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<<...Therefore, as far as using Tech
Analysis on a futures contract is concerned, just let the price dictate your
actions and not the cost of carry...>>
I disagree with that relative to price comparisons. Again,
theoretically futures are today's cash price plus the carrying charges
of storage and interest rates. It's really that simple. So if you
trade on speculation, you are really speculating on the cash price of the
underlying commodity at the point of the expiration of the futures contract, and
I agree that playing the price game (fundamental or technical) is the way
to go. However, they are significant opportunities in grains (and
others) for example, when the distant expiring contracts are priced at a
discount to near-term contracts (when they should have their relative carrying
prices added) and sometimes this price discount is very significant.
When you see this, it can give you a signal of some potentially profitable price
activity. One last thing, one who doesn't watch the cash price (on hard
goods) as closely as they watch the futures prices can also miss some entry
signals.
Jay
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