The Federal Reserve warns of economic risks. Really thanks for the new update ....rising unemployment, a declining housing market, a sideways stock market, record low yields in Treasuries, rising commodity prices and global uncertainty...yeah I would say economic risks are abound. Crude is finding support at the 50% Fibonacci level if you look at the lows from the last three sessions. We expect that level to give way and a trade under $84 a barrel in the coming session could be the viewed as a window to start scaling into longs...in my opinion. If that prediction plays out look for another 10 cent deprecation in the distillates before we find buying. Natural gas prices continue to slide ...some clients remain in their longs. We will need to find support soon as they are dying a slow death with bullish exposure. Apparently stock traders did not like what the Fed was serving as indices not only failed to rally but sold off 1.5-3.0% on the Fed meeting. We will likely be a seller of ensuing rallies with aggressive clients in the Russell or S&P...stay tuned. Based on today's reaction stocks could quickly find their way back to their lows on August 9th. By the end of the day gold and silver had lost their luster reversing after the FOMC meeting with gold don $26 as of this post and silver negative by 55 cents. We are on the sidelines in silver with current clients and have bullish ratio spreads on in December gold. The US dollar broke out to near seven month highs today after the Fed so pay very close attention if this is a failed rally or the continuation of the most recent appreciation. This will be key in a number of other commodity trades. We've yet to act on the Pound but at eight month lows when we see signs of an interim bottom this is on our radar as buy. We choose not to catch this falling knife as we have already done so in the Swiss franc and that has yet to play out. Perhaps a key reversal today in cocoa as new lows were rejected and a close 2.5% off its lows. We're suggesting bullish exposure in March contracts expecting a trade back to the 50 day MA. Cotton, sugar and coffee are all in sell mode. OJ failed to break above previous resistance but after taking a breath we expect it to into next week and if so we would offset clients November bullish option plays...trade accordingly. Treasuries are at new highs in price with yields at multi-decade lows for short and medium term instruments. The action of the Fed and current administration a joke and I cannot see how it can help. That is my rant in terms of trade do not fight the Fed whether you agree with their actions or not because you will get run over! Agriculture continues lower with soybeans the biggest loser shaving 1.3% today. Perhaps another 20 cents lower in corn and wheat and we will be looking for bullish opportunities with clients that trade Ag. We suggest to continue fading rallies in live cattle as beef should come under pressure in the coming weeks. Our target in December live cattle is a trade under $1.16 in the coming weeks...trade accordingly.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.