Energy: Crude oil is just over $1 from its lows but still negative on the session. I think resistance should come in just above $90 and maintain that a trade under $87 is in the cards. RBOB stalled again at its highs…it will be key for the current contract highs to resist further upside or a trade above $3 wholesale will be seen this week. My bias remains that a correction under the 50 day MA should play out in the coming weeks dragging November back near $2.65/gallon. Heating oil has run into mild resistance the last few days but I’d like to see prices back below their 50 day MA to be convinced lower trade is coming. Further pressure in Crude should spill over to the distillates. The 8 day MA has supported natural gas the last few sessions but I view that to be temporary. A settlement under $3.36 in November should lead to further selling. A 50% Fibonacci retracement puts this contract back at $3.17.
Stock Indices: A doji star on Friday followed by selling today is a preliminary sign of an interim top. Assuming the S&P starts trending lower a 38.2% Fibonacci retracement targets 1383 in December. Trades above 13550 continue to be rejected in the Dow but prices remain above their 9 and 20 day MAs as of this post. Confirmation would be trades below their up sloping trend lines; currently at 1440 and 13350 respectively.
Metals: I’ve been hinting at a correction in gold for weeks now but 2 negative down days are not enough to claim victory. Prices are approximately$25 off recent highs but I think we could see 3 times that in the weeks to come. My first target is a trade under $1700/ounce in December. Silver traded under $34/ounce today and on its lows almost $2 off recent highs. My feeling is we trade back near the 50 day MA in the coming weeks which comes in at $31.50. Platinum has a double top and should retreat moving forward. Aggressive traders can gain bearish exposure with stops above the recent highs targeting $1600. Copper is also a sale for aggressive traders targeting $3.57…a 50% Fibonacci retracement and the 50 day MA.
Softs: Cocoa prices continue to trade lower losing almost 12% in the last months. I think the easy money has been made and would lighten up on the position. Another 2-3% could play out before a bounce so trail stops and manage the trade. I’m bearish as long as prices are under 2450 in December. The 38.2% Fibonacci level continues to act as resistance in March sugar as prices have been unable to overtake that level in the last 5 sessions. Remain long with stops under 21 cents. Cotton sentiment remains bearish with prices under the 100 day MA at 72.40. Above that pivot point I’d shift to slightly bullish. Coffee should grind lower with the 100 day MA at $1.72 capping any rally. New contact lows are expected it the coming weeks.
Treasuries: A relief rally has 30-yr bonds slightly bid lifting prices above their 20 day MA. We may see prices challenge their down sloping trend line near 149’00…on this fade the rally. 10-yr notes also managed a small gain trading 11 ticks higher as of this post. As long as prices are under their 9 day MA at 133’16 I like bearish exposure. On a day like today the NOB spread softens the blow as the unrealized loss is about as 1/2 as bad as outright shorts in 30-yr bonds.
Livestock: I have no client exposure in live cattle currently but forced into the trade I’d be long with stops under their 9 day MA targeting a trade above $1.28 in December. The reason for no exposure is the risk/reward is not attractive in my eyes. Feeder cattle remain in no man’s land and could trade in either direction. No trade recommendation. Lean hogs continue to bump up on the 61.8% Fibonacci level but to date have failed to clear 78 cents. I open the idea of higher trade to reestablish bearish trade for clients.
Grains: Aggressive traders can have bearish positioning in corn with stops above the 20 day MA…a level that has capped upside in the December contract for the last week. The next leg lower should get corn under $7/bushel and closer to harvest lows. The 9 day MA has capped upside the last 3 sessions but I think we still could get a bounce in soybeans. I’ve advised clients to offset their shorts and aggressive traders could probe longs with tight stops. Wheat continues to search for guidance from beans and corn. If $8.50 gives way do not rule out the gap getting filled from early July at $8.15 in the December contract.
Currencies: The dollar is back above its 20 day MA making another attempt at upside. The Pound was the big loser today giving up 0.67% as of this post trading under its 34 EMA for the first time since mid-August. I anticipate more selling and would trail stops down trying to capitalize on a potential trade under 1.5900. With the Yen probing its 20 day MA you should have been stopped out of shorts. Book profits on Aussie shorts as we likely will get a bounce from the same levels prices were supported in early September. I am eager to sell the commodity currencies from higher levels…stay tuned.
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