Energy: Crude oil showed some resilience today, closing back over its short-term MAs, gaining 0.75% as of this post. This should tell market participants that oil is much more than just the Middle East, as a cease fire was announced and still crude held its own. I still maintain a solid base has formed and we should trade north from here… trade accordingly. My target in January futures is $92/barrel. RBOB bounced off its 50 day MA to close just off its highs, nearly 1.50%. A penetration above the 61.8% Fibonacci level should lead to an assault of the trend line near $2.77. Heating oil gained 1.08% to close above its 50 day MA. A triple top has formed, so we will need to see higher trade in the next few days or a correction will happen, in my opinion. Natural gas closed higher by almost 2%, closing above $4 for the first time in one month. Traders should have been stopped at a loss on bearish trades. I'd like to get clients long on the next correction, assuming it plays out in the coming weeks.
Stock Indices: The S&P has gained the last four days, as prices are now a few dollars from their 20 day MA. Short term, my objective is the down sloping trend line, about 15 points above today's settlement. If the bears can stay in the driver's seat, my ultimate objective is the 50 day MA just under 1225. The 9 day MA should support any back and fill at 1372. The Dow has also been in the green in recent dealings, closing at one week highs at 12800 in December futures. 13000 is within our sites, while the 50 day MA in this contract comes in at 13185.
Metals: Lower trade was rejected in gold as prices closed slightly positive, getting back most of the previous day's losses. I'm getting mixed signals from outside markets, so I would keep your size small. The fundamental picture is bullish, but until prices can retake their 50 day MA -- currently at $1744 -- I would not rule out a trade under $1700/ounce. Silver gained 1.28% to close above its 50 day MA for the first time in one month. This generated a buy signal, but I did not act on behalf of clients. I will re-evaluate next week and see if that was the correct move. The lower entry I can get, the larger position I would establish. Either way, I should have some sort of long strategy into next week, unless we get a reversal in the coming sessions.
Softs: Cocoa futures continue to struggle at 2480, unable to penetrate that level now for three weeks. It will likely take a falling dollar to jump that hurdle. If so, next stop should be 2535 in March. Sugar lost 1.31% today, but remains above the 9 day MA and 1 cent off the lows. Clients remain in their bullish trades, targeting higher levels in the coming weeks. Cotton has gone nowhere quickly but as long as the 9 day MA holds, I remain friendly. Could the market be taking a breath before the jump to 75 cents? The best performer in this complex by far has been OJ… not Simpson. Frozen concentrate has appreciated 20% in the last two weeks and is almost at my objective, which I thought it would take months to reach. The sad truth is it happened so quickly, I missed the trade for clients. I will need to go back to the drawing board on strategy, but I like bullish trade on a correction lower. Indecision remains in coffee, as prices continue to stall near their contract lows. Clients still have upside calls and are under water, but we believe. We believe prices could appreciate 5-8% in the coming weeks.
Treasuries: For the third session in a row, 30-year bonds are trading under their 20 day MA for the first time in three weeks. Both my objectives have been reached, so my clients have exited the trade. I believe the easy money has been made, but do not rule out more selling. If stocks continue to appreciate, 30-year bonds should lose ground. A 61.8% Fibonacci retracement puts December at 148'14. 10-year notes have competed a 38.2% Fibonacci retracement, as the low of the day was the 20 day MA. Selling should persist at a slower pace in notes as long as equities are well bid. Do not forget the NOB spread, as it has been picture perfect in this environment.
Livestock: Live cattle challenged one month highs, gaining 0.84% today. I see limited upside and as the market hesitates in the coming weeks, I will be exploring bearish trades from overbought levels… stay tuned. Feeder cattle bounced off their 9 day MA, slicing through the 20 day MA like a hot knife through butter. The 50% Fib level is eyed at $148.10, and the 61.8% at $148.90. I cannot declare an interim top, but new highs being rejected, a bearish engulfing candle and a close on the lows is enough for me to price out bearish trades in February lean hogs. Assuming we trade south from here, I think a reasonable objective would be 83 cents… stay tuned.
Grains: Corn failed for the first time in four sessions, challenging the trend line. As long as the 50 day MA supports, stay in bullish trade -- what was resistance has now become support. Some clients have gained light bullish trade, targeting higher trade in the coming weeks. Soybeans also closed slightly lower, just below the 9 day MA. As long as the recent lows hold, I like scaling into bullish trade. As for the January contract, my first upside objective stands at $14.50, then $15/bushel. Inside day in wheat, as prices have been unable to retake their 9 day MA to date. Wheat should move with the whole complex, but I am very unimpressed with the lack of a bounce in recent dealings.
Currencies: The dollar has not really lost too much value, but it has closed in the red six out of the last seven sessions. In my opinion, lower trade is imminent and on a close under the 20 day MA, sentiment would likely shift. The euro, pound and swissie should continue to benefit from weakness in the greenback. My favored play for the three aforementioned crosses remains the cable. The loonie has yet to make a move, but I like layering in longs targeting higher trade. The 20 day MA should support, currently just above par. The yen remains a one-way trade, losing another 1% today and lower by 6% in the last two months. Lower trade appears likely.
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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.