MRCI`s Free Trade of the Month

INDEPENDENT. OBJECTIVE. RELIABLE.
FEB2015
MRCI’s Free Trade of the Month
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.danielstrading.com/trading-advice/third-party-trading-advice/moore-research-center-inc/mrci-trial/
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INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
Buy August Lean Hogs and Sell August Live Cattle
For February’s MRCI free trade of the month we will be looking at the August 2015 Lean Hogs vs August 2015 Live Cattle
inter-commodity futures spread. This trade idea is an inter-commodity futures spread because we spread between two different
(but related) markets. If you would like to know more about inter-commodity spreads, please read the following article Basics of Futures Spread Trading.
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG
OR SHORT POSITION.
The seasonal window for this spread is from February 24th to April 16th. The suggested seasonal window does not have to be
followed by the exact dates. It is more of a guide than a hard rule. The seasonal window typically exists for fundamental reasons,
and according to MRCI the spread has seasonal patterns, “As hog and cattle futures are essentially markets for live animals, seasonal
disparities in supply and demand are reflected in the price structure. Hog slaughter is typically least May->July just before retail pork demand
peaks in August, at the expense of beef demand. As for Cattle, demand is historically weakest in August, with beef supplies large not long
after peak slaughter and families on vacation preferring lighter processed meats at the expense of red meat.”
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.
HISTORICAL TECHNICAL ANALYSIS:
Over the past 15 years this spread has traded as high as +0.000 (2001) and as low as -66.000 (2015). Before this year, the spread’s
lowest point was about -40.00 (see 15 Year chart below). We are about 25.000 lower now than at any point in the past 15 years.
The second chart below combines the current market trading pattern this year with the 15 year seasonal trading pattern. This
year’s spread has been lagging behind the seasonal trend. If the seasonal trend does hold true for 2015, there is a lot of room for
this spread to run higher from a seasonal perspective.
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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 Monthly Price Chart:
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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 Seasonal Trend Chart:
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.
HISTORICAL PERFORMANCE
According to MRCI this trade has been profitable 14 out of the past 15 years when entered on the close of 2/24 and exited on the
close of 4/16. Please note that along the way, there are usually drawdowns. In 2002, the worst equity amount was -$1,456 before
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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
it came back to be a $272 winner. The best winning year was 2014 with a profit of $4448. The worst year was 2003 with a loser of
$96. Also note that while the average winner for this spread the past 15 years is $1346.57, MRCI recommends a stop of $1626.
All of this information is in the table below.
MRCI 15 Year Hypothetical Profit & Loss Table:
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.
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.
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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
Current Year Technical Analysis:
This spread has been trading between -57.000 and -66.000 since December. This spread will have the best chance of working
out if Live Cattle breaks lower during the seasonal window while Hogs find support at current levels. If this spread can trade
higher (Hogs gaining value with respect to Cattle), and it breaks through -57.000, the next resistance level is between -50.000 and
-52.000. Each point in Hogs – Cattle is worth $400.
August 2015 Lean Hogs vs August 2015 Live Cattle Daily Chart:
STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG
OR SHORT POSITION.
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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:
Following the MRCI methodology the play is to buy August 2015 Lean Hogs and sell August 2015 Live Cattle at the close on
Tuesday, February 24th and exit at the close on Thursday, April 16th. MRCI also suggests using a $1626 stop. Margin is $2640
per spread.
Long Aug 2015 Lean Hogs/
Short Aug 2015 Live Cattle Trade Summary
Long
Aug 2015 Lean Hogs
Short
Aug 2015 Live Cattle
Margin
$2640 per spread
Spread Type
Inter-Commodity
Spread Window
2/24/15->4/16/15
Suggested Entry
February 24, 2015
Suggested Stop
$1626
Suggested Exit
April 16, 2015
***Each 1.000 in Lean Hogs & Live Cattle = $400***
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.
This report was written by Craig Turner, Senior Broker at Daniels Trading and Author of Turner’s Take Newsletter.
FUTURES & OPTIONS TRADING INVOLVES SIGNIFICANT RISK OF LOSS AND IS NOT SUITABLE FOR ALL INVESTORS. 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.danielstrading.com/trading-advice/third-party-trading-advice/moore-research-center-inc/mrci-trial/
10
INDEPENDENT. OBJECTIVE. RELIABLE.
MRCI’s Free Trade of the Month
DISCLAIMER
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 OCCURENCES OR LIKELY TO OCCUR.
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.
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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