Energy: Crude oil broke the 2 short term MAs mentioned in previous posts. From here it looks like we will see further downside. My stance is if the 38.2% Fib level is broken at $87.25 in September prices should trade closer to $84. Longs should be out of the trade and assuming prices hang around current levels the next few days I may advise shorts for some aggressive clients. RBOB was the chart of the day and an interim top was obtained in my opinion. A trade 15 cents lower is my call. Heating oil closed at the 18 day MA giving up just shy of 2%. A 61.8% Fibonacci retracement would put September closer to $2.69/gallon. Natural gas sentiment remains bullish but I continue to swim against the tide thinking a correction is long overdue. My previous target of $2.50 seems less likely as prices remain elevated but I think $2.65.2/70 is feasible before prices climb to $4..this is my opinion.
Stock Indices: Stocks finished just off their lows giving up approximately 0.50%. Prices could go either way so I prefer no positions in the market. I am mildly constructive as long as prices remain above their short term MAs. In the Dow that level is 12,750/12,800 and in the S&P at 1,350/1,355.
Metals: December gold failed to remain above its 100 day MA after probing that pivot point for the last three sessions. That level in September just under $1,625 will serve as the line in the sand. Being prices are within $20 of what has served as stiff resistance for the last three months I would be willing to buy a dip that put prices back near $1575. Silver traded slightly lower for the first time in five sessions settling back under $28/ounce. As I said yesterday long term traders can scale into a bullish silver trade in my opinion but keep size small as a move $1-1.50 in either direction could play out.
Softs: Cocoa continues its climb higher adding 1.5% today. If prices get above 2400 near term the move should lift prices to 2500, over a 5% gain from current pricing. Sales of sugar can be made at current levels as a trade back near 21 cents in October is my call. The 50 day MA continues to act as your pivot point in December cotton with prices closing just above that level today. There is no trade to be had here as prices remain too choppy. I would be flat in both orange juice and coffee because of the recent chart action but for what its worth prices do look like they could head lower in both of these commodities.
Treasuries: Even with higher trade the last two session 30-year bonds still remain under their 9 day MA. As long as upside is capped at that level I think it is safe to have bearish exposure. Same story in 10-year notes as prices probed the 9 day MA but settled below that pivot point.
Livestock: October live cattle lost 1% today. Aggressive traders could prove bearish trade with stops above $1.26 in October. August feeder cattle traded above its 20 day MA for the first time in six weeks. I'd be looking for a trade higher and see first resistance just above $1.45 in August. October lean hogs lost 2% today trading back down to its 9 day MA. If this level gives way at 80.20 in October I would suggest taking remaining longs off at a profit or loss.
Grains: I'm still searching for an interim top in grains and a failed advance in corn could be a preliminary sign. If prices can close consecutively below $7.90 in December; the 9 day MA that would be confirmation. When it happens I still think a $1 correction will play out. Soybeans were able to stay in the green but a break down here is still my call as well. Support is seen in November at $16.20 followed by $15.80. My take is we could see a trade under $15/bushel before fresh highs. Today a sharp reversal in wheat with prices closing almost 30 cents off their highs dragging prices under their 9 day MA. On continued selling in December I have $8.40 as a short term target ... trade accordingly.
Currencies: Although still early in the week the dollar is on track to have consecutive losing weeks as my downside target is 82.00 and the 81.00 in the coming weeks. If the dollar continues lower the other crosses should gain steam. The easy money has been made on the commodity currencies so trail stops. Aggressive traders could probe a bullish trade in the swissie and euro with stops below this weeks low.
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.