Today in Commodities: Living Up to Expectations

by: Matthew Bradbard

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.