Today in Commodities: Potential Reversal Looming

An inside day in Crude as prices look to close slightly higher. We have no exposure with clients but expect prices to drift lower in the short run. Inventory report out tomorrow a day later than normal on Crude and the distillates and on Friday for natural gas. As previously stated we expect the September lows in natural gas to hold and we’re advising clients to buy 50 and 75 cent January call spreads.

Sugar screamed higher today regaining the trend line closing 3.5% higher on the day. December cotton made a new high and failed closing 2.5% lower on the day. We’re pricing out bearish plays for clients… stay tuned.

Equities may be starting to roll over, we’ve yet to make a move but we’re getting close. If the S&P fails to close above 1100 in the coming sessions we most likely will get short via futures with a tight stop or back ratio spreads.

Gold made a new high again by another 1% today. It just doesn’t feel right; we suggested December $1075 puts today for $300. We are anticipating a $30-50 break. The question is if 12 days is enough time? A majority of the clients that took that trade are long silver with a nice profit, so it is also a slight hedge as both metals seem to be moving in the same direction. We advised clients to book a profit on their long March corn futures and options. We are still bullish and will look to be a buyer again on a setback. The NOB spread (long 30-yr bonds and short 10-yr notes) appears to finally be working.

Our bullish cattle trade for clients has yet to materialize but we will stay the course. Continue to gain long exposure via futures or options in February live cattle.

As tomorrow is the last day of the Goldman roll we want to have light exposure and will add to the trade for clients once they are profitable. 75.00 in the dollar index remains the line in the sand. The Pound has rolled over and we feel an interim top has formed…sell rallies. Aggressive traders willing to risk to 1.5100 in the Euro-currency could get short. We should have some additional bearish ideas very soon.

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

[Nextel Acce...:]

I keep hearing GLD will go down, and it keeps going up.....

Nov 11 05:01 PM

[SmBlkBob:]

I just love the people who keep calling a top to gold. If I had bailed when this talk first started I'd have missed out on a huge upside.
Now, after all the trash talk, even if gold drops I've still made money.

So, do you feel lucky punk? Drive the price down so I can buy even more.

Bob

Nov 11 05:36 PM

[rrdaniel:]

Anybody knows what Goldman roll is ?

>tomorrow is the last day of the Goldman roll

Nov 11 06:25 PM

[rick12345:]

I can't discount a correction because I do not own a crystal ball, but a 4000 point drop seems rather far fetched given low interest rates and insignificant inflation. For markets to decline with such rapidity there would have to be a massive asset bubble, which quite frankly just isn't occurring. Base metals have remained flat since July and oil is trading at fair value. House prices have improved only marginally while many businesses are still in divestment mode. In fact, the only asset to experience extraordinary growth over the last 6 months is gold. If there was clearly a real threat to inflation silver would outperform gold by at least three to one, yet gains have been modest; Prices are nowhere near the $50 record set in 1980, or even the $20 high of last year.
Hasn't anyone learned a thing from the global financial crisis ?
The same people are still selling snake oil, but this time it's just re-packaged in a shinier box.

Nov 11 10:00 PM

[Dr. O:]

>>Gold made a new high again by another 1% today. It just doesn’t feel right; we suggested December $1075 puts today for $300. We are anticipating a $30-50 break<<

I hope so. I would like to acquire more bullion at lower prices.

Nov 11 10:02 PM

[mwfall:]

what's a 'potential' reversal? is that where if it goes down you say 'see i told you so' and if it goes up you say ' i wasn't wrong- i just said it was a 'potential' reversal.

Nov 12 02:02 AM

[swissfrank:]

'looming' - may be coming but not definite - is also pretty good. So we have a maybe yes/maybe no 'potential' reversal which is 'looming' i.e. may be/may be not coming. Yup, we've got the bases covered.

Nov 12 02:55 AM

[LaChic:]

if we correct in gold it wont be for long, target of 1200 to 1300 still in place short term...

Nov 12 09:54 AM

[Alan Young:]

I think it's like a bagel, but with caviar instead of lox. ;-)

On Nov 11 06:25 PM rrdaniel wrote:

> Anybody knows what Goldman roll is ?

Nov 12 03:26 PM

[rick12345:]

Any dollar correction may hurt gold.

Nov 12 07:09 PM

[MILESCFA:]

On Nov 11 06:25 PM rrdaniel wrote:
> Anybody knows what Goldman roll is ?

Goldman Sachs is a big player (in all markets). Nearing expiration of the active contract, GOLDMAN (and others) have to ROLL THE EXPIRING CONTRACTS INTO THE NEXT ACTIVE FUTURES CONTRACT. It can cause short-term pricing volatilities.

Nov 14 01:13 PM