From indices to energies, metals to grains today may mark a key reversal day…stay tuned. As of this post Crude oil is down 1.20% but almost $2.50 below its intra-day high. We’ve suggested exiting longs and as we said yesterday some aggressive clients have started initiating short positions. On follow thru to the downside tomorrow we could see prices in the coming sessions trade back to the mid $80′s. A 50% Fibonacci retracement drags prices in January back to $85.05. On a $3-4 move lower in Crude expect the distillates to give back 12-15 cents. Natural gas failed to get thru the 100 day MA, we suggest booking profits if you have them in longs and moving to the sidelines. A failed rally in the indices today but it is too early to say an interim top is in place. The next few days a direction should be determined but we feel it is a coin toss so do not wish to be involved with clients.
The 20 day MA remains the pivot point in the dollar index; at 79.50 in the December contract. Depending on the dollar's direction we suggest trading the Euro, Pound, or Swissie in the opposite direction. At the moment we have a bullish bias.
Live cattle are finally cooperating trading down nearly 1.7% today. If the 20 day MA gives way in the February contract in the coming sessions at 104.55 expect the selling to intensify. A failed rally and potential reversal in the metals; copper 11 cents off its highs, gold $30 and silver nearly $1.50. IF this is not a one day event and a true correction our downside targets would be $1330 in February gold and $27 in March silver. Aggressive traders were likely stopped again at a loss on their buys in Treasuries. Step away and lick your wounds as this is two losers in as many weeks.
At the moment we continue to suggest buying dips in agriculture but on a break in the coming sessions there would be chart damage so stay on top of your positions. Currently clients are only lightly long corn, with no soybeans or wheat exposure. Wait for the dust to settle in the softs complex…we should have some fresh trade suggestions in the coming days. We just missed our exit in longs for clients in March sugar. On a trade in the futures back near 29.50 in March we may have to adjust their profit objective.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.