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.
Oct 22, 2012
Energy: Crude oil lost nearly 2% with December fast approaching $88/barrel. Depending on outside markets we could see a trade under $86 as that is where I see the next major support. I would likely be offsetting bearish plays if that happens this week...stay tuned. In the last 2 weeks RBOB has traded lower every session losing just over 8%. We should see a trade under the 100 day MA with is 3.5 cents under today’s settlement. Buying should come around the 50% Fibonacci level just over 10 cents from current prices. Heating oil lost 1.63% with prices in December approaching $3.05. I see a lower trade as prices should challenge their 100 day MA as well just better than 10 cents below today’s close. The consensus is remain in bearish trades looking for more downside. Natural gas lost 4.54% to close under at its 18 day MA; a support level that has held for the last 6 weeks. I think natural gas will trade lower by 25-40 cents in the coming weeks and move lower with the rest of this complex. My suggested trade is short futures while simultaneously selling out of the money puts 1:1.
Oct 19, 2012
Currencies: With the last 2 days appreciation the dollar has made its way back to its 20 day MA where it closed today. A further appreciation could pressure other crosses so pay very close attention to this pivot point; 79.70 in December. I continue to like bearish exposure in the Cable and the Loonie. The Pound traded down to its 50 day MA today and on a breach of 1.6000 early next week 1.5858 should be the next stop. The Canadian dollar broke the trend line mentioned in previous posts that has supported since June. Prices have been above par since early August but I expect that to change in the coming weeks. It is not simple but what I’ve told clients is that as metals and energies trade lower as too should the Loonie. Continue to trail stops in the Yen and milk what the market will give you.
Oct 18, 2012
Softs: Cocoa appreciated 2.22% to close above the down sloping trend line that has acted as resistance since the highs in early September. This may sound familiar as I predicted this in recent post. From here I am expecting a tradable bounce that lifts prices to 2550/2600 in December. Sugar is within 1.5% of its low trade this year but that alone is not a reason to buy. I am waiting for signs of an interim low before advising clients to re-establish bullish trade in March contracts. A 4 1/2 cent trading range in cotton represent a $2250 range but I would have expected more upside follow through after yesterday limit close and prices closed unchanged today. My target is the 200 day MA just under 2 cents from the settlement but I am looking for a sell signal from higher ground and would not be long currently. Coffee lost 1.8% dragging prices to 6 week lows as prices are slowly making their way to contract lows which I do think will happen. Today’s close is within 3.25% of those levels reached in mid-June.
Oct 15, 2012
Metals: Gold lost $22/ounce today and is lower 6 out of the last 7 session losing approximately $60/ounce. Lower trade is my call as I see a trade under $1700 this week if not next. A trade to the trend line drags December futures to $1665 which would be a 50% Fibonacci retracement. Silver gave up 2.75% today dragging price to the lowest close in 5 weeks. Prices are now $2.25 off their recent highs and more selling should follow. My fist target is $31.75 though I don’t see much support until $30.75…trade accordingly.
Oct 11, 2012
Grains: A bullish reaction to today’s USDA. See more extensive coverage on our website from our Agriculture specialist; Doug Bergman. 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.
Oct 10, 2012
Softs: Cocoa gave up 1.86% to trade back near its 100 day MA closing just under its 50% Fib level. 2300 is my third and final target but make sure your trailing stops as after a 12% sell off this market could experience a violent bounce. Sugar lost nearly 1% closing under its 100 day MA for the first time since prices cleared that hurdle 1 week ago. Close out bullish trade and look to buy back in after a correction happens. I think March can be re-bought closer to 20 cents. The 100 day MA continues to cap upside in cotton…as long as that continues remain in bearish trade but stops should be right above that level; currently at 72.40. Coffee lost 1.12% with lower trade 6 out of the last 7 sessions. I am still not ruling out a new contract low and would remain in bearish trade for now.
Oct 09, 2012
Metals: Gold has lost ground the last 3 days falling just shy of $30 or 1.7%. Far from a meltdown but I do think this is the beginning of a leg lower that could put prices under $1700/ounce, back near its 50 day MA. Silver also closed lower today at a 2 week lows under $34/ounce. Prices are approaching the low of the recent trading range and the next test will be if we can penetrate that level and get back near my first target of $31.70/32.00. Once copper breaks $3.67 in December we should see a quick 10 cent drop…trade accordingly.
Oct 08, 2012
Currencies: The dollar is back above its 20 day MA making another attempt at upside. The Pound was the big loser today giving up 0.67% as of this post trading under its 34 EMA for the first time since mid-August. I anticipate more selling and would trail stops down trying to capitalize on a potential trade under 1.5900. With the Yen probing its 20 day MA you should have been stopped out of shorts. Book profits on Aussie shorts as we likely will get a bounce from the same levels prices were supported in early September. I am eager to sell the commodity currencies from higher levels…stay tuned.
Oct 05, 2012
Treasuries: 30-yr bonds have lost ground the last 3 sessions closing the week out under their 20 day MA. I expect further selling and have advised bearish trade looking to capitalize on a trade back near 145’00 in December. 10-yr notes have also started to roll over and ended the week at their 20 day MA. I think the path of least resistance is lower in this instrument as well. This could set up great for a NOB spread as bonds should outpace notes on their way down. This week alone the spread picked up 2 points or $2,000 per. Lone dated 14’ Eurodollars are also a sale at these levels for a trade in my opinion
Oct 03, 2012
Energy: Crude oil gave up better than 4.25% today dragging prices of November futures under $88/barrel near 2 month lows. Another $1 and change and a 61.8% retracement is compete to my third target. I will be looking for an exit window before the weekend if the selling continues. RBOB is roughly 17 cents off its recent highs probing its 50 day MA but closing just above that critical pivot point. On a settlement under $2.79 in November expect $2.65 to be the next stop. Heating oil lost nearly 2% closing lower for the fourth consecutive session and below its 50 day MA for the first time since mid July. This leg should drag prices under $3 which has not happened since early August. With almost a 4% drop in natural gas today the correction hinted at in recent posts could be under way. Assuming an interim high yesterday as 50% Fibonacci retracement of this last leg puts November back near $3.15.