Afternoon Delight 7/20/10
Apparently when traders came back from lunch they found something the liked reversing indices and taking prices higher. The key will be if we have a solid close and follow thru in the coming sessions. Higher high and higher low with Crude finishing just over 1% higher in today’s session. As we’ve said in recent posts aggressive traders could buy dips as long as the 50 day MA holds; in September at $76.70. September natural gas should finish up 1.70% on the day closing just above the 100 day MA. Our suggestion remains purchasing October 50 cent call spreads. Buyers emerged in the indices today lifting prices 1.3-1.6% as of this post forming a bullish engulfing candle on the daily charts. We expect the 50 and 200 day MA’s to cap rallies; those levels are 1083 and then 1103 in the S&P and 10150 and then 10240 in the Dow. October sugar closed down just shy of 2% but did maintain the 100 day MA at 17.15. Take off longs and move to the sidelines. Aggressive traders could sell December cotton with stops above the 100 day MA at 73.90. We may miss the trade but we would prefer to be a seller closer to 77 cents. Coffee lost for the third consecutive session; we likely will have bearish suggestions in the next few days. Remember just over one month ago prices of coffee were 15% below their current price. Prices in Treasuries (30-yr bonds & 10-yr notes) have been unable to see extended upside this month. If prices fail to get above 128’19 and 123’18 soon aggressive traders could get short. Live cattle gained again today making that five out of the last six sessions. It will likely take a trade to 97 in December for the remaining open positions to hit their profit target. Lean hogs appear to have hit an interim top this week and should be sold on rallies. For the last two days the 100 day MA has held in August gold at $1179. As long as this persists aggressive traders can scale back into longs. At the moment we’re not convinced $1155 will not come into play so we’re on the sidelines with clients. Inside day in September silver with prices closing back above the 200 day MA. We see solid support at $17.30 and have advised clients to have small long futures position in September as long as that level holds. Additionally clients own December call spreads from higher levels and are down on the trade. We’d like to see more downside in Agriculture before re-establishing longs for clients. December corn closer to $3.70, November soybeans closer to $9.45 and December soy meal closer to $270. The US dollar is trying to carve out a bottom and we expect a dead cat bounce. In the September contract we would not expect anything more than 84.50-85.00. Some clients remain short the Euro via options and the Swissie via futures and options. The BoC raised rates 0.25 to 0.75% today as expected.
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: bradbard, coffee, commodities, corn, cotton, crude oil, futures, gold, inflation, lean hogs, live cattle, natural gas, S&P, silver, soybeans, sugar, treasuries, us dollar
