MBWealth's Commodity Blog » Canadian Dollar

A new sheriff in town 6/24/10

Matthew Bradbard — Thu, 24 Jun 2010 19:42:56 +0000

Australia elected its first female prime minister. Let’s see if a woman can get things back in order. Perhaps other global leaders could learn a thing or two. Looking at the daily chart in August Crude we may get a bounce from here as the trend line that has been in place since mid-May held today. We are not prepared to commit with futures just yet for clients but we lightly started getting long today. Some clients were buyers of September $76/$85 1:2 call spreads. This strategy gives you flexibility and you can react if Crude moves lower to $74 or higher to $81. Contact us for further clarification. We’ve yet to move into natural gas for clients but if $4.70 continues to support we should have some ideas next week. As of this post equities are on their lows moving below the 20 day MA trading to fresh two week lows. Our first objective of 1075 was obtained in the S&P. The question from here is do we see a move directly to 1045 or do we get a dead cat bounce. Clients were advised to put in gtc profit orders on their September ES puts today. October sugar is running into stiff resistance at 16.25…tomorrow we feel we need to see new highs or we would expect to see a re-visit of 15 cents. Continue to gain bearish exposure to December cotton. The move in coffee has been incredible with prices hitting a twelve year high today. It’s a shame the only coffee in my life lately has been the cup of Joe I drink in the morning. Someone has made a lot of money too bad this time it was not my clients. Treasuries should run into resistance at the contract highs made on May 25th. Clients hold a small put position in August 122 bond puts. Live cattle remain a buy as we view this market as a coiled spring ready to bounce. Aggressive traders could short August lean hogs with stops above the recent highs. The line in the sand remains in place in August gold at $1232-35. Clients have no exposure long or short. July silver held the 50 day MA again today. We think it is still feasible to see a trade below $18/ounce so we are advising clients to exercise patience. On a trade lower they will be looking to buy September futures and December call spreads. Traders should have been stopped out of their soybeans and soy meal at a profit in recent sessions as prices have retraced. We moved the CBOT/KCBOT wheat spread order to 30 cents from 32 cents but the order was unable even at that price. Clients have no currency exposure but would be willing to explore shorts in the Aussie and Loonie from higher levels.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Fed Hesitates…will the markets 6/23/10

Matthew Bradbard — Wed, 23 Jun 2010 19:49:57 +0000

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.

Day 1 of Fed 6/22/10

Matthew Bradbard — Tue, 22 Jun 2010 20:07:46 +0000

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.

China Move – a potential game changer 6/21/10

Matthew Bradbard — Mon, 21 Jun 2010 20:00:44 +0000

After making a new high Crude failed and closed almost $2 off its’ intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We’re not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we’d been calling for today; at $5.865 on the August contract. Aggressive traders could scale into longs with tight stops though they’d be catching a falling knife. The more prudent move may be to see if the trend line at $4.80 holds. In a perfect world $4.55-4.65 in August serves as the ideal long entry. A failed rally in indices as the 50 day MA acted as stiff resistance…this may sound familiar as we forecast this exact scenario in recent posts. From here aggressive traders could fade rallies in the S&P and ES. Today most clients started to buy September ES puts. First target in the futures is 1075 followed by 1045. October sugar gained 3.77% today closing just under 16 cents. We continue to feel this contract is a buy near 15 cents and a sale near 16.50 cents. Traders still holding October longs COULD get a push to 17/17.50 but if that lucky we would suggest exiting the trade. We continue to suggest selling December cotton at these levels anticipating a trade back under 75 cents is in the future. September lumber was lower by 4.28% today reaching a seven month low. Bottom pickers this commodity should be on your radar. We advised clients to exit their NOB spreads at a small profit this morning when 30-yr bonds could not breach 122’20 and it appeared equities were rolling over as to their inverse relationship. Apparently the market liked the Cattle on feed report as cattle were well bid today gaining nearly 1%. We continue to suggest bullish exposure in December live cattle. Lean hogs were higher by 2% today; prices have retraced 61.8% in the last two weeks. We’re not suggesting shorts yet but our bullish objective was obtained today. Key reversal in the metals today; we liquidated ALL clients bullish gold and silver today. As for gold if the trend line gives way at $1235 we could see $1155-1175 soon there after. We will be looking to re-establish longs for clients after the coming wash out (as we see it). Silver made a new high and failed forming a bearish engulfing candle on the daily chart. We expect $17.80 and potentially $17.25. Corn is allowing us to lift our July hedges for clients and get more length in the September options and December futures. As we’ve said use this set back as a buying opportunity. Trail stops on your longs in soybeans and soy meal. We would need to see $2.40 in July oats to hit clients profit objectives in their July $2.50 oat puts; current price $2.64’4. The US dollar likely bottomed today and if indices move lower the dollar should gain this week. Our upside target is the 20 day MA at 87.30. Clients were advised to cut losses on their Yen puts today; a loss of $328/per including our fees. Our featured currency play is bearish exposure in the Loonie with clients via futures and options expecting a trade to .9550 in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Markets Consolidate 6/18/10

