MBWealth's Commodity Blog » euro-currency

CHINA – the 800 lb. Gorilla 12/1/10

Matthew Bradbard — Wed, 01 Dec 2010 20:33:13 +0000

So much for a slow down in China. Bullish engulfing candle in Crude oil today with prices reaching a fresh two week high approaching $88 in January. The 20 day MA at $85.40 should support with upside resistance eyed at $89.25. Natural gas was supported today by outside markets but we’ve yet to suggest for clients to re-establish longs. We would like to see further evidence that prices can maintain current levels. Thankfully we did not act on our bearish bias in the equity markets as China’s friendly PMI aided in a surge of 2-2.50% in the indices. We could be headed for an additional 2-4% but we do not want to be involved with clients. The US dollar could retrace from here if monies continue to flow back into commodities and securities. Operating under that assumption we started gaining long exposure in the Euro today; purchasing March call options for clients. Live cattle printed a new contract high; clients are waiting for a retracement to buy February and April contracts. The 20 day MA supported February lean hogs today…lets see what tomorrow brings. We either advised clients to lighten up on their metal positions or tighten stops as the ride up has been nice but we cannot rule out a correction in the immediate future. Those wishing to remain long we prefer positions in silver to gold. Copper broke out to the upside today gaining nearly 3%; buy dips that hold $3.75 in March. Follow the flow of money out of Treasuries into commodities and securities as a inverse relationship should continue. Corn certainly held the necessary levels as did soybeans and wheat which were all higher in today’s session. Clients cut loses on their short January soybean positions while some reversed and got long March contracts. Our favored pick remains corn but as a whole agriculture is a buy on dips. Sugar was higher by 3% today and on a push thru the 20 day MA at 28.80 we should see a trade near 30.00 cents in the March contract. This should allow clients in March calls to book a profit…stay tuned. I’d rather be lucky than good. Those that listened on our buy in cotton were rewarded with a limit move higher today. As per previous posts we’re expecting a trade in the futures back near $1.30. Those willing to trade illiquid markets could start scaling into longs in lumber with stops just below the recent lows.

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

Regulation reform is rejected 7/15/10

Matthew Bradbard — Thu, 15 Jul 2010 19:57:04 +0000

Reform is rejected as “Mr. Market” does not like the coming changes. Oil’s performance today was similar to yesterdays with a large trading range; prices closed virtually unchanged remaining above the 50 day MA. Continue to use the 50 day MA as your pivot point; in August at $76.25. We expect oil to trade between $75.50 and $79 in the next week and would be willing to trade that range for aggressive clients. Natural gas exploded to the upside today gaining nearly 7% with prices currently above the 100 day MA. Clients are advised to buy October 50 cent call spreads. The S&P is running into stiff resistance at the 200 day MA and 1100 could prove to be a tough hurdle to over come in the September futures. Aggressive traders could start scaling into shorts as we said in our commentary Monday. Most of our clients put on ES positions yesterday. They bought August 1150 calls and September 1075/1000 put spreads. See yesterday’s post. October sugar was higher by 2.47% trading to a new 2 1/2 month high. Clients worked out of more of their October calls. They are nearly out of all their October sugar calls but as we’ve suggested 18 cents may be a stretch on this leg. Stand aside in Treasuries and look to be a seller from higher levels. December live cattle have reached our objective; traders with sizable positions are advised to lighten up. Clients have placed gtc profit orders on their call options. Inside day in gold; clients have No exposure. At this point we feel we could see $30 move in either direction? Silver has yet to make up its mind if prices can push higher. In the last two sessions we’ve traded above the 20 day and 50 day MA’s but failed to close above those levels. Most clients have bullish exposure via September futures or December options. Big buying overnight from China in the Ag sector and weather concerns helped propel prices higher in corn, wheat and soybeans. Continue to buy dips across the board as a grain bull market appears to rearing its head once again. Off their lows on the USDA report two weeks corn has appreciated 18%, CBOT wheat 31% and soybeans 10%. Clients short the Euro via put options got run over today. We will stay in the trade today but recognize that premiums lost 50%. We managed the trade in the Swissie by buying back the September 93 cent puts at a profit of approximately $1100/per. We also initiated a position in August calls paying $850 for 97 cent calls. Clients remain short futures carrying a loss of about 2 cents; $2500/per. We expect prices to roll over but we were early on the trade…obviously. We do not expect the dollar bleeding to continue well at least not at this pace; prices are down 2.4% in the last three sessions.

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

Indices break Win streak 7/14/10

Matthew Bradbard — Wed, 14 Jul 2010 20:29:35 +0000

After 6 positive days is the stock markets day of reckoning upon us? A failed rally in crude today though the 50 day MA did support prices; that level in August is $76.45. Aggressive traders use that level as your pivot point. The option spread mentioned in recent posts; the October $80/85 settled around $1700 today. Being September natural gas is within 5% of the contract low we think aggressive traders can scale into longs on pullbacks with stops below the contract lows. Our clients have been purchasing October 50 cent call spreads and are currently down on the trade. The indices appreciation of late has been impressive but with volumes anemic we feel a correction is likely. The problem is if we see a short squeeze, a 4-5% rise would crush bearish positions. This is the trade recommendation we issued today; buy August ES1150 calls for $350 and buy September ES 1075/1000 put spreads for just over $1000. The idea is on a move higher into next week exit the August calls and hold the puts for the coming leg down. IF prices roll over from here cut losses on the calls and hold the put spreads. Cocoa exploded to the upside today gaining 3.55%. This is now a buy dips market. Clients have exited about 75% of their October sugar longs; we would continue to exit as we feel a correction is looming. Forced into the market we feel OJ prices could fall an additional 10%. Treasuries are back above the 20 day MA; if short and at a profit we would book it and move to the sidelines. Live cattle accelerated to the upside today closing at an 8 week high. Clients remain long expecting more; December has appreciated 5% in the last 5 weeks. Until August gold closes above the 50 day MA at $1219 we are skeptical of gaining long exposure with clients. The 50 day has capped ALL rallies in the last 2 weeks. The metal clients do have exposure to; silver was higher by 0.50% today on the close. In early dealings prices violated the 50 and 20 day MA’s. Clients are buying dips in September futures and purchasing December call spreads. Agriculture was higher across the board but this was likely due to July futures expiration and we still expect a pull back. As we’ve said buy dips in this sector; our favorite remains corn. Clients remain short the Swissie and Euro looking for a break lower but today took on some water.

