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.
Nov 06, 2012
Metals: I was looking for a bounce in gold off the trend line and 100 day MA outlined in recent comments and today we got it, December futures higher by 1.89%...well above $1700/ounce. This could be the beginning of the leg to $2000 but it is too early to tell. At a minimum my feeling is we get a trade to the 50 day MA roughly $25 above today’s close. That is enough for a great trade jumping in and out in bullish February option spreads for my followers. Silver and today’s chart of the day experienced similar upside appreciating nearly 3% today. The fact that we closed above $32/ounce in December should lead to follow through in the coming sessions in my opinion. My target here for traders is also the 50 day MA; currently $33.20. Likewise similar strategy with back ratio spreads in March contracts to play this volatile appreciation I see coming. Stay tuned as we may need to be nimble in the coming days.
Nov 05, 2012
Livestock: Though it’s been a marginal loss live cattle have traded lower the last 4 sessions. The 9 day MA continues to cap upside as prices should continue to leak lower. The path of least resistance has been lower in feeder cattle as well with a trade under $1.46 in January again today. At this point do not rule out a challenge of the July lows. Lean hogs lost better than 1% for the lowest close in 3 weeks. My target in December remains 76 cents and I would not rue out a probe of 75…trade accordingly. My favored play is short futures while simultaneously selling out of the money puts 1:1.
Nov 01, 2012
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 2 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.
Oct 31, 2012
Energy: Crude oil backed off unable to hold onto its gains but I’m seeing signs of the tide shifting with a positive close 4 out of the last 5 sessions. Exit remaining bearish trade and book profits. I expect to have bullish trade recs in the coming sessions…stay tuned. RBOB closed positive but nearly 7 cents off its intra-day highs. The 100 day MA has acted as support of late but do not rule out one more probe. Traders that have ridden RBOB lower should tighten up stops. The 8 day MA has capped heating oil the last 3 sessions as prices have yet to reach their 100 day MA but that is still a possibility in my opinion, just over 7 cents from today’s settlement. Natural gas is almost 30 cents from its high 2 weeks ago and should grind lower but my take is it may be a sharp probe as prices should not stay low for any lengthy period in my opinion. I will be looking to buy contracts into next year on a trade near $3.50 in December.
Oct 30, 2012
Softs: Solid support is seen at the 200 day MA in cocoa evident by the 1.70% leap today and the fact that intra-day prices were up by 4.33%. This is a case of why shorts should trails stops and be out of the trade based on recent price action. Sugar had a marginal gain closing in the green for the first time 8 trading sessions. Scale into bullish plays in March contracts looking to build length on the appreciation. I’ve started to recommend bull call spreads targeting the 100 day MA in the coming weeks. The 100 day MA capped upside the last 4 days and after another failed attempt the bears gained control taking cotton down by 2.33%. I’ve been calling for a trade under 70 cents and we will lively get it very soon. In December under that level I see support at 67.50 cents…trade accordingly. Weakness should persist in OJ as prices are now within 3 cents of their contract lows with no clear sign that selling is done. Coffee cannot get out of its own way...down by 2.7%% today just as I felt a rally was developing. Prices could breakdown but I would not establish fresh bearish trade with client until we get a rally.
Oct 29, 2012
Currencies: 6 out of the last 8 sessions the US dollar has been in the green and today was the first settlement above the 50 day MA since early August. I see further upside and at this point I’m targeting a trade north of 81… a feat that has not been reached since the first week of September. The Euro is below its trend line mentioned in previous posts but remains above its 50 day MA. A trade lower is forecast as bearish trades should have stops just over the 20 day MA. The Loonie is the only commodity currency that I would suggest bearish trade currently. A settlement under par should lead to lower ground. I did advise traders to lighten up last week but those still in should be aiming for .9925 and potentially .9850. As long as December holds 1.2500 in the Yen stay the course in longs attempting to play a bounce.
Oct 26, 2012
Oct 25, 2012
Currencies: Indecision in the dollar as a trade under the 20 day MA leads to lower trade while above the 34 EMA higher trade…stay tuned. The Euro broke the trend line mentioned yesterday so aggressive traders can start gaining light bearish exposure. All remaining shorts should be out of the Pound due to the latest chart action and prices penetrating their 20 day MA. A 50% Fibonacci retracement was completed in the Yen with the 0.58% loss today. Another penny lower could be seen buy I’ll be absent as the easy money has been made in my eyes. Outside of the Euro the only open recommendation is bearish trades in the Loonie as I fell support will give way and we will see a sub-par trade.
Oct 24, 2012
Softs: The near 4% drop in cocoa should have gotten long traders stopped out at a marginal profit from entries last week. Let’s see how we trade the next few days before picking a direction. Sugar closed lower for the third consecutive day trading at fresh lows before paring losses by the close. Depending on stop placement you should be close to taking a loss. Pries will need to hold or cut and move to the sidelines. Cotton lost 2.15% to trade under its 200 day MA for the first time in 2 weeks. More selling is expected but I’d only play via options as a futures trade has too much risk being prices have already dropped 6 cents in December. Coffee is back under $1.60 within a few cents of the recent lows but I’m still calling for a bounce…trade accordingly.
Oct 23, 2012
Metals: Gold lost just better than 1% getting within $5 of $1700/ounce. On a trade near $1665-1680 I would be booking profits on bearish trades and starting to price out bullish positions into next year…stay tuned. Silver closed lower by 1.77% closing near its lows under $32/ounce. The 100 day MA comes in at $30.25 and though we may not get that low I do think we can get pretty close which means stay the course on shorts for now.