Energy: Crude made it four days in a row inching closer to $90/barrel. While the daily chart is approaching overbought levels, as long as prices remain above $87, I'm bullish. As previously stated, above $90 barrel, $94 is the next significant resistance. RBOB was within 1% of the 100 day MA at its highs, a level that has served as a pivot pint since late April. I would not rule out a 61.8% retracement that would lift prices above that level just under $2.95 in August. Heating oil gained 1.25% to lift prices to eight week highs. My next upside target is $2.92. My only advice on all three contracts is too not have too much size because prices are due for a profit taking lead correction that would likely hit energy prices 3.5-5%. Natural gas jumped 6.3%, closing just under $3. Both weekly and daily charts indicate prices are over stretched…I still feel a correction back near $2.50 will play out in August futures.
Stock Indices: The S&P is approaching its highs from three weeks ago, and there appears to be more gas in the tank. A trade above 1375 would likely lift prices to 1390. The Dow powered higher by 1% to lift prices near three week highs as well. The next assault should lift September futures back over 13,000 -- a level not breached since the first week of May.
Metals: Gold lost 1.2% today, taking prices back near their recent lows. Support is seen at $1560 followed by $1540. Inside day in silver as $27 was able to support on a closing basis. I am still in the camp that if prices penetrate $26/ounce, $24 here we come. The 50 day MA has supported copper the last two sessions, but if $3.43 gives way, expect a 10 cent drop to follow. Continue to use the 50 day MA as your pivot point.
Softs: While the easy money has been made in cocoa shorts, I would be bearish as long as prices remain under their 50 day MA; in September at 2220. Major reversal in sugar as lower trade was rejected; prices closed higher by 0.70% near recent highs. I am still waiting for signs of an interim top to gain bearish exposure…stay tuned. Cotton advanced by 1.25%, closing just under its 50 day MA. Aggressive traders can be short with stops above the recent highs. OJ lost marginally, but did probe its 50 day MA for the first time in three weeks. We should get closer to $1.00 in the coming weeks. Coffee kept its head above water, but a probe of the 100 day MA leads me to believe lower ground is around the bend. $1.68-1.70 is my target in September.
Treasuries: 30-year bonds continue to dance around their 9 day MA. A close below that level at 151'5 would be a preliminary sign of an interim top. Same story in 10-year notes, as prices traded on both sides of the 9 day MA closing slightly above that pivot point. A settlement under 134'20 would be a shot across the bow. My favored play remains NOB spreads -- short 30-year and long 10-year.
Livestock: Live cattle recouped the week's losses today, gaining 2.25%, closing back over its 20 day MA. Buy dips as August should see $1.22. Feeder cattle traded higher by the daily limit, picking up 2.25% A gap was filed from the previous session. It would have been a nice confirmation to see a volume spike on the move today, and that did not happen in either product. The price action could prove to be an interim low, but my take currently is that it's just a bounce and not an ultimate low. Lean hogs were higher by nearly 3% and had a 4.25 cent range, which is rather large. As long as the 61.8% Fib level holds, dips can be bought in September futures.
Grains: Corn traded higher, but did fail to make new highs as we started the day in the red. The longer prices fail to trade above $8/bushel, I think the likelihood increases that we get a major correction. Soybeans picked up 1.85% to close at new highs. Support is seen at $16, and the scary thing is there is no upside resistance. Even with that being the case, I feel a major correction is imminent. Wheat traded higher by 1.7% lifting price above their 2011 highs. Upside resistance is not seen for another 50 cents/bushel. Precipitation, profit taking, a demand decline -- I don't know the catalyst -- but the media will find a reason to explain the impeding correction...of course, this is my opinion.
Currencies: The key to me will be how the dollar reacts to its 20 day MA…which is 35 tics below the current price. My bias is with further downside, but keep your size small for now. The European currencies have not been able to gain any traction, but I would remain long with stops below the recent lows in the euro and swissie.
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.