New month...new opportunities
Commoditytrader.com - Mon, 02 Aug 2010 21:34:47 -0500

In the last three days Crude oil has advanced nearly 6% lifting prices back above the 100 day MA. We missed this most recent move with clients and being we only see an additional $2-4 upside we would not suggest getting on the train at these levels. Pullbacks should find buyers between $79.50-80.00 in the September contract. Natural gas had some trouble getting thru the $5 level with prices correcting back to the 50 day MA today losing just over 4%. We suggest keeping your stops on futures just below that MA. For fresh option entries we would be buying November 50 cent call spreads. On a move above today's highs we would also suggest moving your October option positions out to November.

I do not trust the up move in indices but as I said to a client today that and a nickel will get you a piece of gum. Indices are above the 200 day MA and until we get back below those levels the bulls are in the driver's seat. Aggressive clients will fade rallies in the S&P as long as prices remain below 1135 in September. Some clients hold September Es puts expecting 1000-1025 into the fall. At the moment they are down on the trade with the last two day's activity. We see the next upside resistance in the Dow just above 10800 and in the S&P at 1135-1140. Bearish engulfing candle in October sugar today with prices closing 0.90% lower. We anticipate a trade back to 17 cents in the next few weeks. December cotton failed to get above 80 cents today; aggressive traders could short futures with tight stops or buy December put options. December coffee closed nearly 5% off its highs; is an interim top finally in?

Lumber is back above the 50 day MA; we expect a gain of 10% in the coming weeks. We expect to see a pull back in lean hogs, live cattle and feeder cattle but at the moment do not have any exposure with clients. Pork bellies which we rarely trade are trading at an all time high, brace your self for higher bacon prices. Tomorrow the test will be if gold can close above the 100 day MA; in December at $1187. One would think with outside market influence today gold would've seen better performance. When markets should move higher and they do not that generally means they will move lower...stay tuned. September silver gained 2% today solidly above the 50 and 100 day MA's. Those levels which had previously served as resistance now will act as support. We suggest moving trailing stops up from $17.40 to $17.80 on futures. Continue to buy December call spreads as this leg could lift prices back near $19.50. We suggest booking profits on agriculture longs as a correction appears to have begun today. That means take profits in corn, soybeans, soy meal and wheat and look to re-enter longs on a set back and be positioned long ahead of the 8/12 USDA.

We do not expect prices to get back to the levels from one month ago but after a 12-40% appreciation even bull markets need a rest. The dollar index broke the 200 day MA today but we think we're over due for a "dead cat" bounce. Clients cut losses on all their futures in the Swiss franc today; this one stung as clients ended up losing just over $3,000 per contract including all hedges and fees. Option traders remain in puts in the Swissie and Euro currently carrying a loss. We cannot seem to figure out the currency market at the moment so we will refrain from new recommendations until we get a clearer picture, perhaps three Central bank meetings this week will shed some light?

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.