Energy: Crude oil was able to close in the green after being down nearly $2 in early dealings. We will need to see a settlement under to 100 day MA in December -- currently just under $91 -- to confirm bearish sentiment. On a trade back near $88.50 on this contract, I will be looking to unload remaining trades for clients ...trade accordingly. RBOB closed below its 8 day MA, finding support at its 20 day MA. A close under $2.75 in December confirms lower trade. My first target on a leg lower would be $2.61/gallon. Heating oil traded down for the second day in a row, trading under but closing above its 8 day MA. $3.13 needs to be breached to confirm a lower leg. Expect this in the coming sessions, in my opinion. Natural gas lost 2.66% today, closing at its 8 day MA. I'm operating under the influence that an interim top was made, and we see a trade lower short term. A 38.2% Fibonacci retracement puts December back near $3.55, though I would not rule out $3.40 and if so, I would be an aggressive buyer …stay tuned.
Stock Indices: The 50 day MA held the last three sessions, with the S&P gaining nearly 1% today. As long as prices remain under their 9 and 20 day MA on a closing basis, I view this nothing more than a bounce. Those pivot points come in just above today's close. Those short, stay short and trail stops down. On a leg lower, I still think a trade under 1400 plays out in December futures. The 50 day MA has also been the line in the sand in the Dow as well. That support level comes in at 13240 and above resistance, is eyed at the 9 and 20 day MA, approximately 50 points above today's close. Do not rule out a bounce, but I give the same advice -- remain short and protect profits with stops. Those with a sizable equity portfolio are advised to lighten up on longs, as a correction lower is still my call.
Metals: Gold lost $22/ounce today, and is lower six out of the last seven sessions, losing approximately $60/ounce. Lower trade is my call, as I see a trade under $1700 this week, if not next. A trade to the trend line drags December futures to $1665, which would be a 50% Fibonacci retracement. Silver gave up 2.75% today, dragging prices to the lowest close in five weeks. Prices are now $2.25 off their recent highs, and more selling should follow. My first target is $31.75, though I don't see much support until $30.75 …trade accordingly.
Softs: The 200 day MA has supported cocoa the last three sessions. The easy money has been made on shorts, in my opinion, and with only a narrow window of profit, tighten stops as a bounce is overdue. A bounce near 2450 in December could be sold. Though sugar is under 20 cents and on my radar as a buy, there is no need to catch a falling knife. Let's see some signs of an interim bottom before reestablishing longs in March sugar. Hopefully, longs listened to me last week to book profits, as prices dropped over 8% within that time frame …see previous posts. Based on a few technical indicators, it appears we will get a bounce higher in cotton, so make sure those shorts have stops just above the 100 day MA -- currently at 72.40 -- to get stopped out. I prefer selling from higher levels than buying if, in fact, prices trade higher. Coffee is meeting mild support just below $1.60, but I'm still not ruling out fresh contract lows. Those with sizable bearish exposure should hedge their trade with options -- either buying calls or selling puts, in my opinion. As long as December coffee is under $1.71 I'm bearish, but that would represent a $3,750 trade against an unhedged short per contract.
Treasuries: 30-year bonds are above their down sloping trend line. In December currently, that level is 149'00. I open trade near 150'00 to potentially probe shorts again. For now, I'm on the sidelines with clients. As long as 10-year notes remain above their 9 day MA, I would refrain from trade. I wish to have bearish exposure in this complex, but prices above this pivot point are bullish, so that does not jive with bearish exposure.
Livestock: December live cattle is finding mild support just above $1.25 so a bounce could play out, but I'm getting mixed signals, so would not take a trade for new positions in either direction. Any short should have tight stops. November feeder cattle are finding buying interest under $1.44, but I do not see a catalyst to drive prices much higher or lower. That being the case, sloppy sideways action is not conducive for me to trade, so stand aside. December lean hogs continue to grind higher, closing at two and a half month highs, just under 79 cents. I like bearish trade but hate picking tops, as generally it's a losing battle. Aggressive traders can get short futures while simultaneously selling out of the money puts. My suggestion is start very light and add once the market turns. Ultimately, I think this contract trades under 73 cents, but from what level?
Grains: After two attempts, corn failed to take out its 50 day MA, and has fallen roughly 30 cents/bushel in recent sessions. A close under $7.30 in December puts $7 back in play. Both daily and weekly charts are looking uglier, so maybe harvest lows have yet to be made. If bears grab control, they could take December to $6.75, where shorts should seriously lighten the load. To a much lesser extent, bulls failed to rally soybeans as well, with prices approaching three month lows as we attempt to fill the gap mentioned in previous posts. The next stiff support in November is seen at $14.50. Wheat continues to take guidance from the other Ags, so the latest 40 cent jaunt was not surprising. In December, support is seen at $8.30, followed by $7.95.
Currencies: The dollar is stuck between the 20 day SMA and the 34 EMA. Whichever direction prices break short term will determine the next leg, in my opinion. Those levels in December come in at 80.25 and 79.70, respectively. The European crosses remain range bound until a direction is determined. Protect open profits in the pound …trail stops. I'd like to see the aussie and kiwi work higher to set up sell signals from higher ground. Aggressive traders can gain bearish exposure in the loonie, which I think should play out if metals and energies fail. I think the December contract could see a trade under par in the coming weeks, currently at 1.0175.
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.