Opening Position
November 2005
The damage that hurricane Katrina caused shook the financial markets and particularly crude oil, where already high prices saw a sharper rise. That eased, fortunately, but only for a short while, mainly due to the anticipation of further damage that could be caused by Katrina's successor, hurricane Rita. When Rita was downgraded to a less-severe, Category 3, storm and ended up causing less damage than its predecessor, crude prices did open lower, but that may only have been an initial reaction. There is no doubt that both hurricanes will have a disastrous effect on economic conditions.
Despite the concerns about economic conditions, the Federal Reserve still tightened interest rates by a quarter of a percentage point. It is clear that the reason they did so was to control inflation which, at this point, could rise rapidly, given the increase in energy prices. And with energy prices as high as they are, consumers are likely to curb their spending.
This will, in turn, affect the bond markets. I thought it was interesting that President Bush made a plea to Americans to reduce their dependency on gasoline. Although his stated rationale was to prevent oil prices from rising some more, we shouldn't forget that oil that has been consumed is irreplaceable; once it's gone, it's gone. As a result of the reduction in supply and the continued demand, oil prices will continue to rise.
Floyd Upperman, the Technical Analysis of STOCKS & COMMODITIES interview subject this month, discusses his thoughts on this topic and more. Find out how the information generated in the Commitment of Traders Report has helped him build trading systems, which in turn has helped him become a successful commodities trader. The interview starts on page 62.
Building a trading system is a necessity when it comes to trading. But as we all know, trading systems have to be continuously updated and tweaked. In this issue, we have included an article on how to "Improve Your Trading System With Speed" by Gomu Vetrivel, which focuses on speed or momentum. You'll find that adding this single component may help you improve the performance of your current trading system.
Last but not least, the voting for our annual Readers' Choice Awards
(RCA) has begun. Please be sure to visit our website at www.Traders.com
and vote for your favorite products and services. As always, we value your
feedback.
Jayanthi Gopalakrishnan,
Editor
Originally published in the November 2005 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2005, Technical Analysis, Inc.
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