Bernanke mumbled about inflation and voiced that the Fed will continue to do all that it can do which is good in theory but what tools are left in the tool box? Crude touched $90/barrel for the first time in five weeks but yesterday and today prices were unable to penetrate the 40 day MA. We're advising longs to lighten up as we feel the easy money has been made on longs. I'm incapable of calling a top so it may not make sense to leave the position altogether but after a $10 advance don't rule out a $3-4 correction. If that happens we would continue to buy dips for clients. Natural gas closed back above its short term MA's and appears to be on the verge or breaking above a trend line that has capped up action since early June. We love bullish exposure into November and December thinking this is one of the best risk/reward plays in the commodity complex. Flip a coin in terms of the short term direction in the indices ...we chose the sidelines. Ultimately on a trade higher we would be looking to gain bearish exposure with clients...on a move closer to 1235-1250 in the S&P. Gold gets back most of yesterday's losses today as the 20 day MA continue to act as solid support. We remain on the sidelines with clients looking for a long entry from lower levels. Silver picked up nearly 2% but we have no exposure currently...basically we are uncomfortable with the trend less markets and see better opportunities elsewhere. The 1% advance in the greenback today helped lift the dollar to near two month highs. The Yen backed off slightly which helped with our bearish trades but not so good news in regards to the Swiss franc. Clients have light exposure via options but the near 2% decline today sucked out plenty of premium in their calls. We do expect a recovery in the coming weeks but the daily chart is ugly and we may take some more heat in the immediate future...we suggest weathering the storm for now. We hit out first target of $1.70 in November OJ but clients remained in their positions as we feel there is more left...stay tuned. Continue to scale into shorts in December coffee...our target is $2.70. Corn broke the trend line that we've hinted at in recent blogs trading down nearly 2% today. Traders could remain in their bearish trade in corn...either outright short December 2011 or in the spread short December 2011/long December 2012. If you don't like corn we view soybeans as a potential short target as we feel $13.50 in November is a more appropriate price. The bullish momentum is picking up in live cattle and is staring in lean hogs. My suggestion is to be long either of these livestock products.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results