Crude advanced 2.30% as of this post and is on the verge of penetrating the 9 day MA for the first time in nearly three weeks. A settlement above $94 in August should be followed by a trade up to at least $98 in the coming weeks. The fact that the distillates are finding a bottom should lend to a leg up in Crude. RBOB is 15 cents off its lows from yesterday and heating oil has bounced 10 cents…stay tuned. Natural gas picked up just over 2% and will close over the 9 day MA. Goldman is covering their shorts and as we’ve voiced in recent sessions a 10% appreciation from here is what were expecting…trade accordingly. Indices traded to their highest level in one week and should be on their way to their respective 100 day MA’s …1307 in the S&P and 12160 in the Dow.
The dollar index will lose 0.40% today and selling should pick up on a breach of the 20 day MA; at 75.15 in September. Expect the commodity currencies; the Loonie , Aussie and Kiwi to outperform if commodities continue to appreciate in the short run. Livestock was a marginal gainer but we would still like long entries from lower levels in hogs and cattle with our clients.
Gold and silver held onto slight gains today and as we voiced yesterday our suggestion is purchasing call spreads in October gold and December silver. We are early and will look to add to this trade once the train gets moving north again which we feel is sooner rather than later. Cocoa backed off its highs but mid-day traded above the 200 day MA…we are looking for more upside. The 4.25% appreciation in sugar did not help our clients shorts today with prices advancing to six month highs. Our target in the October contract remains 23 cents but we did not expect to take this much heat. Ags are starting to find buying ahead of Thursday’s USDA. We suggest buying December corn, November soybeans, September CBOT wheat and September soybean oil. Do not get involved in all though as there will likely be a strong correlation in grains in the coming sessions. As of this post both 10-yr notes and 30-yr bonds have broken their respective 20 day MA’s. Clients that held on are finally getting some premium back! The short end of the curve, i.e. long dated Euro-dollars are also rolling over…
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.