Today In Commodities: Stimulus To Follow

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 |  Includes: BAL, CAFE, CANE, CHOC, CORN, CU, DBA, DIA, FXB, FXE, FXF, GAZ, GLD, IAU, JJC, MOO, OIL, PLTM, SLV, SOYB, SPY, UDN, UNG, USO, UUP, WEAT
by: Matthew Bradbard

Energy: What an ugly week with crude losing 8% dragging prices to nine-month lows. When $90 broke I thought it was possible to see $83. I just did not expect it a few days later. It's not that I am upset about losing on a small long position I have for clients I'm more disappointed I did not stay short as I had shorts on for some clients at $105. It's expected to leave money on the table as a trader but this was a lot of money quick. I feel we've come down too much too quick ... hopefully I'm not talking my position. RBOB and heating oil both gave up just over 2% today to end the week at fresh 2012 lows. It's all on crude but prices should be close to a bottom. Refrain from picking bottoms if risk averse but there should be a violent reversal very soon in my estimation. Heating oil got within a nickel of its October lows which will need to hold but RBOB is still 20 cents from those levels. As for natural gas prices were lower by nearly 40 cents this week closing lower the last six sessions. I advised shorts to book profits and though we could see lower ground I'm content on the sidelines.

Stock Indices: A 2.25-2.75% loss on equities today has bears back in the drivers' seat as support gave way with stocks closing at six month lows. My first targets have been achieved and from here. On a further leg down I see support at 1,245 in the S&P and 11,800 in the Dow. The jobs number was uglier than the market had anticipated and with fewer jobs being added and an uptick in unemployment stocks traded one way today. A bounce should be sold as prices will likely continue to slide.

Metals: Gold exploded 3.7% higher today with prices erasing three weeks of losses in one session, lifting prices intra-day back above its 50 day MA. Gold should be bought on weakness as a bottom has been established in my estimation. Upside in August I see as $1,670 followed by $1,700. With silver settling back over $28/ounce traders can wok long here as well. This could be a bumpier ride than gold but I see $30.50/31 in the coming weeks. My suggestion is to build a position in both metals as this could be the 2012 low that we just made. Platinum is a buy but the idea of spreading this metal against gold I would abandon. $1,540 is my target in July. My target was $3.30 in copper which was achieved today ... exit and move to the sidelines.

Softs: Depending on your stop placement you may have been stopped out of cocoa, if so re-enter as I like buying at these levels. Check out the correlation to the pound and inverse to the dollar so next week will be telling. Sugar broke support as prices are approaching 1 ½ year lows. Holding back on buying may have saved us a few shekels as this market is not ready to be bought. I was wrong in cotton - no bounce as prices are headed further south. Like coffee we would like to be short for clients but only after a bounce.

Treasuries: Want to really see how ugly the perception is out there in the economy ... check out a longer term chart of Treasuries. 10-year notes and 30-year bonds have traded higher for 11 weeks in a row. Prices are well above 2008 highs. Are we close to an interim top? I have no idea. One of my good friends who works at respected hedge fund who generally has some good trading ideas called me early this morning asking about ways to get short Treasuries. I cannot use him as an indicator but I like that contrarian play. I will have some suggestions for traders next week.

Livestock: Mixed signals in live cattle, move to the sidelines as it could go either way. Feeder cattle are bouncing but I'm not a believer until prices retake their 20 day MA - in September at 159.60. Lean hogs have gained for seven straight sessions and I see more upside to come. I would start trading October as opposed to June and on a setback I would be willing to buy closer to 80/81 cents.

Grains: Perhaps I was premature mentioning longs in corn as clearly there could be more downside. December under $5/bushel is on my radar next week. July wheat lost nearly 5% today to drag prices back near $6/bushel. Let's see if we test the May lows ... traders may get an opportunity to buy December wheat closer to $6.25.Soybeans completed a 50% Fib retracement getting within a few pennies of my target before reversing. Dead cat bounce - I think prices head south and see a sub $13 trade before any substantial upside. Oats appear to have reached a turning point ... that could be positive for other Ag products in the weeks to come. Crude oil and soybeans are falling apart and with a close under 49.00 in July there is no reason to be long soybean oil. I will look for a buy from lower levels when outside markets stabilize.

Currencies: Doji star followed by a failed higher trade ... the dollar is showing signs of exhaustion. A G-20 meeting over the weekend, talk of intervention from the BOJ and four central bank meetings next week expect fireworks to fly in FX. Next week the RBA, RBC, BoE and ECB meet so if carrying a large profit on any cross tighten stops, lighten up or exit the trade. I expect to be buying the euro, swissie and pound for clients next week ... stay tuned.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.