Crude will close above the 9 day MA for the first time in three weeks advancing nearly 3% today. Futures have moved roughly $13 off their lows from last week and from here we feel you could see an additional $5-7. The distillates should also move north from here as heating oil has advanced the last four sessions and RBOB three out of the last four we've closed higher. Early selling was rejected in natural gas with prices holding onto the 9 day MA; in September at $4.01. We're suggesting bullish exposure in October. The indices will close 1.6-2.5% higher in today's session with the S&P and Dow nearing their 38.2% Fibonacci retracement levels. We expect more and as we voiced last week our targets are 11700/11800 and 1235/1245 respectively. Gold recouped $22/ounce today after selling off in previous sessions. We think we could see a trade lower but have opted to view from the sidelines. A trade closer to $1675 in December may get us interested ...stay tuned. Silver picked up 1.4% today closing just below the 20 day MA; in September at $39.66. Trade the breakout above $40 or below $37/ounce. The dollar and Swissie got hit today while other crosses were in the green on the day, the Aussie and Euro gaining the most on a percentage basis followed closely by the Loonie. Our trade recommendation in this sector remains bullish exposure in the Loonie. We have select clients long cotton and OJ looking for more upside and we still like being long November lumber though we've yet to make a move for clients. Cotton could break out to the upside if price action can fight through the previous congestion just above today's highs. As for OJ we should continue to see a bounce after the 20% route we experienced in recent weeks. Aggressive traders could have bearish exposure in 10-yr notes or 30-yr bonds...at the moment we have NO exposure with clients. The logic is if equities rally and most commodities rally the money should flow out of Treasuries...at least in theory. A trade back to their 20 day MA's would be 5 handles in 30-yr bonds and nearly 3 handles in 10-yr notes. Soybeans and soybean oil remain on our buy list but we've chosen to reverse course in corn and have advised aggressive clients to gain bearish exposure to play a potential 4-6% depreciation.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.