Today in Commodities: What Consumer Confidence?

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Includes: AGA, BALB, CAFE, COPX, GAZ, GLD, MOO, OIL, SGG, SLV, UDN, USO, UUP
by: Matthew Bradbard

If investors are not interested/confident I am a seller. When August Crude took out $77.70; the 9 day MA mentioned yesterday buyers disappeared and as of this post prices are below the 20 day MA down 3.40% on the day. The path of least resistance is down and this leg could drag prices back to $73/barrel. We see light support at $75; last week's low but we expect it to give way. We will look to get clients long from lower levels. Natural gas is down by nearly 4% having completed a 61.8% Fibonacci retracement. Aggressive traders are advised to scale into October futures while we prefer October 50 cent call spreads anticipating $6/BTU months down the road. ALL our short objectives were realized in the indices today. We would advise booking profits on all shorts or at least to trail down your stops. From here we would like to see a bounce to get clients short again. Just to be clear most of our clients were out ahead of the G-20 so they did not realize the last 40 points in the S&P. 1070-1080 we may get clients short again.

A rising dollar most likely leads to lower cocoa; prices got hit for 5% today. For those still hanging onto longs in October sugar on a trade above 16 cents we would exit remaining longs. Cotton traded lower for the third consecutive session; without a bullish surprise in tomorrow's USDA continue to be bearish in December cotton. Coffee looks like we may get a correction lower; our clients will be absent being we see better risk/reward elsewhere. After a 30% appreciation in the last two weeks that should be expected. Treasuries trade to 14 month highs today, as long as indices tumble this will persist but we think this trade is in its final chapters. Live cattle were marginally lower today; we would use a mild set back as a buying opportunity in December. Lean hogs were lower by 1.40% today trading to 2 week lows. Continue to trail down your stops. On a trade closer to 73 in October clients will be looking for an exit door.

Gold barely eked out a profit today but the key is prices in August managed to stay above the 20 day MA. Longs in gold are braver than I am but as long as $1235 holds the trend is your friend. The 20 day and 50 day MA’s in silver are serving as solid support; most not already involved in silver were buyers of $3 call spreads in December today. Copper was lower by 5% today closing back under the 200 day MA. If yesterday serves as an interim top this should not be ignored.

Buyers were absent in grains today as investors likely lightened up into tomorrow’s USDA report. Our clients are holding long positions in September options and December futures into tomorrow's report. Some clients less bullish than I have chosen to spread off their December longs in corn with September shorts. Expect fireworks tomorrow on the open in agriculture. Acreage est. comes in at corn 4.598 mln, wheat 53.825 mln, soybeans 78.183 mln. Stocks est. comes in at corn 4.598 bln, wheat 0.940 bln, soybeans 0.594 bln. The commodity currencies continue to be in sell rallies mode though clients missed today looking to be a seller from higher levels. The only action today was scalping in the Pound as we maintain prices have gotten ahead of themselves and see 1.4700 very soon. Be cognizant that the dollar may run into considerable resistance at the 20 day MA; 87.00 in the September contract.

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