Commodity Trader

Christmas Eve Rally

2009-12-24T19:45:18Z

This has been a very interesting week in the precious metals markets. Monday and Tuesday we experienced the continued U.S Dollar strength as we watched the Gold (Comex) trade as low as$1075.20 (12/22) and looking as if it would continue to drop like a stone. The U.S Dollar has been stellar since the December 4th's unemployment data and has also been fueled by the downgrading of Greece's credit status which has certainly put pressure on the entire European Union. Greece's deficit problems has forced investors to flock to the U.S Dollar as a safer haven. Since the U.S Dollar and the precious metals trade inversely (most of the time) the rush from investors to buy Dollars sent the Gold market south and sending the Gold "Bulls" running for cover.

This entire scenario changed Wednesday as reports out of Europe seem to signal the threat of a devastating financial breakdown in Greece had been reduced. This weakened the U.S Dollar versus the Euro and sent investors into the Gold and Silver markets as a safer haven and as a diversification away from the U.S Dollar. This trend continued on Thursday as the Comex Gold settled at $1104.80 or $29.60 higher than
Tuesday's low.

India's jewelers where buying Gold overnight ... (BARGAIN HUNTING)... There "wedding Season "lasts through January...The international press has reported that China has a huge demand for retail Gold.

Good news on the home front today as once again fewer Americans than predicted filed for jobless benefits and orders for durable goods rose. This translates into confidence for the expansion of our economy. It certainly looks like commercial spending is also coming back!

Today's Gold and Silver markets began reclaiming lost gains with the assistance of a stronger Crude oil market. Many international investors lack confidence in the U.S Dollar and have suggested this late U.S Dollar surge will not last.

Be very careful if you intend to trade the precious metals next week... It should be very "THIN" with "EXTREMELY LIGHT VOLUME" but as we all know the volatility will remain "HIGH"..... Always remember "THE MARKET IS ALWAYS RIGHT"

MERRY CHRISTMAS and HAPPY HOLIDAYS TO ALL.....

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-4669
312-775-3014
312-563-8029

*THERE IS EXREME RISK TRADING FUTURES,OPTIONS,AND FOREX*

Commodity Trading School Futures Market Summary

2009-12-23T14:39:03Z

SUMMARY OF UPCOMING DATA 12/22/09
8:30 AM US PERSONAL INCOME (0.5%)
9:55 AM US CONSUMER SENTIMENT (73.5)
10:00 AM US NEW HOME SALES (440K)
10:30 AM EIA PETROLEUM INVENTORY REPORT.
11:00 AM US 2, 5, 7 YEAR NOTE ANNOUCEMENTS

DATA RESULTS 12/21/09
US GDP-FINAL 3RD QUARTER (2.2%/2.7%)
US EXISTING HOME SALES (6.54 M/6.25 M)
FHFA HOUSE PRICE INDEX (0.6)

US DEBT REVIEW AND OUTLOOK

US 30 YEAR FUTURES continued to drop on Tuesday, as those taking part in the relatively light trading volumes focused on maintaining the "Santa Rally" with regards to equities, continuing to fuel support for economic recovery (and potential inflation) in 2010. The outlook continues to essentially do the work of the Fed by increasing interest rates as traders and investors continue to seek risk and returns composite with the potential rise in prices expected from the global recovery.

Markets focused on the positive side of data today, taking cues from the better than expected reading of US existing home sales while shrugging off the weaker than expected readings and revisions for US 3rd quarter GDP. The looming threat of new US debt supply continues to pressure prices, as traders await the release of figures for next week's US 2, 5, and 7 year note auctions. Many expect that the markets could stage of short covering rally near or after the release of the auction figures, as traders stage a "sell the rumor, buy the fact strategy" and square up short positions ahead of the Christmas holidays.

Technically, 30 year Treasury futures continue in a down trend, with 115-18 setting up as a downside level of support. Upside resistance on a short covering rally appears to set up at 116-23.

US EQUITY REVIEW AND OUTLOOK

US EQUITIES continued their cautious climb, trying to be good for the "Santa Rally". Elements that supported gains in the major averages included continued stabilization in the US Dollar and a better than expected reading on US home sales. The quietly optimistic mood was still strong enough to shrug off a downward revision to US GDP (Gross Domestic Product) and another downgrade of Greek Sovereign Debt.

Energy and technology stocks were among the best performing sectors of the session. Energy stocks gained after crude oil prices rebounded on short covering and perceptions of improving demand going into 2010, as well as having the OPEC decision out in the open. Technology stocks continue to gain global focus, as demonstrated by Google, which closed over $600.00 for the dirst time since early 2008.

Technically, S&P should continue to range trade, with 1118.00 as initial breakout point. Support for the range continues to hold at 1094.00. (click on the charts to enlarge).

Prepared by Rich Roscelli & Paul Brittain.

Please email questions or comments to rich@binvstgrp.com

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

China Secures Gas Supply From Turkmenistan: Who's the True Winner?

2009-12-23T12:06:05Z

On December 14, 2009, an inauguration took place that deserves more attention than it received because it marks an economic power shift to the benefit of three Central Asian countries and China and to the detriment of Russia. The presidents of China - Hu Jintao, Turkmenistan - Gurlanguly Berdymukhamedov, Kazakhstan - Nursultan Nazarbayev, and Uzbekistan -Islam Karimov, inaugurated the Central Asia-China gas pipeline that links Turkmenistan's natural gas fields on the Caspian Sea to the Western Chinese border in the Xinjiang province.

