Energy: Crude failed to make it to higher ground, closing down just over 1% today. I remain convinced a bottom is near, but let the market reinforce that before establishing any size on your long positions. RBOB failed to hold the eight-day MA, but did probe above that level midday. A close above $2.68 is needed to confirm an interim bottom. Heating oil lost 0.50%, but $2.60 did hold. Prices are on the edge of a cliff ... the next few days are key in determining the immediate direction. I am mildly bullish on all three products. Natural gas is still testing lower ground, down 1.5% today. I'm in the camp that the lows from mid-April will be challenged and I'm waiting to see how the market reacts on that occurrence … stay tuned.
Stock Indices: Stocks will finish lower by 1% as traders have yet to make up their minds. The short-term MAs have held as support and should act as a key pivot point moving forward. Those levels come in at 1,305/1,310 in the S&P and 12,360/12,400 in the Dow.
Metals: August gold appears to be closing above its 50-day MA. I like long exposure and have advised for weeks now to buy trades under $1,600. Prices in the August contract got within $7 of $1,550/ounce and that may be as close as we get. Silver has yet to trade above $2, but as long as prices remain above $28 I like the bullish trade. My suggestion is to scale into bullish trades in both metals currently. Copper has been unable to break $3.30 all week and I still think we get a bounce closer to $3.50 in the coming weeks … trade accordingly.
Softs: September cocoa traded to one-month highs, gaining 1.25% today. Traders should be rolling from July out until September if they are not already trading this contract. As long as the greenback is offered, we should climb higher. Sugar lost 2% to test the trend line it broke above a few sessions ago. This level will need to hold or I would reverse my stance and get bearish. December cotton advanced 2.3%, closing back above 70 cents. My stance is that we see a trade to 77 cents in the coming weeks.
Treasuries: 30-year bonds and 10-year notes are still wavering back and forth between their nine- and 20-day MAs. When prices close back under their 20-day MA I would be adding to the trade. On a settlement above the nine-day MA, walk away with a small loss.
Livestock: Live cattle broke their short-term MAs, as forecast, to close lower by 1.75%. This drags prices back to two-week lows. I expect further selling as 120.00 may come into play … trade accordingly. Feeder cattle also broke down to lose 1.4%. An interim top is likely in place as a trade back to 157.00 in September is my best guess. Lean hogs erased yesterday's losses, closing back above their nine-day MA. As long as 84.00 contains upside, I suggest remaining in bearish trades.
Grains: Corn has lost 6.50% in the last three sessions and that test of $5/bushel may come sooner than anticipated. I like scaling into longs on this correction to have some skin in the game for the month-end USDA report. Remain long your July wheat with stops just under $6.10 and let the market determine your destiny. Soybean prices have started to peel off, losing 1.3%-1.8% depending on the contract month. They were my chart of the day and I think we see more downside to follow.
Currencies: The dollar closed under the 20-day MA, shedding 0.40%. The European currencies can be bought, but tread lightly would be my advice. If the yen breaks 1.2525, look out below. That support has held at the 31-day EMA, but on a breach expect 1.5%-3% deprecation to follow, in my opinion.
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.