Today in Commodities: The Fight for Leadership

Oil appears to be stalling after a very impressive move... could it be the US dollar is finding footing? If prices fail to trade above yesterday's high at $81.99 on the December contract we should have an interim top in place. We have clients positioned in bear put spreads in January. Natural gas should move lower in the coming sessions. A forecast for colder weather could cause a spike higher in the immediate term but storage continues to build. We are on the sidelines but will explore longs after a break of 40/60 cents.

OJ started to rollover; our first target would be the gap in the chart about 5 cents lower. Clients are short January, expecting a trade back near $1 in the futures. Sugar broke lower; we would like to see a trade back near 21 cents to re-establish bullish plays for clients.

Yesterday stocks sold off; today they are gaining ground, more sideways action to come. We have a bearish bias, as most of you know.

Grains are having a tough time breaking as the weather is wet and cold, not ideal for harvest. At the moment we will not establish outright longs unless we get a break lower, but we have suggested various futures spreads to at least gain some exposure in case we do not get a break.

Gold and silver continued to trade sideways, short term who knows? A break out of the recent sideways consolidation should determine the next leg.

Live cattle closed near the highs for the day, as we’ve said we are bullish but expect a 2/3 cent break so trade accordingly.

The dollar is trying hard to rally but to date has failed to get enough interest. As for the Loonie we failed to break the 20 day moving average so we advised clients to book profits on their shorts again. Next week we may explore shorts once again, it will be depending on our dollar outlook.

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

[TonyNed:]

The USD is dragging along in an oversold condition. Look for oil to take a short breather before resuming it's uptrend as the dollar pulls out of oversold. Gold looks as though it will move sideways for a couple more sessions or possibly even a little pullback before extending further. Nat Gas needs to be avoided until the mid $4 range.

Oct 22 09:54 PM

[Adam-i:]

Matthew, appreciate your column as always. It is incredibly valuable for a newbie in commodities.

You had a good call back in August predicting the december crude / nat gas spread was going to fall because it was at an all time high. Sure enough, it came down almost 10% over the next month. That same spread is even higher than it was in August (approximately 76 vs. 70 in August). It sounds like you think both will come down in the short-term, but what do you think the spread will do? Which do you think is goin to fall faster?

Oct 23 12:14 AM

[TonyNed:]

Adam,

Matthew's call was pretty general. Looking at the chart, the bottom in NatGas was pretty obvious because it had to make an oversold condition on the RSI before advancing. I stated that as a condition of a reversal in one of my comments prior to the inflection point. The spread isn't the controlling factor so don't treat it as an impetus for price movement. Nat Gas and Crude move to their own tune. Look at short term movements because the short term is predictable, the long term is anybody's guess and I strongly emphasize guess.

Oct 23 04:32 PM