Energy: Crude oil failed at the same resistance that has capped rallies the last three weeks, reversing mid-day to close near its lows, off 1.23% down. I anticipate lower trade into next week, dragging prices back near $87 and if so, I will tighten stops on shorts to not have the trade move against open positions for clients again. After printing a fresh contract high in RBOB, prices backed off to close virtually unchanged. I still am searching for confirmation when the correction will begin. If oil trades lower, it should prevent wholesale prices from trading north of $3/gallon. Heating oil gained 0.31% to close at three-week highs. While we could move 5-8 cents higher, I am sticking to my guns that this whole complex should see a correction very soon. The 8 day MA continues to support natural gas, but the longer prices fail to retake $3.50, the less likely it will happen on this leg. A correction of 25-40 cents is still my opinion.
Stock Indices: Four down days in a row as the S&P is fast approaching its 50 day MA at 1420. I anticipate more selling, as my first target is the 38.2% Fib level at 1383. The Dow is also approaching its 50 day MA at 13215, on its way to the 38.2% Fib level at just under 12950. The trend lines that acted as support all summer should now act as resistance, as the floor has now become the ceiling.
Metals: The correction in gold continues, albeit at a snail's pace, with gold approaching a $40 correction with more in store. If $1750 gives way, I would expect a relatively quick probe to $1700 in December futures. After three losing days, silver was able to claim a small victory, gaining 12 cents today. I expect lower trade ahead, targeting a trade under $32.50 in December futures ...trade accordingly. Copper should continue to trade lower with the S&P…$3.60 is the target in December. Platinum was the chart of the day, as we are in the first inning of a move that I think could drag futures 4-7% lower. The risk to reward dynamic is also attractive.
Softs: Cocoa gave up 1.86% to trade back near its 100 day MA, closing just under its 50% Fib level. 2300 is my third and final target, but make sure you're trailing stops, as after a 12% sell-off, this market could experience a violent bounce. Sugar lost nearly 1%, closing under its 100 day MA for the first time since prices cleared that hurdle one week ago. Close out bullish trade and look to buy back in after a correction happens. I think March can be re-bought closer to 20 cents. The 100 day MA continues to cap upside in cotton …as long as that continues remain in bearish trade, but stops should be right above that level -- currently at 72.40. Coffee lost 1.12% with lower trade six out of the last seven sessions. I am still not ruling out a new contract low, and would remain in bearish trade for now.
Treasuries: 30-year bonds gained 0.51% to close just under their 9 day MA. Stops should be just above 149'00 in December, so traders may be out at a loss very soon. If that happens, we will likely get an opportunity to sell again from higher levels. 10-year notes also challenged their 9 day MA, closing just under that pivot point. Stops should be above 133'16 in December. As for NOB spreads, a trade wider than -16.00 in December would suggest to get out of this trade at a loss.
Livestock: Live cattle failed at its 20 day MA, closing slightly lower. If December fails to get above $1.27, I'd suspect we trade back down to the recent lows. Feeder cattle have been range bound going on one week, so until the market decides on a direction, I would stand aside. Lean hogs gained 1.69%, closing above 78 cents, so traders probing shorts should have been stopped at a small loss. Wait for signs of a top, and I may suggest bearish probes again.
Grains: USDA report tomorrow, so expect fireworks. I think it is possible we get a bullish number, but I advised clients to lighten up ahead, as there is mixed opinion on numbers for supply and demand. Corn lost 0.71%, closing lower five out of the last eight sessions. Wait for tomorrow's number. Support is seen at $7, with resistance at $7.70. Soybeans lost 1.73%, dragging November to their lowest close in 3 months. $15.40 is your resistance, while the next bearish leg should fill the gap from 7/3, 47 cents below the current price. It appears that we could get a bounce in wheat, with prices closing higher the last three sessions. Do not expect much, as prices have been range bound. I have a slightly bullish bias, thinking we could see 25-40 cents in the coming weeks.
Currencies: The dollar failed to take out its 34 EMA, finishing just above 80.00 in December. The 20 day MA at 79.60 that was resistance should now be support. The pound stalled today, but I think we see a trade under the 50 day MA yet. Stops can be tightened up just above their 34 EMA, in my opinion. Cover bearish trade in the aussie, and replace it with bearish trade in the loonie. The Cad is exhibiting more weakness, and I like the chart pattern better. After we see a bounce in the aussie, I'd be prepared to give another short trade rec. Once again, all shorts should be closed in the yen because of the recent action, trading above its 20 day MA.
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.