Bloomberg L.P.

August 15th, 2008

Global Weekly Technical Strategy

Topic: The Bloomberg Weekly Strategy is back! Going forward you will see a broader universe of
securities being analyzed, weekly themes such as a particular indicator or market, and input by
Bloombergs Application Specialists from around the world.

Goal:

To communicate with and educate our clients on using the Bloomberg Terminal and the study
of Technical Analysis.

This week: Are you long or short hard commodities?

Rubber:
Consolidation may be over
Gold Spot:
Pitchfork Power
US Oil Fund: Oil and Oscillators
S&P Sector Rotation from an energy perspective
Chart Enhancements: Check your annotations button on your chart new tools available
Seminars / Books:
Seminars in New York, Chicago, Boston, San Francisco, London and Sao Paulo
{BOOKS<Go>} - Trading ETFs - by Deron Wagner

Market Recap as of 4:00pm EST:

Security
WTI CRUDE FUTURE Sep08
NATURAL GAS FUTR Sep08
HEATING OIL FUTR Sep08
GASOLINE RBOB FUT Sep08
GOLD SPOT $/OZ
SILVER SPOT $/OZ
CORN FUTURE
Dec08
WHEAT FUTURE(CBT) Dec08
SOYBEAN FUTURE Nov08

Last Price
113.76
8.069
312.1
285.89
787.345
12.785
549.5
849.25
1219

% Chg WTD
-2.61
-1.29
-2.23
-1.87
-8.14
-16.25
6.46
7.21
2.75

Questions/Comments:
Paul Ciana, CMT pciana@bloomberg.net
Guido Riolo - guidoriolo@bloomberg.net
Tom Schneider tschneider7@bloomberg.net
Eugene Sorenson esorenson1@bloomberg.net

% Chg MTD
-9.58
-10.71
-11.59
-7.73
-13.91
-27.72
-9.18
4.76
-13.60

%Chg YTD
21.42
2.92
20.88
12.05
-5.64
-13.28
16.53
7.52
8.26

Bloomberg L.P.
Chart of the Week {RT1 Comdty<go>}

Rubber Daily One Year

Rubber, along with many commodities, enjoyed a strong bull trend over the last year. The above chart
highlights rubber trading in an upward sloping channel rising as much as 58% in one year. Since the
double bottom in March 2008, price did not stumble when breaking resistance of 24000 and heading to its
all time high level set in June 2006 of 28000. By analyzing this rally with a Fibonacci Arc we can see
price has corrected 38.2% of this trend in 75% of the time it took to move from ~21000 to ~28000, a mild
consolidation at most.
What is different today versus June 2006 is aggregate volume has almost doubled. (Aggregate volume is
the summation of volume for the entire contract series). To easily see this, type {RT1 Comdty GP
W<go>} and select Aggr Volume from the Lower menu field and place a 10 in the Mov. Avg. field to
the right of it. Now you can see volume rose as price began falling in June 2006 and volume is falling
now as price is experiencing a correction. Respectively, these are typical characteristics of a trend
reversal and a consolidation in trend.
True Range represents todays trading range adjusted for a gap from yesterdays range. It takes the
largest of the following: todays high todays low, absolute value of todays high yesterdays close, or
absolute value of todays low minus yesterdays close. The Average True Range is an exponential
moving average of the true range. Peaks in ATR imply a top or bottom is forming. The last peak
occurred just prior to testing support at the 38.2% level implying the correction is complete.

- Paul Ciana
2

Bloomberg L.P.
Chart of the Week {GOLDS Index<go>}

GOLDS Index, Ten year weekly chart

Andrews Pitchfork is a trend line technique applied to a price series to identify support and resistance
levels in a trend. To plot a rising pitchfork like the one in the chart above, three points need to be
identified: a starting low (in this case the low at 251.95 on the 27th of Aug, 1998), a reaction high (340.50
on the 8th of Oct, 1999) and a reaction low (253.85 on 16th of Feb 2001). A median line will be projected
from the initial point with two parallel lines starting from the reaction points selected. In this case the
Pitchfork is applied to a log scale chart and overlaid with the TD SequentialTM indicator. In the last 10
years there were 3 instances when the price of gold entered the Pitchfork while Weekly TD Sequential
completed both a sell countdown (red 13) and a sell setup (green 9) in the same price area. These are
circled in red on the chart.
In the previous 2 occurrences (Feb through Apr 2003 and May through Jun 2006) the market came down
by 17.97% and 25.73% respectively. In both cases the drop reversed after getting to less than 1% away
from the TDST line, provided by TD Sequential.
The third occurrence has started with the high at 1032.70 on the 21st of March 2008. So far the market
reached a low of 846.22 on the May 2nd , 2008. That equates to 4.87% away from the current TDST
placed at 805.05. As history tends to repeat itself in Technical Analysis, the price of gold may have a little
more room to fall before anything else.

