Today in Commodities: Month End, Q2 Over

by: Matthew Bradbard

I am torn on oil therefore have no positions on for clients. In the August contract we violated the trend line that has held since mid-May but quickly rallied back to close slightly lower in today’s session. We’ve seen a 50% Fibonacci retracement at today’s lows but have a sneaking suspicion we could see a probe at $73 before we resume moving higher. We’re suggesting scaling into longs in October natural gas; either futures or options depending on your risk tolerance. We like 50 cent call spreads in October thinking $6 is a reasonable target by then.

Ugly last hour in equities; we‘re still looking for a rally to sell for clients. Maybe a fixed jobs number on Friday will get us the bounce we’re looking for. I expect to see 950 in the S&P by fall but we’re more comfortable selling near 1070 than current levels; 1025. A trade back near 2850 in September cocoa we would exit cocoa shorts and start looking to reverse. Sugar was impressive today gaining 5% closing back over the 9 day MA. One of the floor traders I execute orders with said 20 cents today; boy I hope he’s right. On a trade closer to 17 cents we would likely start working out of the remainder of clients' longs. December cotton lost 2.24% today closing at a three week low. Trail down stops to protect profits. A 50% Fibonacci retracement would drag December to 74.25. The sideways consolidation in live cattle in our opinion is the market taking a breath before the next leg up. Use this period to scale into longs. Stay in your lean hog puts; we’re looking for a trade under 74 cents in October. Same old tune gold held the 20 day MA again!

Clients are on the sidelines as we think you can flip a coin in gold presently. Clients remain long silver waiting for a confirmation of where from here. Within the next week we expect a $1-1.50 move one way. Being most of our clients are long we hope up. Can you say LIMIT UP in corn? Corn was higher by 8.85% today and we feel this is just the beginning. Look to lift hedges or add to longs on back and fill action into next week. The report was mildly bearish soybeans so expect lower trade; clients will look for long entries from lower levels…stay tuned. The Pound should move down; clients were a day early yesterday. We will be looking to re-establish shorts for clients in the coming sessions. We suggest waiting till next week on other crosses.

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