joe do you pay attention to COT data? |
| JoeRoss | pedro: I don't, but Andy does. |
| pedro | Is there a way to protect yourself from Limit Moves, Joe? |
| pedro | It's one of my biggest fears |
| JoeRoss | pedro: Yes! Don't trade. |
| JoeRoss | I don't know of any other way. |
| pedro | Have you ever been in this type of situation (against you?) |
| JoeRoss | pedro: Yes I have. Twice. |
| JoeRoss | It's my bed time |
| pedro | How did you manage? |
| JoeRoss | Thanks for the chat. |
| pedro | Oh Sorry! |
| maple | Joe, Good night and thank-you for the chat. |
| Joy | Joe: Thank you! Before you ‘suddenly vanish’ again today hopefully to ‘surfing’, I just want to express my gratitude for all of your time and teaching, today and as always! |
| pedro | Thanks for your time again Joe |
| sb123 | g'night Joe...all |
| pedro | It's been wonderful! |
| Rory | Thanks Joe. |
| JoeRoss | Thank you Joy. |
| Sherri | Night all. Thanks, Joe. |
| walkegra | Thank you Joe |
| JoeRoss | See you next week. If I missed any questions, send me an email (support@tradingeducators.com) or bring them next week. |
| pedro | Great chat! |
| JoeRoss | Happy days for you between now and then. |
| JoeRoss | Bye |
| Joy | Have a great week, Joe! Rest some! |
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Next Chat with
Joe Ross:
Wednesday, June 25, 2008
Time: 8:00 - 9:00 P.M., U.S. Central Time.
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