Today's Gold trade settled $5.30 lower...

There was a very large trading range in the Globex over night trading session ($17.80) producing a High of $962.10 and low of $944.30.

The Gold market took a massive tumble due to $3.00 plus sell-off in the Crude Oil, a rise in the U.S Dollar index and China's key stock index dropped 6.74% And a 3 month closing low.

News that Chinese (state owned) companies could default on commodity derivatives...certainly sets a poor precedent.

The lack of volume is certainly adding to the wicked volatility.

Hopefully we will be out of this summer /Holiday market 8/8...

REPORTS...TUESDAY 9/1

CONSTRUCTION SPENDING..........9 am (cst)

EXISTING HOME SALES................9 am (cst)

THE FOLLOWING ARE MY SWING NUMBERS FOR 9/1/09

(DECEMBER GOLD)

2ND RESISTANCE...........$973.00

1ST RESISTANCE...........$966.00

PIVOT...........................$955.00

1ST SUPPORT................$948.00

2ND SUPPORT................$937.00

Mike Daly /Gold Specialist

PFG BEST

mdaly@pfgbest.com

877-294-4669
312-775-3014

Energies Look for guidance from the dollar and the stock market to help positioning in energies. What will be on our radar this week is buying December $75/80 call spreads for under $2000 for clients wishing to gain long exposure in Crude oil, if the support holds? As we wrote last week we would not suggest out right shorts in oil but to play the ratio we have suggested buying puts in oil and calls in natural gas expecting the spread to narrow. As for the distillates we see no viable play. We continue to try to catch a falling knife in natural gas which has yet to show signs of a bottom.

Livestock We will be advising clients to exit their October lean hogs calls but too remain long on their December contracts. Prices have risen 11% in the last 2 weeks and be may be due for a breather. We rarely trade feeder cattle or pork bellies and have no suggestions for the time being. October becomes the front month in live cattle this week. With prices trading at an exorbitant premium to cash expect December and the forward months to gain on October. We have clients positioned in options and futures to take advantage of this.

Financials

Stocks: Equities continue to climb the wall of worry but at this time we are more content on the sidelines than bucking a trend and getting short and certainly new long entries are late to the party. For stock investors who have not lightened up in their portfolio what are you waiting for?

Bonds: Prices in Treasuries could go either way and with the NFP # out on Friday we suggest to sit on your hands. Longer term as a position trade we still are suggesting long dated puts in the Euro-dollar and will be using rallies to position clients short futures.

Currencies I've been predicting a dollar rally for the past few weeks and as you know it has yet to materialize. I still feel it is in the cards as displayed by the sharp baffling rallies last week. This will not be a trade we take but it cannot be ignored as the effect on other markets. The main happenings this week will be 2 central bank meeting; with the RBA and ECB expected to keep rates as is at 3% and 1% respectively. Our only currency exposure with clients is short Aussie dollars in September which is more of a hedge. If we start to see a correction in commodities we will most likely move out to December.

Grains This summer's weather has been mostly favorable for corn and soybeans, but concerns remain that both crops may be vulnerable to yield losses this fall due to late planting. Crops look huge but there is virtually no margin for error. If we do in fact get an early freeze hello bull market. We have client's positioned long December corn and wheat and are currently carrying a loss. Before we commit more money we would like to see more of a conformation of a bottom. A base looks like it is being formed but the sentiment remains bearish on both crops. We may take a look at rough rice for clients because of the weather problems in India. We will need to do some further investigation being we do not trade this market frequently.

Softs There is more sideways action in the softs sector than trending markets with the exception of sugar which broke out to new contract highs last week. We were late getting back into sugar for clients but have a majority positioned long currently in the March 10' contracts. See previous comments. Sugar has both technical and fundamental support to see higher pricing and it has been almost twice its current price, albeit about 30 years ago. Outside of sugar our exposure with clients is short cocoa which longer term looks like a good trade if the dollar rallies but the October puts clients currently own go off Friday so we need a decline immediately. We have long entries in cotton, oj, and coffee on our radar but have yet to commit funds.

Metals We rarely trade copper but prices should be followed as it is a barometer of the overall economy. It will be a good litmus test to see how prices respond at $3.00. Gold is sending mixed signals and although longer term we expect much higher pricing in the immediate future I do not have a good feel. We would rather be long than short but we would pare your position size and make sure you have stop loses being a dollar rally could be painful. Furthermore if and when the stock market corrects will gold act as a flight to quality? Silver remains our favorite long trade. It may sound like a broken record so we will keep it short and sweet, clients will be positioned long silver for the next 2/3 years expecting $25+ ounce. This move will not happen overnight and it will not be in a straight line. Currently we suggest call spreads in December.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.

