Energy: Crude oil finished higher for the second week in row… a feat not reached since the beginning of September. Prices closed out the week near their highs, just about on the down sloping trend line mentioned in recent posts. I am calling for appreciation in the weeks to come, targeting $90-92/barrel in the January contact. RBOB finished the week where it started but on the week, the range was a dime. Upside resistance is seen at the 50% Fibonacci level just above today's highs, followed by $2.73/2.75. Expect a trade near those levels if crude moves as forecast. Heating oil closed over its 8 day MA, just under $3/gallon. I see solid support at $2.95 and anticipate a trade back near $3.10 in the coming weeks. The 18 day MA supported the last two days, as natural gas ends the week on a strong note, closing up by 2.17% and the highest weekly close in three weeks. I'm expecting a probe above $4 into next week.
Stock Indices: The S&P has closed lower five out of the last six weeks, but selling could be drying up. We nearly completed a 61.8% retracement on the daily chart, and came very close to a 38.2% retracement on the weekly chart. I will need more evidence next week on a shortened trading week, but I am calling an interim low. My target is the 50 day MA, just under 1425 in the coming weeks… trade accordingly. Selling was also rejected in the Dow today, with prices closing 1.1% off their lows. As for upside resistance in December futures, 12725, followed by 12925, with my ultimate objective at 13200.
Metals: Gold may have lost its luster, down five out of the last six days, but in that time, prices have only lost $15/ounce. $1720 should cap any advances, as I am targeting $1680 into next week on December futures. Silver was able to pare losses the last few sessions, but still closed lower on both days and down slightly on the week. I'm expecting prices to back off, as I'm thinking we can trade under $31 before we see another leg higher resume.
Softs: The 3.42% loss in cocoa futures today erased the two previous days' gains. Again, a classic case of why traders should trail stops -- as I had just mentioned in yesterday's post -- and not get greedy. Prior to today's correction, prices gained 7% the previous four sessions. I'll be interested to see the price action when the 200 day MA is tested -- in March at 2360. Mixed signal in the weekly sugar chart… an inside candle and also a doji star. Weighing the risk/reward dynamic, I continue to think scaling into longs just above 19 cents makes great sense. My favored play is back ratio spreads, targeting 21 cents in the coming weeks. Cotton has appreciated five out of the last six sessions and should continue to track higher, especially if stocks can catch a bid. My initial target in March was 73 but with some outside market help, 75/76 may be obtainable. On a retracement next week, I will be looking to gain bullish exposure in OJ with clients… stay tuned. Seven consecutive losing weeks in coffee, as prices bounced off 29-month lows. I think we are very close to finding a value zone, so I've advised March back ratio spreads and will be adding to the trade for clients once prices start cooperating. I expect a 7-10% appreciation in the coming weeks.
Treasuries: 30-year bonds remained above 152'0 to close higher on the week but if you notice, prices could not hold onto their gains. I'm anticipating prices roll over and December makes its way back near 149'00 in the coming weeks. The 9 day MA currently is at 151'9, while the 20 day MA comes in at 149'18. 10-year notes traded to their highest level in three months but like 30 year-bonds, they are extremely overbought, and I'm calling for deprecation immediately to follow. A trade under 133'00 in December is my call… trade accordingly. The NOB spread is my favored vehicle of choice for bears in the complex.
Livestock: Live cattle picked up 0.50% to close at three week highs. A trade above $1.3050 and I think we would challenge the October highs, just below $1.32. Feeder cattle moved in the same direction, just at a smaller percentage gain, 0.31%, as prices still remain under their 9 day MA. On further appreciation into next week, my first target would be $1.4725. Aggressive traders could continue to pick a top on lean hogs, but stops should be in place just above the latest highs. We still have yet to get confirmation that a trade lower will play out as forecast.
Grains: Bullish engulfing candle and a reversal in December corn today could signal an interim bottom. Close out bearish trade, as I am reversing my stance and will be pricing out bullish trade next week. Soybeans lost 1.34% today, completing a 61.8% Fibonacci retracement to the penny. Longs are on my radar and on signs of buying interest, I should have some bullish ideas into next week. A 38.2% retracement that took much longer than I anticipated was completed today with a probe of $8.30 in wheat. Do not rule out further selling to fill the gap mentioned in early July but if corn and beans find their footing, we may see selling dry up. A market does not move straight down, and today marks the seventh consecutive losing day… that will not continue.
Currencies: I did not see this coming and to me, it just is a false breakout for now, but the dollar did surprise me today, gaining 0.21% to put prices at 10 week highs. On that, traders may have been stopped on their long probes in the euro and swiss. My suggestion is not to add or try again until the dollar in fact tops. Remain short the aussie, with stops just above the 20 day MA. Trail stops down in the yen to protect profits after the near 2.4% route in recent sessions.
Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.