Commodity Trader

The Golden Path

Tue, 29 Apr 2008 21:53:35 -0500

The Gold market during the past seven months has truly been incredible. Flash back to mid-September 2007 and you will find Gold trading in the $680.00 range, while six months later in mid-March '08 it was trading $1,030.

New Year Market Analysis

Mon, 31 Dec 2007 12:59:11 -0500

As the New Year approaches the typical topic of discussion is to prognosticate, predict, and further espouse a view of what the future will bring. Our view is not a pretty view, well, certainly not in the short-term, but a view that becomes somewhat less gloomy as the year 2008 progresses.

Coffee Bulls Have Upside Technical Momentum

Thu, 20 Dec 2007 17:05:21 -0500

March coffee futures are in a six-week-old uptrend on the daily bar chart and hit a fresh nine-week high of 136.00 cents on Wednesday. Coffee bulls do have upside near-term technical momentum and are looking for more on the upside in the near term. See, too, that the shorter-term moving averages I follow (9- and 18-day) are in a bullish mode as the 9-day is above the 18-day moving average.

BM&F's IPO

Wed, 19 Dec 2007 14:58:15 -0500

The Brazilian Mercantile & Futures Exchange-BM&F SA ended its Initial Public Offering (IPO) process with the participation of 260,946 investors. All of the 299,184,846 common shares offered to the market were sold. This figure includes 39.02 million common shares to cover over-allotments. The IPO generated BRL5.983 billion, absorbed in its totality by the selling shareholders. A total of 253,707 individual investors participated in the IPO, acquiring 28.56 million shares. The greatest volume of shares - 231.43 million - was purchased by 806 qualified institutional buyers. The end of the IPO process resulted in a free float of 33.2% of BM&F's common shares.

Option Queen Letter

Tue, 18 Dec 2007 18:13:44 -0500

On Friday December 14, 2007 ICE Futures US, announced that the open-out-cry markets, for all but a hand full of futures contracts, will end removing the trades to cyber-space. Yes, options will continue to trade on the floor in open-out-cry, but futures will be gone from the pits. While we understand the expense involved with the support of an open-out-cry market, we also know full well, that in times of market disruptions, the open-out-cry market is the only market that can fairly disseminate prices. When cyber-space fails the open-out-cry market survives. This unanimous action by the ICE Futures US board in closing these vital markets is a mistake that will come to light during a crisis.

O&F Forex News

Mon, 17 Dec 2007 18:20:27 -0500

Last weeks FOMC report came out within the expectations. As we forecasted, it turned out to be good for the Dollar. We have now seen significant moves in the Dollar against all of the majors. This Week we are expecting a small near term pullback in the Dollar which we will use to add to our long Dollar positions against the Pound, Euro and Swiss. We see the overall Dollar strength playing itself out sometime early in the New Year, so do not look to hold any of these trades for the longer term. Keep in mind that liquidity will fall almost daily until after January 3rd so many of the moves we see between now and then will be exaggerated.

Crude Oil Breaking Down; Commodity Bulls Beware

Fri, 07 Dec 2007 15:22:19 -0500

January crude oil futures on Thursday hit a fresh six-week low and traded below $86.00 a barrel. The market has taken a haircut to the tune of around $14.00 a barrel from the all-time high above $99.00 scored a couple weeks ago. Serious near-term technical damage has been inflicted to suggest that at least a near-term top is in place. See on the daily bar chart for January crude oil that uptrend lines have been penetrated on the downside. Also, see at the bottom of the chart that the Moving Average Convergence Divergence (MACD) indicator is in a bearish mode as both the thick blue MACD line and the thin red "trigger" line have been trending lower for the past month. Both lines are poised to move into bearish territory below the horizontal "zero" line.

U.S. Dollar Trying to Recover; More Work Yet

Tue, 04 Dec 2007 15:36:44 -0500

The U.S. dollar index is an excellent barometer for monitoring the overall health of the U.S. dollar as it trades against the other major currencies. The March dollar index futures hit a fresh all-time low last month, and a downtrend line is still in place on the daily bar chart. See on the daily bar chart that just recently the dollar index has produced a short-covering bounce that has seen prices challenge the downtrend line, but so far fail to push above it. A solid push above strong technical trendline resistance that is now located at the 76.00 level, basis the March U.S. dollar index, would provide the bulls with fresh upside technical momentum to begin to suggest that a near-term market bottom is in place.

