Today in Commodities: U.S. Dollar on the Doorstep

If the dollar does in fact rally and this is not another head fake expect a wash out. Oil made a new low but buyers came in, tomorrow’s inventory report will be the “X” factor. We’re still expecting a sell off to $75ish but will need some help from the dollar. A falling stock market would also help as the correlation is strong.

Natural gas is getting close to our $5 objective, we’ve started to price out January call spreads and may try a futures entry, stay tuned. Softs were uneventful; cocoa was lower for the third straight session but we need a collapse at this point for open positions to play out. Sugar is on our radar but we’re expecting a trade lower before making a move for clients.

Stocks are mixed as of this post. We maintain that prices should back off. We would be looking to exit our clients' December ES put spreads on a move near 1040. Finally agriculture is cooperating; oats traded lower and corn and beans faltered as well losing another 2% in corn and 4.5% in wheat. With a trade below $5 in wheat we will be shopping longs. Corn is supported in December at today’s lows at the 38.2% Fibonacci line at $3.70, 50% at $3.57 and 61.8% at $3.44. We are suggesting longs in wheat and corn but from lower levels. Look for some bullish rec’s in the coming sessions. Gold and silver are correcting, in gold we suspect another $30/40 and in silver a trade near $16.

The auctions were well bid today with Treasuries moving higher. We may have been a day early with our NOB buys yesterday for clients. As long as Treasuries move higher this spread should be a smooth ride, our target is a 1 basis point ($1,000) profit per spread. We will be moving clients out of December longs in live cattle and on the next leg down we will be moving that money into February longs. The dollar should settle above the 20 day moving average today for the first time since 10/2. We like selling rallies in the Euro and Loonie and buying dips in the yen. For aggressive traders we may buy the yen against the Aussie playing the carry trade.

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

[Matthew Bra...:]

oats traded lower and corn and beans faltered as well losing another 2% in corn and 4.5% in wheat.

SHOULD BE corn and wheat NOT corn and beans...sorry for the confusion

Oct 27 03:58 PM

[woodennickels:]

is that anything like beef and cheese?

Oct 27 04:20 PM

[User 456427:]

Sorry, I am new to this. When you say that you like selling rallies in the Euro and Loonie does that mean that you are selling EUR vs USD as the EURUSD pair goes up and selling USD vs CAD as the USDCAD pair as the USDCAD pair goes up? If so, then doesn

Oct 27 04:59 PM

[jimbo's gra...:]

Don't panic with SLV. Our author just gave a staggering prediction of $16 for silver right about the time it hit $16. WOW, what an insight! Now, on to a real prediction... stay with silver. It is a very volatile investment but ultimately it will hit $20 in the next few months, possibly by year's end. Stick with it and enjoy the benefits. If you're not in, its at bargain prices right now! Get better than 25% return on your investment in only 2-3 months. Where else can you get that? BUY SLV now and watch it hit $20, then sell and let's plan the victory party!

Oct 28 01:47 PM

[Matthew Bra...:]

JIMBO...the author predicted $16 when silver was at $18 so it has almost reached his target. In agreement $20 is doable maybe early next year.


On Oct 28 01:47 PM jimbo's gravy train wrote:

> Don't panic with SLV. Our author just gave a staggering prediction
> of $16 for silver right about the time it hit $16. WOW, what an insight!
> Now, on to a real prediction... stay with silver. It is a very volatile
> investment but ultimately it will hit $20 in the next few months,
> possibly by year's end. Stick with it and enjoy the benefits. If
> you're not in, its at bargain prices right now! Get better than 25%
> return on your investment in only 2-3 months. Where else can you
> get that? BUY SLV now and watch it hit $20, then sell and let's plan
> the victory party!

Oct 28 04:04 PM

[Matthew Bra...:]

Close we're looking for the eur/usd to move down just like in FX but for the other cross you mentioned we're looking for the Loonie to depreciate and in FX it is the reciprocal. So far so good. We hit our target on the downside today in the Loonie and are expecting a touch more in the Euro. Additionally for other currencies we advised clients to buy the Yen today...opposite in FX.


On Oct 27 04:59 PM User 456427 wrote:

> Sorry, I am new to this. When you say that you like selling rallies
> in the Euro and Loonie does that mean that you are selling EUR vs
> USD as the EURUSD pair goes up and selling USD vs CAD as the USDCAD
> pair as the USDCAD pair goes up? If so, then doesn

Oct 28 04:08 PM

[picman:]

Glad to hear your comments Matthew regarding silver into the coming mon ths and its good to hear you agree it has solid potential to see $20 in the near future. I have had this confidence for a while now and while this week's disappointing drop-off is a bump in the road, that's all it is. I'm still pumped to see SLV break $20 and hoping to see it very late this year or early into 2010.

Oct 28 08:04 PM