It appears metals started to correct today…what will be next? August Crude is off the board and September is now the front month. We should get our first settlement above the 40 day MA in one week…we suggest bullish exposure thinking we could see a $4/5 appreciation from current levels. Doji star in natural gas yesterday and lower trade today…on a break of 20-30 cents we will look to be a buyer anticipating holding into the fall for some clients. As of this post indices have appreciated 1.5-2.0% and this puts prices back above their respective pivot points. North or south who knows…our suggestion is stand aside for now. The Swissie can be sold with stops above the highs and the same goes for the Loonie but back away from the other commodity currencies for now.
A correction in gold and silver…we think so. Bearish engulfing candle in both daily charts as we see an additional $30-40 in gold and $2 in silver to the next true support…trade accordingly. Some clients have small bearish positions in gold while most are waiting for lower buying opportunities in both metals. Aggressive traders could buy live cattle and sell lean hogs. Picking just one we prefer selling hogs. Our suggested trade today was in October with a downside target of 87.50 in the coming weeks. Sugar prices appear to be consolidating before continuing their leg lower. On a breach of the trend line at 28 cents in October expect selling to intensify as we feel a further 7-10% depreciation is coming. We have changed our minds on cotton and now will be looking to play the long side for some clients just for a bounce…stay tuned.
We are pricing out bull call spreads in December currently. We are operating under the influence that grains hit an interim top today. Aggressive clients got short soybeans today while most will wait to be a buyer from lower levels in soybeans, corn and wheat. The 20 day MA held and 30-yr bonds picked up nearly a basis point today..we may be sellers from higher levels but for now back off. The only play we see in this complex is playing the short end of the curve in long dated contracts.
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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