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We have NO concrete stance on Crude so keep your size small or move to the sidelines until we get a clearer picture. We suspect traders will try to probe the $84 level in October Crude but as opposed to getting short we’d prefer to be a buyer closer to those levels. Further weakness in the products could spill over and intensify selling in Crude, so be sure to monitor the movement in heating oil and RBOB. Natural gas could not get out of its own way on the week as the base building process continues. Buy at these level because, on a breach of the downsloping trend line, expect short covering and a volatile 7-10% appreciation, in my opinion.
The major exchanges around the globe got hit today, falling 2-5% to end the week in the red. Buying appears to be rejected and without new players returning to the marketplace prices may grind lower. I cannot figure out the indices so wish to have no part in the wild gyrations, long or short, with clients.
Gold pushed $1900/ounce for much of the week but prices settled about $40 below that level and $65 from its record high made mid-week. Until another sizable correction we’re suggesting the sidelines to our clients. The sentiment remains bullish in silver but the volatility is a bit much for my liking. A close below $41 should signal a trade back closer to $38/ounce where long entries would be back on our radar.
Clients legged out of their September Yen puts today at a loss as we did not want to execute the options being today was expiration. Another 1% depreciation sucked further premium out of our clients' Swiss franc options today. We expected to take some heat and remain in the trade, looking for a relief bounce, but if we do not see sit soon we will likely cut losses here as well ... stay tuned. The 5% rally in the US dollar lifts the buck to our target and from here we would expect a a trade back near 75.00; trade accordingly. Today’s new recommendation was to start scaling into longs in the Loonie, trading the December contract for some clients with a target of 1.0200.
OJ has picked up 8% in recent weeks but we’re looking for more to take profits for clients positioned in November options. A trade closer to $1.75 will likely get our profit limits hit; stay tuned. Coffee exceeded our target in just two days, closing down nearly 5% today; we booked profits on the trade and will look to sell the next rally ... stay tuned. Clients booked profits on their corn shorts today as we did not want to carry a decent winner into a USDA report, being we will be out of the office next Monday and Tuesday for a conference in Chicago. Clients will have no corn, wheat or soybeans positions into the report unless it is a trade they put themselves in. We will re-examine our stance after the report to see exactly where we stand ... expect fresh trade recommendations next week.
We have a change of heart in live cattle after digging a little, factoring in seasonal tendencies, a conference call yesterday and a conversation with a a large livestock CTA today. We’re suggesting bearish exposure in December live cattle expecting a 2-4 % drop in the next few weeks. As for lean hogs we’re still in buy the dip mode; trade accordingly.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results