Energy: Crude oil was able to close in the green after being down nearly $2 in early dealings. We will need to see a settlement under to 100 day MA in December, currently just under $91 to confirm bearish sentiment. On a trade back near $88.50 on this contract I will be looking to unload remaining trades for clients…trade accordingly. RBOB closed below its 8 day MA finding support at its 20 day MA. A close under $2.75 in December confirms lower trade. My first target on a leg lower would be $2.61/gallon. Heating oil traded down for the second day in a row trading under but closing above its 8 day MA. $3.13 needs to be breached to confirm a lower leg. Expect this in the coming sessions in my opinion. Natural gas lost 2.66% today closing at its 8 day MA. I’m operating under the influence an interim top was made and we see a trade lower short tem. A 38.2% Fibonacci retracement puts December back near $3.55…though I would not rule out $3.40 and if so I would be an aggressive buyer…stay tuned.
Stock Indices: The 50 day MA held the last 3 sessions with the S&P gaining nearly 1% today. As long as prices remain under their 9 and 20 day MA on a closing basis I view this nothing more than a bounce. Those pivot points come in just above today’s close. Those short stay short and trail stops down. On a leg lower I still think a trade under 1400 plays out in December futures. The 50 day AM has also been the line in the sand in the Dow as well. That support level comes in at 13240 and above resistance is eyed at the 9 and 20 day MA, approximately 50 points above today’s close. Do not rule out a bounce but I give the same advice remain short and protect profits with stops. Those with a sizable equity portfolio are advised to lighten up on longs as a correction lower is still my call.
Metals: Gold lost $22/ounce today and is lower 6 out of the last 7 session losing approximately $60/ounce. Lower trade is my call as I see a trade under $1700 this week if not next. A trade to the trend line drags December futures to $1665 which would be a 50% Fibonacci retracement. Silver gave up 2.75% today dragging price to the lowest close in 5 weeks. Prices are now $2.25 off their recent highs and more selling should follow. My fist target is $31.75 though I don’t see much support until $30.75…trade accordingly.
Softs: The 200 day MA has supported cocoa the last 3 sessions. The easy money has been made on shorts in my opinion and with only a narrow window of profit tighten stops as a bounce is overdue. A bounce near 2450 in December could be sold. Though sugar is under 20 cents and on my radar as a buy there is no need to catch a falling knife. Let’s see some signs of an interim bottom before re-establishing longs in March sugar. Hopefully longs listened to me last week to book profits as prices dropped over 8% within that time frame…see previous posts. Based on a few technical indicators it appears we will get a bounce higher in cotton to make sure those short have stops just above the 100 day MA; currently at 72.40 to get stopped out. I prefer selling from higher levels than buying if in fact prices trade higher. Coffee is meeting mild support just below $1.60 but I’m still not ruling out fresh contract lows. Those with sizable bearish exposure should hedge their trade with options; either buying calls or selling puts in my opinion. As long as December coffee is under $1.71 I’m bearish but that would represent a $3,750 trade against an unhedged short per contract.
Treasuries: 30-yr bonds are above their down sloping trend line; in December currently that level is 149’00. I open trade near 150’00 to potentially probe shorts again. For now I’m on the sidelines with clients. As long as 10-yr notes remain above their 9 day MA I would refrain from trade. I wish to have bearish exposure in this complex but prices above this pivot point are bullish so that does not jive with bearish exposure.
Livestock: December live cattle is finding mild support just above $1.25 so a bounce could play out but I’m getting mixed signals so would not take a trade for new positions in either direction. Any short should have tight stops. November feeder cattle are finding buying interest under $1.44 but I do not see a catalyst to drive prices much higher or lower. That being the case sloppy sideways action is not conducive for me to trade so stand aside. December lean hogs continue to grind higher closing at 2 1/2 month highs just under 79 cents. I like bearish trade but hate picking tops as generally it’s a losing battle. Aggressive traders can get short futures while simultaneously selling out of the money puts. My suggestion is start very light and add once the market turns. Ultimately I think this contract trades under 73 cents but from what level?
Grains: After 2 attempts corn failed to take out its 50 day MA and has fallen roughly 30 cents/bushel in recent sessions. A close under $7.30 in December puts $7 back in play. Both daily and weekly charts are looking uglier so maybe harvest lows have yet to be made. If bears grab control they could take December to $6.75 where shorts should seriously lighten the load. To a much lesser extent bulls failed to rally soybeans as well with prices approaching 3 month lows as we attempt to fill the gap mentioned in previous posts. The next stiff support in November is seen at $14.50. Wheat continues to take guidance from the other Ags so the latest 40 cent jaunt was not surprising. In December support is seen at $8.30 followed by $7.95.
Currencies: The dollar is stuck between the 20 day SMA and the 34 EMA. Whichever direction prices break short term will determine the next leg in my opinion. Those levels in December come in at 80.25 and 79.70 respectively. The European crosses remain range bound until a direction is determined. Protect open profits in the Pound…trail stops. I’d like to see the Aussie and Kiwi work higher to set up sell signals from higher ground. Aggressive traders can gain bearish exposure in the Loonie which I think should play out if metals and energies fail. I think the December contract could see a trade under par in the coming weeks, currently at 1.0175.
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.
Comments are closed.