Energy: Crude oil will close positive but an inside day and prices even with the bump remained below the 100 day MA. I like fading prices at this level anticipating a trade $5-8 lower in the coming weeks. RBOB failed to break the 8 day MA as we ended back over $3/gallon. My take remains a 20 cent reduction is around the bend. Heating oil has failed to make higher highs this week as I operate under the influence prices should roll over in this distillate as well. Natural gas picked up 3.6% lifting prices back over the 50 day MA. We've completed a 50% Fibonacci retracement but I think we could still see prices challenge the 100 day MA. This represents a 16 cent drop from current pricing.
Stock Indices: Indices could not hold onto their gains as new highs were rejected. A preliminary sign of an interim top but first lest see a penetration of the 9 day MA. In the S&P at 1,398 and in the Dow that pivot point comes in at 13,115. On that the next support is seen at the 20 day MA 1,377 and at 12,950.
Metals: Gold fought to stay settle above $1,600/ounce but has lost ground the last two days. The momentum seems to be shifting as prices appear likely of heading south in the near term. My target in December is $1,565/1,570. A lower low and lower high in silver with prices closing virtually unchanged. I suspect prices will be $1.25-1.75 lower in the coming weeks.
Softs: Cocoa got back most of yesterday's losses trading back up to resistance. I view this as an opportunity to sell as prices should retrace closer to 2300 before higher highs in my opinion. After today's losses sugar has corrected more than 15% in the last 30 days. Prices are close to an interim low but let's see some evidence before probing bullish trade. Three losing days in a row for cotton but prices must break the 50 day MA at 71.30 in December to see continued depreciation. That is my forecast and my target once prices breach 67 cents. Coffee continues its slide six negative days in a row. Continue trailing stops as my target prices should challenge the June lows.
Treasuries: 30-year bonds lost 0.90% to drag prices to their lowest close since late May. A 38.2% Fib retracement drags September 2 points lower. Stops can be trailed and set just above the 20 day MA in my opinion. 10-year notes also leaked lower but to a lesser extent losing 0.40%. Sentiment remains bearish in the entire complex. My best trade idea is a NOB spread, short 30-year bonds and long 10-year notes.
Livestock: Live cattle made a fresh 4 month high as prices continued to inch higher. We've reached the overbought level though so I see limited upside short term. Look for an exit window on longs. Feeder cattle jumped 1.6% to trade to one month highs. The 38.2% Fib level in September is 146.50 while a 50% retracement puts this contract at 149.50. October lean hogs have gained ground four out of the last five sessions with a gain of 3.4%. I expect further appreciation and advise scaling into bullish trade. My favored play is long futures while simultaneously selling out of the money calls 1:1.
Grains: Corn has traded lower the last 3 days and with consecutive closes under the 20 day MA there should be more to follow. I see mild support at $7.70 in December but would not rule out a trade back near $7 /bushel. Could one day of rain in the Mid-west be a contributing factor? Yes not because the effect on the crop but rather psychology. November soybeans are in the middle of $1.50 trading range that has been in effect through July and August but I'm staring to think we may finally get the break I'd been calling for the last several weeks. On a breach of $15.50 a trade back to $14.70 is expected. Wheat futures have almost dropped $1/bushel in the last 3 days dragging prices to one month lows. This is expect to be the weakest link so on an all out AG correction expect a trade under $8 in December.
Currencies: The commodity currencies still can be sold as the Kiwi and Aussie appear to be the most vulnerable. Risk to reward assuming stops above the recent highs and on a 50% retracement we're looking at almost 4:1 in the Aussie so that would be my pick. The Yen lost 0.50% today to close under the 34 EMA for the first time in one month. I like scaling into bearish trade with a target of 1.2500 in September.
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.