A great saying I read on one of the blogs I read…eat turkey and do not be one. It was referring to doing homework when trading…having a plan and executing it. I for one am looking forward to some turkey and family time …until next week!
Crude oil worked lower again today as it appears this will be the second week that we see prices under pressure. We have traded approximately $7 lower and we think we’ve experienced about 50% of the expected move. Our targets in January are $92 followed by $89.50. RBOB is already finding buyers around current levels and the fact that heating oil has completed a 61.8% Fibonacci retracement we do not expect much more immediate downside. We have suggested our hedgers in distillates to start gaining partial long exposure. Natural gas is higher by 2% back above the 9 day MA. We like being long January, February and March contracts. By early Spring we expect to see prices 15% higher than they are currently…trade accordingly.
Our downside objectives have been met with the indices with the S&P at 1162 and Dow under 11300. We could see further downside as the weekly charts are ugly but we’ve advised clients to move to the sidelines for now. A common conversation we’re having with clients is why it may make sense to hedge sizeable stock positions via index futures and or options. Contact us for more specifics. The 100 day MA in gold continues to cap further upside. As long as prices remain below $1710 we see new lows in the coming weeks. I’ll have to re-evaluate next week but I think $1625/1635 is possible. The $2 wild trading range continues in silver as traders try to play the tug of war for control. If we cannot get above $33.50 in the next few sessions I see $29 by the first week of December…in my opinion.
WOW…the dollar broke out today gaining just better than 1% to two month highs. All crosses were hit with the Euro and Aussie falling the hardest. We like bearish exposure in the Yen but outside of that risk/reward we see no viable trades in forex. Aggressive traders can gain short exposure in March coffee with stops just above the 50 day MA. We may be a bit early but we like scaling into longs in March cocoa looking to add to the trade once prices are back above 2500. Continue to play the short end of the curve via 2013 Euro-dollars. Trail stops and let the trade work we are in this one for the long haul. Grains were lower by 1-3% today with the entire complex in the red with the exception of rice. On a bounce we would be looking to re-establish shorts with clients. We remain on the sidelines with clients looking for a lower long entry in live cattle. Lean hogs remain in bull mode but as previously stated on a trade above 92.00 in February book profits on longs as we’re approaching overbought levels.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.