This pipeline then connects with the West-East Gas Pipeline that crosses China and supplies cities as far as Shanghai and Hong Kong. 13 billion cubic meters (bcm) are supposed to transit through this pipeline in 2010, 30bcm by the end of 2011 and over 40bcm by 2013. Ultimately that pipeline could supply China with more than half of China's present day natural gas consumption.

Diversification of gas export routes seen as a regional security factor

Most commentators and officials have stirred clear from saying openly that Russia is losing ground in Central Asia because of political sensitivities. Despite years of recurrent official declarations that there are no spheres of influence - with the word "influence" being astutely replaced by the word "interest" - there is a delicate balance of powers in the region with historic, cultural and economic ties that cannot be ignored. There is also the need to accommodate the growing interest in the region of new players such China, the United States and the European Union. Russia sees the region as its natural backyard but many countries no longer consider Russia as the most rewarding partner or one that should always have the upper hand.

Turkmenistan is the big winner with this new pipeline as this new export route for its gas production frees it from the diktats of Gazprom: about 70% of its natural gas production used to exit the country through the Gazprom network. Turkmen President Berdymukhamedov stated, "The successful implementation of this project could become a prototype for all international energy partnerships," adding that "this pipeline will have a positive impact across the entire region and beyond, and it will become a major contributing factor to security in Asia." Other winners are Uzbekistan and Kazakhstan that will also be able to supply the pipeline with their own gas production, notably from the Karachaganak, Kashagan and Tengiz fields in Kazakhstan.

The Central Asia-China gas pipeline is a US$7.3bn project, 1,833 km long with 188 km going through Turkmenistan, 530 from Uzbekistan to Kazakhstan, and 1,115 km from Kazakhstan to China. The West-East Gas Pipeline crossing China is over 4,500 km long, making of the joint pipelines the longest in the world.

A new natural gas player: Turkmenistan

In 2008 the independent British auditing company Gaffney, Cline & Associates Ltd was tasked with assessing the volumes of Turkmen gas reserves in the Yoloton-Osman fields. Despite allegations that Turkmen officials - which included the heads of Turkmengas, Turkmenneft and Turkmenneftegazstroy - misled the auditors by providing inaccurate inflated data, it remains reasonable to believe that Turkmenistan holds the 4th or 5th largest natural gas reserves in the world in light of regularly announced gas discoveries in regions with already proven reserves. President Berdymukhamedov himself sacked the Turkmen officials entangled in this scandal in October 2009.

The problem for Turkmenistan until now was that its export routes were limited as over 70% of its gas exports transited through Gazprom's pipelines. An explosion at a key pipeline in April 2009 resulted in bitter battles: Turkmenistan and Russia blaming each other as to the causes of the accident; Turkmenistan supposedly losing over $1 billion per month in revenues; Gazprom refusing to pay European market prices for Turkmen gas per a deal concluded when prices were higher; Turkmenistan announcing it would provide gas to Nabucco, the nemesis of Russian-sponsored South Stream pipeline; etc.

The recent report by Vedomosti that Gazprom plans to purchase "not more than" 10.5 bcm from Turkmenistan during 2010-2012 compared to the usual 50 billion bcm is the confirmation that Turkmenistan absolutely must diversify its export routes. The bringing online of this new pipeline could not have been timelier.

A crack in Gazprom's Hegemony

Gazprom has for many years monopolized gas supplies from Central Asia. With growing interest from China and Europe to diversify their gas supplies, Gazprom engaged in a risky pre-empting game consisting of securing supply agreements, notably with Central Asian countries, to cut the grass under the feet of European countries that have been looking at alternative supply routes bypassing Russia. This has proven to be a costly and risky game, notably with Turkmenistan, as world market prices and demand dropped and the contracted prices were higher than the prices Russia could reasonably resell the gas for. The game played also includes undermining the Nabucco pipeline.

Nabucco, a natural gas pipeline bypassing Russia and endorsed by European countries and the United States, is the perfect example of the power struggle at play: by securing large gas volumes from Turkmenistan and Azerbaijan, the financial viability of Nabucco comes into doubt as it is not clear that there would be enough gas available to supply both Nabucco and the South Stream pipeline supported by Gazprom. Turkmenistan, bitterly annoyed by Gazprom running away from its contractual obligations, announced in July 2009 its willingness to supply Nabucco. Azerbaijan had also conveyed its willingness to supply both pipelines, though is recently playing harder to get in light of the recent Turkey-Armenia rapprochement.

China's steady approach to diversifying its suppliers for everything

China is very well aware that its economic growth and even domestic stability is conditioned upon securing supply chains through long-term agreements. One step at a time China is securing its supply of staple commodities, minerals and energy supplies. To further secure its position in the supply country, China offers loans and technical expertise in addition to gaining the management authority to run the local operations. China has become one of Africa's top three trading partners and several countries, no matter how unsavoury and corrupt they may be, became important trading partners like Sudan, which exports a majority of its oil to China, while others guarantee China's food supply. In November 2009, the China Metallurgical Group bought for US$3 billion a 30-year lease to exploit copper deposits in Afghanistan further demonstrating that no country, no matter how troubled it is, is off-limit.

