Commodities Mostly Range Bound Ahead Of NFP

Crude oil closed above its eight-day MA but did fail to take out the $87/barrel level in December. As I’ve said a base appears to be forming for a leg higher but I would not expect more than $2-$3 of upside and an ugly jobs number likely puts Crude under $85 so tread lightly. I am waiting for confirmation to get clients positioned in bullish trade. RBOB has been able to maintain positive closes the last two sessions but what I see is closes well off their highs, 7 and 4 cents respectively. If the 100 day MA gives way at $2.6250 in December expect a trade to $2.55. Heating oil has traded lower the last three sessions unable to take out its eight-day MA. Within 4 cents of the 100-day MA just under $3/gallon I expect a probe very soon. Natural gas should continue to grind lower…$3.50 remains my target in December.

Stock Indices: Bullish engulfing candle in the S&P today with a close just under the 20-day MA. I view this just as a bounce and nothing more. I do not see December futures above 1435 unless we get a tremendous number Friday. When the next leg lower resumes 1380 remains my target. Impressive showing in the Dow today gaining 1.04% recouping the previous week of losses. Maybe a probe over 13300 but my opinion is that will be met with selling.

Metals: Gold was incapable of holding onto early gains closing down marginally today. If prices do not get over their 100-day MA soon I’d say we get another leg lower targeting $1675. That hurdle on the upside currently sits at $1738. Buying was rejected in silver futures as well but prices were able to maintain $32. The pivot point on the upside as I see it in this contract is $33.15. A trade under $31.50 which could play out in the coming weeks should lead to a trade under $31/ounce. This has not occurred since late August…stay tuned.

Softs: Cocoa closed higher for the third day running retaking the 100-day MA today. Aggressive traders can scale into bullish exposure with an objective of 2500. Sugar is like watching paint dry of late but I suggest accumulating at these levels thinking appreciation is just around the bend. Be willing to add to the trade once the market proves you correct. In the last two weeks cotton has lost 10% and the easy money has been made on shorts but we could see a little more weakness. I’m bearish but would not suggest fresh entries at this level. A five-cent higher trade in OJ was rejected with a close just off its lows. $1.05 is supporting January but a sub $1 trade is still a possibility in my opinion. A new contract low was made in coffee with the near 1% loss today. I left shorts prematurely with clients but I’m not interested until prices bounce.

Treasuries: 30-yr bonds gave back some of their recent gains ahead of Friday’s NFP. As long as the nine and 20-day MA support I say the path of least resistance remains up. Inside day in 10-yr. notes with a probe of the 20-day MA and a settlement just above that pivot point. NFP will determine the next leg in this complex.

Livestock: Ugly price action in live cattle with a close near their lows and more selling expected. $1.26 should act as resistance in December with the bears eyeing $1.24. Feeder cattle also a healthy loss closing lower by 1.5% and the lowest close in three weeks. If $1.46 gives way In January do not rule out a trade to the July lows. Lean hogs closed down near their lows as buying has been rejected the last two sessions and if the closes are any indication of what is to come we should see a breakdown very soon. I’ve advised bearish exposure thinking we see 75/76 cents in the near future.

Grains: For over 2 ½ months the 50-day MA has acted as resistance in December corn and that has certainly been the case of late evident by the price action. Until that level is take out I’m bearish; currently at $7.54. January soybeans are trying to make a decision as prices now for two weeks have been in a 50 cent trading range back and forth. It could go either way…look elsewhere. Wheat continues to be a sleeper as I see no reason to trade until we get more movement.

Currencies: Above the 50-day MA the dollar should move higher and below the 20-day MA lower but this back and forth is anyone’s guess…I need confirmation. My feeling is we get a move higher but listen to the market. Those levels are 80.15 and 79.85 respectively. The Yen closed below 1.2500 so longs should be taking a small loss. The Loonie closed higher by 0.38%, enough for me to advise all remaining shorts to move to the sidelines and book all remaining profits in bearish trade.

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