Liquidity Squeeze 8/27/9
Well as month end nears and volumes start to drift expect volatile movements as seen with the reversal in equities mid-day the rally in oil and the fall in the dollar. We remain spectators in the stock market comfortable viewing from the sidelines. The move in oil was impressive as we missed a pretty nice rally. We are pricing out December $75/80 call spreads for clients currently. A trade over $73 should lead to an attempt at $75 in October. Was natural gas down yes but we should close 10-15 cents off the lows. Being the talking heads are calling for $2.50 we most likely are nearing a bottom. A trade $1 higher in the futures in the next 30/45 days is not out of the question. We do not have a good feel for the metals either way so we would trim your position. Metals could go either way in the short run. We suggested for clients to exit their gold today and lighten up on silver longs. Longer term we remain very bullish. On market manipulation we may get a healthy set back. By no means are we advising shorts in metals. Corn slightly higher, still building a base and wheat slightly lower. Both of the ag’s have been sideways but our bullish bias still lives, clients are long December calls. For a futures play one could get long with stops below the recent lows. Cocoa got hit by almost 5% today. We are on the right side with clients but will we have enough time on the October contracts? Live cattle and lean hogs were higher on the day. We suggest traders who are not following livestock too start because we could be in the beginning stages of bull markets for both. Of Course just my opinion.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
Tags: cocoa, commodity, corn, crude oil, futures, gold, lean hogs, live cattle, livestock, natural gas, options, silver, stock market, wheat
