If you would like to learn more about the Commodity Market Monitor, feel free to contact us with any inquiries you may have.
The Commodity Market Monitor is the culmination and formalization of methods, and procedures used to buy, sell, and manage price risk exposure over more than 30 years.
The methodology incorporates three different approaches to observing market behavior.
A model has been created based on the optimum outcome of a specific mathematical calculation.
The model is structured to generate buy and sell signals, and show open and closed profits and losses, along with a summary of cumulative statistics. The model is at all times either long or short.
The limitation here relates to the mechanics of the London Metal Exchange, such that an LME trade basis the 3-month price for example, does not incorporate contango erosion or the influence of backwardation in the ‘mark to market’ calculation after a trade is made. Thus, when a trade is closed out, it is also based upon the 3-month price, which is not a true reflection of market values.
Also, in the interest of keeping the model as clean and simple as possible, it does not reflect the cost of changing from the expiring active month contract to the next active month, nor are commission charges included.
This is a strictly mechanical approach, with more losing trades than winners, but ultimately, the gains far outweigh losses. It epitomizes the rule of “Cut Your Losses, and Let Your Profits Run” The model serves as a guide for the user to determine if and when trades may be entered into.
Each market is viewed on an individual monthly basis in isolation.
Support and resistance lines can be moved to assist in daily decision making, and the month to date average is incorporated to illustrate how the market is progressing during the period.
This methodology enables one to see how their buying or selling compares to the monthly average price as it evolves.
Markets are viewed relative to their performance against specific high and low points over varying time periods.
Strategically, these charts enable one to see if the market is making higher highs, or lower lows, and can also assist in making long term strategic hedging decisions if, and when the market rises above a specific high or falls below a key low point.
The Market Monitor incorporates 22 different markets, with each one having the three individual models. It has been developed in such a way, that by entering the closing prices each day, all markets, and the three models for each are updated, with an end of day position report also generated showing open and closed year to date P&L for all markets.
The program has also been structured so that individual ‘modules’ can be made for any combination of the 22 markets. For example, one module may include just Comex copper, silver, and gold. Alternatively, another module may be the LME metals.
This system is an invaluable tool for any organization, as it will strengthen and enhance your monitoring, control, and management of price risk.
- LME Copper
- LME Aluminum
- LME Lead
- LME Tin
- LME Nickel
- Comex Copper
- Comex Silver
- Nymex Platinum
- Nymex Crude Oil
- Nymex Heating Oil
- Nymex Gasoline
Nymex Natural Gas
- ICE U.S. Dollar Index
- CME Euro
- CME Japanese Yen
- CME British Pound
- CME Australian Dollar
CME Canadian Dollar
- CME Mini S&P 500