MRCI`s Free Trade of the Month

INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
SEP
INDEPENDENT. OBJECTIVE. RELIABLE.
About Moore Research, Inc.
Moore Research Center, Inc. (MRCI), an authority in statistical research for seasonal trading, features approximately 30 Monthly
historical trading strategies for outrights and spreads from a variety of the major commodity markets. MRCI bases its research
and strategies on the last 15 years. From that, seasonal trades are chosen as much as 3 months prior to publication in the monthly
report and as much as 12 months prior to their seasonal entry date in special reports.
SPECIAL OFFER FROM MRCI & DANIELS TRADING:
Two Week Trial Subscription to MRCI Online
http://www.mrci.com/catalog/special_offer.php?sourcecode=DT
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
Buy December 2014 KC Wheat & Sell December 2014 Corn
For September’s MRCI free trade of the month, we will be looking at the December 2014 KC Wheat vs December 2014 Corn
inter-commodity spread. This spread is primarily a bearish play on December 2014 Corn.
The seasonal window for this spread is from September 20th to September 30th. It is a relatively short trade for a seasonal futures
spread trade. While the seasonal window does not have to be followed by the exact dates, it is a trade that will probably be best for
the last half of September. As for why this spread has seasonal patterns, MRCI says, “US wheat harvest is complete, and supplies will
decline until next June. In contrast, corn harvest has begun and will accelerate into October as huge new supplies come to market.”
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG
OR SHORT POSITION.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES OR CONDITIONS
ARE COMMON OCCURRENCES OR LIKELY TO OCCUR.
DT SEASONAL & FUNDAMENTAL ANALYSIS BY CRAIG TURNER OF TURNER’S TAKE
NEWSLETTER:
This is a short term trade and it sets up well for corn harvest. In the last half of September, we start to get harvest reports from
the Midwest. When combined with the reports we are already getting from the South, the trade can start to estimate the size of
the crop. We also see increased selling in corn during this time when compared to winter wheat because the winter wheat harvest
is over, but we are now getting into the thick of corn harvest. There is also a certain amount of premium in new crop until harvest
(much like time premium in an option). Once the corn is harvested, the weather risk to the crop is no more and the risk/damage
premium disappears. This is primarily why a seasonal pattern exists. The next task is to determine if this is likely to repeat for 2014.
Over the past few WASDE reports, the USDA has been raising yields for corn and many traders are buying into the old saying
“big crops get bigger”. Many of the field reports we are getting from farmers point to better than expected yields in the Delta and
the southern Midwest. If this trend continues, the bearish pressure on corn should send prices lower. Wheat, on the other hand,
is expected to be more stable, and with harvest complete Wheat has the potential to gain bullish support via the export market.
This is a short term trade and the seasonal window closes at the end of the month. It is a nice play on corn harvest price pressures.
The idea is that as reports from the field come in, the market will selloff due to confirmation of a good crop. Farmers also contribute
to price pressure as they sell corn off the combine.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES
OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR. STRATEGIES USING COMBINATIONS OF POSITIONS,
SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
Dec KC Wheat vs Dec Corn MRCI Seasonal Chart:
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES
OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR. STRATEGIES USING COMBINATIONS OF POSITIONS,
SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
HISTORICAL ANALYSIS:
Below is the MRCI 15 year hypothetical profit and loss table. The entry price is the close on the first day of the seasonal window,
and the exit price is the close on the last day of the seasonal window. This spread can be volatile, even with only a 10 day seasonal
window. The P&L below has had winners of over $4,500 and losers of $1,900. This seasonal spread has been a winner 12 of
the past 15 years, and if you took this trade every year for the past 15 years, the average annualized result would be a positive
$1,231.25 per year. In the three years this trade lost, the average loser was $1187.50.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THERE IS A RISK OF LOSS WHEN TRADING FUTURES AND
OPTIONS.
