Today in Commodities: Living Up to Expectations 21 comments
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Expectations for tomorrow’s number is a loss of 230,000 jobs. It is not as much about the number but rather how the market reacts.
Gold was within spitting distance of $1000 today, this level should be breached before the Labor Day weekend. The questions will be if we run stops, will there be a short squeeze, will new buyers come into the market? As most of you know, we prefer silver, which was up 5% today vs. a 1.5% move in gold. Additionally gold is much closer to its all-time high. We see more potential in silver than gold.
We remain flat in currencies for clients as a whole. Some have chosen to get short Euro-currency, which we do not see as a bad call. In Treasuries we suggested clients to buy December 30 yr bonds today and use October 10-yr puts as protection into the jobs number. On a spike lower lift the puts and hold the December longs. Clients bought June 10′ 98.50 Euro-dollar puts today for $550.
There was a new 7 1/2 year low in natural gas today as prices are currently down 20 cents. LET ME SAY THIS LOUD AND CLEAR: WE MAY BE WRONG BEING LONG FOR THE NEXT 60 DAYS BUT WE WILL KEEP A PORTION OF OUR CLIENTS' COMMODITY PORTFOLIO LONG NATURAL GAS AS TO BE THERE WHEN PRICES GET BACK IN LINE, whether that be two, three or four months from now.
We bought November lumber for clients today expecting a $20/30 move higher, have stop loss below recent low. Agriculture has yet to bottom, remember USDA next week. As previously stated, mother nature rules the roost. If you have not yet taken a profit on October lean hogs do so, on a move north of 50 cents in December put in profit order. We have numerous long suggestions in futures and options in live cattle.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
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Long and terribly wrong. A week ago you were long NGV09 at $3.20/mmbtu, now its $2.50/mmbu. A mere 22% loss. The initial and maintenance margin for 1 NYMEX NG contract is $10,575. You would have lost $7,000/$10,575 or 71% on your initial investment. Hopefully your audience has ignored your bad advice.
Ask yourself why NG is at $2.50 and you"ll realize why simple technical analysis and historical analogies of crude:natural gas are inane and misguided.
NGX09 has another 10% decline and NGZ09-NGF10 have even more. The contango is unprecedented and WILL come in. Commodities are zero and Matt is trying to convince you it is an investment. It isn't, its a trading asset.
Commodities are zero and....
should be
Commodities are zero sum....
Did someone hit you in the head with a hammer? I am long $1 call spreads not futures so though clients are down they are still in expecting a move higher. See previous posts. Clients that listened to me are down in this trade but most are also long sugar and silver from much lower levels. It is called diversification.
On Sep 03 05:41 PM hammer wrote:
> "There was a new 7 1/2 year low in natural gas today as prices are
> currently down 20 cents. LET ME SAY THIS LOUD AND CLEAR: WE MAY BE
> WRONG BEING LONG FOR THE NEXT 60 DAYS BUT WE WILL KEEP A PORTION
> OF OUR CLIENTS' COMMODITY PORTFOLIO LONG NATURAL GAS AS TO BE THERE
> WHEN PRICES GET BACK IN LINE, whether that be two, three or four
> months from now."
>
> Long and terribly wrong. A week ago you were long NGV09 at $3.20/mmbtu,
> now its $2.50/mmbu. A mere 22% loss. The initial and maintenance
> margin for 1 NYMEX NG contract is $10,575. You would have lost $7,000/$10,575
> or 71% on your initial investment. Hopefully your audience has ignored
> your bad advice.
>
> Ask yourself why NG is at $2.50 and you"ll realize why simple technical
> analysis and historical analogies of crude:natural gas are inane
> and misguided.
>
> NGX09 has another 10% decline and NGZ09-NGF10 have even more. The
> contango is unprecedented and WILL come in. Commodities are zero
> and Matt is trying to convince you it is an investment. It isn't,
> its a trading asset.
The more that one is hated, and the more enemies one makes, the closer one knows they are getting to the truth.
NG is in final capitulation mode, and you'll be vindicated. Nearly all of the Canadian NG juniors I follow have formed classic divergence bottoms against the NG low itself. Steady as she goes.
On Sep 03 05:52 PM Matthew Bradbard wrote:
> Hammer
> Did someone hit you in the head with a hammer? I am long $1 call
> spreads not futures so though clients are down they are still in
> expecting a move higher. See previous posts. Clients that listened
> to me are down in this trade but most are also long sugar and silver
> from much lower levels. It is called diversification.
