1994 SPREAD INVESTMENT LETTER
| JANUARY | FEBRUARY |
| As can be seen in the chart, this currency spread, long March Japanese Yen / short March Swiss Franc, absolutely exploded. The move from late December to mid-February was worth over $10,000! | This spread was long soybean
meal / short corn and gained over $2,500 from mid-January to mid-May. A chart is not
included because of the different unit of measurement for each of the contracts. |
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| MARCH | APRIL |
Next we
selected an energy spread, long gasoline / short heating oil. Entry was suggested at
"even money" (i.e., the point at which the price of both "legs" is the
same) which is shown in the chart by the horizontal line. As can be seen, entry was not
attained until late April but, once entry was attained, the spread exploded and gained
almost $4,000 by late summer. |
What a run this live hog / pork
belly "special situation" spread had increasing over $9,500 from early April to
late July!
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| MAY | JUNE |
| In May, we went back to the
grains and bought wheat / sold corn at the horizontal line shown in the chart. As can be
seen, this was a major winner of almost $6,000. |
This heating oil / gasoline spread was a major turkey as the exchange changed the specifications for the gasoline contract. Not content to get hammered once, I reviewed the spread again in the July letter. |
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| AUGUST | SEPTEMBER |
| This intramarket gasoline
spread was also involved with the changes in the exchange specifications. Although the
spread eventually gained over $1,500, an extreme amount of patience was required. More
successful were those who use the "scale trading" money management approach (see
"The Greatest Game in the World"). |
Here I returned to the currency market, long Deutschmark / short Swiss Franc. The break of the down trendline shown in the September issue was worth over $1,500, a little more than the required margin. |
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| OCTOBER | NOVEMBER |
| Trying to regain something from
the energy complex, I tried this intramarket heating oil spread which turned into about a
$400 loser.
|
For November, I went back to
the intramarket spreads and selected soybean oil. The spread made about $400 from
late-November to mid-January which is more than required margin. The +50 point target
shown by the upper horizontal line was never attained. |
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|
| DECEMBER | |
| Time for a major winner, and
going long the US Treasury Bond / short the US Treasury Bill right near the late November
lows was a stroke of good fortune that provided over $12,000 in gains by late May. The
chart shown is a ratio spread.
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