Energy: Crude oil traded up to the 100 day MA as forecast and is close to a 50% Fib retracement - that level comes in just above $94 in September. I'm staying with my bullish theme thinking we could see an additional 2-3%. My stance would be to lighten up on longs on a further advance as we will likely see a trade back under $90 in the coming weeks. RBOB probed $3/gallon for the first time since late April. The sentiment remains bullish until prices break the trend line on the way down which is currently 20 cents under current prices. I do not expect much more upside so start to lighten up longs. Heating oil is above its 100 day MA for the first time since late April as well closing just under $3/gallon. I see $3.02 - 3.05 as the near term window for upside before we see profit taking ... trade accordingly. Natural gas put in another positive showing but as long as prices are under the 8 day MA; in September at $3.00 my take is the correction that started last week is not compete. My targets remain $2.75 followed by $2.60.
Stock Indices: A further advance today has equities almost challenging their highest levels seen in 2012. As previously stated as long as prices remain above their 9 and 20 day MA there is no reason to be short but I do not see a catalyst to lift prices much higher. Could a solution out Europe do that or QE? Yes on both respects but I do not see either scenario likely in the immediate future. Remain defensive and I got an idea - use the 10% appreciation in the last 3 months to book profits and take some money off the table.
Metals: Gold failed at the 100 day MA, closing slightly lower today. $1620 in December will continue to act as a pivot point moving forward. On a close above that level my expectation would be $1600/1665. Silver gained for the third day running but in that time frame prices are only $1 higher with a settlement just north of $28/ounce today. Further upside is expected as long as prices maintain $27.50 I am mildly bullish. Copper appears to made an interim bottom as prices have appreciated 15 cents in the last 3 sessions. I do not see resistance for another dime.
Softs: Cocoa continues its streak adding another 2% today lifting prices to fresh five-month highs. Bulls remain in the driver's seat but continue to trail stops. Sugar hit my target trading under the 50 day MA for the first time in 5 weeks. Since calling for a retracement several weeks ago prices have depreciated just over 10%. Cotton failed to make it to higher ground but I suspect there is still gas in the tank as my target is 2-3 more cents higher in December futures. Play the break out or break down in coffee as I expect a 10-15 cent move once prices break above the 100 day AM or below the 50 day AM.
Treasuries: 30-year bonds and 10-year notes were losers again today dragging prices to four week lows. My interpretation is we've experienced approximately 60% of the current leg. That being said 30-year bonds should see 145'00 and 10-year notes should see 132'00. Those willing to be a bit more patient and play the short end of the curve could be in bearish trades in 2013 and 2014 Euro-dollars with stops above the recent highs.
Livestock: Live cattle are below their 9 day MA and in my opinion headed lower. A 61.8% Fibonacci retracement on the move we had in the last two weeks puts October back near $1.22. My stance in feeder cattle is neutral to bearish. I don't expect upside but there should not be too much downside either as a solid base looks to have formed in the last three weeks. Fresh lows in lean hogs as the route continues temporarily dragging hogs under 75 cents. Selling appears to be slowing but it is premature to call a bottom. Those in a bearish trade should lighten up in my opinion.
Grains: The 9 day MA continues to be the line in the sand in December corn. When $8 gives way for whatever reason I expect the weak longs to be shaken out and like a snowball rolling down a hill for the selling to intensify. Do not rule out a volatile move dragging price closer to $7/bushel. November soybean futures are nearly $1/bushel off levels seen last week and my target is yet to reached. $15.20 followed by $14.70 are my first two price objectives. Wheat held its own, managing to hold onto the 20 day MA for the last 3 days. On a close below $8.90 I think we see an additional 50 cent bushel reduction ... trade accordingly.
Currencies: The dollar has yet to breach 82.00 but it is on its way in my opinion. I'm getting mixed signals in most crosses so I would tighten stops or move to the sidelines. The only clear signal I have is a bearish trade in the yen with stops above the recent highs. I think we could see a 2.5-4% depreciation in the yen.
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.