Energy: Crude oil traded below, but closed just above its 100 day MA, finding mild support at the 38.2% Fibonacci retracement. I continue to be bearish, but I cannot rule out a bounce to $94/94.50 before selling commences again. My target on November remains $89.25. RBOB advanced nearly 2%, bouncing off its 50 day MA. As long as November is under $2.85/gallon, I'm bearish targeting $2.65. Same story in heating oil, finding mild support at its 50 day MA just above $3/gallon. $3.16 should serve as resistance, with $2.95 as my downside target. Albeit minor, natural gas closed positive for the first time in six sessions -- $2.85 in November remains my target.
Stock Indices: In the last five days, the trading range of the S&P is just over 15 points, and in the Dow, it's not much wider at 150 points. To me, the market looks tired, but I will need to see confirmation to issue a bearish trade recommendation. The first sign would be a settlement under the 9 day MA at 1448 and 13440, respectively.
Metals: For five days, December gold has failed to penetrate $1775/ounce, and the longer it does not, the less likely it will on this leg. I am advising longs to book profit, as the charts are signaling signs of exhaustion and a setback to come. I think it is possible to trade back under $1700 in the coming weeks. The correlations have been out of whack, but imagine a stock market that sells off and a dollar that bounces…could this not point to a correction in gold. Silver continues to tread water in a $1 trading range just under $35/ounce, closing 30 cents off that level today. I know it is a broken record, but I'm looking for a correction. I think December futures can trade back near $32/32.50 in the coming weeks…trade accordingly.
Softs: Cocoa is approaching a $200 loss in the last two weeks, as prices are very close to challenging the up sloping trend line that has supported prices since late June. I'm in the bearish camp expecting more selling, targeting a trade closer to 2400. Sugar failed to make a new low today, able to gain 1.12% in March. Bulls have had some discouraging action this week, but I view this as a setback and remain in the trade as long as 19.50 holds as support. Cotton lost 1.56% today, trading back near its 100 day MA. We may get the break I had anticipated, for this to play out, prices would need to break 74 cents going into the weekend…stay tuned. Coffee confirmed the leg lower is under way, breaking its 100 day MA, stopping at the 61.8% Fibonacci level. This depreciation should drag prices under $1.60 in the coming weeks, if not days.
Treasuries: 30-year bonds advanced again today grinding higher, as prices should be on their way back above 149'00. Sales will be back on my radar if and when that happens for clients. 10 year-notes spiked above their 20 day MA, but backed off, closing near their lows. On their highs, a 50% Fibonacci retracement was completed, but I still think further appreciation is to follow and would need to see 133'00 in December to re-explore bearish trade. Patient traders can nibble at December 2014 euro-dollar bearish trades in my opinion.
Livestock: Bearish engulfing candle in December live cattle today, with a loss of 0.74%. Prices failed at the 20 day MA and retreated, closing near session lows. I'm bearish with a target of $1.25 on this contract. The stochastic on the daily chart supports a move lower in feeder cattle as well. In the November contact, I am targeting $1.4350 in the coming weeks. Lean hogs failed to get above 75 cents for the second day running, but I view this as a pause and more appreciation to follow. As long as 73 cents supports, remain in bullish trade.
Grains: December corn lost 1.4%, but the disconcerting thing is that a triple bottom may be in the making. I'd feel better on my bearish call on a penetration of $7.40 on a closing basis in tomorrow's session. Bearish engulfing candle in soybeans, and as readers know, I said fade rallies. November closed almost 70 cents off their highs. This is significant as buyers were rejected, and we settled under the 50 day MA on this contract for the first time since beans were trading under $13/bushel…current price is 25% above that level. I think we can see an additional 50-60 cent depreciation to follow. Wheat only lost .25% today, closing at around the same level it opened. $9 should cap upside short term, especially if corn and soybeans are pressured. On the downside, $8.30 is my target in the December contract.
Currencies: The buck, not the deer was on the move today, gaining 0.44%, as a bounce is underway. 80.75-81.00 should be challenged in the coming weeks, which in theory, should pressure other crosses if I'm correct. The European currencies can be sold with stops above the recent highs. My first downside targets are the follows: in the euro at 1.2715, the swissie at 1.0550 and finally the pound at 1.6000. The commodity currencies can be sold very lightly, and I'd be willing to add to the trade on a close under their 20 day MAs. Wash trades in the yen, as I'm getting mixed signals from the market and the BOJ.
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.