The RCM Commodity Update covers all major U.S. commodity markets to ensure you are aware of the main movers among all seven commodity sectors including energies, financials, metals, softs, livestock, grains and currencies. Trading recommendations for both futures and options are based on technical analysis.
Dec 18, 2012
As of this post the S&P is higher by 0.88% lifting prices to 8 week highs. All of last week’s losses have been recovered as we are now within 1.5% off the highs made in September. Regular readers know my stance I am expecting a trade south between now and the end of the year. Some of my clients remain in their bearish trade…they are down just over $1000 per strategy. In full disclosure this is a tiny position for clients and with the loss it amounts to approximately a 4% draw on their accounts. I have been catching grief because some followers thought I was all in or outright short futures and that is NOT the case. The Dow gained 0.63% to close at 8 week highs as well with prices 1.6% from their fall highs. We are bucking the trend but will stay the course thinking we get a violent correction this week or next. Those not short but long should be looking to take profits on any index longs or outright stock holdings in my opinion before years end.
Dec 17, 2012
Currencies: The dollar is lower but only by 1.4% in the last week even with prices in the red 5 out of the last 6 sessions. I was wrong as I anticipated a trade north into the end of the year. We will need to see prices reverse immediately but for now I am on the sidelines here with clients. The Euro is probing the triple top spoken about in recent posts. On signs of an interim top I’d be looking to play put options again for clients. Just like last time we will need to be nimble as if we stayed in the last trade that was booked as a profit clients would now be in a losing trade. The Aussie and Kiwi are exhibiting signs of exhaustion so bearish trades are on my radar but I’ve yet to move. I’m thinking short futures against a sale of an out of the money put 1:1…stay tuned. Since my last post the Yen has experienced another leg down but now both daily and weekly charts are saying a bounce is due. We are within tics of the 2012 low so risk to reward with tight stops light bullish probes make sense in my opinion just to pay bounce.
Dec 11, 2012
Dec 10, 2012
Grains: Specialty report published under Premium Research today to be ready for tomorrows USDA report. Corn is down 5% in the last 2 weeks but most of the damage is done in my eyes as the market has factored in a bearish report and weak export numbers in the last few weeks. If anything we could get a bullish surprise in my opinion. Some clients hold March back ratio spreads and at a loss at the moment. A trade back to the upper end of the range should get them profitable…stay tuned. Soybeans were able to hold their own rallying back in late dealings to hold the 9 day MA. As long as the down sloping trend line supports, near $14.25 in January I am friendly. $8.50/bushel gave way in March wheat to register its lowest close in 5 months. Wheat remains a follower to the other Ags but being we are at the lowest level in month light bullish probes would be my suggestion. Far from my favorite play as I would prefer soybeans and corn to wheat at the moment.
Dec 06, 2012
Energy: Crude oil lost 1.84% today and is down almost $3/barrel in the last 3 days. As we approach the November lows it will be interesting to see how the market reacts. My stance is as long as the dollar is appreciating oil has a shot to print under $85 in January. I am eager to be a buyer for clients but do not find it necessary to catch a falling knife. After breaching the trend line yesterday RBOB followed it up with a 1.55% loss. A challenge of the November lows which I expect is a further 2.7% loss. Heating oil closed under the $2.95 support level mentioned in previous posts. A 50% Fibonacci retracement drags January to $2.89. The pivot point in natural gas comes in at the 100 day MA just under today’s settlement. I would be ok establishing bullish trade on a 5-10 cent setback willing to let go at a loss on fresh lows.
Dec 05, 2012
Currencies: The dollar started to dig in its heels today trading higher for the first time 6 days. I think we see a trade back near the 20 day MA which represents just better than a 1% appreciation in the coming weeks. Today’s chart of the day is the Euro and I think we are establishing a triple top as I’m forecasting deprecation to follow. All bets are off if the ECB surprises tomorrow. I advised some clients to gain bearish exposure today via out of the money puts targeting a trade back to the 20 day MA. Traders could also probe bearish plays in the Cable with an exit strategy above the latest highs. The BoE also meets tomorrow. Bearish trade in the Aussie and Loonie are high on my radar but I would like to see more confirmation. The Yen gave up 0.60% but stayed contained with the recent base. I am in the camp that we see a volatile spike higher in the near future.
Dec 04, 2012
Metals: Gold futures lost 1.7% to close under the 100 day MA penetrating $1700 for the first time since the first week of November. I expect lower trade thinking $1670 is in the cards and I am not ruling out $1640 on a total meltdown. Prices ran up nearly 17% high to low since summer so a correction lower should be viewed as just that a correction. For the bull market to be sustainable which I believe it is we need to see setbacks along the way. Silver closed lower by 2.82% and under the 50 day MA previously referenced. A challenge of the trend line that has held since summer puts March futures under $32.50/ounce while the 100 day MA comes in at $31.75. My stance is lower trade but exactly where I will abandon ship with clients I’m not sure…my guess is around those levels if given the opportunity. My favored play for the trade is back ratio spreads.
Dec 03, 2012
Currencies: The US dollar lost 0.36% to trade to 3 week lows completing a 61.8% Fibonacci retracement. I do not see much lower ground and would expect buying to support very close to these levels. That being said those long European crosses are advised to trail stops up just under current levels to remain profitable on a correction. I still like bearish trade in the Aussie thinking a commodity correction should pressure and I do not see any bullish action taken by the RBA this week.
Dec 01, 2012
Softs: At the beginning of the week it appeared cocoa was ready to breakdown but prices recovered to close just under 2500 on the week. With prices over the 9 day MA I am mildly friendly but below that pivot point I’d shift gears. That level is 2470 in March. Sugar has finished higher 3 out of the last 5 weeks but prices have gone nowhere. I continue to like scaling into longs above 19 cents but if prices do not move in the next few weeks I would abandon ship and start looking for other opportunities. Risk to reward I still like buying here with an objective of 20.50-21 cents in March. There has been a lot green in cotton gaining 14 out of the last 17 sessions after bottoming just under 70 cents in March. From here I would not rule out a probe north of 75 cents but the easy money has been made on longs in my opinion. Aggressive traders could be gaining bearish exposure in OJ playing retracement after the 20% plus appreciation in recent weeks. My target in January is $1.15. Coffee appeared to be off to the races mid week but the wind was taken from the bulls sails on Friday with prices down 3.7%. Some clients have bullish exposure in March with an objective of $1.63-1.65 in futures. Stay the course for now.
Nov 28, 2012
Metals: Gold broke below its 50 day MA and closed lower by just better than $25/ounce. Lower ground is expected as the 100 day MA should come into play the next few sessions; currently at $1696 in February. I am targeting the Fibonacci levels on the chart as my objectives on the way down. There was talk of “fat fingers” or a bad trade but the reality is more selling than buying. My personal opinion is stops were run and if outside markets cooperate we should see more selling. March silver pared its losses after probing the 50 day MA closing lower by only 0.89% after being down nearly 3% intra-day. I see lower ground here as well thinking we’ve established an interim top…see chart of the day. My exit window would be between the 38.2-50% Fibonacci levels that would put futures lower by roughly by 5.5-8.5%. I’ve advised clients to lightly gain bearish exposure by utilizing back ratio spreads in both gold and silver.