Money helps shift the balance of power

As Cicero's saying goes "nervi bellorum pecuniae" (money is the sinews of war) and in the commercial wars that are being fought, China has huge financial reserves that it can put in the balance, notably through its state-run financial institutions such as the China Development Bank (CDB). The CDB played a critical role in financing the construction of the US$6.7bn Kazakh section, the largest and most expensive chunk of the pipeline. The China National Petroleum Corporation (CNPC) acquired 50% of MangistauMunaiGas in April 2009 for US$2.6bn and the China Investment Corporation acquired about 11% of KazMunaiGas Exploration & Production in September 2009 for about US$939 million.

China has a financial advantage at a time of liquidity shortages: its ability to instruct it state-owned companies to work on specific projects and to coordinate the involvement of all possible Chinese players (finance providers, construction and management companies, etc.) enables China to strategically position itself at every level of the food chain. For instance in Central Asia, China acquired shares in companies that exploit gas fields (MangistauMunaiGas and KazMunaiGas E & P); China got the rights to exploit fields in Turkmenistan when other countries are still struggling to obtain such rights; China financed and helped in the construction of the pipelines running from the fields (CNPC, China Petroleum Pipeline Bureau and China Petroleum Engineering and Construction Corporation); and China purchases the gas production.

China is at an advantage compared to its American or European competitors as the US has no state companies while Europe's few state companies are held to the same standards as private sector companies and cannot as easily be told what to do. Also, China's financial support has no string attached beyond a long-term commitment for guaranteed supply. The United States or members of the European Union often condition the granting of financing to the improvement of democracy and human rights which is seen by Central Asian countries as an intolerable mingling with domestic issues. Furthermore, China has a lot of state companies that the government can "instruct" to work on a project such as a pipeline. CNPC was the leading operator of the Central Asia-China pipeline project, working closely with each country towards its completion.

This conjunction of companies "ready-to-go" with guaranteed financing and full government endorsement and support gives China a competitive edge. However, moving away from Russia's arms into China's is not a love story but more a marriage of convenience. Concerns exist over China's growing influence and its lower environmental standards. Central Asian countries remain interested in American and European commercial involvement to see it have a balancing role. In addition US and European companies implement good business practices such as transparency, accountability, sanctity of contracts, rule of law, etc. that would greatly benefit Central Asia that is plagued by corruption.

One successful example of mutually beneficial regional collaboration

The fact that Turkmenistan, Uzbekistan and Kazakhstan managed to coordinate their efforts towards the common goal of building a pipeline that will serve them all is an achievement. China played an instrumental role as conductor in making it happen. President Hu Jintao himself underlined the benefits of mutual collaboration through a win-win situation, stating "in line with the principle of mutual complementarity, mutual benefit, equality and win-win cooperation, the four countries have actively carried out energy cooperation and achieved fruitful results."

This said, regional cooperation is far from being a reality in Central Asia despite the well-recognized benefits of cross-border commercial activities. In the end, though Turkmenistan is definitely an important winner with this new pipeline, China can be seen as the ultimate winner by having not only secured a very valuable route for its gas supply, but also by having reinforced its image as a regional player that managed to get three Central Asian countries work towards a mutual beneficial goal, namely a new export route for their gas.

The additional bargaining power Turkmenistan, Uzbekistan and Kazakhstan gained from diversifying their energy export routes, thanks to the Chinese assistance, strengthens their political and economic independence and reinforces regional stability and security and that achievement deserves recognition.

This article was written by Philip H. de Leon for OilPrice.com who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at: www.oilprice.com

Golden Roller-Coaster

2009-12-17T23:29:36Z

The precious metals have experienced a roller-coaster ride encompassing huge volatile swings and technical breakouts. The volatility has remained high however, the volume is decreasing as many Gold bugs have packed it in for the year. The economic news
for the week has favored the U.S Dollar and boosting it to three month high's. Despite the FOMC decision to keep U.S Interest rates unchanged there was a "hint" regarding a possible rate hike in the near future. This news coupled with Standard & Poor's decision to downgrade Greece's credit rating due to its deficit situation sent investors scrambling to buy the U.S Dollar. This reaction caused an inverse reaction to the precious metals and causing another volatile sell-off causing the February (GLOBEX) market to dip below the $1100.00 level. Research tells me the jewelers of India have expressed huge interest in buying Gold at the $1100.00 and below to fill their demand for the ongoing "Wedding Season" ornamentation.

China is expected to produce over 300 metric tons of Gold again this year. They announced recently that it wants to build up its Gold reserves to 10,000 tons over the next decade. This should be attainable especially when you consider they are the world's largest Gold producer and they are not exporting any!

As the price of Gold continues to fall it offers an opportunity (in my opinion) for investors to invest in physical Gold and silver to diversify against possible inflationary periods ahead. The drop in price certainly has become an answer to the many "Brides to be" in India's prayers. Their culture appreciates the "BIGGER IS BETTER' philosophy when purchasing Gold jewelry and ornamentation during their Festival and wedding seasons.

Since December 4th and the positive unemployment numbers....(taking the unemployment rate from 10.2% down to 10.0%) the Gold market has dropped over $ 130.00 in a much needed correction. There was no doubt the Gold and Silver markets were both technically over-bought. The market was running on fumes as it was trading around the $1220.00 level. There was no momentum and as seasoned Gold trader I realize markets rarely rally when everyone is long. The Silver market has enjoyed the success of Gold during this year long rally and certainly has out performed Gold on the year thanks to its duo metal status..(precious metal /industrial metal)

The December Gold has rallied from a low of $810.00 on 1/15 to a high of $1226.40 on 12/03 The December Silver has rallied from $10.39 on 1/15 to a high of $19.43 on 12/02....This year long rally was primarily due to the weakness and inability of the U.S Dollar to maintain any momentum. This recent correction from December 4th is due to the stellar strength of the Dollar.