Matthew Bradbard — Fri, 18 Jun 2010 20:02:00 +0000

Two sided trade in Crude as prices look to finish up 0.50% today. We have advised clients to exit their longs and expect a $3-5 correction into next week. Ideally we would be a buyer when August was below $75/barrel. We should have some trade ideas next week on September and October contracts. We’re sticking to our guns thinking natural gas will correct and allow our clients a long opportunity closer to $4.70 on the August contract. We’re expecting on a last gasp attempt at the 50 day MA in indices to get clients short. As it stands now we like selling the S&P above 1130 and will also be pricing out September ES puts options for clients from higher levels. Aggressive traders could buy probes of October sugar closer to 15 cents (see yesterday’s post).Traders should continue to gain bearish exposure to December cotton via futures and options. We would back off any bearish plays in coffee as we view it too risky. Clients remain short Treasuries into next week (NOB spreads) expecting a trade to at least the 40 day MA; in September 30-yr bonds at 121’18. Cattle on feed report came in around expectations and should have no significant impact on the market. We still like gaining long exposure in December live cattle via futures and options with clients. Record high in gold again today with prices violating $1260. We expect to see a trade to $1300 in the coming weeks. If that happens we would look for an exit door for clients who are positioned long currently. Silver is above $19 as we predicated gaining nearly $1 this week. On a trade above the May highs we would start lightening up on client’s long futures and options. We advised clients to roll all their July longs to September and would recommend you do the same. December corn finished above the 40 day MA for the first time in three weeks but was unable to penetrate the trend line that has served as resistance since January. We will be covering client’s hedges next week on a set back and will be advising clients to gain more long exposure in September options and December futures. July oats partially filled the gap but we would need a trade closer to $2.40 next week to hit our objective of 8-10 cents on the July $2.50 puts. Clients remain in their Yen puts but they could expire worthless next week; this would result in a $400 loss/per. Our favored currency play is short Loonie expecting .9550 in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The last Gasp in the Stock Market 6/17/10

Matthew Bradbard — Thu, 17 Jun 2010 19:56:27 +0000

Indices approach the 50 day MA and then fall apart…that is our prediction. We advised clients to exit all longs in oil today. Inside day and we expect prices to back off…on a $3-5 set back we would re-establish longs. The 9 and 20 day MA’s should serve as solid support; those levels in July come in at $74.80 and $73.25 respectively. The correction in natural gas only lasted one day with prices rebounding today. We may miss this trade but are not willing to commit capital until we get a correction. Traders more aggressive than our clients could be long as the trend has clearly reversed but we are advising clients only to buy on a pullback. For now the 200 day MA appears to be acting as support in the S&P but if it were to give way we may advise clients to get short from lower levels. We have not made a move just yet but we’ve told clients above 1130 we’re interested in getting short exposure via futures and put options…stay tuned. October sugar closed below the 9 day MA for the first time in nine session; another 2-4% decline and we will be shopping longs for clients again. Unless things change we want to be a buyer closer to 15 cents and a seller closer to 16.50 cents. Aggressive traders should continue to gain bearish exposure in December cotton. Coffee had its first down day in eight sessions losing 1.50% today. $1.60 could prove to be an interim top…stay tuned we may have some bearish ideas to come. Treasuries moved higher today against our clients. We will weather the storm thinking this rally will reverse into next week. Clients are in NOB spreads (short 30-yr bonds/long 10-yr notes). As of this post today’s action hit the position for $600 per spread. Cattle on Feed report tomorrow after the close with large numbers expected. We suggest scaling into longs in December live cattle and owning 25-40% into tomorrow’s number. August gold briefly penetrated $1250 today closing higher by $16/ounce. We expect a new record high tomorrow or next week and will be looking to lighten up on a trade closer to $1300/ounce. Silver traded to a four week high inching closer to $19/ounce. A higher trade tomorrow should lead to an attempt at the May highs above $19.50. December corn failed to close above the 40 day MA for the second day in a row. Short term we could see an 8-12 cent retracement which we would suggest buying September options and December futures on. If long soybeans and/or soy meal we would suggest taking a profit and moving to the sidelines. If you got filled on the wheat spread take it off at a small loss ($150-300 per).If you followed us on the July oat puts place a gtc profit order at 10 cents. Oats were down 3.24% today and if they fill the gap from three days ago tomorrow we should be close to our profit objective, a 120% return. We advised clients to take a profit on their long Euro-currency today; though it may be premature the Yen position was moving against them and we wanted to add to the shorts in the Loonie and did not want to have too much exposure in currencies. The Yen broke out to the upside today and clients unfortunately own puts. A total loss would be a loss of $400 per but they still have one week. Clients were buyers of August Loonie puts today that did not already have exposure with a target of .9550 in the futures.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Could it be the calm B4 the Storm? 6/16/10

