Today in Commodities: Dog Days of Summer

by: Matthew Bradbard

Crude broke lower today and is currently down just over 4%, a 50% Fibonacci retracement takes prices in September down to $66. It is unlikely we see a complete reversal but it is possible to see a trade down to the trend line at $65 with no longer term chart damage. We prefer to be a buyer from lower levels as opposed to a seller on behalf of clients. Natural gas is a buy, well, at least we feel the risk being long is justified considering the potential reward. We are advising buying November $1 call spreads.

Risk aversion is back in the currency market, yen and dollar up and the other crosses down. Look for more specifics in our weekly commentary on Monday.

We remain long corn and wheat and as we’ve said our targets are $3.70 on December corn and $5.70 on December CBOT wheat.

Silver and gold broke lower, we think on outside market influence; weakness in equities, and oil and strength in the US dollar. Hold off on new entries in futures, our favored play remains $3 call spreads in December silver.

Much overdue, but stocks appear to be moving south. We maintain a 960 target very soon. Do not rule out a test of the 50 day moving average at 940 on a complete meltdown. We suggest accumulating longs in live cattle and lean hogs when prices are at these extremes. Be patient! The softs sector was ugly today; cocoa down 3%, sugar closing lower for the second session in a row, cotton down limit intra-day, oj a loser by 8.5% and coffee shedding almost 3%.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results.