A Rising Tide

A rising tide lifts all boats! As stocks increase and metal bulls get back in the driver’s ‘s seat look for commodity appreciation. Crude manages a slightly higher close but the real story is the prices should settle $2 off their intra-day lows as trades below $92/barrel were rejected in August. If the distillates did not trade 1-2% lower today we would have likely seen more appreciation. On signs of an interim bottom in heating oil and RBOB that should signal a turn higher in Crude. Six out of the last eight sessions natural gas has lost ground with prices approaching levels not seen in five weeks. We have buy targets with longer time frames on our radar but have yet to commit client capital…stay tuned. 1250-1255 has served as solid support for the last week in the S&P. Aggressive traders could work into longs with an initial target of 1300 in September futures.

The dollar backed off slightly but did hold the 20 day MA; in September at 75.25 which should serve as the pivot point. We see no currencies that scream buy or sell but aggressive traders could be starting to scale back into longs in the Loonie. The best performing sector of late could go to livestock; lean hogs have appreciated 12% in the last two week, feeder cattle are up by nearly 10% while live cattle bring up the rear gaining 8.5%. Gold and silver were only slightly higher but we like the chart formation and anticipate a leg higher to commence any day now. We expect August gold to make a new contract high in the coming weeks and could see July silver near $40/ounce.

Cocoa bounced off a triple bottom and is back over the 20 day MA. We suggest getting long at these levels with a target of 3100 in September. Sugar was higher by 4% today breaking out to 3 1/2 month highs. Some of our clients are short and feeling the pain as prices have shot 11% higher in the last three sessions. Stay short for now but if prices do not roll over soon we will be forced to cut losses. Coffee gave up 2.4% today making it a near 10% loss in the last four days. We should see a trade below the 200 day MA for the fits time in twelve months. That level in July is $239. Corn and soybeans were unchanged while wheat gave up nearly 2%. All grains are oversold and could be bought with the intention of adding to the trade at higher levels. At the moment some clients are long CBOT wheat from higher levels looking for a trade back near $8/bushel in the September contract. Treasuries look toppish but that has been the story for several weeks. Clients are short and carrying losses in 30-yr bonds and Euro-dollars.

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

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