As a Gold trader you must ask the question....Can the U.S Dollar maintain this momentum?

Give me a call...lets talk Gold .....

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-4669
312-563-8029
312-775-3014

*There is extreme risk trading futures, options, and forex

March Corn Futures Trapped in Choppy Trading Range

2009-12-16T16:32:15Z

March corn futures at the Chicago Board of Trade are presently trapped right in the middle of a 2.5-month-old trading range at higher levels on the daily bar chart. That trading range is bound by strong overhead technical resistance at the November high of $4.25 a bushel and by strong technical support at the November low of $3.72 1/2. The direction in which March corn "breaks out" of the aforementioned trading range on the daily bar chart will likely be the direction of the next significant price trend in the corn market.

The corn market bulls have recently gained some fresh upside technical momentum by rallying March futures prices from the December low of $3.79 and pushing and closing prices above what was major psychological resistance at the $4.00 level. March corn on Monday hit a fresh two-week high of $4.10. Near-term chart resistance for March corn futures is located at Tuesday's overnight high of $4.08 1/2, at $4.10, at $4.12 1/2 and then at $4.15. Near-term chart support is located at $4.05, at $4.00, at $3.96 and then at $3.90. Stay tuned! Jim Wyckoff

Major Powers Follow Different Paths to Same Energy Security End Game

2009-12-14T19:54:13Z

China's completion of an historic natural gas pipeline with Kazakhstan bypassing Russia this week tightens the Asian behemoth's grip on energy resources needed to fuel a burgeoning economy, a desire also forcing it on a quest for oil and gas wealth in other corners of the globe.

China is not alone in this scramble for energy security. Hungry for oil and gas, world powers like Russia and the United States are also relying on different strategies to grab resource treasures but their efforts have raised questions about conflicts down the road.

The U.S. Energy Information Administration describes China as the second largest energy consumer behind the United States. Taking advantage of the world's financial crisis, the Asian powerhouse has tapped currency reserves to invest in both Russia and Central Asia, helping to construct power plants and other domestic infrastructure in return for long-term oil and gas supplies, said Ben Montalbano, a senior research analyst at the Washington-based Energy Policy Research Foundation.

Lacking energy reserves, China has been "working hard to lock in" investments in Africa, Central Asia and Venezuela, Montalbano told OilPrice.com. The country has also sought natural gas to satisfy increasing consumption and built many liquefied natural gas receiving terminals over the last year, he added.

"Cut off from African natural resources . . . China's growth stops," warned Peter Pham, director of the Africa Project at the New York-based National Committee on American Foreign Policy and an associate professor at James Madison University in Harrisonburg, Virginia.

This intensive bid for energy, however, has caused friction with the world community. Under an investment strategy in Africa, China "wins over very easily governing elites but doesn't necessarily win over the populace," Pham charged.

Chinese state-owned companies tend not to invest in exploration but prefer to offer "inducements," he said. China's offer of multibillion-dollar credit facilities to Angola was pivotal for the African nation to get "off the hook" from negotiating with the International Monetary Fund and the World Bank to meet "serious reform and certain conditions" before the organizations granted such facilities, he argued. China then bought stakes from the Angolan state oil company, he said.

China, moreover, has helped the Khartoum government to evade United Nations sanctions by assisting in the building of at least three weapons factories in Sudan, he said.

Not to be outdone, Russia has returned to Africa in "considerable force" pursuing natural resources in part to recover its "great power status," said Pham. Russian firms are trying to "lock in partnerships" with resource producers to form, for example, the "stream of a natural gas OPEC," he said.

Russia holds the world's largest natural gas reserves and the eighth largest oil reserves, according to the U.S. Energy Information Administration. Next year, its federal budget will be nearly 50 percent derived from oil and gas exports, emphasizing a reliance on gas exports to "feed the budget," Montalbano of the Energy Policy Research Foundation told OilPrice.com. To some extent, China and Russia have worked together in the oil and gas domain. Earlier this year, China announced a $25-billion loan to Russian firms in return for a 20-year supply of crude oil.

Russia is not the "behemoth of financial reserves" it was two years ago and has a "fairly weak" banking system and industry, Montalbano maintained. While the country is discussing certain projects with Iran and potentially with Iraq, it is mainly concerned with opening up huge Arctic gas fields because its existing fields are declining, he noted.

Russia and other northern countries have increasingly turned to the melting Arctic but the region is "still up for delineation," said Boyko Nitzov, director of the Eurasia Energy Center at the Atlantic Council in Washington. "The Arctic is still fairly off limits for large-scale production of oil and gas" and difficult to access especially during the winter, Nitzov explained.

For American oil companies, an over-reliance on the Middle East for energy needs has shifted its attention to Africa, a major energy supplier over the last several years edging out the Persian Gulf in energy imports to the United States, Pham explained. U.S. firms tend to forge production-sharing agreements or explore resource development, but lack
carte blanche in their pursuit of oil riches in places like Africa due to U.S. government sanctions and public pressure, he said. This puts the United States at "a slight disadvantage" relative to Russia and China, he added.

