Money is flowing out of safe havens i.e. gold and 30-yr bonds and back to more speculative plays i.e. Crude oil and stocks is confidence returning? Crude is higher by almost 4% as of this post but the next test will be if we can trade above previous resistance just above today's highs. We do expect this to happen but we would not rule out a slight retracement first. That being said continue to buy dips but we suggest trading November with new entries. Same story with heating oil and RBOB, if they take out previous highs look for the momentum to lift prices even higher. Remember a rising tide lifts all boats. Natural gas remained positive but was unable to hold onto the gains from early in the session. Still under $4 we view natty gas as a buy thinking $4.25 followed by $4.50 in the coming weeks. An impressive showing in equities today with a gain 2.5-4% as of this post. Clients will remain on the sidelines but forced into the market we think we could see a trade higher into the FOMC meeting. Gold gave up just over 3% today trading below the 20 day MA but able to hold onto to settle just above that level; in December at $1810. On a breach of the trend line just above today's lows expect selling to intensify. A 50% Fibonacci retracement drags prices back under $1700/ounce...trade accordingly. Silver appears to close slightly lower but a 20 cent loss is a hiccup as intra-day prices were off more than $1/ounce. Like gold we expect further downside with a target in December at $37.50/38.00. Our current holding for some clients in the currency market is bearish option plays in the Yen and bullish option plays in the Swiss franc. We're looking for a trade to 1.2800 in the Yen and 1.2000 in the Swiss in the next few sessions. Cotton was higher by the daily limit...another 5% advance and shorts will be back on our radar. OJ picked up another 1.8% today as the grind higher is getting our clients November call options some premium back...again our target is $1.70/1.75. Aggressive clients started to scale in December coffee bearish plays today. We opted for a 1:3 ratio spread expecting coffee to trade lower after the 60 cent surge we've seen in recent weeks. Not a top but maybe a trade as Treasuries may make an attempt once again at the 20 day MA . Some aggressive clients have bearish ratio spreads on in 30-yr bonds trying to capitalize on a trade closer to 137'00 in December. With the exception to rice and soybean oil all the Ag commodities were in the red today with corn and wheat down 1%, and soybeans marginally lower. We continue to suggest scaling into shorts in either soybeans or corn with our top pick being corn thinking we trade lower in the coming weeks. Keep your size small because even while the technical picture supports a break we do have a USDA report next week. Lean hogs and live cattle are a buy on dips as we should see a 3-5% advance in the coming weeks. We will likely have options and futures trade recs to follow so stay tuned.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.