Today In Commodities: Is Corn Poised For A Sell-Off?

by: Matthew Bradbard

Energy: Inside day in crude oil, with prices as of this post just above $96/barrel. Prices are $2 off their highs from last week, but I'm looking for more pressure targeting $90 in the coming weeks. RBOB gave up 0.50%, trading below the 8 day MA, but closing above that pivot point. My first target as prices roll over is $2.72 in October. Heating oil has not gone anywhere, but prices have closed in the red the last three sessions. The 8 day MA has supported, but when it gives way, $2.90 should be the next stop -- current price is $3.13. Another loss today drags natural gas lower by nearly 10% in the last four sessions, and puts prices near 3 month lows. $2.50 in October seems to be a real possibility.

Stock Indices: Securities closed marginally lower, with prices looking like they are one down day away from breaking the trend line that has supported since the beginning of June. September futures in the S&P would need to breach 1400 and the Dow would not to penetrate 13000. On that, I would target 12600 in the Dow, and 1335 in the S&P.

Metals: Gold continues to dance above the 200 day MA, but as I suggested yesterday do not rule out a correction before we see higher ground. In the last 60 days prices have gained nearly 10%, so why couldn't we see a $50-60 retracement? My first support line in the December contract is at $1625. Silver is also finding support at that pivot point, and being prices have leaped 12% just in the last week alone. Commodities do not move in a straight line, so some back and fill action here would be normal. Buy the dip, as prices should not penetrate $28/ounce in my opinion.

Softs: Cocoa picked up 3.8% today, and has climbed over 8% in the last three sessions, lifting prices to 10 month highs. In full disclosure, I missed this move for clients. From my perspective, prices could try to fill the gap from last November, which would lift prices an additional accordingly. Today will likely serve as the beginning of the next leg higher in sugar I've been calling for in recent posts. October futures climbed 2.9% on a bullish engulfing candle. My targets are 21.25, 22.00, followed by 22.50. Cotton should break lower, as aggressive traders can gain bearish exposure with stops above the recent highs. I continue to feel coffee could bounce to its 100 day MA, lifting December 4% from today's close…trade accordingly.

Treasuries: Eight days in a row, 30-year bonds have gained ground, and that should continue to be the case as I'm targeting 150'00 in September. 10-year notes are following that same trajectory, having completed a 50% Fibonacci retracement as of today. A trade above 134'00 in September would get me looking for an exit door on any bullish trades.

Livestock: Live cattle have completed a 50% Fibonacci retracement, but as long as prices remain under their 20 day MA, I say more selling is to follow. My target in October remains $122.00. Feeder cattle remain in no man's land and could go either way, so look elsewhere. Lean hogs are less than 1.5% off their recent lows, but cannot seem to gain any traction. Keep your size small until this market proves itself, but I do anticipate a bounce and would stay as long as the recent lows hold.

Grains: Corn was lower again today, close to challenging the lows from two weeks ago. With prices closing below $8/bushel, will we see the sell-off I've been predicting for weeks? I see support at $7.70, but no solid support until $7 in December. November soybeans challenged their 9 day MA, which has supported for the last two weeks. Once prices get moving south in beans, I see a swift $1.75-2.25 price drop. Wheat continues to be the weak link, taking guidance mainly from corn. $8.30 is my target on the December contract.

Currencies: The dollar traded lower, erasing the two previous days of gains as prices once again approach 81.00 in September. FX traders can remain in bearish trade in the kiwi and aussie as long as prices remain under their 20 day MAs. In September, those levels come in at .8090 and 1.0450, respectively.

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. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.