Golden Swings

Mon, 03 Dec 2007 17:41:13 -0500

The volatility in the commodity markets has been tremendous and in my opinion can be traced to several factors. These factors include such items as high energy prices, the ongoing mortgage debacle and ensuing credit crunch, the possibility of future rate cuts, and geo-political tensions, just to name a few. These have all combined in some sort to keep pressure on the U.S Dollar. Recently the crude oil futures looked certain to trade $100.00 per barrel and Gold was on its way to $900 per ounce, however both markets have since pulled back.

Coffee Futures Month End Adjustments

Fri, 30 Nov 2007 13:33:56 -0500

Coffee prices remained confined to a 150 point range on what amounted to an inside day Thursday. Traders processed the meaning of the previous two days, Tuesday reversal and Wednesday sharp gain. I expect funds to be supportive if not encouraged to add to their long positions on Friday... And yes, there is a part of me that is waiting for the other shoe to drop.

U.S. T-Bond Bulls Still Technically Strong

Thu, 29 Nov 2007 15:25:56 -0500

The volatility in the U.S. Treasury markets heated up this week, as new contract highs were notched on Monday, followed by solid losses on Tuesday and Wednesday. However, price action Thursday morning found the bulls making a counter-attack and having success. Price action Thursday morning was scoring a bullish "outside day" up on the daily bar chart for March U.S. Treasury Bond futures--whereby the high was higher and the low was lower than the previous session's high and low, with higher prices on the day Thursday.

Gold Makes Strong Rebound; Bulls Again Powerful

Mon, 26 Nov 2007 12:55:57 -0500

The gold futures market recently backed off sharply from the early-November contract and 27-year high of $848 an ounce. Profit-taking pressure was featured. The past few trading sessions have seen the precious yellow metal in a solid price rebound as the bulls have regained fresh upside technical momentum. The early-November high of $848 is now stiff overhead resistance for the bulls to overcome. However, a push and close above that key price level would be significantly bullish and would open the door to a challenge of the all-time high of $873 an ounce, scored in 1980. On a further corrective pullback there is now solid trend-line support at the $790 area.

Holiday Volatility

Wed, 21 Nov 2007 19:00:56 -0500

This week we have the Thanksgiving holiday here in the States. Most US traders take most if not all of the week off. What that means is a significant fall in liquidity. Lower liquidity usually means more volatility so while it is a Holiday, it is not time to lose focus and turn a blind eye towards the markets. In fact, weeks like this often provide better than usual trading opportunities.

Keep in mind that we just had the G20 meeting, which by most accounts turned out to be a "dog pile" on US treasury secretary Paulson. The other finance ministers berated him about the disorderly free fall of the Dollar that he has allowed. Our sources tell us that most of the other ministers left the G20 meeting deciding that they would have to take matters into their own hands since the US is either unwilling or unable to do the right thing. We continue to look for a bounce in the Dollar in the near term as Europe, Canada, and Australia make the necessary adjustments to deal with a Dollar that in the long run is expected to continue to free fall.

Technically Crunching the Market

Tue, 20 Nov 2007 10:59:04 -0500

The market's action has made it fairly clear that this "wall of worry" will be tough to climb and unlike earlier in 2007, we might actually be headed for trouble. High energy prices, "agflation", a soft dollar, a weakening economy based upon the trembling merits of a housing recession (if not an outright housing depression) will all soon factor into a potential stagflation scenario. I personally am not calling for stagflation, but the ingredients are mixing and the path may have already been aligned.

Option Queen Letter

Mon, 19 Nov 2007 10:32:34 -0500

Just to be positive, here is some good news--because the US currency has declined so steeply, manufacturing is returning to our shores. Recently, BMW announced that it will beef up its US production of their cars which, this is a switch, will be shipped to Germany and other destinations. Why? Simple, it is cheaper to produce the cars here and ship them where they are needed. The weak US Dollar strategy, a silent one, is reaping some rewards returning some, painfully little, manufacturing to our shores.