This may be too rich for some accounts. If that is the case, I would look at the mini contracts. December Corn has a mini contract
that is a 1/5th the size of the standard. While there is a mini contract for KC Wheat, it does not have a lot of open interest or
volume. I would rather buy the mini contract for Chicago Wheat and the two wheat contracts should track each other pretty
closely during the seasonal window.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES
OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR. STRATEGIES USING COMBINATIONS OF POSITIONS,
SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
MRCI 15 Year Hypothetical Profit & Loss Table:
THIS TABLE IS PRESENTED FOR INFORMATIONAL PURPOSES ONLY. THERE IS RISK OF LOSS IN FUTURES TRADING. 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 THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR
TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF
HINDSIGHT. 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.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES
OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR. STRATEGIES USING COMBINATIONS OF POSITIONS,
SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
TRADE SUMMARY:
Traders who want to follow MRCI based on their hypothetical performance and seasonal window should enter this spread at the
close on Friday, September 19th (9/20 is a Saturday) and exit on the close of Tuesday, September 30th. MRCI also suggests a stop
of $975, but if you use the mini Dec Corn and mini Dec Chicago Wheat, the stop would be $195.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE IS HIT, BECOME MARKET
ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE DIFFERENT FROM THE STOP PRICE. IF A MARKET
REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A “LIMIT MOVE”, IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
Long Dec 14 KC Wheat/Short Dec14 Corn
Trade Summary
Long
Dec 14 KC Wheat
Short
Dec 14 Corn
Margin
$1320
Spread Type
Inter-Commodity
Spread Window
Sept 20 to Sept 30
Suggested Entry
Sept 20 Close
Suggested Stop
$975 risk ($195 minis)
Suggested Exit
Sept 30 Close
***Each $0.01 in Wheat & Corn is worth $50***
This report was written by Craig Turner, Senior Broker at Daniels Trading and Author of Turner’s Take Newsletter.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES
OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR. STRATEGIES USING COMBINATIONS OF POSITIONS,
SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
Contact Craig Turner
800.958.9470 Toll-Free
312.706.7610 Local
312.706.7510 Fax
[email protected]
Subscribe to Turner’s Take
http://www.danielstrading.com/checkout/?product_id=32745
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INDEPENDENT. OBJECTIVE. RELIABLE.
About Moore Research, Inc.
Moore Research Center, Inc. (MRCI), an authority in statistical research for seasonal trading, features approximately 30 Monthly
historical trading strategies for outrights and spreads from a variety of the major commodity markets. MRCI bases its research
and strategies on the last 15 years. From that, seasonal trades are chosen as much as 3 months prior to publication in the monthly
report and as much as 12 months prior to their seasonal entry date in special reports.
SPECIAL OFFER FROM MRCI & DANIELS TRADING:
Two Week Trial Subscription to MRCI Online
http://www.mrci.com/catalog/special_offer.php?sourcecode=DT
9
INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
DISCLAIMER
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS. 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 THE
ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS
TAKING A SIMPLE LONG OR SHORT POSITION.
STOP ORDERS DO NOT NECESSARILY LIMIT YOUR LOSS TO THE STOP PRICE BECAUSE STOP ORDERS, IF THE PRICE
IS HIT, BECOME MARKET ORDERS AND, DEPENDING ON MARKET CONDITIONS, THE ACTUAL FILL PRICE CAN BE
DIFFERENT FROM THE STOP PRICE. IF A MARKET REACHED ITS DAILY PRICE FLUCTUATION LIMIT, A ‘’LIMIT MOVE’’, IT
MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.
EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH
MOVES OR CONDITIONS ARE COMMON OCCURENCES OR LIKELY TO OCCUR.
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET
COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND
SOLICITATION FOR TRADES. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN
DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH
AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES,
TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE
INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND
RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING
FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD
UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR
THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR
CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE “RISK DISCLOSURE” WEBPAGE ACCESSED AT
WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH
NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES
NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICES.
THE RISK OF LOSS IN TRADING COMMODITY FUTURES AND OPTIONS CONTRACTS CAN BE SUBSTANTIAL. THERE IS
A HIGH DEGREE OF LEVERAGE IN FUTURES TRADING BECAUSE OF SMALL MARGIN REQUIREMENTS. THIS LEVERAGE
CAN WORK AGAINST YOU AS WELL AS FOR YOU AND CAN LEAD TO LARGE LOSSES AS WELL AS LARGE GAINS.
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