It is evident by the market fluctuations that investors are not excited about the current economic conditions. This in my opinion is just and as far as I see these wild swings are not going to end in the immediate future so tread lightly. Oil is down nearly 9% in the last seven days but as we said yesterday as we approach the levels we bounced off in June we see value here. We’ve advised clients to lightly scale into October contracts thinking we have sold off too aggressively of late. It is apparent that the downward pressure in the products (RBOB and heating oil ) are spilling over into Crude oil. We could see another 10 cent decline in the products which would likely equate to a $2 drop in Crude…trade accordingly. Natural gas dropped 1.5% today dragging prices near six month lows. We like getting long October via futures and or options depending on your risk tolerance.
A near 30 point trading range in the S&P and 200 in the Dow is not settling for traders but the reality is in our opinion the panic will subside and we bounce from here. Remember it is always darkest before dawn and this recent route has been one of the ugliest in years. Traders in the S&P should have an upside target of 1305/1310. Gold hits another record high nearing $1700/ounce but in recent days the upward momentum has been waning. Am I calling a top…no way as I’ve tried to play the correction and got walloped but it feels awfully crowed and ripe for a nasty correction. Silver gained 4% today and this reminds me of being short sugar two weeks ago…see previous posts.
This is not for the faint of heart and it may take deeper pockets to stay with my clients silver shorts than I had previously thought. At the moment we are staying the course willing to stay a bit longer before we admit we’re wrong.
Oh by the way sugar has lost almost 13% in the last week for anyone that’s not following. The Aussie remains a sale as long as the 20 day MA caps rallies. That pivot point today shifted from support to resistance FYI. Sugar gave up nearly 2% as our first target was obtained intra-day today. On a new low we should see a probe to 26 cents where would likely leave our shorts or at a minimum tighten stops and lighten the load. OJ may have started to roll over as prices were lower 1.5% today. We’ve suggested bearish exposure in November contracts. Grains traded slightly lower giving back some of yesterday’s gains. We are wanting more downside to be a buyer at lower levels this week or next. Lean hogs were down big in early dealings but pared losses closing back above the 20 day MA. We have some clients short but are perplexed by the comeback. If we do not revisit today’s lows in the next few sessions we may advise to wash the trade…stay tuned.
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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