Matthew Bradbard — Wed, 16 Jun 2010 20:04:38 +0000

A supportive inventory report aided energy prices today with Crude oil and the distillates putting in another positive showing. We feel prices are overdue for a setback so we advise tightening up stops and lightening up on longs. On a pullback we would not expect much more than $3-5. At that point we would be a buyer again for clients. With natural gas prices unable to push thru $5.20 this could be day one of the pullback we had anticipated. A 38.2% Fibonacci retracement would also fill the gap from Friday we mentioned yesterday. We will be looking to be a buyer of September for clients if prices come off an additional 4-6%. We expect another 20-30 points higher in the S&P but think the 50 day MA at 1140 could be a significant hurdle. If October sugar trades above 16.50 in the balance of this week we will be working out of most of our clients remaining longs. Risk to reward we still like the idea of short exposure in December cotton with tight stops or put options. September 30-yr bonds will close below the 20 day MA for the second day in a row but we’ve expected more of a breakdown. It may take the last gasp of air from sock traders to break Treasuries. Clients remain in bearish positions expecting 120/121 in September 30-yr bonds. Continue to work long December live cattle via futures and options. We suggest light exposure ahead of Friday’s Cattle on feed report and then we will be adding to positions next week as long as we get no curve-balls on the report. Sideways congestion in gold and silver as metal traders are trying to figure where from here? If we see new highs in gold and buying does not come into the market we will be offsetting those positions in the next few sessions. Stay tuned and we will let you know the outcome if we make a move for clients. Most clients have bullish exposure to silver but are growing impatient of the non-action. Those carrying large positions long corn we advised to establish some hedges or to lighten up on their longs taking some money of the table. We think there is more upside but we could get a setback in the short term. We pulled back the order on the wheat we mentioned in recent commentaries; buying CBOT wheat and selling KCBOT wheat. Not because we do not like the trade…we do. We need to exit other positions before feeling comfortable gaining more exposure for clients. Traders could have been filled at our suggested limit today (25 cent premium to KCBOT). We suggest risking 8-10 cents looking to make 20 plus cents on the spread. Clients remain long the Euro expecting 1.2600, short the Yen expecting a trade below 1.08 and we put on a trade in the Loonie for some clients today. We think the upside should be capped at .9850 and could see prices give back after the 4.25% appreciation in the last week. Clients went short futures and sold puts against their position with an initial target of .9600.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Contrarian Ideas 6/10/10

Matthew Bradbard — Thu, 10 Jun 2010 19:57:00 +0000

Crude is back above $75 for the first time in 3 1/2 weeks advancing for the fourth consecutive session. On the highs prices got within 30 cents of our first target; again$76.60 and then $79 are our objectives. It is entirely possible we run into resistance just above today’s highs so if you have sizable positions lighten up or tighten stops. Natural gas tested the 38.2% Fibonacci level today but we still want to see more back and fill action before re-establishing longs for clients. Another 20 cents lower and we suggest working long September contracts. Can you say short squeeze? The S&P hit out first sell objective but we backed off and think there is more upside in the immediate future. The sentiment is so bearish we have decided to stay on the sidelines with clients thinking we can see a trade back over 1100…maybe 1125. The 200 day MA at 1100 and the 50 day at 1145 should serve as resistance. Sugar has gained 8% in the last 5 sessions; we expect another 5-8% before abandoning client’s current longs. Aggressive traders could short December futures in cotton with very tight stops. We prefer buying December put options with our clients. OJ and coffee were two markets I was waiting for lower ground but they look to be firming up so I will re-examine both commodities in the coming days…stay tuned. The Treasury complex appears to be rolling over as money finds its way back to risk assets. Clients are in NOB spreads; short 30-yr bonds and long 10-yr notes. As we said yesterday we expect 120/121 in September bonds. December live cattle remain on our buy list via futures and or options. Gold was lower today but held the 20 day MA and trend line. If flight to quality money leaves gold prices could get hit $35-50 ounce at a moments notice but we would buy the dip and advise commodity investors to have a portion of their accounts in either gold or silver. Silver fared better today gaining 10 cents. We suggest using $17.80 as support and $18.50 as resistance. Most clients are long in either futures or options expecting $19/ounce very soon. Did a USDA report actually help our clients yes it did happen today on bullish news on corn. Ending stock lower, ethanol usage higher, imports to China higher not to mention the weekly exports were supportive as well. Continue to buy September options or December futures assuming the low this week is an interim bottom. Of course this is an assumption not a certainty….time will tell. The dollar has lost ground for three sessions now and appears poised to break the 20 day MA for the first time since mid-April. We advised clients to exit their remaining Loonie longs and to place gtc profit orders on their Aussie longs. The Loonie is higher 1.23% and the Aussie 2.68% as of this post. The ECB and BoE kept rates as is which was no surprise. A new trade idea for clients today; they bought July put options in the Yen. Our logic is if the indices rally we should see the Yen break down less than 1.0800.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

