Today in Commodities: Will PPI and CPI Tell the Truth About Inflation?

Mixed bag in energies with oil and RBOB lower and heating oil and natural gas higher. We are holding December $75/80 call spreads for clients in oil thinking a test of $74 is in the cards in coming weeks. A roller coaster ride in natural gas in recent sessions with prices appreciating 13% Monday. If we get through the recent highs; $3.42 in October we should see more short covering. For new entries we like the month of December for call spreads. Isn’t it ironic that I get no comments on natural gas when prices start to do what we predicted.

The dollar is exhibiting signs of a bottom, let me rephrase a bounce could happen which would set up a good short opportunity. Currencies continue to be a traders' market. We are pricing out long trades in the yen for clients. On a dollar rally we also expect the Euro to break 5 cents. Could it be 7 days in a row higher in the stock market? Perhaps… we have clients who trade equities on the sidelines unless they put the position on.

Sugar was higher by 4% today, we bought the dip for clients last week in March 10′. Those who did not get out of coffee Friday got a bonus Monday with prices higher by 5%. We closed out longs Friday for clients. We bought January $1 call in OJ for clients today for $900, see post from Monday morning. On futures buy November with stops below 85 cents.

Silver and gold were lower but we expect more before we are prepared to buy for clients. We advised clients to sell June Euro-dollars Monday with a stop above the recent highs. We are operating under the premise that prices are starting to roll over and we should see a decent sell off. We are thankful we exited longs in lean hogs last week as prices came off 2-3% today. We will refrain from getting short but do expect prices to move lower, stay tuned for a long entry. Agriculture was mixed with little to report. On a breach of last week's lows in corn or wheat we would advise taking a loss on recent futures purchases.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Comments

[BullnBear:]

I have a feeling that some outside issue is going to bring some strength back to the dollar and I believe that this will happen via the political arena.

Wheat and corn are really going south, not cotton south, just south as in down.

Sep 14 05:03 PM

[Mayer Amsch...:]

Your article has nothing to do with PPI or CPI.

Sep 14 06:06 PM

[dcb:]

I'm doing th oppposite of what you adise. only time will tell. ag (dba) is at ling term support and there are drought in india mexio. plus MACD is turning pos, and rsi indicates a buy signal.

Sep 14 06:35 PM

[dcb:]

I would add that i consider it confirmation with bond behavior today. clearly bonds and atocks at disassocited, but bonds and certain commodites are not. perhaps that is the better method of looking at bind price behavior not stocks.


On Sep 14 06:35 PM dcb wrote:

> I'm doing th oppposite of what you adise. only time will tell. ag
> (dba) is at ling term support and there are drought in india mexio.
> plus MACD is turning pos, and rsi indicates a buy signal.

Sep 14 06:37 PM

[rrdaniel:]

Good call on sugar; what may happen next ?
Another short dip ?

Sep 14 07:17 PM

[ManAboutDallas:]

He was just seeing if you were paying attention, Mayer... good on 'ya .


On Sep 14 06:06 PM Mayer Amschel Rothschild wrote:

> Your article has nothing to do with PPI or CPI.

Sep 14 08:23 PM

[ManAboutDallas:]

Spot on, 'Bard...

>The dollar is exhibiting signs of a bottom, let me rephrase a bounce
>could happen which would set up a good short opportunity

actually, an EXCELLENT "short opportunity", but that won't keep it from buttering the chumps yet again as the BubbleVision Bubblehead lather 'em up by putting visions of Dollar Index .90 dancing in their little punkin' seed heads.

Dollar rally will top just under 78.40, which is where it meets .618 Fibo resistance of the July 16 / Sep 12 top/bottom and .236 Fibo resistance of the June 8 / Aug 5 top/bottom.

Sep 14 08:31 PM

[ManAboutDallas:]

IF... big if... it's luckier than it has ANY right to be.

Sep 14 08:33 PM

[iknow1:]

Matt,

Congrats on your call spread positions in Nat Gas. And you are correct the detractors are silent.

One of your readers took advantage of the oversold weekly and daily stochs on Sept 3 (see Sept 3 comment) and and got long Oct NG from $2.425 on Sept 4.

I was wrong about the double bottom, but the market had put in over 94% of the decline by Sept 3 as suggested. The lows around $2.409
reflected a 99% move and so entry risk was very low.

So there is no10 lot position for me but still a meaningful trade.

Already rolled into Nov and have stops at 3.95 With an objective of 4.74 this week.

Good luck with your call spreads.

BTW I was wrong on my call for a Bottom on the $$ after Labor Day.
There was a loser that was booked at a $500 loss. Hope your bounce is better than mine.

ik1

Sep 14 09:07 PM

[Belome:]

Yep... congrats... if you make a call long enough and the market drops 40% from when you start making that call and it finally makes a turn you deserve all the credit in the world....whatever.

Sep 15 12:10 AM

[przem23:]

Dian wrote a good article about the recent spike.

seekingalpha.com/artic...

I believe the recent spike was mostly technical, having touched a long term support line. As David Fry suggests, watch out for that 22 MA!


On Sep 14 09:07 PM iknow1 wrote:

> Matt,
>
> Congrats on your call spread positions in Nat Gas. And you are correct
> the detractors are silent.
>
> One of your readers took advantage of the oversold weekly and daily
> stochs on Sept 3 (see Sept 3 comment) and and got long Oct NG from
> $2.425 on Sept 4.
>
> I was wrong about the double bottom, but the market had put in over
> 94% of the decline by Sept 3 as suggested. The lows around $2.409
>
> reflected a 99% move and so entry risk was very low.
>
> So there is no10 lot position for me but still a meaningful trade.
>
>
> Already rolled into Nov and have stops at 3.95 With an objective
> of 4.74 this week.
>
> Good luck with your call spreads.
>
> BTW I was wrong on my call for a Bottom on the $$ after Labor Day.
>
> There was a loser that was booked at a $500 loss. Hope your bounce
> is better than mine.
>
> ik1

Sep 15 12:22 AM

[Belome:]

BTW for NG is this a tecnical recovery, short squeeze or the beginning of a bull market? Would you care to elaborate? You have been wrong in the grains for quite a while now so too with the hogs. Don't let nat gas get to your head that story isn't over yet.

Sep 15 12:28 AM

[Worldtravel...:]

Your betting on a dollar correction, I'd give you a short term rally maybe.. Long term, without a change in US monitary policy, I'm betting on a dollar collapse. We've seen this movie before.

Sep 15 08:50 AM

[If Then:]

what's the title got to do with what you wrote???

Sep 17 11:10 PM