Based on the action in Treasuries, commodities and stocks today it may be more about not losing than making money. Crude oil gave up 1.50% today trading near a three week low. Prices appear to be rolling over and we see a trade below $94 into next week and a potential trade back near $90/barrel on a severe overreaction. As we said yesterday the closer natural gas futures get to $4 the bigger interest we have. Hold off for now but with September within 15 cents of that mark natural gas needs to be on your radar. Stocks as of this post are trading lower once again but our suggestion is to cash out on bearish trades and move to the sidelines.
Gold finished up $15 on the week with its highest close today but nearly $10 from its highs. To me this trade is way too crowed and at these levels we would rather be short. We recognize this is a controversial opinion but we have voiced a $50 correction and stand by that idea. Silver closed below the 9 day MA again today but have stayed range bound all week. $41 in September should continue to cap rallies as we anticipate a trade under $38/ounce in the coming weeks…trade accordingly.
Outside of the dollar the Loonie was the lone loser today giving up 0.50% trading to a two week low. On a breach of the 20 day MA on a closing basis we should see the selling intensify. A 50% Fibonacci retracement would drag prices 1 cent lower. Sugar traded lower this week for the first time in four weeks and only the second losing week in the last twelve weeks. In fact prices briefly traded below the 20 day MA for the first time since mid May. Some clients are short October and March expecting an additional 10-15% depreciation. A serious break out to the upside in the debt complex on both ends of the curve as this clearly served as the flight to quality in today’s action. Clients took some heat in Euro-Dollars thankfully they only have a small position.
Corn was lower by 2.5%, soybeans 1% and wheat nearly 3%. Look for this to continue and we should be able to buy from significantly lower levels ahead of the August USDA. Live cattle goes out near its highs and should make a stab at the 20 day MA next week and perhaps an attempt at the early July highs…trade accordingly.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.