- Guido Riolo

Bloomberg L.P.
Chart of the Week {USO Equity<go>}

United States Oil Fund Daily Chart

The weekly chart of the United States Oil Fund (USO) shows that the trend is likely to reverse to the
upside.
This Oil ETF, which closely tracks the New York Crude contract on NYMEX, recently hit a high of $120 in
mid-July. The two months leading up to that showed some divergence between the price of USO and its
RSIwhile the price was climbing, the RSI was weakening. It is no surprise that the trend reversed to the
downside.
Further indications of an impending bullish trend is the RSI turning up from the 30 line, the turning up of
the Fear & Greed study (sellers are losing control-buyers are regaining it) and the %DS crossing above
the %D line in oversold territory in the slow stochastic.
$100 is an important psychological level that provided support twice in the uptrend and may now serve as
resistance. In the event of a rally higher, look for USO to struggle at passing this level.
- Tom Schneider

(Interested in learning more about ETFs? Check out the last page for a new book release on ETFs)

Bloomberg L.P.
Chart of the Week

S&P500 - Sector Rotation

The chart above shows the normalized relative strength of six S&P sectors (right scale, normalized on
June 30, 1998) with the S&P overlaid in white (left scale) over the past 20 years. The Energy Sector led
the market higher, beginning in December 2003. The Financial sector has pulled the market lower in
recent months. However, now these two sectors are now showing signs of reversal. Historically,
Financials have been a leading sector and Energy has been a lagging sector.
Similarly, the relative strength of Utilities and Basic Materials has been inversely related to the S&P 500
throughout the past 20 years. The downturn in relative strength over the past several weeks of Energy,
Utilities and Basic Materials combined with the possible upturn in the relative strength of Financials
suggest we are observing an important turning point. The impact on the S&P 500 will depend heavily on
how far the Energy sector corrects. This is similar to 2000, when Information Technology was the only
sector that out-performed the S&P.

- Eugene Sorenson

Bloomberg L.P.
Chart Enhancements Annotations

New Annotations for Identifying Trends

Some existing annotations have been improved and new annotations have been added

Sticky Mode select sticky mode and then an annotation to draw them continuously
New Trend Line Styles - Segment, Extended, Ray, Verticle, and Average lines
introduced
Net Change tool calculate the point change of a security
Fibonacci Arcs estimate support/resistance based on time and price
Cycle Finder identify seasonal trends in a security
Geometry tools - Rectangle and Hexagon to identify GANN angles
Andrews Pitchfork Connect peaks and valleys to identify support and resistance lines
Channel A lightly shaded channel to highlight an existing trend
Swing Line use this to draw wave counts and double click when done

Bloomberg L.P.
Upcoming Seminars
New York:

9/ 4/08 3:45PM - How Green is Your Portfolio?

9/10/08 4:30PM - Panel & Seminar: Structured Notes and Exotic Derivatives
9/17/08 8:00AM - Earnings Guidance & Long-Term Value Creation

Chicago:

9/10/08 2:00PM Equity Search and Screening Tools

9/10/08 3:45PM - Technical Charting Series: Daniel Gramza: Market Profile

Boston:

8/21/08 3:00PM Timing Is Everything: Alerts & Charting

9/15/08 4:30PM Technicals with Tom DeMark

San Francisco:
London:

8/19/08 2:00PM - Getting Started: Charting & Alerts

8/20/08 2:00PM - Advanced Technical Analysis

9/05/08 9:00AM Oil & Gas with Julio Bueno, Secretary of State of Rio De Janeiro
9/11/08 11:30AM Shining Some Light on Dark Pools: A Panel Discussion

Sao Paulo: 9/23/08 12:30PM Identifying Trends with Fibonacci, Candle Patterns and more
9/25/08 12:30PM Understanding Oscillators and DeMark Indicators

New Book Release from Bloomberg Press!

TRADING ETFs
Gaining an Edge with Technical Analysis
by Deron Wagner
In Trading ETFs, money manager Deron Wagner introduces the
major types and families of exchange-traded funds (ETFs) and
then provides step-by-step guidance to picking and trading them.
Unlike other books on ETFs, Wagners strategies are based on
technical analysis, a method of timing the market that greatly
improves an investors chances of predicting short and
intermediate term ETF trends.

ISBN: 978-1-57660-305-5 $55.00

Deron Wagner is the founder and head portfolio manager of

Morpheus Capital LP, a U.S. hedge fund, and Morpheus Trading
Group, a trader-education firm that provides daily technical
analysis of leading ETFs and stocks. Wagner is coauthor of The
Long-Term Day Trader (Career Press, 2000) and The After-Hours
Trader (McGraw-Hill, 2000). He is a frequent guest speaker at
financial seminars around the world and has appeared on CNBC
and ABC discussing his expertise.