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Commodity Market Update - 26.10.12

Energy: $85 supported in Crude oil the last 3 sessions but I view this as a pause before more selling ensues. I’ll remain bullish as long as December is below $87/barrel. RBOB is nearly 10 cents off its intra-week lows with two consecutive closes back over the 100 day MA. Those that road bearish positions down are advised to move to the sidelines. Heating oil gained 1.12% to close just below is 8 day MA. The same advice as RBOB book profits and move to the sidelines on heating oil trades. Natural gas finished lower for the first Time in 5 weeks. Consecutive settlements under its 18 day MA confirm that prices should see further deprecation. My target in December is 20 cents from today’s close.

Stock Indices: The S&P probed 1400 again today but pared losses by the close to finish just above that pivot point. Resistance in December futures comes in at 1420 while my objective remains 1380. The Dow held its pivot point as well closing just over 13000. 13200 should serve as resistance while 12800 is my downside target.

Metals: For the last 3 days gold has been stuck in a $20 trading range. With prices under the 50 day MA I’m bearish looking for further deprecation. A trade to at least the up sloping trend line and if bears take control a trade closer to $1650 where I would be a buyer with both hands. Buying was rejected in silver as the up sloping trend line mentioned in previous posts capped the bulls in recent dealings. A trade under $31.50 should lead to a probe of the 100 day MA, currently at $30.35.

Softs: Cocoa futures traded lower the last 4 sessions to finish the week under its 100 day MA down just over 5% on the week. More selling should follow. Everyday this week sugar was in the red closing at a fresh contract low. Take a small loss on your latest purchases and look to re-buy once there are signs of a bottom. Cotton closed under its 100 day MA making its way under 70 cents in the coming weeks in my opinion. Coffee has closed lower for 4 consecutive weeks closing the week under $1.60. I have walked away and until we get a trade higher I’ve suggested the sidelines.

Treasuries:  30-yr bonds gained nearly 1%finihig just under its 20 day MA. From here I expect December to make its way back near 151’00…trade accordingly.  10-yr notes took direction from bonds closing over its 9 day MA and further appreciation is expected. 133’00 in the December contract should play out next week in my opinion.

Livestock:   5 out of the last 6 days live cattle have been in the red as December got within 5 ticks of my $1.25 target on its lows today. That objective should be reached next week and move to the sidelines if so. Off the interim high last week feeder cattle are down 2.6% but I think there should be 40% more on this leg…trade accordingly. With today’s appreciation of 1% lifting prices of December lean hogs above its 9 day MA exit shorts and re-evaluate. Though I’m bearish I’m not willing to fall asleep at the wheel.

Grains: Corn has lost nearly 30 cents as chart damage has been done and more depreciation should play out. I would not rule out a trade closer to $7/bushel in the coming weeks. Although it’s only been a 75 cent ride in the last 2 weeks soybeans have moved from oversold to overbought within that time frame. I do not think prices get to $16 as previously forecast. In fact weakness in outside markets may pressure soybeans so risk management is critical. If a leg lower ensues I’d anticipate $14.75 in November. Wheat is back under its short term MAs as further selling should drag prices to 5 month lows as I see little support.

Currencies:  The Euro probed its 34 EMA and has traded lower 7 out of the last 8 sessions even though only registering just over a 2 cent loss. Aggressive traders can gain bearish exposure with stops above the 20 day MA. The Loonie settled under par down 0.49% today. I do believe there is more selling to come but those with multiple positions were advised to lighten up today. The dollar has closed higher 4 out of the last 6 weeks establishing a solid base that I feel could lead to more appreciation. In the weeks to come RISK OFF could put the dollar index closer to 81.50 in my opinion. After the 50% Fibonacci retracement was complete followed up by a bullish engulfing candle I think the Yen appreciates short term. Buy with stops below the latest lows targeting 1.2725 in December. 

By. Matthew Bradbard

Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals.  You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice.  Past performance is not necessarily indicative of future results.

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