Fed Hesitates…will the markets 6/23/10
Third consecutive down day in Crude as the August contract today traded below the 9 day MA for the first time in two weeks; that level is $75.80. There should be some more work on the downside but we would expect buyers to emerge between $73-74. August natural gas is finding support at the 20 day MA but we would caution traders to wait for tomorrows AGA report before getting long. Buy a spike lower on the report if given the opportunity. This is on our client’s radar but we’ve yet to get involved…stay tuned. The Fed might as well take off as we see no reason to meet if they keep their outlook unchanged. I’m not advocating rates to move higher but I believe the Fed is failing to see the forest through the trees. Indices are finding mild support at the 20 day MA. Short term we could see a bounce and if so we advise traders to fade the rally as we still believe a retest of the June lows is imminent. Aggressive traders can continue to buy October sugar near 15 cents and sell above 16 cents. In the softs sector as well aggressive traders could sell December cotton expecting 74-75 cents in the not to distant future. Traders with large short positions in the S&P were advised to buy August 30-yr bond puts to weather a modest rally in indices. Gold traded below BUT settled above the 20 day MA and trend line that has held in recent weeks. As we’ve said on a breach of this level expect a violent 4-6% decline. The 50 day MA passed the first test today as prices bounced from $18.25-18.35 level. Clients may start nibbling in September futures 50-70 cents lower and look to buy December call spreads. Use the current set back to get long corn; USDA quarterly stocks report one week from today. Clients are running out of time on their July oat puts; with out a large decline these options will expire worthless. This would result in a loss of $225/per. We will be looking to enter CBOT/KCBOT wheat spread for clients tomorrow at 32 cents o/b premium to KCBOT. Clients were stopped out of their shorts in the Pound at a loss of $240/per. Clients were advised to book profits on their shorts in the Loonie in their futures and options as our downside objective was realized and we did not wish to carry the position into the FOMC. High to low the Loonie has depreciated 300 points in the last three sessions. If September rallies to .9750 in the coming sessions we may get clients short again.
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, bradbard, british pound, Canadian Dollar, commodity, corn, crude oil, Fed, FOMC, futures, gold, MB Wealth, natural gas, options, silver, treasuries, USDA
