Energy: Inside day in crude oil… maybe I'm too cautious and leaving a few bucks on the table, but I advised traders to either close out or lighten up on their bearish trades today. I am not prepared to be a buyer yet, but I do not wish to be short with any size… trade accordingly. RBOB gave up nearly 1% today, and closed almost a dime off its highs yesterday. Resistance is at seen at the 8 day MA, while support is at the 100 day MA. A lower leg is my bias, and would get December futures at $2.54, which remains my target if the 38.2% Fib level gives way at $2.6150. Heating oil gave up the goose, losing and closing just under its 8 day MA. As long as prices remain above $3/gallon the sentiment is in favor of the bears, but I think we get one probe lower at least testing the 100 day MA before upside resumes… just my opinion. Yesterday's gain in natural gas was erased and then some with the near 3% drop today. December traded to its lowest level in three weeks, and is now within 20 cents of my ultimate target. My favored play is short futures while selling out of the money puts 1:1.
Stock Indices: Day two of stock market closure due to Sandy, but trading should resume tomorrow. The pivot points remain 13000 in the Dow and 1400 in the S&P. If and when the NFP number comes out, it will be the next catalyst, in my eyes, and set the tone short term. My bias remains down.
Metals: Gold has been range bound for the last five sessions, unable to wander too far away from $1700/ounce. With prices in December futures under $1730, there should be more downside before this leg is compete, in my opinion. I draw a support line under $1700 at $1675/1680 and at this point, I am not ruling out a test of the 100 day MA at $1670. Silver failed to hold onto early gains, closing roughly 35 cents off its intra-day highs. Resistance is seen at $32.50 with support at $31.50, though I think the 100 day MA comes into play here as well at $30.45. The reality is, long entries are on my clients' radar from lower levels. I see both silver and gold at higher prices into 2013, so I've advised buying a further dip. For precise entry and strategy, contact me for futures and options plays.
Softs: Solid support is seen at the 200 day MA in cocoa, evidenced by the 1.70% leap today and the fact that intra-day prices were up by 4.33%. This is a case of why shorts should trails stops and be out of the trade based on recent price action. Sugar had a marginal gain, closing in the green for the first time in eight trading sessions. Scale into bullish plays in March contracts, looking to build length on the appreciation. I've started to recommend bull call spreads targeting the 100 day MA in the coming weeks. The 100 day MA capped upside the last four days and after another failed attempt, the bears gained, control taking cotton down by 2.33%. I've been calling for a trade under 70 cents, and we will likely get it very soon. In December under that level, I see support at 67.50 cents… trade accordingly. Weakness should persist in OJ, as prices are now within 3 cents of their contract lows with no clear sign that selling is done. Coffee cannot get out of its own way... down by 2.7%% today, just as I felt a rally was developing. Prices could break down, but I would not establish fresh bearish trade with clients until we get a rally.
Treasuries: My call is that 30-year bonds continue to grind higher, as I am looking for a selling opportunity for clients from higher levels. A trade closer to 151'00 in December is of interest. 10-year notes probed 133'00 on its highs, which was my prediction several days ago. From here, I think we get a 134'00 trade in December, which puts bearish trade back in focus.
Livestock: After the doji star yesterday serving as a key reversal, live cattle are back on the move, appreciating 0.74% today to close just under their 9 and 20 day MAs. My suggestion is use those levels as your pivot points. I will be absent from either direction with clients, as I'm getting mixed signals. Feeder cattle closed higher by 1.37% at one week highs above its short term MAs. This is a bullish development, and should lead to higher ground. Inside day in lean hogs, with prices in December closing just above the 20 day MA. I like bearish trade here, and have advised clients to position themselves to potentially capitalize on a move to 75 cents in the coming weeks.
Grains: Yawn… corn has gone nowhere of late, but I remain bearish as long as prices are under their 50 day MA; in December, currently at $7.57. If support that has held for the last two weeks at $7.30 gives way, expect $7/bushel to follow. There are far better trading opportunities elsewhere, in my opinion. January soybeans attempted to muster a rally today, running into resistance at the 9 day MA. If January fails to retake $15.70 in the coming sessions, expect a trade under the lows from mid-October. Day four of the wheat slide, with prices closing in on their October lows, 20 cents above that level as of this post. Further weakness is expected, with a target of $8.30 in December.
Currencies: The dollar lost 0.41% today, and will need to remain above its 20 day MA at 79.80 in December for me to remains bullish. Take profits on remaining loonie shorts. The lone currency on my buy list is the yen, as I see 1.2500 as support with an upside target of 1.2700/1.2750 in the coming weeks.
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.