The Brazilian Securities, Commodities and Futures Exchange, BM&FBOVESPA, will host the 4th International Financial and Capital Markets Conference between August 27 and 30. The biennial event takes place in the city of Campos do Jordão, in São Paulo, Brazil. The Conference's objective is to promote derivatives and capital markets and to bring together in Brazil leading national and international speakers.

The Conference's official opening ceremony will take place on August 27, at 8 p.m., with speeches by BM&FBOVESPA's CEO, Edemir Pinto, and CME Group's CEO, Craig Donohue. The Exchange's Chairman, Arminio Fraga Neto, will deliver the event's closing speech on the 29 th, at 5:30 p.m.

The fourth edition of the Conference will feature as guest speakers: Raghuram Rajan, chief economist at the IMF from 2003 to 2007 and PhD from the Massachusetts Institute of Technology; David Altig, senior vice-president and director of research at the Federal Reserve Bank of Atlanta, PhD in Economics from Brown University and adjunct professor of Economics at the University of Chicago; Eraj Shirvani, president of the International Swaps and Derivatives Association - ISDA, managing director of Credit Suisse, in London, and head of fixed income for EMEA; and Maria Helena Santana, president of the Brazilian Securities and Exchange Commission (CVM) and responsible for the implementation of the Novo Mercado segment at the Exchange, among others.

The Conference brings together market professionals, academics, politicians, regulators, and the media to debate the current state of the financial markets and future perspectives. This year, discussion topics include: the importance of risk management post subprime crisis, market regulation and supervision, organized OTC derivatives, and future domestic and international economic outlook.

The 4th International Financial and Capital Markets Conference is the most important event of its kind in Latin America, past speakers have included: Nobel Prize winners Edmund Phelps, Myron Scholes, Paul Krugman, and Robert C. Merton; managing director of the IMF, Rodrigo de Rato y Figaredo; ex-directors of the IMF, Stanley Fischer and Anne O. Krueger; and Brazilian authorities such as former President, Fernando Henrique Cardoso; Henrique Meirelles, president of the Central Bank of Brazil; and Marcelo Fernandez Trindade, ex-president of the Brazilian Securities and Exchange Commission (CVM).

Why is it dangerous when most of the marketplace is leaning one way? Well, because most people lose money when they invest, so if you do what most do you will arrive at the same outcome. When the majority thinks the stock market is moving into a new bull market it is probably time for a correction, when most believe the US dollar is doomed it will presumably see higher ground, when the general market sentiment is that fed funds will be near zero indefinitely then we may actually see rates move higher sooner rather than later. The point being is when too many people lean in one direction it is generally a bad outcome. Think of yachtsman all running towards one side of a boat...you get the idea.

Financials

Stocks: Both the S&P and the Dow closed almost at the exact price where the week started, talk about a market that may be running on fumes. Sellers continue to emerge around 1010 to 1015 in the S&P and we will be sellers at those levels with them on behalf of clients. Continue to accumulate puts and hold for a break to 960 is how we see it. 958 serves as the 38.3% Fibonacci retracement, the 50 day moving average comes in at 940 in September. The Dow should find resistance at 9425 and support at 9175 and then 8975. In the words of Warren Buffet we suggest booking profits as "you never go broke by taking a profit." It may actually help you sleep better as well with less stock market exposure.

Bonds: The Fed concluded its 2 day meeting and kept rates unchanged at .125%, as expected. Their latest information "suggests that economic activity is leveling out." They also confirmed that they are in the process of purchasing $300 billion of Treasury securities and expect to be done by October. September 30-yr bonds traded higher by 3'19 points last week closing back over the 40 day moving average. This level at 117'20 should now act as support. Resistance comes in at 119'16 followed by 120'10.

September 10-yr notes were also higher last week, gaining 2'11.5 points. Support comes in at the 40 day moving average as well at 116'18 with resistance at 118'00 followed by 118'20. After last week's gains in the Euro-dollar look to buy more puts this week. This will be a reoccurring theme as we will continue to advise selling rallies for the next several quarters. Our favored play is at the money or just out of the money puts in June and September 10'.

Currencies

The Euro was marginally lower giving up 5 ticks as prices have been unable to get too far from the 20 day moving average on either side. Resistance comes in at 1.43/1.4325 with support between 1.4040 and 1.4070. Prices could go either way.

The Aussie was lower by 58 ticks last week as the high for the last 2 weeks has acted as significant resistance at .8450. Support is seen at .8175 followed by .8025. On the weekly chart it looks like we should see lower levels. We scratched for clients on the September 80 puts last week deciding to exit because the option premiums were not moving.

The Swissie was higher by 63 ticks last week. Resistance comes in at .9375 and then .9410 with support at .9225. No opinion at this point.

