Today In Commodities: Crude Trades Near 7-Week Low

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Includes: AGQ, BAL, CAFE, CANE, CHOC, CORN, COW, DBA, DIA, FXB, GAZ, GLD, IAU, MOO, NAGS, OIL, PHYS, SLV, SOYB, SPY, UDN, UGA, UNG, USO, UUP, WEAT
by: Matthew Bradbard

Energy: November crude oil is trading under its 100 day MA as of this post, lower by 1.15% and trading to near a seven week low. Prices are nearly $10 off their highs from less than two weeks ago. A 50% Fibonacci retracement on this contract puts prices at $89.25, while a 61.8% retracement drags prices to $86.80. RBOB moved in the other direction, gaining 1.25% and closing back above its 8 day MA. Heating oil was not able to hold onto its gains, closing marginally higher, but remaining under the 8 day MA. This tug of war should not continue, as the distillates and oil should move in the same direction -- my bias is lower. Natural gas advanced, bouncing off its 38.2% Fib level, closing a dime above $3 in November. I am not a buyer, but forced into the market, we I could see prices bid back near $3.25/3.30, in my opinion.

Stock Indices: Have stocks finally started the correction I've been hinting at for several weeks? The S&P gave up nearly 1%, closing under its 9 day MA and very near its 20 day MA. Operating under the influence an interim high has established, a 38.2% Fibonacci retracement puts prices back near 1380. On a percentage basis, the Dow was not as big a loser, but prices did penetrate the 9 day MA the same. On a 38.2% retracement here, 12900 comes into play. Aggressive traders can gain bearish exposure and remain in as long as new highs are not established in either index.

Metals: Doji star in gold, as indecision has been the name of the game. Prices have been stuck in the $30 trading range now for almost two weeks. My take is prices are ripe for a correction, but first $1750 must give way in the December contract -- $1690/1695 is my first target…trade accordingly. Silver lost ground for the third session in a row, as prices remain under $34/ounce. $34.50 should act as resistance, and I see prices closer to $32 in the coming weeks. Those not willing to get short are advised to lighten up on longs. The idea would be to re-establish longs after a correction takes place.

Softs: Cocoa gained 1.5%, bouncing off the 38.2% Fib level. What I like in the chart action, even though I've advised bearish exposure, is prices challenged the trend line breached yesterday and failed. As long as prices remain under today's high, look for lower trade ahead, as my target still is a trade under 2400. 2.22% gain in sugar today, with prices in March 13' one penny off their lows. I prefer bullish exposure -- thinking this trade is just getting started. Both daily and weekly charts look favorable as long as futures stay above recent lows. Cotton once again closed under its 100 day MA, down the last four sessions. Lower trade is expected as prices should slide near their May lows in the coming weeks. Coffee found support at the triple bottom mentioned in recent posts. From here if prices rally, look to reestablish shorts from higher levels. I would move to the sidelines on open positions at a small profit/loss, depending on your fill.

Treasuries: Quite a streak in 30-year bonds, registering seven straight trades in the green as prices closed at their 20 day MA. Let December get above 149'00, and then I'm going to started exploring bearish trade. At their highs, 10-year notes completed a 61.8% Fibonacci retracement. Still, I think there is higher trade to come, and I am open to bearish trades close to 134'00 in December.

Livestock: December live cattle closed down their daily limit, losing 2.34% less than half a cent from the target I've been voicing in recent posts. Look for an exit window overnight or into tomorrow. Traders with large positions should close out at least 75% and gamble with the reminder, looking for a big hit in my opinion. Feeder cattle also failed and got the confirmation I needed breaking their MAs. This leg should get November trading under $1.44, in my opinion…trade accordingly. Exit remaining lean hog longs, as the entire livestock sector could feel pressure short term. I will be advising buying back in after a retracement…stay tuned.

Grains: December corn could bounce slightly, but for fresh entries, you could have a sell stop under $7.35 as a new low should signify a probe closer to $7/bushel. The 50 day MA is your pivot point in November soybeans, currently at $16.43. Start lightening up on shorts, as the risk to reward dynamic is getting skewed. I'm afraid to advise you to leave the whole trade, as bearish momentum could drag prices an additional 30-40 cents lower, but I'm getting mixed signals short term. $9 remains your pivot point in December CBOT wheat. Prices could go either way, so just make sure you manage open positions. My bias remains with the bears, but not for fresh entries.

Currencies: The U.S. dollar remains undervalued and, in my opinion, due for a bounce. I'm not advocating the start to a new bull market, just to be clear -- a 1.0-1.5% bounce is the call. All European crosses are a sale in my eyes, with the best risk to reward scenario in the cable. I suggested this premise in my chart of the day for swing traders today. The commodity currencies are sales, and this should be confirmed in the coming sessions, with settlements under their respective 20 day MAs on the daily chart.

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.