As NG plummets to $2.50, traders wonder where the bottom is. Well we have some past experience based upon technical indicators. I track a few commodities using a daily and weekly stochastic. As you know, values for %K and %D run between 0 and 100%. Low numbers approaching zero often indicate a low and values approaching 100 indicating a pending high. So here goes a comparison of the S&P bottom in March with today’s Nat Gas price.
Look at the table below
Date S&P Low %k/%d % of Drop
3/3/09 688 0.6/5.0 96%
3/5/09 676 .7/6.2 99%
3/8/09 670 3.0/4.0 100%
Now here we have Nat Gas (Oct) Lets apply the same criteria and see what we get.
Date NG Low %k/%d % of Drop
9/3/09 2.500 0.78/0.83 96%
9/4/09 2.420 Est .7/6.2 Est 99%
9/8/09 2.400 Est 3.0/4.0 Est 100%
Additionally, daily S&P RSI hit 27 the day before the low and improved on the day of the actual low indicatring bullish divergence. The NG RSI is 18 as of Thursday’s close. Look for the same type of divergence when the bottom goes in
As you can see we may be looking at a bottom on Tuesday at about $2.40. If we wanted to wrap a down cycle of about 10 days to this, the $2.40 low would be on Thursday 9/10/09. I’ll be watching and looking for a daily signal like a volume climax to confirm the low.
Happy trading.
August 27, 2009
As of this moment the October spread is 22:1, November 17:1 and December at 15:1. We would suggest allocating approximately $5000 per strategy, getting short crude and long Natural gas for the month of December.
August 26, 2009
This week the Crude:Natural gas ratio traded to historical extremes and we do not expect it to last.
August 21, 2009
Natural gas was lower today but UNG was higher -- could that be a forward indicator of an impending bottom in the futures? Additionally the forward months held their value, trading only slightly lower. The November$5/6 is where we would suggest looking currently.
August 11, 2009
For the October $5/6 call spreads we suggest trying to buy back the top leg for $300 gtc. For new entries we were buyers of the November $5.50/6.50 today at $1900/per.
July 27, 2009
A potential double top formed last week at $4.05 (September) as prices failed to get through the 50 day moving average after 2 attempts. That level should serve as resistance at $4.03 with support at $3.65. We are still advising clients $1 call spreads, on multiple positions split the purchase between October and November.
July 15, 2009
Natural gas got hit by 4% today. For all you naysayers, this is not a day trade; we are building long positions for clients expecting to see 60 cents to $1 appreciation in the next 2 months. Talk to me in late September and then say we’re wrong.
Thank God we have guys like you telling their clients to go long NG. You have been DEAD WRONG !!!
On Sep 03 05:52 PM Matthew Bradbard wrote:
> Hammer
> Did someone hit you in the head with a hammer? I am long $1 call
> spreads not futures so though clients are down they are still in
> expecting a move higher. See previous posts. Clients that listened
> to me are down in this trade but most are also long sugar and silver
> from much lower levels. It is called diversification.
And finally, remember the odds of picking a top or bottom are at least 2:1 against being correct, so look at the post above with some caution.
ik1
Aureus
Two more: Inflation hedge.
Bottom line: nat gas has to go up from here, too many are waiting and salivating to empty the bank on this goldmine.
Read more: joeshareholder.blogspo...
OK I HEAR YOU LOUD AND CLEAR!
Own the miners, I agree, and preferably diverse base metals producers like BHP, RIO, FCX.
Personally, I'd rather own physical copper in my backyard than gold coins. In fact, I'd rather own guns, ammunition, water, dry bulk food instead of hoarding gold--especially if you believe the real drivers to make gold push higher are in play!
Think about it, if gold couldn't hold above $1,000 per troy oz in the worst crisis since 1929 what worse outcome would have to happen to cause it to push higher from here?
Gold had every excuse to trade above $2,000-3,000 and it never did.
I'd rather own miners than gold. You lost all credibility there.
Look people if you're day trading someone else's picks start thumbing the classifieds cause you're about to be broke. The difference between you and him is you have only so much money and he is moving clients monthly.
We are expecting inflation by buying commodities right now. In the next few months the gold bugs are going to gloat as the dollar drops quickly. Gold won't benefit as much as any other commodity and that is the reason it's ok for media advertisements for gold because we'll all be making triple what gold bugs are making. There is karma.
The race will begin when Dow bottoms in the next couple months. As soon as I see a new low on Dow I'm getting ready to buy any commodity on my platform.