Is there another way to trade the movement in metals and energies without buying/selling gold or crude oil? The answer is yes and while there are many ways one of my favorites is buying/selling the commodity currencies; the aussie, kiwi and loonie. Known as the"commodity currencies" because their economies and currencies are so attached to the price action in commodities. The chart above is a daily chart of the Canadian dollar. In terms of correlations if you go back and see what metals and energies have done and overlay with this cross the correlations are high.
Prices have started to bounce off oversold levels this week and today prices penetrated the down sloping trend line that has capped all action for the last 1 ½ months. A move appears to be under way so I would suggest buying dips.
A viable play would in my opinion be a combination of futures and options ... I have a target of .9850/9900 in the coming weeks. This is a $100,000 contract so every penny move in the futures market is a gain/loss of $1,000 per contract.
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.