As we voiced yesterday the longer we fail to close over $90/barrel the likelihood increases that we get a correction of $3-5 lower in the immediate future in Crude oil...trade accordingly. If we are so lucky to get that break we would be a buyer of November or December at those levels. Aggressive traders could gain bearish exposure with stops just above the recent highs. So much for our breakout in natural gas as prices fluttered nearly 4% today closing back below the trend line. We remain long with some clients but the wind has certainly been taking from our sails...stay tuned. After breaking the trend line yesterday gold continues lower giving up just over 2% today closing at two week lows. Our first target in December is $1745 followed by $1695 and ultimately $1650. December silver closed at the 50 day MA today losing 1.6%. We think short term the path of least resistance is lower ...our targets are $38.75 and then $37.60. We view the currency sector as perhaps the most aggressive so tread lightly but we continue to get a number of trade signals. On our radar is buying dips in the Euro, Pound and Loonie and the Swiss franc remains our lone open position with some clients. We're still looking for a recovery bounce after last weeks intervention. On a trade north of 1.2000 we would likely start lightening up for clients in this trade. Clients still positioned long in OJ are now playing defense as prices have started to roll over. We will now need to see a new high trade for these positions to be profitable...stay tuned. Cocoa nears its contract lows as we gave up another 1% today. Yesterday clients started scaling into longs and we still view that as a viable trade. 10-yr notes closed below the 20 day MA today and 30-yr bonds are approaching that key pivot point. For months we have said on a settlement below the 20 day MA an interim would likely be in...stay tuned. Ag continues lower with corn down by 3.2% trading near $7/bushel.. We were laughed at weeks ago when making that recommendation but we let the trade speak for itself. The easy money on shorts has been made but there could be a little more downside. Soybeans gave up 1.75% while wheat lost 1.2%. The entire complex should feel some more pressure but we view it as unlikely that we get a meltdown in agriculture unless we see a mass exodus from funds with is NOT going to happen in my humble opinion. Continue to buy dips in lean hogs. We may have gotten out of some of our clients live cattle futures prematurely so on a slight appreciation we will likely re-establish shorts. Thankfully for our clients bearish options positions we stayed in the trade as cattle lost 1.3% today and should see further downside. Yesterday it was more of a risk management decision but hindsight we should have stayed in the trade. The lesson is if you leave a trade it is OK to go back to the drawing board and if the merits are still there to get back in the same trade even at lower/higher levels.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.