The Loonie experienced some weakness most likely from adverse action in the metals and energies giving up 164 ticks last week. Being we've had 2 consecutive negative weeks, it is most likely an interim top was made 2 weeks ago and we should see a short-term trade lower. Resistance comes in at .9250 with support at .9000 followed by .8850.

The Cable lost 171 ticks ending the week just above the 50% Fibonacci retracement level. Resistance is eyed at 1.6620 with support at 1.6360. I would rather be short than long but currently we have no client exposure.

Japan's central bank kept rates unchanged but did underline its cautious outlook for the economy saying conditions had stopped worsening but that unemployment would stay high and consumer spending low. The Yen gained just over 3 cents last week picking up almost 3% closing back above the 20 day moving average. If equities continue to falter we should see further upside. Support is seen at 1.0450 with resistance at 1.0650 and then 1.0750. Aggressive traders could buy September 103/106 call spreads for $2000 holding into expiration. If prices finish above 1.06 this spread will be worth $3750. Less aggressive traders could buy the September 110 calls for $375, risking the premium with a target of $675.

The Kiwi dollar gained 55 ticks last week but prices are looking tired. We expect a down move but will be watching from the sidelines. Resistance is at last week's high at .6879 with support at .6675.

The US dollar was higher by 17.5 ticks last week and has now been positive for 2 weeks in a row for the first time since April. Support is seen at last week's low at 78.30 with resistance at 79.10 and then 79.60. Tough to say but if equities trade lower money could flow back into the dollar. Though we have no exposure we have a bullish bias.

Metals

December gold was lower by $7.90 last week as gold movement, at least for the time being, seems to be governed by outside markets. Resistance comes in between $962/965 with support at $940 and the $930. We don't have a good feel either way so we would caution any exposure. Seasonally this is a strong period for gold but that alone is not a compelling enough reason for my clients to be long. In the past 9 years having long exposure in gold from late July to early September has been a profitable trade. Past performance is not indicative of future results.

September silver was higher by 16 cents last week making last week the 5th consecutive positive week. Resistance comes in between $15.10/15.20 with support at the 50 day moving average at $14.00 followed by the 50% Fibonacci retracement level at $13.75. We're advising clients to buy December $3 call spreads and prefer silver to gold. The ratio we have spoken of for months now currently sits at 65:1. At $1000 gold, if we were to get back to historical norms, silver would be priced closer to $30/ounce. You tell me what metal you would rather own?

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Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.

After a slow start to the news week, traders were able to gnaw their teeth on this afternoons 3-year note auction. However, with the 10 and 30-year auctions and the FOMC interest rate decision looming, the market is bracing itself for volatility.

Today's auction went relatively well; $37 billion in 3-year notes were met with a bid to cover of 2.89 and a lower than expected yield of 1.78%. Additionally, foreign buyers stepped up their game; the indirect bidder participation was 62.5%.

Much of the recent buying can likely be attributed to short covering ahead of event risk but that doesn't mean that the move won't continue. I don't see any significant resistance in the long bond until 118'18 but 121 doesn't seem unlikely in the coming week or so. I have been noting seasonal strength during this time of year and caution that fundamentals are often overlooked. Accordingly, traders should hold an upside bias. That is not to say that the short side of the market is off limits, but traders must be patient in their entry to reduce the odds of being caught off guard. Meanwhile, the mid-116's are pivotal for the note. It will likely take a close above 116'18 to keep the bulls in control of the immediate future. Next resistance lies at 117'20.

It always amazes me how short-term investors' memories are. There is chatter of improving U.S. and world economies, which we feel is way too premature. Corporations are reporting optimistic numbers but could that be because expectations were so low? We've lost 2 million jobs in the last 6 months and because unemployment dropped 0.1%, which I still doubt is the case, it is supposed to be viewed as positive? Commodities are moving higher and this signals a recovery...I don't think so. Treasuries and equities are trading in tandem as opposed to inversely, this will not last. The dollar is not being sought out as the fear trade and it actually rallied on positive economic news? As my basketball coach used to say, sometimes the best offense is a good defense.

Even after the recent market turmoil it appears investors still have an appetite for risk. Whether the risk taking is misguided is debatable, but the reality is if investors are more informed about the inherent risk they may be more comfortable taking risk. Though there still seems to be more questions than answers for investors to earn above average returns, they may need to be willing to take above average risks. That is not to say the stock market alone, real estate, bonds, or even commodities should be your sole focus it just means that investors need to educate themselves on the unique risks for each asset class and really ask themselves what type of beta they can handle in their portfolio. My suggestion would be to consult a professional in the chosen asset class that interests you and align yourself with someone that has a comparable take on the markets.