Energy: Crude oil lost 0.82%, failing to close above its 8 day MA the last two sessions. My target on the next leg down is $89.25, followed by $87 in November. Heating oil closed lower for the third consecutive session, just under its 8 day MA as of this post. If the 50 day MA gives way about 5 cents under current pricing, a trade under $3/gallon should follow. Resistance in November is eyed just above $3.14. RBOB lost 1.91% today, and was featured as the chart of the day. I'm operating under the influence an interim top was made and we move south from here. First support is seen at the 50 day MA around $2.78, followed by $2.65. Natural gas is up eight of the last nine sessions, trading above $3.50 for the first time since early January. After a 20% advance, I'd not expect much more, but I am not calling a top. I'm just saying the easy money has been made, and a 25-40 cent correction would not surprise me.
Stock Indices: An inside day in the Dow, with prices closing under their 9 day MA. 13500 continues to act as stiff resistance, as more selling is expected. The next hurdle on the downside is the 20 day MA, at 13390 in December futures. Same pattern in the S&P with an inside day, closing just under the 20 day MA. I'm expecting lower trade and awaiting confirmation, with a breach of the trend line at 1425.
Metals: Gold prices remain elevated but as I've stated, the longer prices do not trade above $1800/ounce, the less likely they will on this leg. Aggressive traders can probe bearish trade trying to capitalize on a $75-100 drop in the coming weeks. December silver was a slight loser, back under $35/ounce and, in my eyes, taking a deep breath before a dive lower. I think this month we can see prices trade under $32/ounce, which would represent a 7.7% decline.
Softs: Cocoa gained 1%, bouncing off the trend line that has supported since early June. Though prices may stall, I still think lower trade is likely in the coming weeks. Resistance in December is seen at 2500, with the next support at 2375. March sugar gained 2.18% to complete a 38.2% Fibonacci retracement. In the last twoweeks since I've advised longs, it has not been a one way street, but prices have appreciated nearly 10%. I expect more upside and would use the Fib levels as upside targets…see previous chart of the day. Cotton may bounce from oversold levels, so do not establish fresh trades. Those short should have stops just above the 100 day MA -- currently at 72.60 in December. Coffee gained 3.15% today to close at nine-week highs. I did not expect prices to get above $1.82, so I have egg on my face. From here, I will not take the trade, but prices will likely move to their 200 day MA, roughly 7 cents higher …trade accordingly.
Treasuries: Going on five sessions, December 30-year bonds have been unable to retake the 150'00 mark. I've yet to reestablish bearish trade for clients, as I think we can get one more gasp near 151'00. I have advised clients to use that if given the opportunity to fade the rally. If I am correct in my analysis, that should translate to a pop in 10-year notes above 134'00 to open up a sale above that level. That would also put the NOB spread closer to -17.50/18.00, where I may be willing to re-establish the spread…stay tuned.
Livestock: Live cattle have gained three out of the last four sessions, closing back over its 9 day MA. I like bullish trade, and I'm thinking this leg drives cattle prices back near $1.30 in December. My favored play is long futures while simultaneously selling out of the money calls. November feeder cattle probed the 9 day MA, gaining 0.60% today. While I think higher trade is around the bend, I'm content on the sidelines, as I see limited upside. I sighted the buying strength in recent sessions in lean hogs and advised shorts to close out at a slight loss, and I'm glad I did. Prices gained 2.3% today, and are higher by just better than 3 cents the last two sessions. A 61.8% Fibonacci retracement puts prices in December near 78 cents, and I think we could move even higher …just my opinion. I will be looking for bearish trade for clients from higher levels.
Grains: Corn needs to make a decision, and I would play the breakout if a scalper …a trade above the 20 day MA or below the 9 day MA. I like the idea of fading rallies, and I'm still thinking we could see a sub $7 trade in December futures. November soybeans lost 1.9% today, dragging prices to 11 week lows. 20 more cents and a 50% Fibonacci retracement is complete. Then the next target would be the gap in the chart from 7/3 at $14.78. Trail stops on bearish trade. Wheat remains a follower, and the weakness in the soy market may overshadow the sideways action in corn …look for more pressure. In December, my target remains $8.30. Some traders asked about the recent trade recommendation in soybean oil. This was a loser, as you should have been stopped out yesterday when 52.00 was breached. Doing things all over, it was a good set up and just a losing trade. Do not probe again until there are signs of an interim bottom.
Currencies: Day three, the dollar failed to get above its 20 day MA. We will need to see this in the next few sessions, or a move lower will likely resume. Close out short trades in the euro and swissie with prices back over their 20 day MAs. Traders can remain short the pound, as they should have just been established with tight stops. The big loser as prices moved south was the aussie, which is good, as followers should have bearish exposure. Stay put for now. Traders can be short the loonie, with stops just above their 20 day MA -- current risk approximately $550.
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.