Competition for energy assets will probably not lead to open conflict but rather to increasing political tension, predicted Africa expert Pham. Leading African organizations, Europe and the United States never recognized Guinea's military coup last year, which led to a subsequent massacre of opposition members. Yet China signed a deal with the military junta, risking a perception as a "rogue operator in the single-minded pursuit of resources," he warned.

Although Russia and China, meanwhile, have both benefited from joint oil and gas investments, making conflict doubtful in the forseeable future, "10, 20 years down the road, who knows," Montalbano added.

This article was written by Fawzia Sheikh of OilPrice.com who focus on Fossil Fuels, Alternative Energy, Metals, Oil Prices and Geopolitics. To find out more visit their website at: http://www.oilprice.com

Dollar Rallies Alongside Commodities

2009-12-11T21:24:28Z

After 8 days of selling Crude is now oversold with the daily stochastic at 10 & 15 in the January contract. Clients have been advised to buy March $5 call spreads as we expect a $5 move higher in the coming weeks. Natural gas is too volatile for our liking currently. We will be looking to buy if prices come down 50 plus cents from current levels at the beginning of 2010. Nice follow through in sugar as a breakout is confirmed; sugar has appreciated 8.5% in the last 2 sessions to trade to it's highest level in 7 weeks. Clients are positioned long March and May, we've suggested futures and options.

Play the breakout in equities expecting a 5% move in the direction of the break out. As we've recently said if February gold fails to penetrate $1100 in the coming sessions we would suggest lightly scaling back into longs and/or pricing out $100 and $150 call spreads. The line in the sand in March silver we at $17. We have clients in call spreads and will be getting long futures early next week with tight stops if the current lows hold. Corn took out the 20 day moving average with no problem and could over take the 100 day next week; in March at $407′6. We have clients long March and May and are first expecting $4.25 and then maybe $4.50, especially if the FUNDS get interested. Soybeans and wheat were also gainers on the day but corn remains the stand out.

Short Euro-dollars and have a small position into the FOMC meeting next week. Support held on 30-yr bonds and on a trade higher clients should be able to recoup some value on their NOB spreads which have been loosing in recent sessions. Just when you where ready to throw in the towel on live cattle longs we got MOOving to the upside with a 1.5% move today on good volumes. If prices are able to over take the 20 day moving average this could turn out to be a hell of a trade; in February at 83.45.

The dollar has had a nice run and shorts are being squeezed but what is all the fuss? The rally is just over 3%...big deal. The real story is the velocity and how one sided this trade was. The Euro-currency and Pound should suffer the most on a continued dollar rally though we think the bulk of the move has already happened. If we were not leaving next week we would be looking for long entries in the yen for clients. We tried today and lost $225 on a futures.

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

Commodity Trading School Futures Market Summary

2009-12-10T23:29:22Z

SUMMARY OF UPCOMING DATA 12/11/09
8:30 am US RETAIL SALES (0.9%), EX AUTOS (0.5%)
US IMPORT/EXPORT PRICES
9:55 AM US CONSUMER SENTIMENT (68.2)
10:00 AM US BUSINESS INVENTORIES (-0.2)

DATA RESULTS 12/10/09
US INTERNATIONAL TRADE (-32.9 B VS.-$36.4 B)
WEEKLY JOBLESS CLAIMS (474 K VS. 460 K)
EIA INVENTORY # NAT GAS. (-64 BCF)
US 30 YEAR BOND AUCTION ($13B) BID TO COVER 2.45, YIELD AWARDED 4.520 %

U.S. Debt Review and Outlook

US TREASURIES continued their slide on Thursday, with the long end of the yield curve hitting the worst levels of the session after results of the US 30 year Treasury auction posted disappointing results. The weak bid to cover of 2.45 continued to demonstrate investors continued reluctance to commit funds for extended periods in the wake of potential recovery and inflation due to the record liquidity which has been pumped into the market place. The yield spread between US 2 and 30 year debt widened to its greatest level since 1980 (remember interest rates at that time?).

Treasuries backed off their lows as shorts took profit, applying the "sell the rumor, buy the fact" strategy in a classic pattern. Experience suggests that traders may be expecting continuation of short covering going into the weekend as trading volumes decline going into the end of the year.

Technically, 30 year futures broke through bottom end of range at 118-24, moving through downside target of 118-04. New resistance sets up at 118-28, with 119-11 setting up as possible upside target. Remain bearish on the contract, with 117-17 setting up to next target on the downside. A break of this level could lead to move down to 116-12.

U.S. Equity Review and Outlook

US EQUITIES recovered ground, following European indices higher, as the markets appeared to digest sovereign debt concerns for the time being. Trading volumes were extremely light as end of year squaring of positions and short term trades take hold of market sentiment.

Thursday's trading activity was defined by tight range trading, covering of recent short positions, and conservative bargain hunting. It appears that the lack of volume allowed for buyers to try and keep the tradition of end of year optimism alive. Data outlook was mixed today, as a jump in weekly jobless claims was offset by a lower US trade deficit figure. A report on US net worth of households rose for the second time in the 3rd quarter.

Most sectors were up on bargain hunting. The major exception was the financial sector, as uncertainty dogged the sector as traders await details on Citigroup's tender of new equity to raise funds to pay back its TARP debt. The uncertainty centers on the amount of new equity or "How I should stop worrying and see how much my Citigroup shares will be diluted (or hobbled).

Equity futures undergo roll on Friday, with March futures on the major indices going lead.

