apr mrci s free trade of the month 2015 · for april’s mrci free trade of the month, we will be...

INDEPENDENT. OBJECTIVE. RELIABLE.

MRCI’s Free Trade of the Month

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About Moore Research, Inc.


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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/




3FUTURES & 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.

Buy July 2015 Soybeans and Sell November 2015 Soybeans

For April’s MRCI free trade of the month, we will be looking at the July 2015 Soybeans vs November 2015 Soybeans bull

futures spread. This trade idea is a bull futures spread because we are long the front month (July). If you would like to know

more about the different kinds of futures spreads like bull, bear, and 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 April 8th to May 8th. 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 because, “Already tight old-crop supplies must stretch until next September/October. The

bulk of the new US crop will be planted in May. With a bird in the hand worth two in the bush, old-crop has usually outperformed new-crop

during April and eventually into July. Note the compressed values on the monthly chart.”

EXAMPLES OF SEASONAL PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES OR CONDITIONS ARE COM-MON OCCURRENCES OR LIKELY TO OCCUR.

FUNDAMENTAL ANALYSIS BY CRAIG TURNER OF TURNER’S TAKE NEWSLETTER:

For the first time since the 2006/2007, the US will have adequate soybean stocks. From 2005 through 2007, the July vs Nov

spread traded between a 40 cent carry (-$0.40) to a 40 cent inverse ($0.40). From 2008 to 2014, the US regularly experienced

tight stocks and the July/Nov spread traded from even ($0.00) to as high as $3.60 inverse (July over Nov) in 2013 (see chart in the

next section).

When stocks are burdensome, July vs Nov trades at a carry (a negative spread price that implies July is trading UNDER November).

However, when stocks range from adequate to tight, then July can trade over November (this is known as trading at an “inverse” in

the grain markets which implies the front month is trading higher than the deferred month).

The July/Nov soybean spread presents an attractive risk/reward set up this year. The downside appears to be limited due to the

already low price for the spread due to large South American harvest, large global stocks, and adequate old crop US soybean

stocks. This spread can move higher if there are South American export logistical issues, increased US domestic demand, US

reduction in acres, US reduction in yield, or an overall expansion of demand from China. The seasonal window for this spread is

April 8th to May 8th, so the most likely bullish catalyst will be loss of acres or late planting for soybeans, with a less likely chance

of increased demand from China.

http://www.mrci.com/client/spreads/strat/s4256.php

http://www.danielstrading.com/strategies/2011/03/05/basics-of-futures-spread-trading/





Under the right scenarios the July/November spread has the ability to pop 10, 20 or 30 cents higher depending on the severity

of a weather market. If we don’t get a weather market in April, then this spread would be expected to chop around with limited

downside.

STRATEGIES USING COMBINATIONS OF POSITIONS, SUCH AS SPREAD AND STRADDLE POSITIONS MAY BE AS RISKY AS TAKING A SIMPLE LONG OR SHORT POSITION.

HISTORICAL TECHNICAL ANALYSIS:

Below is a 15 year monthly chart of the July vs November Soybean futures spread. As you can see the spread rarely trades at

a carry (under $0.00). In years when we have real supply issues (either through loss of production or increases in demand), the

spread has the potential to move higher. There certainly is risk to the downside at current prices, but based on where this spread

has traded in the past, the upside potential appears much greater.

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 COM-MON OCCURRENCES OR LIKELY TO OCCUR.





HISTORICAL PERFORMANCE

If you entered this trade at the close of April 8th and exited at the close of May 8th every year for the last 15 years, the trade

was a winner 13 times and a loser twice. The worst equity amount has been $750, which explains why MRCI has a stop loss of

almost $1000. Some years, the trade was a small winner ($50) and the best year was 2013 when it was up over $2500. I think in

an average year, a good target would be plus 5 to 10 cents, or $250 to $500 per spread. Years in which we have adequate stocks

and weather rallies in April have causes this spread to gain on average about 5 to 10 cents over the course of the month. While

extremes to the upside have happened, they are not to be expected. For July/Nov to gain 20 cents ($1000) or more, we need real

loss of acres in soybean planting by May 1 or export demand would have to switch from South America to the United States in April

(which is unlikely with the large South American harvest this year and only moderate logistical issues).

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 FLUC-TUATION LIMIT, A “LIMIT MOVE”, IT MAY BE IMPOSSIBLE TO EXECUTE A STOP LOSS ORDER.

MRCI 15 Year Hypothetical Profit & Loss Table:

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.





CURRENT SEASONAL YEAR TECHNICAL ANALYSIS:

Below is a chart of current year July/Nov Soybean spread (thick black line) vs. the fifteen year seasonal pattern (thin blue line). The

spread is generally following the seasonal pattern this year, and you can even make the argument it is lagging behind this year. If

we do get seasonal bullish triggers like South American export logistic issues, increased US export demand, or new crop planting

issues, the spread could go higher and also catch up to the traditional seasonal trend line.

July vs November Soybeans Seasonal Chart:





TRADE SUMMARY:

Following the MRCI strategy, a trader would enter this spread (buying July and selling Nov) at the close on the close of Wednesday,

April 8th and exit the spread (selling July and buying Nov) at the close of Friday, May 8th. Traders would also use a 20 cent stop

($1000).

Another way to play this spread, and it is something I do in my Turner’s Take Daily Newsletter, is to buy support around 18 to 19

cent inverse (July trading 18 to 19 cents over November), risk to below the lows of October 2014 (below 4 cents), and then have

the first target at the red trend line around 33 cents (looking for about 15 cent gain) with an ultimate final target of 50 cent inverse,

which are the highs from October.

If we don’t get any kind of weather rally or supply tightness then the spread most likely just leaks lower. If we get a moderate

weather or demand rally, we probably trade to the low 30s. If we get a serious production issue or real increased demand, there is

the possibility this spread trades to a 50 cent inverse

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Long July 2015 Soybeans/ Short November 2015 Soybeans Trade Summary

Long July 2015 Soybeans

Short Nov 2015 Soybeans

Margin $385 per spread

Spread Type Bull Futures Spread

Spread Window 4/8/15 -> 5/8/15

Suggested Entry April 8th Close

Suggested Stop $978

Suggested Exit May 8th Close

***Each 1 cents in Soybeans = $50***





July vs November Soybeans Daily Chart from Turner’s Take

This report was written by Craig Turner, Senior Broker at Daniels Trading and Author of Turner’s Take Newsletter.



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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

mailto:cturner%40danielstrading.com?subject=

http://www.danielstrading.com/checkout/?product_id=32745

About Moore Research, Inc.


10

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





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DISCLAIMERSTRATEGIES 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.

http://www.danielstrading.com/legal-notices/risk-disclosure/

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