The Greenback Should Guide

As the US dollar trades to a three month low investors should key of its movement to aid in other trading decisions. Crude oil advanced to a five week high today as prices continue to trend higher holding the up sloping trend line now for the last two weeks. Clients remain bullish with a $102/ 103 target this week or next. Natural gas remains in sell mode as we expect another 10 cents before we want to initiate longs for aggressive clients. A trade to $4.20 in September would complete a 61.8% Fibonacci retracement. Securities came under a little pressure and as of this post are trading just above their 20 day MA’s. On a close below those levels expect prices to make their way to their 50 day MA’s; in the Dow at 12270 and in the S&P 1306.
Gold will not trade at a record high today but we should have a record high settlement with prices higher by 0.50%. With a temporary resolution from Washington we expect the flight to quality buying to evaporate ad gold to fall back 4-6%…trade accordingly. Silver traded back to $41/ounce; the 50% Fibonacci retracement level that has served as resistance now for one week. It is a bit scary but some aggressive clients remain short expecting a trade back to $38/ounce. The dollar lost nearly 0.80% today falling to a three month low. The Loonie was higher but gained the least of all the majors…we’re suggesting bearish exposure.
Sugar remains on our sell list as 31 cents is capping the most recent rallies. We think 26/27 cents is a more realistic level in the coming weeks in the October contract. We’re starting to price out bearish plays in OJ …stay tuned. Call me crazy but I’m calling an interim bottom in December cotton with today’s key reversal. We’re looking for an entry in bull call spreads and think this leg could carry prices back near $1.15. The 20 day MA’s continue to be the pivot point in both 10-yr notes and 30-yr bonds…until they give way on a closing basis stand clear. We advised clients to cover their corn futures spreads from yesterday as it was a bearish trade and it looks like corn could trade higher from here. We have yet to re-initiate long positions for clients but as we’ve said we expect to before the August USDA. Could it be from higher levels clients ask…maybe…stay tuned.
Live cattle bounced off the 50 day MA advancing 1% today. We like being long and expect prices to continue trading north from their current oversold levels. A trade back to the 20 day MA and we would likely be looking for an exit door; in October at 117.90.
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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