Today in Commodities: Dollar Up, Again

The dollar rally looks to be real and markets are feeling the effects. As we’ve indicated, most of our current positions are factoring in a moderate dollar rally before an about face and move to lower lows.

Crude was lower by virtually 3% as we near our targets on shorts. The last 4 sessions the futures have made lower highs and lower lows… to me this means prices are moving lower for now. We’re thinking about $2 lower and then we will offset clients' shorts. Natural gas was punished another 4% today with prices nearing $5 on the December contract. We’ve started pricing out bullish plays but it may wait till next week, stay tuned.

All the softs were lower, sugar hit the upsloping trend line, should be a touch more on the downside. We’re still looking for a trade near $1 in OJ futures, be patient.

Stocks are moving lower as we forecasted, we’re nearing our first objective on the S&P and about 125 more points lower on the Dow. We will be putting in gtc profit orders for the December ES puts for clients today.

Mixed results in agriculture today. We originally put a short on in oats as a hedge against other longs; being we do not need a hedge at this point we decided to lift oat shorts for clients today at a small loss ($100 per). Wheat is getting close to a buy, stay tuned. We issued a buy in corn for clients today. For option traders we suggest March calls. For more aggressive traders we bought futures, sold March calls and bought December puts for downside protection. For an explanation contact us.

Another 1 - 2 days of red in gold and silver and we will be advising clients to buy. On a trade through $16 we will be exiting clients' silver puts. I will let you know the outcome when we execute the trade.

Treasuries rallied as we suspected, as of this post the NOB spread clients are in picked up 10 ticks. Fourth positive day in the dollar as a move to 77.50 looks to be under way. Clients booked profits on Loonie shorts, objective met. We will be placing profit orders on Euro-currency puts expecting a bit more downside. We missed the Yen/Aussie trade but it exploded today moving $4,000 per spread, hopefully some followers got in! Not wanting to miss a bigger move we bought December 110/113 call spreads in the Yen for clients.

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

[JasonC:]

Hey, someone noticed that the dollar went up! No fair! No one on the planet is supposed to be able to notice when that happens! Everyone screaming in chorus that it is toilet paper is supposed to make it so, and make everyone's overcrowded commodity bets pay off at infinite, wipe away all debts, and make every doom monger whole.

Oct 28 04:35 PM

[bmartasin:]

Today was a "taken out to the woodshed and beat like a red-headed stepchild" day for longs, including myself.

Oct 28 05:14 PM

[Nick14902:]

Anyone that jumped onto the "band wagon" on $82 Oil is going to feel really bad. They should start the sell off by tommorrow. I dont like being a nay-sayer, but common $82 oil? The only reason on the spike last week was due to a less than bad report on inventories? I am waiting for $72 to unwind my short. The rise in the dollar is just the first downward leg for oil. Next will be the realization that no one is driving to work in the morning.

Oct 28 07:14 PM

[rick12345:]

Whether I agree or disagree with your calls Brad, I always keep an eye on them. Thanks again.
Stocks are now reaching "Heavily oversold" levels, but I question peoples thinking on oil and gas which were up until now extremely undervalued. Unfortunately, a stronger USD will only impact so much before traditional market forces take over.
I'll be the first to admit that I don't understand finance, but I do understand economics. Therefore, I am expecting another round of stimulus spending to be announced very soon , much to the disappointment of the American public. It doesn't matter how much people bitch and whine, it is the only way out of the current mess, and I don't think Bernanke and Obama are ready to risk a double dipped recession just because your congress don't like it. Not acting now will lead to a period of deflation which I can guarantee is not good for the US economy; You think 10% unemployment is bad. Try looking down the barrel of 15% - 20%.

Oct 28 11:00 PM

[CLH:]

Commodities don't go up during a recession (depression?). Gold doesn't go up during deflation. These things seem simple to me.

Oct 28 11:19 PM

[ManAboutDallas:]

You appear to be one of those poor souls who thinks the world begins at the Statue of Liberty and ends at the Golden Gate Bridge.
Sure enough, the United States is in recession and heading for worse, but the U.S.'s day in the sun is over, and the rest of the world is raring to go.

On Oct 28 11:19 PM CLH wrote:

> Commodities don't go up during a recession (depression?). Gold doesn't
> go up during deflation. These things seem simple to me.

Oct 31 03:21 PM