Commodity Currents: Which Way Wednesday.

Aug. 22, 2012 9:27 PM ET
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Contributor Since 2011

Spent my entire career on the trading floor of major futures exchange experiencing price discovery up close and quite personal and know first hand just how irrational these markets can be. Initially in futures, branched into the world of options trading learning various options strategies that can be implemented to generate profits regardless of market direction. While irrational markets can always become more irrational, they are too large to fade but their behavior can be anticipated with a certain degree of certainty so we can tailoring appropriate strategies in futures, options or combinations to specific market situations to minimize risk while increasing reward.

Coffee headed lower more likely to challenge 160.00 again after earlier failed rally attempts so have to see if buyers support to make another upside attempt as 164.80 seen short-term resistance with an inside day in Sugar after a rally attempt was stopped by 20.25 checking gains with no new lows either although a trade to 19.50 is not out of the question. Cocoa sold off now under 2,400 looking lower with significant support seen at 2,310 and resistance remains at 2,411 with Orange Juice continuing its advance trading at 121.85 as buyers return with next upside target just under 130.00 as 114.50 support and Cotton was fractionally lower but what is encouraging here is buyers supporting at 75.00 not waiting for a pullback to 73.88. Inside days for the grains with Corn ending the session fractionally lower but falling short of new highs with support seen at 811 with similar performance in Wheat also ending fractionally lower too after prior day's gains only 18 cents away from its support at 899 although Soybeans remains poised for new highs as its support is more distant at 1650. So far no real compelling evidence markets are ready to top but they are not in any hurry to breakout higher either. Hogs were slaughtered after prior rejection at 76.100 looking for 72.825 although nothing goes down forever no sign of a reversal either with Cattle continuing their decline heading toward support at 123.650 with resistance at 125.200. Crude continues to challenge 97.50 with more buying having little to show for it thus far but showing little signs of reversing with support remain unchallenged at 95.00 however Natural gas advanced looking for 2.857 again after buyers supported at 2.770 now putting 2.900 within reach so have to be quick to buy dips in this market as it appears to be looking for higher prices. Gold shined again building on earlier gains closing at 1,656.10 with next upside 1,662.10 and looking higher at this time with Silver approaching 30.00 with 31.415 next upside objective with Copper approaching 3.5040 with new support of 3.4235 as buyers return. Support for stocks held at 1408 keeping the sellers at bay as it will take a close under 1396.75 to risk the up term trend as the S&P500 remains within reach of new contract highs that were rejected last session with the Nasdaq 100 finding support at 2754.50 as well also remaining within reach of new highs but prices need to do more then just hold support however. 10yr Treasuries surged as buyers returned blowing through 133-00 stopping at 133-16 have to see if prices can push higher to 134-00 as 132-29 should support any pullbacks while no support for the Dollar falling below 82.00 with a vengeance as prices take the path of least resistance clearly lower with support seen at 81.255.


The risk of loss trading commodity futures contracts can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. Trading futures without protective stops or options is not recommended. Past performance is not necessarily indicative of future results.

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