Three Distinct Positions

I constantly remind my clients there are three distinct positions: bullish, bearish and the sidelines. We have most of our clients money on sidelines as we do not see many screaming buys or sells. Crude oil will end the week at the upper end of the recent trading range just above $94/barrel in December. Some clients hold a small bearish position waiting to add to the trade once we get confirmation that prices are rolling over. We had a few false breaks this week but until we get a settlement below the 9 day MA we do not suggest adding to the trade. Yes one can pick a bottom in natural gas with a tight stop but we prefer waiting for a settlement above $4 before establishing bullish trades.
Stocks closed modestly lower today but did maintain a close above their 9 day MA’s. Some clients maintain bearish ES positions expecting a trade back to 1185. We are looking for a new shoe to drop very soon to drag prices lower into the end of the year…trade accordingly. Gold has traded higher four out of the last five weeks after bottoming out in late September. From here we see $50 of upside and $50 of downside so we prefer the sidelines. Until silver breaks above $35 or below $32.50 we expect a trading range. Our bias is a trade closer to $30/ounce and if so lucky we would be shopping longs for clients.
Aggressive clients remain in their bearish trades in the Yen expecting a re-test of 1.2600. The fact that prices have not been able to rally this week after a major intervention tells us we should see further depreciation. Lighten up on live cattle longs if we fail to see new contract highs early next week. Lena hogs have completed a 50% Fibonacci retracement after the last two week sell off. Being hogs are over sold and prices are failing to make new lows aggressive traders can start scaling into bullish plays. Nothing to report in either the Ag sector of softs.
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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