Today in Commodities: Short Week Not Short on Opportunity

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Includes: BALB, COW, DBA, FXA, FXC, GLD, GRU, JJA, MOO, SGG, SLV, SPY
by: Matthew Bradbard

The 9 day MA held once again today as energies were 1.40-4% higher on the session. It appears the path of least resistance remains up in Crude oil and the distillates. The only two situations where we would likely change our mind is a reversal lower in equities or a bearish inventory report tomorrow. Without either of those scenarios our previous targets in Crude stand.

Natural gas caught fire today as well, trading to a fresh three-week high. We suggest trailing stops on futures and have advised clients to place gtc profit orders on their September call spreads. They would likely need to see 25 cents in the futures to reach their objective.

As of this post a bullish engulfing candle on the daily chart in indices should have bears temporarily hibernating. As we’ve voiced we are looking to sell this rally expecting the S&P to make its way to 1125-1145 in the coming weeks. We will have some bearish strategies in Treasuries in the coming sessions for clients in both futures and options…stay tuned.

Sugar traded lower by just over 3% today; clients are long and losing money. The good news is the loss on their futures position is being offset to some extent by the call options sold. We are willing to take a little more heat, but if prices continue to falter we will cut losses. Cotton is close enough to our objective that we advised shorts to tighten up stops and to start liquidating shorts. On a rally in October or December we would be looking to fade a rally for clients.

Live cattle closed back above the 100 day MA, gaining 1.0% today. Clients are positioned to take advantage of higher pricing; again our target is .9600-.9700 on the December contract.

June gold was down for the first session in seven days, though it held the 20 day MA. We expect the grind higher to continue and have advised clients to buy dips… stay tuned. As long as the 100 day MA holds in July silver on a closing basis we like being long with clients; that level is $18.15. We still expect a trade over $19/ounce but it may be a bumpy ride.

Corn was off 1.50% today, trading to the lowest level in 8 months. Clients are long September and December and currently down on the trade. We’ve advised clients to weather more downside as we still feel prices will be higher in the next 4-8 weeks. More pain may follow but clients do not have all their eggs in this basket. Those with too big a position should pare down or sell other months or use options to hedge off some of their exposure.

The Loonie is above the 20 day MA and 3 cents of its lows from last week…stay long. The Aussie fought back to near .8400 by day's end; clients are long expecting .8700.

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