Today In Commodities: Currencies Are On The Move

by: Matthew Bradbard

Energy: Any upside was rejected in Crude oil, with prices closing near their lows, down 2.25% as of this post. Prices are below their 100 day MA, which should confirm more selling. My target in December remains $87/88 in this contract. The 8 day MA capped buying today in RBOB, with prices off 1.87%, trading below $2.70/gallon. The 100 day MA comes in at $2.60, and should come into play in the coming weeks. A bearish engulfing candle on the daily heating oil chart, with prices down 1.45%. This leg lower should get the December contract close to $3/gallon, in my opinion. The only positive in the energy sector today was natural gas, trading 0.75% getting December closer to $4. This is a fresh 2012 high, but a correction is imminent, in my opinion. Some traders that are getting hurt, but their short futures potion should be somewhat offset by their short put options.

Stock Indices: Today's chart of the day is the S&P, as I identify a potential triple top in the daily chart. As of this post, we have a trade 1.6% lower, as we are testing the 50 day MA. It is premature, and it will take a close under the up sloping trend line, but I do expect that to play out in the coming weeks. A close under 1425 in December futures should get prices moving towards 1380, in my opinion. The Dow is lower by the same percentage, testing its 50 day MA on its lows. A close under 13260 would likely lead to a 38.2% Fibonacci retracement, putting December futures at 12925.

Metals: Gold is lower by $22/ounce, trading to one month lows and testing its 50 day MA as forecast. We may see mild support at this pivot point in my eyes, but I'm expecting more downside. $1700 should support, and then under that level, next stop should be $1675 …trade accordingly. Silver is down by 2.35% under its 50 day MA, challenging $32/ounce and having lost better than $3 in recent weeks. There should be some support around $31.75, and then under that level, $30.75. Shorts, stay the course, and those looking to buy, I expect bullish trades in the coming weeks from lower levels.

Softs: Cocoa appreciated 2.09% today at two week highs, as prices are nearly 6.5% off their lows this week. I see more upside short term, and have a target of 2550/2600 on longs. For now it looks like 20 cents will hold in March sugar, so aggressive traders can probe bullish plays with tight stops. If we gain more traction next week, I'd be willing to add to bullish trade. If December cotton cannot retake 78 cents early next week, I'd say the upside is over on this leg. I am not establishing bearish trade just yet, but without follow through from the appreciation early this week, upside could be limited. Coffee gained 1.92%, and though I may leave some money on the table, I'd exit bearish plays -- book profits and move to the sidelines. I feel there is a risk that we get an appreciation …just a hunch, and bears should have a decent profit.

Treasuries: As long as stocks trade lower, we should see a flight to quality bid higher in Treasuries -- displayed by the .080% gain in 30-year bonds today. I see support in December just above 146'00, and we could challenge this week's highs moving forward, in my opinion. A bullish engulfing candle in 10-year notes, with a gain as of this post of 0.27%. 131'25 should support the December contract, and on a leg higher, resistance comes in at 133'10, followed by 133'25.

Livestock: After four positive sessions, live cattle closed out the week with a slight loss, down 0.53%. Aggressive traders can probe bearish trade, as December should back off in the coming weeks. My favored play is short futures while simultaneously selling out of the money puts. My target is $1.2450. Feeder cattle also lost ground today, but the chart action is not as compelling, in my eyes. I see resistance in January just above $1.51, and once prices confirm a trade lower, I would be targeting a trade under $1.47. Lean hogs ended the week on a positive note, gaining 1% today. The last time prices in this contract were above 80 cents was late July, but we are almost there. I like probing bearish trade, thinking an interim top is very near. I feel a more appropriate price is 75 cents, and would try to initiate a small position to capitalize on a move to that level in the coming weeks.

Grains: The 50 day MA capped rallies in December corn today, much like it did on its last attempt. This level will serve as a pivot point into next week. A trade above that level, expect $8, and if we fail, look for a trade back to $7.25/bushel. The 20 day MA was the resistance level in November soybeans, as prices were unable to hold onto early gains. $15.70 is your upside resistance, while $14.85/14.90 is your support. I am expecting a bounce in the coming weeks, but it's a challenge to see any real upside in grains considering outside markets, in my opinion. Wheat alone should experience some upside, but set your expectations, as the most I see is potentially 30-40 cents/bushel, and that does not excite me, being that the risk is not much less than that, in my opinion.

Currencies: With the last two days' appreciation, the dollar has made its way back to its 20 day MA, where it closed today. A further appreciation could pressure other crosses, so pay very close attention to this pivot point -- 79.70 in December. I continue to like bearish exposure in the cable and the loonie. The pound traded down to its 50 day MA today, and on a breach of 1.6000 early next week, 1.5858 should be the next stop. The Canadian dollar broke the trend line mentioned in previous posts that has supported since June. Prices have been above par since early August, but I expect that to change in the coming weeks. It is not simple, but what I've told clients is that as metals and energies trade lower, as too should the loonie. Continue to trail stops in the yen, and milk what the market will give you.

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.