The big money appears to be in liquidation mode in an attempt to have some dry powder to be prepared for what next week brings. Oil’s decline was minimal but damage has been done as prices closed below the 40 day MA. We anticipate a trade back to $94 in September and would be on the sidelines or short not long. Natural gas has lost 8% in the last two weeks closing lower nine out of the last ten sessions. Longs are on our radar but we’ve yet to make a move although the closer we get to $4 the more interest we have.
Stocks are slightly lower giving back gains from early dealings. We expect to see more an additional 2-3% depreciation in the immediate future. December gold traded below the 9 day MA but did manage a close just above that level; at $1607. Consider yourself warned we expect a $50 drop in the next few sessions. September silver is $1.70 off its highs from yesterday but we think you could see another $1.50-2.00 into next week. The 20 day MA seems like a reasonable target; at $38.05. Day two of the dead cat bounce in the dollar as we expect this to continue into next week…trade accordingly. The Loonie broke the trend line that has supported price action for the last four weeks. We are suggesting bearish exposure looking for an additional 1-1.50 cent break in September futures.
Sugar gave up nearly 4% today as October may finally be breaking. A 38.2% Fibonacci retracement on the move since May is a trade to 27.25 while a 50% move would drag prices back to 26 cents. We would be ok remaining long cotton as long as 99 cents holds in the December contract on a closing basis. OJ traded to a new contract high today…we’re suggesting fading this rally with November options. All agriculture products were lower in today’s session but we would like a bigger break next week before positioning clients long ahead of the August USDA report. This will likely be in corn and soybeans but stay tuned for specifics. If October live cattle can get above 116.50 tomorrow we will hold our clients long options into next week as a trade to the 20 day MA at 117.70 may be attainable…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.
MB Wealth Corp.
Trading in commodity futures and options involves substantial risk of loss. Past performance is not indicative of future results.