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Daily Commodity Update - 15.11.2012

By Matthew Bradbard | Thu, 15 November 2012 23:16 | 0

Energy: At its highs Crude oil touched the down sloping trend line but prices failed closing lower by 1.14%. For 3 weeks now a base has been forming and from here I’m looking for 4-6% appreciation. RBOB finished slightly lower but did close above its 100 day MA. My upside target is about a dime above today’s settlement. Heating oil lost 1% closing just off the lows. We will need to see a close above $3.02 in January to confirm an interim bottom. Buying was rejected in natural gas around the same level the last 2 days as prices lost 1.75% today. Stops should be just under the close and on lower trade tomorrow back to sidelines we go.

Stock Indices: A minor loss in the S&P puts prices at fresh 3 ½ month lows but the pace of selling is slowing. As I said yesterday to complete a 61.8% Fibonacci retracement we only need to see about another 15 points. I’m the minority but I’m still anticipating a bounce back near 1425 in December futures in the coming weeks. Another 0.18% loss in the Dow today with a decline of 5.4% in the last 2 weeks.  Like the S&P I think we’re due for a bounce…target in December futures is 13200.

Metals: Gold is down 3 out of the last 4 sessions dropping nearly 1% today as prices approach $1700/ounce. Under that pivot point I see support at $1670 followed by$1640. I will be looking to buy from lower levels but have yet to determine the exact strategy for clients. I do know that I want to be in February contracts but have not decided on what futures or options plays. Silver closed 0.63% lower but pared its losses closing 50 cents off the lows. My target remains $30.75/31 on the impending correction. I am intrigued to be a buyer of March at lower levels. I do not think we can get much more than a mild correction especially if the dollar starts to back off as expected.

Softs: For the last 5 days cocoa price have strengthened just over 6% within $17 of my $2500 objective. It still looks like this leg has some life and though I would not get greedy do not rule out $2575 in March futures. Sugar lost ground today closing under its 9 day MA down just better than 1%. It’s a bit frustrating for my longs as I thought the appreciation was under way. Stay the course as this is viewed as a minor setback for now. My target remains 21 cents in March in the coming weeks. Cotton advanced 1.38% to close at 2 week highs making its way to my 73 cent target. In fact a 61.8% retracement puts prices just under 74 in March. On its highs OJ completed a 50% Fibonacci retracement but I think this trade is just getting started. In 3 short sessions prices gained over 10% but I think we could see further upside. Look at deeper analyses in today’s chart of the day. Coffee closed near its highs on the session 3% off its lows. A close back above $1.56 should shift the momentum from the bears and get longs interested again.

Treasuries:  30-yr bonds were in the green but barely able to hold onto gains as I think a correction is upon us. My stance is that we will roll over and move back towards the 20 day MA just over 149’00 in the coming weeks. 10-yr notes are also exhibiting topping action unable to hold onto any significant gains in recent dealings. Bearish plays are advised but regular followers know I prefer NOB spreads as opposed to outright short futures in either instrument.

Livestock:   February live cattle got back most of yesterday’s loss closing higher by 0.19% just above its 9 day MA. If stocks can find their footing I think we can manage to see slight appreciation but do not bet the farm as it has been dicey. The last 2 days feeder cattle have hinted that prices have moved low enough as selling was rejected. From oversold levels it will take prices over the 9 day MA to confirm a low; that level stands at $1.4585 in January. Lean hogs bounced off the 9 day MA but I’m still calling for further deprecation. My target in February pigs is 83 cents.

Grains: Corn stalled today closing lower by 0.62% Prices could go either way so I’ve suggested bearish trades to tighten up stops or move to the sidelines. Soybeans gave up 1.2% closing just above $14/bushel. I think we are within 15-25 cents of an interim low which seems like a fair amount of risk but being I think there is $1 of potential upside the risk/reward dynamic puts long entries on my radar. Today’s loss makes it 5 consecutive days in wheat though the same support that held in mid-October appears supportive. Look for guidance from other Ag markets. I will warn those entertaining longs I just notice a gap from early July that if filled puts futures 3.5% lower.

Currencies:  The dollar index continues to dance just above the 81 level though I expect that to be short lived…forecasting a correction. Aggressive traders can scale into longs in the Euro and Swiss. The Aussie has started to trade lower closing under the 20 day MA for the first time in 3 weeks. As I said yesterday I think December futures can make their way closer to $1.01. In the last 2 days the Yen has lost better than 2% putting prices near 7 month lows. I see little support for another 2% so go with it. This is a perfect example why stops are so critical…see previous posts.

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. 

By. Matthew Bradbard

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