Energy: Crude oil started the week trading slightly lower, but was able to hold the 8 day MA, in September at $89.04. As long as $88.40, which serves as the 20 day MA supports, I remain friendly. RBOB continues to inch higher, trading back up to the 100 day MA today. This level has acted as a resistance for nearly four months, so it would be a bullish development if September could get above $2.83. The 8 day MA is supported in heating oil just above $2.86, while resistance is seen at $2.94. I am mildly bullish, and I expect both distillates to follow crude higher or lower in the short run. Natural gas surged nearly 7% today, to close near the highest levels seen in 2012. I do not trust these levels, and I do not wish to have bullish exposure until a correction ensues.
Stock Indices: Equities failed to follow through after last week's surge to end the week. Just maybe the perceived reaction to the news out of Europe is not as bullish as previously anticipated. The path of least resistance remains up, but do not rule out a 1.5-2.5% correction after the pop last week. Solid support is seen around 12750 in the Dow and 1350 in the S&P.
Metals: August gold was only a slight gainer, but was able to take back the 100 day MA. That level should serve as a pivot point, so pay close attention to $1620 and how gold reacts the next few sessions. As long as prices hold $1600, I'm friendly. However, prices have run into resistance around these same levels over the last three months, so we will likely need to see a new catalyst to take gold to higher levels. September silver picked up nearly 2% today, lifting prices over $28/ounce and three week highs. Further buying could lift silver near its 100 day MA at $29.55. Traders with longer time frames could be scaling back into December bullish exposure.
Softs: Cocoa is up 6% in the last three days, lifting prices to resistance levels that have capped upside for the last four months. If weakness persists in the dollar, a trade over 2400 and six month highs would be expected. Sugar futures have fallen a little over 1 penny in the last week, but I think it has further room to fall. In October, my target is a trade under 22 cents. Continue to use the 50 day MA at 70.75 in December as your pivot point in cotton. Short trades should have been stopped at a profit, as OJ probed the 50 day MA today. Coffee is back above the 100 day MA…my suggestion is for bearish traders to move back to the sidelines.
Treasuries: 30-year bonds and 10-year notes were higher on the session, but as long as prices remain under their 9 day MAs, I like bearish trade. I still feel a 38.2% Fibonacci retracement could play out, which would drag September 30-yr bonds near 145'00 and 10-yr notes near 132'00.
Livestock: Live cattle are trading at 2½ month highs, but have reached overbought levels. It may be premature at the moment, but I will be looking to probe bearish trades in the coming session when I see signs of an interim top. August feeder cattle have built a solid base of late, and with a close over the 9 day MA the last two sessions, I think we see a bounce short-term. On a closing basis, as long as prices hold 134.00, I would have an upside target of 145.00. October lean hogs have gained three out of the last four sessions, and appear like they have further ground to cover. As long as 80.50 holds, I would be friendly.
Grains: Corn broke out to fresh highs, closing above $8/bushel. I prefer the sidelines. As the saying goes, grains take the stairs higher and the escalator lower, and I anticipate a nasty correction. I've said this for the last week. Although Ags are in the headlines, in that time frame, prices have only climbed 5-7% depending on the contract. I do not want to get locked into what I think will be a 15-20% correction. In the last three days, soybeans have recouped 75% of the decline in recent weeks. The market has caught its breath, but a further correction may play out, so I would walk away until it happens. For those braver than me, support in November is at $16.25, followed by $15.80. Wheat also has recovered most of its losses, closing back above the 9 day MA, just under $9.25 in December. I'm still forecasting a further correction here as well.
Currencies: The 20 day MA is the pivot point in the dollar index, and prices are currently below that level. In September, that pivot point is 83.25. The best performers of late have been the commodity currencies, and that should continue as long as commodities remain in favor. Those long the aussie, kiwi and loonie should trail stops as the easy money has been made, 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.