Today in Commodities: Vindication as Markets Make Sense

by: Matthew Bradbard

Short covering, month end, dollar rally, call it whatever you want. Here is the scorecard: short Crude oil, short the S&P, Short Euro-currency, Long the Yen, short silver, long Treasuries (NOB spread).

We advised using today’s’ retracement in corn to buy or get positioned in a portion of the corn you want to own into the USDA on November 10th. Additionally clients were buyers of February live cattle on today’s setback. Clients bought futures and at the same time just out of the money puts. They were not filled on their limits on calls, will try again next week.

Next week's agenda is stacked full of market moving events; RBA, FOMC, ECB, BoE, G-20, and NFP are the highlights. We are still looking for more down side in oil; $75.70 is the 38.2% Fibonacci number, $73.80 is the 50.0% Fib number.

As we’ve stated, we need cocoa to collapse to get a winner for clients, but on a 5-10% selloff we should at least get some value on our puts. Remember we are expecting for OJ prices to revisit $1 in the futures, trade accordingly.

Looks like I’m not the only one that doubts the G (Gross )DP number for Q3. Equity trader’s short futures trail stops down and for ES put holders 1 or 2 more days and we will be looking for the exit door.

Silver held the trend line for the last 3 sessions. Ideally we get a break lower early next week to lift short and get clients long. Still pricing out March and May call spreads. The dollar should have a little more upside left in it, if so the Euro-currency should continue south, we should know by Sunday night’s action. The yen broke above the 20 day moving average, on a trade back above 1.1150 clients should be able to take a profit on their 110/113 spreads. The FX story today was the breakout in the Euro-Yen. Follow this as it speaks to risk aversion.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.