Technically, December S&P futures traded to initial resistance level of 1103.00. Expecting market to enter period of narrowing range. Still see 1113.00 as a key resistance level, with a break allowing for potential try at 1122.00. Support sets up at 1092.00, with 1087.00 downside target.

Prepared by Rich Roscelli & Paul Brittain.
Please email questions or comments to: rich@binvstgrp.com

Live Cattle Hover Near Contract Low

2009-12-09T21:34:37Z

click on the chart to enlarge

February live cattle futures on the Chicago Mercantile Exchange last week hit a fresh contract low of $82.75. Prices then saw a tepid short-covering bounce, only to back off again and presently hover near the contract low. Prices are presently in a six-week-old downtrend on the daily bar chart. A close below solid technical support at $82.75 in February live cattle would produce more chart damage to suggest another leg down in prices in the near term. The downside technical objective for the bears would then be pushing and closing prices below strong chart support at the $80.00 level.

For the cattle market bulls to begin to regain fresh upside technical momentum to suggest that a market bottom is in place, they will have to push and close February futures prices above strong technical resistance at the October low of $84.25. Below that level does lie chart resistance at $83.55, at this week's high of $83.85 and then at $84.00. My bias is that the cattle futures market is close to marking a market bottom, from a time perspective, but a fresh spike lower cannot be ruled out. Stay tuned! Jim Wyckoff

As the Greenback Turns

2009-12-08T21:21:10Z

Five consecutive lower days in Crude oil; on a breach of $72 in January a trade down to the September lows could be in the cards. Look for a higher trade in the dollar for guidance. We would advise booking profits in both futures and options on all remaining natural gas. Ideally traders took advantage of the 15% appreciation in the last 3 days. Soft commodities were lower across the board. Clients remain long sugar and short OJ.
We most likely will be looking for buys in coffee and cotton but not until next year.

Equity markets are lower as of this post with all US markets trading below the 20 day moving averages. We suspect lower action but are content on the sidelines with clients. For those who are short we would use objectives as follows: S&P 1060, Dow 9,900 and NASDAQ 1625. Another painful day for bulls in the metal complex with gold down by $30 plus and silver fading by 75 cents. An outside day formed in February gold that could carry prices down to $1100. We would suggest starting to scale into longs at that level. Buying $100 & $150 call spreads should also be on your radar. We are nearing a level that we would be comfortable getting long silver futures for clients. We should see some good resistance in the March contract between $17/17.40. Clients who have already purchased $2 call spreads hold your positions.

The KCBOT/CBOT wheat spread was a slight gainer; we suggest this spread as opposed to outrights until we see signs of an interim bottom. We feel March and May corn is a buy at these levels; March closed at $3.85 and May at $3.96. USDA report out Thursday morning. We entered March NOB spreads for clients today. We expect 30-yr bonds to gain on 10-yr notes for those not familiar with this trade. A trade over 122′00 in March 30-yr bonds should get clients the profit we're looking for. Live cattle were lower on the day, clients may get stopped on their December longs as we have stop loss orders just under the recent lows. We're still suggesting long exposure in February futures and options. 5 positive days in a row now in the dollar with prices gaining 4%.

We still like the idea of selling rallies in the Pound and Euro; as objectives as long as the dollar rally persists the Cable could see 1.6100 and the Euro could see 1.4500. Currency traders who bought the yen (see yesterday's recommendation) should start looking for an exit. We expect to be exiting around 1.14/1.1450 in the next few sessions.

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

Oversold Bounce but Buyers Reluctant

2009-12-07T22:30:45Z

An overnight global bid kept the Treasury complex in positive territory for much of the session but the buying seemed to be of a "dead cat bounce" nature; another round of auctions have supply on the minds of traders.

It was a slow news day, making Ben Bernanke's speech the most exciting event. The Fed Chairman made it clear that "rates will remain low for an extended period". He added that the timing of a rate tightening would be a "challenge" while hinting that inflation doesn't seem to be an immediate factor.

The commodity and financial markets have been relying on the U.S. dollar for guidance but recent volatility in the greenback has made for highly unpredictable markets. The buck traded in a 75ish point range but settled only moderately lower on the day. Bonds and notes have been the one complex that haven't chosen a correlation with the dollar. The mood of the markets play a large role in the perception of currency pricing and its effect on Treasuries. At times a weaker dollar is said to put U.S. securities on discount and are supportive to pricing but in less optimistic times a struggling greenback tests the nerves of those already heavily long dollar denominated assets. One big seller could change the market environment in a split second. Confusing? Yes it is....now more than ever, this is a chart reading market.

We are women and therefore are allowed to change our mind at the blink of an eye; nevertheless, the game plan for the next few months will be to maintain a bullish bias. This assumption is based on our technical and seasonal analysis as well as "gut". Market fundamentals might not matter in the next few months, so try to avoid "marrying" a well-researched position.

On Friday we noted the chance of an oversold bounce early this week, and today fit the bill. However, as long as the 30-year bond holds below 120 we feel as though the odds favor a move to the 117 area. Similarly, notes face resistance near the mid-118's and failure at this level should trigger selling that brings the March 10-year note futures contract near 117.

Treasury Bond and Note Option Trading Recommendations

**There is unlimited risk in naked option selling.

November 15 - Sell the January Bond 125 calls for 20 ticks or better.
· Our clients were recommended to cancel this order

November 30 - We recommended to sell the February Bond 128 calls for about 25 ticks (fills were reported from 24 to 25).
· December 3 - Our clients were advised to buy these back on this morning's dip. Fills ranged from 9 to 10 ticks. A fill at 9 on the exit, yields a profit of 16 ticks ($250) for those filled at 25 on the way in before commissions and fees. If you would like to receive these recommendations and adjustments in a timely manner, open an account with DeCarley Trading.

