Do not read into market activity today as volumes were light on the Jewish holiday of Yom Kippur. As long as crude holds Friday’s low we will remain long with clients; November contract $65.05. October expires today in natural gas with November becoming the active contract. Recognize this market still trades in deep contango so overnight prices will appear to jump $1 and this is not the case. We have suggested a 50 cent correction before establishing longs for clients. At this juncture $5 appears to be stiff resistance; a 31.8 Fibonacci retracement takes prices to $4.40 in November.
Softs were quiet with the exception of sugar gaining almost 5%. We did suggest lightening up on Friday. Hindsight being 20/20 we would do the same being we did not know which way the breakout would be. The S&P had its best performance in 2 months today, we got short for clients. This may be contrarian but we advised clients to buy December 1075/1025 put spreads for just over $1000.
We reached our objective in the KCBOT/CBOT wheat spread for clients today at 20 cents premium to KCBOT. Corn was a gainer of a nickel, on a move thru recent highs we should see 10/15 more cents. If so we would advise taking partial profits on longs and tightening up stops.
Gold and silver were marginally higher, we still feel lower levels are coming. December 30-yr bonds were higher by 20 ticks as of this post, clients remain long. As previous posts suggest on a trade above 122 we will start looking for an exit.
Live cattle futures were relatively quiet but take a look at the spreads; December and February are gaining on April.
The Euro-currency gave up 70 ticks, stay short. The US dollar was higher by 25 ticks, use the 20 day moving average at 77.35 as your pivot point. The yen overnight traded to 1.1341 in the December contract, we remain long with clients looking for higher pricing. Today’s settlement should be closer to 1.1150 so expect volatility.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.