Inflection Point

Energy: Light volume can exaggerate moves so let’s see what happens the remainder of the week. $100 was rejected in November Crude oil futures with a near $5 trading range in today’s action. A close under $96.50 puts November back under the trend line. I see support at $94.50 followed by $91. RBOB lost nearly 3% trading as lows as 2.78…16 cents off its highs. This was the first settlement under the 18 day MA since late June. Assuming an interim high is in a 38.2$ Fibonacci retracement puts November just under $2.65. Heating oil lost 2.7% to close at a 1 week low. Like RBOB it is too early to call a top but price action if confirmed in the coming sessions should lead to a leg lower. Solid support is not seen for another 20 cents. Natural gas closed lower for the third consecutive session. If November breaks $3 the $2.85 should come into play in my opinion.
Stock Indices: Inside day in stocks with a number of market participants off with the Jewish holiday. Lest see what the rest of the week brings. If by mid-week futures cannot take our 13600 in the Dow and 1480 in the S&P I would say an interim high was in. I’m waiting for a sign but on this I’d be willing to gain bearish exposure with clients. Between now and then lighten up on longs and book a profit for crying out loud.
Metals: For three sessions December gold has been unable to settle above $1775 losing .70% today. This week could be a turning point as prices may finally correct. A 38.2% Fibonacci retracement puts December back at $1685. December silver futures have lost ground the last 2 days with prices approximately 85 cents off their highs from Friday. Like gold we’ve seen a major run of late so maybe some back and fill action to come. While bullish medium to longer term do not rule out a trade back under $32/ounce in the short run. The biggest movers in this complex today were palladium and platinum both losing nearly 3% as a I expect these metals to continue to pressure the entire complex.
Softs: Cocoa lost 2.2% to close near 1 week lows. A breach of 2550 should open the flood gates and get price back near my target of 2450. March 13′ sugar has gained 6 out of the last 7 sessions as prices are approaching 21 cents. I like bullish exposure thinking a trade over the 100 day MA is in the near future. Prices in cotton remain above the 100 day MA but before we reach the apex which will be this week expect a beak out…my bias remains lower. Coffee lost 3% but remains slightly above its 100 day MA. On a breach of $1.73 in early dealings tomorrow approach bearish trade. My suggestion is bearish ratio spreads.
Treasuries: 30-yr bonds gained for the first time in 10 trading days. A bounce may play out but as long as December remains under 147’16 I’d remain in bearish trade. 10-yr notes were slightly higher bouncing off the same support that held last Friday. Close out your December NOB spreads and look to re-enter as the spread widens back to previous levels.
Livestock: December live cattle broke down 1.1% to complete a 38.2% Fibonacci retracement on its lows. I like bearish exposure targeting $1.25 on this contract. November feeder cattle remain above their 9 day MA but I expect that to be short lived. Traders can gain exposure via put options looking to get in futures on a confirmation in the coming sessions. As long as lean hogs remain above their 20 day MA I like bullish trade. December futures should see a trade north of 77 cents on this leg in my opinion.
Grains: December corn is decisively under its 50 day MA losing 4.3% today to drag prices to their lowest close since mid-July. Those patient enough to remain in the shorts are starting to reap the benefits. I see more downside as $7/7.20 is now within our sites. November soybeans were down 4% the daily trading limit of 70 cents. A 50% Fibonacci retracement is within pennies. The 50 day MA now comes into play roughly 40 cents lower. I’m bearish as long as pries are under $17/bushel. CBOT wheat lost 5% closing just below its 50 day MA. This level was support since wheat was trading at $6.40 on this contract. The next solid support is seen at $8.25/8.30 in December…expect it to be challenged.
Currencies: The dollar held at 79.00 but on light volume and an inside day so let’s see what the next few sessions bring. My suggestion is tighten up stops on any remaining longs in European crosses. As for the Commodity currencies aggressive players can scale into bearish trade with stops above the recent highs. The Yen should move lower as I am eyeing 1.2500 in December on this leg…trade accordingly. This was today’s chart of the day; weekly Japanese Yen.
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

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