New month…fresh perspectives 6/1/10

Matthew Bradbard — Tue, 01 Jun 2010 19:39:03 +0000

Crude and the distillates were off today but as long as the 9 day MA holds on these three markets we will advise clients to stay long. As we’ve said in recent posts we’re expecting more upside in the immediate future. Our target in July oil is $76.60, $79 and then $81.50. We’re advising clients to be positioned in August and September options. Use the 2% set back in natural gas to be a light buyer of September 50 cent call spreads. We are anticipating a rally in the indices and if the market delivers we will be looking to re-establish shorts in the ES for clients…at the moment clients have NO exposure. Sugar was higher by 1.48%; clients remain long October futures against a short October call. We are mildly bullish anticipating 16.50/17.00 cents in the coming weeks. Cotton was a loser again today making today the sixth consecutive session. We’re anticipating another 2-3% lower. Clients were advised to cut losses on their August lean hog puts today; a loss of $225/per. Another bullish trade idea in live cattle; today aggressive clients went long December futures against a sale of December 96 cent calls 1:1. We are bullish but selling the call gives clients a little downside protection. June gold traded to a two week high carrying prices back above $1225/ounce. At the moment clients have NO exposure but based on the price action we do expect a probe of $1250 in the coming sessions. Some of our clients do own silver which was slightly higher today. They are positioned either long July futures or September call spreads expecting a trade above $19/ounce and potentially $19.50 this week or next. Clients that did not previously own corn were advised to buy September calls or December futures today as prices are near the bottom of the trading range we’ve seen in the last three months. We advised clients to take a profit on their long Pounds today as prices were unable to get thru the 38.2% Fibonacci retracement level. Stay the course on your long Loonie positions as we feel there is another 2 cents to go. As for other crosses we advised clients to buy the Aussie today as we expect prices to make their way closer to .8700 in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Long Weekend = Long Commodities 5/28/10

Matthew Bradbard — Fri, 28 May 2010 19:49:13 +0000

We will return Tuesday after the long weekend expecting to see the majority of commodities higher…time will tell. Oil should close about 10% off its lows this week. We expect more upside to come in the weeks to come in Crude, RBOB and heating oil. Some of our clients are back into natural gas; buying September 50 cent call spreads today. We will remain flexible on this position but want to have light exposure to play a potential move to $4.75/5.00 in the coming weeks. As long as prices in the indices sty above the 200 day MA we continue to think we will get a rally out of here. We’ve advised clients that we will be looking to be a seller between 1125-1145 in the S&P. Sugar was off by nearly 5% today; clients remain long willing to ride this a bit lower before throwing in the towel. Most are long October futures and short calls against their futures. Cotton closed lower all five sessions this week; on a trade below 79.50 we expect 77.50. We advised clients to book a profit on their short 30-yr bonds today. We are shy of our objective but chose not to hold the position over the long weekend. Euro-dollars will close down on the week but until we get a settlement below the 20 day MA we would not get too excited about the downside. Those traders with a long term horizon are advised to have short exposure but do not pile in just yet. Clients need more downside ideally next week to exit their shorts in lean hogs. December live cattle gave back all their gains from yesterday today closing down 1.21%. Clients started buying yesterday and will likely be adding to their longs next week. If $1200 continues to support gold we may reluctantly be a buyer next week for clients…stay tuned. Silver was higher by 2.7% this week closing just above the 20 day MA today. Clients are long via futures and options as we expect a trade above $19 in the coming weeks. Funds were sellers of agriculture today doing some month end window dressing. We suggest using this set back to be a buyer of corn, soybeans and soy meal. Clients remain long the Loonie and Pound into next week expecting more upside.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.