Thursday's End Of Day Commodity Update

Inside day in Crude oil closing 0.90% higher just above $92/barrel. My loyal followers should remain in bearish trade still expecting trade back to $87/barrel. As long as prices remain under $94 in November I’m bearish. RBOB failed to make a new high trading lower before finding support at the eight-day MA. A settlement under $2.92 should lead to a trade under its 50-day MA, currently at $2.8370 in November. Heating oil appreciated 1.37% closing at a fresh six-month high fast approaching the contract highs now within a dime. While I am not jumping in front of this train I do expect a move south in the energy complex. It may take weakness in RBOB and Crude to pressure heat so the sideline is the play until we get confirmation. Natural gas was the standout today appreciating by 3.71% lifting prices to fresh 2012 highs. Those who probed shorts should have been stopped at a loss on a fresh high. Prices are within 10 cents of completing a 61.8% Fibonacci retracement in the weekly charts. I do not like bullish trade until prices back off. I’ve missed a lot of the move in recent months for clients both up and down but it is about risk management and being comfortable in the trade which I currently am not.

Stock Indices
S&P closed virtually unchanged after challenging the trend line and failing in early dealing. Remain in bearish trade as long as prices are under their nine- and 20-day MAs; those levels are 1440 and 1443 respectively. The Dow was all over the place but failed to take out its 50-day MA. On a breach of 13225 in December futures tomorrow or next week look for increased selling. A trade under 1300 should be achieved on this next leg lower in my opinion.

Metals
Gold experienced its first positive session on the week able to trade 0.31% higher. I continue to expect lower trade. If $1750 gives way in December $1700 should follow soon thereafter. I see resistance in this contract at $1785. Silver is down just better than 50 cents on the week even with slight gains the last two sessions. Support comes in at $33.25 followed by $32/ounce.

Softs
Cocoa traded to a 10 week low falling nearly 1% today and trading at its 200-day MA for the first time since late July. This has been a great trade for the bears but the easy money has been made in my eyes. 2300 is not out of the question, which would be a full 61.8% Fib retracement on December. As forecast sugar prices are coming off down 3.81% today alone. We should get a shot to be a buyer of March 13’ under 20 cents and with outside market influence maybe even under 19.50. Expect a buy very soon…contact for exact details. A bearish reaction to today’s USDA has cotton down 1.93% challenging two-week lows. More weakness is expected as stops should remain above their 100-day MA. Coffee down 1.65% to close at five-week lows. A new contract low should be right around the corner but with prices so oversold take ½ the trade off…book partial profits.

Treasuries
30-yr bonds bumped up against their down sloping trend line...the same resistance that capped trade last week. Overnight prices are above that level. I think we could get a trade back near 151’00 in December so I suggest closing out any bearish trades. Prices of 10-yr notes remain trapped between their nine- and 20-day MAs. I suspect we see the rising tide lift all boats and see a trade back near 134’00 in the coming weeks. Stops on outright shorts should be just above the nine-day MA, currently at 133’10.

Livestock
Perhaps a key reversal in live cattle as a trade above the nine-day MA was rejected and December closed under its 20-day MA for the first time this week. More selling is expected with stops just above $1.2650. Feeder cattle lost nearly 2% and their daily limit closing just above $1.44 in November. A trade below that support should lead to levels not seen since early July…trade accordingly. New trade idea in December lean hogs as I think we get bearish trade in the coming weeks. Let’s try shorting futures and selling out of the money puts 1:1; at today’s levels I like selling the 76 strike.

Grains
A bullish reaction to today’s USDA. Corn gained nearly 5% to trade to its 50-day MA as voiced yesterday on a bullish number. As long as $7.55 holds aggressive traders can buy dips. $15.20 is your support level in November soybeans. The report though not bullish in my eyes it looks like traders want to take soybeans higher. A trade above $16 I would start looking for an exit on trades established in recent days. Wheat appreciated 1.87% closing above all its short term MA’s. We should see a trade near $9.10/9.15 in December but I will not partake.

Currencies
The 34-day EMA continues to act as resistance in the dollar. We are at a crossroads in the dollar as a close back under the 20-day MA at 79.60 I am back in sell mode so a buyer of other crosses. I will likely be force to close out some bearish trades in other commodities…stay alert. Close shorts in the Pound and book profits. Bearish trades in the Loonie should have been stopped at a small loss. Bearish engulfing candle in the Yen has bearish trades back on my radar…stay tuned. As it stands now 1.2800 is resistance but I’ve yet to issue a trade rec.

Matthew Bradbard
VP of Managed Futures & Alternatives

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