Day 1 of Fed 6/22/10
Though we expect no change in rates tomorrow volumes have dried up in recent sessions; perhaps after 2:15 tomorrow investors/traders will be back at work. Crude oil should settle lower again today; on a breach of the 9 day MA at $77.50 expect a challenge of the 20 day MA at $75.50. If our assessment is correct expect the distillates to give back as well. This could all change on tomorrows inventory report or an over reaction on the Fed decision. As we voiced yesterday we’re not advising shorts but rather to exit longs and look to re-enter from lower levels. Natural gas briefly traded below the 20 day MA; that level comes in at $4.75 in August. The 50% Fibonacci retracement level on the August contract is $4.67, the 61.8% comes in at $4.54. We’re tracking September and October call spreads but have not acted on behalf of clients yet…stay tuned. We feel an interim top was put in yesterday in indices and aggressive traders can fade rallies. Most of our clients have bearish exposure via September put spreads in the ES. Our first objective is 1075 and then 1045. Sugar remains a buy dips market as we feel there is more upside to come; with resistance in October at 16.20 and then 16.65. December cotton remains on our sell list as we expect a 5% sell off. Aggressive traders can short futures with tight stops though we prefer purchasing put options for our clients. Not me but someone is interested in our Treasuries as the auction was well bid today. 30-yr bonds traded to a new two week high; clients should get an opportunity to be a seller from higher levels in the weeks to come. The high settlement in the September contract is 124’29 which could be broken tomorrow. December live cattle failed at the 38.2% Fibonacci level and could see more sideways action. On a trade above today’s high we would likely be adding to clients longs. Sideways chop in the metals today; after yesterday’s reversal we feel that a correction is upon us. Traders should re-visit silver under $18 and gold under $1200. Clients were advised to lift their short July hedges in corn today. We’ve been pretty consistent but those that need to hear it again use this pullback to buy September and December corn as we feel the bottom is in and we could see appreciation in the coming weeks. Tighten up stop on soybeans and soy meal longs. Client’s currency exposure includes bearish plays in the Loonie and short futures in the Pound were established today. Our targets are .9550 and 1.4570 respectively.
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: bonds, british pound, Canadian Dollar, commodity, corn, crude oil, federal reserve, FOMC, forex, futures, gold, live cattle, MB Wealth, natural gas, options, silver, treasuries
