Trading Plan 8/18/10
Traders that have been around know this all t0o well “plan your trade” and “trade your plan.” Crude will finish lower today but well off it’s lows on a bearish inventory report. On such a bearish report the fact that Crude was able to hold its own we think a rally is in the making. As long as $75 holds on a closing basis we still expect a grind to $80/barrel in the coming weeks. At these levels risk/reward we suggest bullish exposure in natural gas. Our suggestions include scaling into October futures and purchasing 50-70 cent November call spreads. We expect sideways sloppy action in the indices; a settlement below the 50 day MA at 1085 should mean 1035-1050, a settlement above the 20 day at 1103 should mean a challenge of 1125. Not to exciting but we view this as a tradable range. December cotton closed down for the third consecutive session; aggressive traders could purchase December put options. November lumber is back above the 50 day MA; we’re thinking a 15-20% appreciation is feasible from here. Comparing the current Treasury market to the NASDAQ tech bubble in my opinion is not a fair comparison. I do think it will end ugly but not because of greed but rather investors realizing 2-4% over decades is a losing investment. A top could be in the making but I suggest waiting for evidence and being late to the trade. Live cattle made a fresh 2010 high today. We expect a higher trade but want a retracement before re-establishing longs for clients. October closer to 93-94 cents and December closer to 95-96 cents. Lean hogs are back above the trend line and once again in my opinion have become a buy dips market. The 20 day MA at 76.30 in October should serve as support. Gold gains again for the fifth consecutive session; I got to tell you though a set back to $1195-1200 looks likely. Silver closed down 1% but the 50 and 100 day MA’s did support. We view support at $18.25 followed by $17.80; these levels need to hold for my clients to remain bullish. Between now and the fall we do think $20/ounce will happen but will a washout in the interim try to shake out the weak longs? Continue to buy dips in corn, soybeans are a sale and we think both KCBOT and CBOT wheat could drop 50-75 cents at any moment. Flip a coin in currencies we have no feel.
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, calls, commodities, commodity, corn, cotton, crude oil, currencies, dollar, energies, futures, gold, grains, lean hogs, live cattle, matthew bradbard, MB Wealth, metals, natural gas, S&P, silver, soybeans, stock market, treasuries, us dollar, wheat