Treasury Bond and Note Futures Trading Recommendations

**There is unlimited risk in trading futures.

Flat

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

www.CarleyGarnerTrading.com
www.DeCarleyTrading.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Weekly Metals Report

2009-12-03T20:55:05Z

So far this week we have seen all-time highs ($1227.50) in the Gold market and watched Silver trade over $19.40 per ounce. The Gold market has been fueled by an influx of speculators, hedge funds and central banks all seeking to add to their positions
and reserves. Many countries are moving out of their U.S Dollar reserves and into precious metals "safe havens" to protect their assets against possible global inflation. Recently we have witnessed the purchase of IMF Bullion from the central banks of India (200 metric tons), Sri Lanka (10 metric tons) and Mauritius (2 metric tons). This may only be the tip of the iceberg as India, China, and Russia to name a few have expressed interest in building their reserves as the U.S Dollar continues its struggle against
the basket of currencies.

"Dubai's debt crisis could be China's opportunity to snap up Gold and Oil assets" a senior Chinese official was quoted as saying Monday. This emphasis the realization the danger for investors is not just not just in corporations it is also exists in Nations. Dubai has asked for "debt freeze" or extension in order to repay $60 Billion Dollars it owes its creditors.

The gold market has rallied over 35% on the year thus far. This is a direct result of the diversification away from the Dollar. With the lack of Dollar confidence, ongoing recession and world wide stock market fluctuations it certainly makes sense for investors to seek safer havens.

The silver market has certainly profited from the recent Gold rally as Silver is trading over $19.40 per ounce. As jewelers are reporting a higher demand for Silver due to the high price of Gold. Also there appears investors are taking physical delivery of both
Gold and Silver as an alternative or a hedge to trading the Stock market. This shows a lack of trust or confidence in investments that are not tangible. Silver offers a better bang for the buck. (19.40 oz. versus $1200.00 oz. Gold)

We are also still in the heart of India's wedding season which extends to the end of January and as they consume approximately 20% of the world's bullion I expect them to purchase their traditional Gold ornaments however, using less Gold. (instead of 22 carats / using 18 carat)

As we are approaching year end it is important to realize there may be some profit taking from speculators and hedge fund managers alike as they prefer to end the year in the black. There are many "BUBBLE" theorists and market technicians claiming how "OVERBOUGHT' the market has become. Actually I believe them to be correct however, how big will this bubble become and until the Dollar can gather and sustain momentum
(FOMC RATE HIKE) the seasoned investor will continue to move into safer havens or "hard assets" such as precious metals.

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com
877-294-3014
312-294-4669
312-563-8029

*there is EXTREME risk trading futures, options, and forex*

Choppy Up-Trend Still in Place in Chicago Wheat

2009-12-02T20:49:59Z

March soft red winter wheat futures at the Chicago Board of Trade are presently in a choppy, two-month-old uptrend on the daily bar chart. However, stiff technical resistance lies overhead, at the November high of $6.04 3/4 a bushel. A close above that key technical resistance level would provide the wheat market bulls with fresh upside near-term technical momentum to then suggest a challenge of major psychological resistance of $7.00 a bushel.

A close in March Chicago wheat below solid technical support at last week's low of $5.52, which is also the last "reaction low" in the up-trend on the daily chart, would negate the up-trend, dent the bullish enthusiasm and begin to suggest that a near-term market top is in place. Importantly, the wheat futures market has been heavily influenced recently by the key "outside markets" that include the U.S. dollar index, crude oil prices and U.S. stock index futures prices. As long as the dollar index continues to trend lower while crude oil and stock index futures trend higher, then the path of least resistance in wheat futures will remain sideways to higher. Stay tuned! Jim Wyckoff

Commodity Trading School Market Summary

2009-12-02T00:00:13Z

Commodity TRADING SCHOOL

SUMMARY OF UPCOMING DATA 12/02/09

8:15 AM ADP EMPLOYMENT REPORT

10:30 AM EIA INVENTORY REPORT

2:00 PM BEIGE BOOK

DATA RESULTS 12/01/09

ISM MFG INDX (53.6 vs.55.0)

US CONSTR SPEND (0.0 -0.4%)

PENDING HOME SALES INDEX (114.0 vs. 109.5)

US DEBT REVIEW AND OUTLOOK

US TREASURIES retreated on Tuesday, as the long end of the yield curve came under the bulk of selling pressure. Risk tolerance returned to the global markets with an apparent cheer today as the uncertainty of Dubai World securities default continues to wane. Worries regarding the regions debt subsided after a report by the Wall Street Journal stated that Dubai World was close to reaching terms of renegotiation of approximately $26 billion of its debt tied primarily to its regional commercial real estate holdings.

The lack of a "fire sale" mentality (so far) with regards to Dubai's financial difficulties prompted traders to rebound from risk hesitancy. This fueled a rotation to higher yielding investments which put renewed pressure on the US dollar, which fell to its 2009 low. Additional steepening of the yield curve was supported by the Australian Central Bank raising interest rates for a third consecutive month and a report that the euro zone unemployment rate remained high (9.5%), but steady. Both of these developments seemed to support sentiment of global recovery, lessening the appeal of low yielding government debt.

