Energy: Crude oil closed lower by 0.86% and though $85 has supported in recent sessions, I'm still expecting a probe lower in the coming sessions. A settlement under $85 should get us a trade under $83/barrel, where I would likely be looking to reverse from short to long for clients. $87/barrel in December will need to contain any upside for me to keep this stance. RBOB closed 6 cents off its highs, closing under its 8 day MA. They fact that we did not rally as tight as supplies are on the East coast to me means we should see further pressure, as long as there are no delivery disruptions. Continue to use the 8 day MA as your pivot point. Support in December is eyed at $2.61, followed by $2.54. Heating oil closed in the green, but well off its highs, just under its 8 day MA. If prices start to roll over, we should see a probe of the 100 day MA at $2.98. Natural gas gained 2.12%, back above its short term MAs. The only trade I've advised is short futures while selling at the money puts, so a move like this is against us but not too painful. Stay the course if the latest highs contain.
Stock Indices: Muted action in stocks, as markets were closed and will be again tomorrow on account of Sandy. My sentiment remains bearish, as both the Dow and S&P have pierced psychological levels of 13,000 and 1400, respectively.
Metals: $1700 continues to support gold futures, but once that level is breached -- which I feel is just around the bend -- expect the next leg to drag prices to $1675, and potentially $1645. My buy window would be between those two levels. Silver was just shy of a 1% loss, with a close back under $32/ounce. Like gold, silver is meeting mild support at its 38.2% Fibonacci level, which comes in at $31.75 in December. On a trade under that level, my targets are $30.75, followed by $29.75. The closer December gets to $30, the more eager I would be to exit shorts and start scaling into longs. I suggest nibbling at longs because though the daily chart would be constructive at the aforementioned levels, the weekly charts in these two metals are ugly.
Softs: Cocoa prices have fallen five days in a row, today getting hit for 1.38% to put prices back at their 200 day MA. This level has supported since late July, but a close under 2350 in December means 2300 comes into focus. In my opinion, this will be determined by the U.S. dollar's price action. My suggestion is lighten up on any shorts. Lower trade was rejected in sugar, but we still sit just off contract lows. Lightly scale into bullish trade, willing to add when the market proves you correct. Today's chart of the day was a weekly chart, which is useful, in my opinion, when constructing a longer-term swing trade. The 100 day MA remains your pivot point in cotton, with a close just under that level today. I expect a trade under 70 cents in the coming sessions, but would have tight stops just above 73 cents on open positions. OJ lost 3.43% to trade at two month lows, and more selling is expected. Do not rule out a test of contract lows 5.5% below today's close. A bullish engulfing candle in coffee, gaining 2.47% today. I still would like to see a bounce for a sale to be on my radar for clients. Resistance comes in just above $1.70, followed by $1.80 in December.
Treasuries: 30-year bonds are above their 20 day MA, higher five out of the last eight sessions, gaining nearly 3 points. It will take a trade north of 151'00 in December futures for me to suggest bearish trade…stay tuned. 10-year notes also gained, closing at one week highs just under its 20 day MA, though, above that pivot point overnight. I see a trade closer to 134'00 in our future in the December contract.
Livestock: My $1.25 objective in December live cattle has been achieved, and we may not get much more. Solid support is eyed at $1.24, but we may not get there. If short and experienced this last leg, I'd tighten up stops just above the 9 day MA to keep the trade profitable on a bounce. Feeder cattle bounced today after trading to three month lows. Trail stops just above the 9 day MA as well here. Lean hogs were able to pare loses, but still closed in the red down 1.39%, probing the 20 day MA. I like bearish exposure, targeting a trade to 75 cents in December. The suggested trade is a short future and selling puts 1:1.
Grains: After four days of selling a doji star in December corn today. Perhaps an interim bottom, but as long as the 50 day MA caps upside, I suggest bearish trade. I'm targeting a trade near $7/bushel on the next leg lower. January soybeans gave up 2.17%, closing under their 20 day MA. Under $15.25, I see the next support in this contract at $14.90. Wheat continues to look for direction from the other Ags, and weakness in corn and beans has equated to three losing sessions in wheat, with prices approaching two week lows. $8.30/bushel should come into play in the December contract.
Currencies: Six out of the last eight sessions, the U.S. dollar has been in the green, and today was the first settlement above the 50 day MA since early August. I see further upside and at this point, I'm targeting a trade north of 81… a feat that has not been reached since the first week of September. The euro is below its trend line mentioned in previous posts, but remains above its 50 day MA. A trade lower is forecast, as bearish trades should have stops just over the 20 day MA. The loonie is the only commodity currency that I would suggest bearish trade in currently. A settlement under par should lead to lower ground. I did advise traders to lighten up last week, but those still in should be aiming for .9925 and potentially .9850. As long as December holds 1.2500 in the yen, stay the course in longs attempting to play a bounce.
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.