Today in Commodities: Baby With the Bath Water

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 |  Includes: AGF, BAL, CAFE, CORN, GAZ, GLD, MOO, NIB, OIL, SGG, SLV, SOYB, UDN, UUP, WEET
by: Matthew Bradbard

Ignore the merit in your individual holdings as traders may temporarily abandon specific fundamental and technical reasons to hold and raise cash…be careful. Today’s trading range in Crude oil futures was nearly $5 or $5,000 per contract. Fasten your seat belt as volatility is likely here to stay! Our target of $94 was reached so we advised traders to exit their bearish trades from last week at a profit. Though at this time we cannot rule out a trade $3/4 lower we will likely be buying dips this week…stay tuned. Natural gas was a slight gainer today but do not get too bullish is this is only the second positive showing in the last eleven trading days. As we voiced last week the closer we get to $4 the more interest we have as a potential buyer. We have started tracking October bull call spreads for clients this week…stay tuned. A bearish engulfing candle and a major reversal is two ways to describe today’s action in stocks. We do not see much more downside as most damage we feel is done with the recent 5% sell off. Aggressive clients stepped in as light buyers today buying at the money bull call spreads with a target of 1305/1310 in September futures.

By the close gold was down just about $10/ounce but to see the selling intensify we need to see prices back below the 9 day MA in the next few sessions; that level is $1612 in December. Silver gave up nearly 2% as we maintain our opinion that a trade to $38/ounce is in the near future…trade accordingly.

The dollar and the Swissie were the lone gainers in FX today. We expect the dead cat bounce to continue in the greenback and as for the Swissie prices are at record highs but we do not like fresh entries at these levels. We advised clients to close out their shorts in the Loonie and depending on their entries they should show a slight profit. On our radar is bearish exposure in the Aussie but we’ve yet to make a move…stay tuned.

Sugar gave up nearly 3% today closing below the 20 day MA for the first time in two months. Some patient clients remain short looking for an additional 6-10% depreciation. Cotton gained 3.25% today closing at a two week high above the 20 day MA for the first time in two months. We missed this trade with most as we have allocations in other soft markets with clients but we sure called it and based on our research we think an additional 10 cents is feasible in December. Hopefully a dip will coincide with our exit of either OJ or sugar shorts with clients…stay tuned. Stand aside and let Treasuries show signs of a top before selling! Grains were higher across the board but we remain on the sidelines looking for a lower entry for clients ahead of the USDA report two week away…stay tuned. Live cattle hit our target at the 20 day MA …our suggestion is either trail stops or take a profit on longs. Aggressive clients were given a bearish trade recommendation in October lean hogs today. We expect the contract highs just above today’s close to serve as resistance and we have a downside target of 88.50.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.