Holders of long positions also looked to profit take ahead of this week's US employment data. Expectations are for the lowest amount of jobs lost for 2009 to be reported (-120,000). Assuming the traditional theory that employment recovery is the lagging indicator of a recession/recovery cycle- expectation of a slowdown in job losses would be just the incentive that holders of Treasuries would need to pullback on long positions. While sentiment remains negative for Treasuries due to the historic supply and hampering of returns due to the weak dollar, the employment picture could create a "sell the rumor, buy the fact" rebound in Treasuries as they continue to range trade going into the end of 2009.

March 30 Year futures are the lead month. Technically, the contract appears to be setting up for a continuation to the downside. Ranges should remain tight for the week, with a likely retracement back to 121-28, with 122-08 setting up as resistance. This should be followed up by continued downside movement to initial support level of 121-05. Key support level sets up at 120-24, with a break of this creating a path to test 120-00.

US EQUITY REVIEW AND OUTLOOK

US EQUITIES continued the pre Christmas rally on Tuesday, as higher risk/reward instruments continue to shrug off the apparent speed bump of the Dubai World default. Markets continue to breathe short term sighs of relief as the amount of debt being renegotiated was less than speculated ($26 billion). In addition, reports surfaced that the negotiations were proceeding well and rescheduling of the debt payment plan should be forthcoming.

Overall market sentiment was strong today, with the major indices closing near their highs of the session. Technology, material, and media stocks were among some of the strongest gainers. Equity bellwether General Electric was at the center of a major deal today. The company announced an agreement to buy the needed stake of NBC Universal from Vivendi to facilitate the sale of 51% of the media group to Comcast. This deal was viewed as a positive step toward GE achieving the desired goal of consolidating its business dealings.

Overall upbeat forecasts in beleaguered sectors such as homebuilding and retail helped drive the US dollar near its lowest levels of 2009, fueling additional appetite for risk.

One element of today's equity jump appears to be playing devil's advocate. The financial sector lagged behind most gainers today. This element could suggest that the elements of recovery remain fragile in the outlook for traders and investors. The question (or lessening) of market volatility is not likely to be answered anytime before the middle of 2010, so traders should expect significant volatility and its contribution to choppy equity markets, with price floors dropping out quickly for the remainder of the year. Traders should seek to employ the corresponding tools and strategies to protect and/or take advantage of underlying caution and uncertainty.

Technically, Dec S&P futures appear to be forming a triple top. Initial Resistance should form at 1113.50, with a break of this level possibly setting up a test of 1121.50. Downside support for the market sets up at 1093.00 with 1083.00 and 1066.00 likely downside targets if this level is pierced.

Regarding the determination of an end of year target- Not high on priority list, futures allow by trading benefits from upside & downside movement after all. Will try to come with something in the next day or two.

US DEBT FUTURES	OPEN	HIGH	LOW	CLOSE	CHANGE
US H0 (US 30 YRS)	122-21	122-21	121-15	121-20	-1 03/32nds
SP Z9 (S&P 500)	1104.00	1111.70	1102.70	1108.40	+13.60

Click on the charts to enlarge

Prepared by Rich Roscelli & Paul Brittain.

PLEASE EMAIL QUESTIONS OR COMMENTS TO RICH@BINVSTGRP.COM

Gold sets the Tone

2009-12-01T23:08:18Z

Crude looks poised to move higher but before committing capital we'd like to see the inventory report tomorrow. We feel that without any bearish developments the recent test of $75 could prove to be support. We're tracking bull call spreads in addition to selling puts and buying calls. In the last 9 trading sessions natural gas prices have moved up 65 cents only to reverse and move back down 55 cents. This is terrific if timed properly but the leverage is huge so be careful. We like the idea of buying February and March 50 & 75 cent call spreads but have yet to move on behalf of clients...stay tuned.

Though sugar was quiet today we like the idea of long exposure via out right calls, back ratio spreads or long futures with stops just below 21.80 in the March contract. Lumber may be correcting closing $14 off its highs. We prefer to be a buyer of cotton from lower levels, closer to 68.00 in March would be ideal. Prices appear to be moving lower. Equities have traded back to the top of the recent trading range. Those who have not taken shorts off in the S&P we would suggest stops at 1113.

Gold has traded above $1200 closing just below on the February contract. The question is now that this level has been achieved will investors book profit or will new buyers take gold to higher levels. All clients that are long futures are suggested to have some sort of option protection. Silver broke to new highs today; the May $3 call spreads gained nicely though we may be looking for an exit door if tomorrow is anything like today. 30-yr bonds were lower by just over 1 basis point, we would like to see that type or movement on the short end of the curve as we have clients positioned short Euro-dollars.

I would think if equities move higher Treasuries would trade lower though we have no exposure currently with clients trading the long end of the curve. We're anxious to get clients long corn but suggest waiting for a break, furthermore we may trade May as opposed to March...stay tuned. The KCBOT/CBOT wheat spread picked up marginally today; again we're suggesting that KCBOT will gain on CBOT. Not a pretty trade in live stock today, well for our clients anyway.

Live cattle were lower by just over 1% and Lean hogs were higher though only by 8 ticks. Our stance is February cattle should move higher and February lean hogs should move lower. We used the rally in the Pound today to get short futures for clients above 1.66 and to buy December 165 puts expecting a trade down to 1.6450 in the coming sessions.

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