In the immediate future, what comes out of Greece will be the driving force in the markets. August Crude gave up 2% today and is nearly $10 off levels from just over one week ago. Aggressive clients have light long exposure and are carrying losses; we will not be adding positions until we see an inter bottom. Clients own about 50-60% of the ultimate long we want to own, but from about levels $5 higher. Those not willing to buy a standard futures could buy a mini or sell calls against their futures 1:1. On its lows today, natural gas had retraced 61.8%. Prices have yet to reach oversold levels on the daily chart, but we’re getting close. Look for buy recommendations likely via call spreads in the coming weeks.
Stocks manage to hold slight gains for the first time in seven weeks. We have no feeling at this point, but forced into the market, we would rather be a seller than buyer.
The dollar gave back some gains today, trading back to the 20-day MA. Whether 75.25 gives way in the September contract will largely depend on news out of Europe and the flight (or lack of flight) to quality into the greenback. Use that level as your pivot point. On a break lower in the dollar, look to be a buyer of the pound or euro.
Strong finish to the week in live cattle with August higher by 2.2% and December picking up just over 1%. A 50% Fibonacci retracement would lift prices about 2.5% higher.
Silver has been sideways now for four sessions but we think a base is being built for the next leg higher and have we’ve started to position clients in bullish positions in September futures and options. Gold picked up nearly $10/ounce today and should be on its way to levels seen in late April. We advised clients to gain bullish exposure in October contracts.
Continue to buy cocoa and fade this rally in sugar. Coffee broke down today, closing at a five-month low; we feel there is more downside to come. We will be reversing in our grain positions for clients if they have not already. That means we’re now suggesting bullish plays and have covered our client’s shorts. Our favored picks at this moment are buying wheat and corn.
Stand clear of Treasuries for now … there will be a time in our opinion to be short, but all attempts to date have resulted in client losses.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.