Energy: Unable to hold onto its gains, crude oil backed off, but I'm seeing signs of the tide shifting with a positive close four out of the last five sessions. Exit remaining bearish trade and book profits. I expect to have bullish trade recs in the coming sessions… stay tuned. RBOB closed positive, but nearly 7 cents off its intra-day highs. The 100 day MA has acted as support of late, but do not rule out one more probe. Traders that have ridden RBOB lower should tighten up stops. The 8 day MA has capped heating oil the last sessions, as prices have yet to reach their 100 day MA, but that is still a possibility, in my opinion -- just over 7 cents from today's settlement. Natural gas is almost 30 cents from its high two weeks ago and should grind lower, but my take is it may be a sharp probe, as prices should not stay low for any lengthy period, in my opinion. I will be looking to buy contracts into next year on a trade near $3.50 in December.
Stock Indices: The S&P failed to gain any traction, running into resistance at its 9 day MA. Prices have yet to really break down under 1400 and make their way to my target of 1380. The next catalyst will be the jobs number, and as we assess the damage from Sandy, I certainly think that could play a factor. The 9 day MA acted a resistance in the Dow as well, but 13000 did support. It will take a close under that level to confirm more downside.
Metals: Gold picked up 0.53% to close at a one week high. Prices could be building a base for their next launch higher, but the jury is still out. I'm giving it a few days to make a decision on the direction of the next leg. Silver gained 1.40% to close at one week highs. A base is forming, but I'd like to see volumes pick up, as they've been light. I'm still thinking a lower leg could play out, but I'd be quick to change my mind and be a buyer with clients if the market dictated… stay tuned.
Softs: The last five attempts in the last month, the 200 day MA has held up in cocoa futures. With that, aggressive traders can lightly scale into longs with stops just below that pivot point. My upside target in December would be 2500. Lower trade was rejected in sugar, with loses being pared and sugar closing1.5% off its lows. I suggest scaling into bullish plays, and my featured trade is buying bull call spreads in March 13' contacts targeting the 100 day MA. Cotton is down seven out of the last 10 sessions, hitting my objective of 70 cents today. I see no solid support until 67/68 cents in December futures. OJ is lower the last four sessions and on its way to a fresh contract lows, in my opinion. I would not rule out a sub $1 trade in January in the coming weeks. Coffee was lower by 1.62%, and is trading just 1.5 cents above its contract lows. Until prices get closer to $1.70 in December, I've chosen to walk away with clients.
Treasuries: 30-year bonds are at two week highs, closing back above 149'00. I'd say about 60% of this up leg has developed, and I am still targeting a trade north of 151'00 in December. 10-year notes continue to work their way higher, closing above their 20 day MA for the first time in three weeks. Significant resistance comes in just shy of 134'00 on this contract.
Livestock: Live cattle ran into resistance at its 9 and 20 day MA. It's a crap shoot and could go either way from here. I have a neutral bias and no stance on establishing any fresh positions. Inside day in feeder cattle, finding resistance at its short-term MAs as well. Buying was rejected in lean hogs, with prices closing under its 9 day MA, with a close 1.25% off their highs. Bearish trades are my suggestion…my favored strategy is short futures while selling out of the money puts 1:1.
Grains: Corn gained 1.89% today to erase the last week of losses, but I view this just as a bounce until prices get above their 50 day MA -- that level is $7.57. Soybeans picked up 0.80%, closing just shy of $15.50. Prices could go 30 cents in either direction…stand aside for now. If soybeans can stabilize and we start to see crude oil appreciate, I will start to price out bullish strategies in soybean oil… stay tuned. I see 50 as a value zone in the December contract and prices are hovering just above that level currently. Wheat gained for the first time in five sessions, picking up 0.90% and closing at its 20 day MA. I continue to expect wheat to look for direction from outside markets -- a laggard, not a leader.
Currencies: The dollar tested its 20 day MA, which should serve as the pivot point in the coming sessions, so pay very close attention to 79.80 in the December contract. If we see metals and energies pick up at all, expect the loonie to follow. After the 3% drop in the last six weeks, a bounce is due anyhow. Aggressive traders can scale into longs in the yen with stops under 1.2500, with a 1.2700 objective.
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.