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

Go with the Flow 7/13/10

Matthew Bradbard — Tue, 13 Jul 2010 20:18:57 +0000

If the dollar is moving south and the indices are moving north that is conducive for commodities to trend higher. Crude is above the trend line mentioned in yesterday’s blog higher by over 3% in today’s session. Not to mention a bullish engulfing candle on the daily chart so yes folks it looks like higher ground is in the future. Aggressive traders in futures should use $75.50 followed by $74.40 as support in August. A possible trade idea would be the October $80/85 call spread for $1700. Natural gas has lost ground for the last five days but $4.33 continues to support. Prices are starting to look over sold and we like purchasing 50 cent call spreads expecting a rebound in the coming weeks. Indices domestically and abroad showed strength today rising 1.50-3% climbing to fresh highs. As of this post the S&P is above the 50 day MA and we’ve yet to get clients short. They are prepped and we expect to make a move this week or next; at the moment we are eyeing 75 point ES September put spreads and scaling short into futures for clients. We feel there is limited upside but an additional 3-4% is not out of the question. We advised clients to take off more of their October sugar longs today thinking a correction may be in the immediate future. Sell a rally in cotton; we are selling above 77 for clients if given the opportunity. November lumber was higher by 3.20% today closing at $219; our target is $240-250. 30-yr bonds broke the 20 day MA trading down 0.70% as of this post. We’re anticipating a trade down to the 40 day MA at 124’16 unless the equity rally is derailed. Continue to buy dips in December live cattle. August gold traded up to but failed to close above the 50 day MA. On a settlement above $1218 we would be interested in gaining long exposure for clients. September silver was higher by 1.72% now approaching the 50 day MA. Most clients have bullish exposure either via September futures or December call spreads. Corn was a loser again today; we see support in December at $3.77 followed by $3.70. We suggest using the current pullback to be a buyer of December contracts. The dollar down equated to other currencies moving higher at least today. Clients are positioned to take advantage of a move to .9200 in the Swissie and 1.2300 in the Euro in the coming days to week.

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

World Cup over 7/12/10

Matthew Bradbard — Mon, 12 Jul 2010 20:13:29 +0000

Now with the World Cup behind us traders can focus on the job at hand and get back to business. We expect Crude oil to track higher but the 20 day MA is serving as resistance and I noticed today looking at the daily chart if you draw a trend line down from the May highs it comes in at $76 in August. Support is seen at $74.40 followed by $73.40. If these support levels hold thru tomorrow we should have some bullish suggestions. We would refrain from trying to pick a bottom in natural gas futures BUT we could be forming a triple bottom in August from the last three sessions. For our clients we’re suggesting October 50 cent call spreads; i.e$4.75/5.25 should be approximately $1400/per. As of this post indices are higher with the S&P trading just above the 20 day MA. If we close higher today will mark the fifth consecutive positive session. Upside resistance comes in at the 50 day at 1092 and then the previous resistance at 1120/1125. We will be looking to establish shorts for clients from higher levels. October sugar gained just under 3% today closing back over 17 cents. On a push 2-4% higher exit remaining longs as we do not see much more upside. We do expect cotton to trade lower though we would like to be a seller from higher levels for clients. Ideally selling December over 77 cents anticipating a trade under 70 cents months down the road. Traders that do not mind trading illiquid markets could gain long exposure in lumber as long as the 20 day MA holds looking for a trade to $240 in the coming weeks. A trade higher was rejected in Treasuries with prices near their lows as of this post. Continue to sell rallies in 30-yr bonds and 10-yr notes. We would use the current setback in live cattle to be a buyer as long as the 100 day MA supports; in December at 93 cents. Inside day in August gold; we’ve advised clients to buy a trade above $1218 or sell a trade below $1174 but until then stand aside. As long as the 100 day MA supports September silver we would remain long silver. Clients are purchasing December call spreads expecting a trade to $19.50. If September copper fails to get above $3.06 in the next few sessions we would expect a pull back to $2.86-2.90. In the immediate future we expect to see a lower trade in agriculture and would advise longs to tighten stops or move to the sidelines and look to re-establish longs from lower levels. Our favored play would be a purchase of December corn closer to $3.80. The dollar has completed a 61.8% Fibonacci retracement and we think a bounce is in the future. As it stands now we would be a seller of rallies in the Pound, Euro or Swissie. Clients are positioned short the Swissie from a previous trade and some purchased September Euro puts today. Our targets are .9200 and 1.2300 respectively. Book profits on remaining longs in the Loonie and move to the sidelines.

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.

Climbing the Wall of Worry 6/15/10

Matthew Bradbard — Tue, 15 Jun 2010 19:45:02 +0000

The indices trading higher should mean the dollar and Treasuries down and most commodities up. That is how we have positioned clients as you can read below. Oil is thru $76 trading near a one month high. The momentum is up but if you are not already long we would not suggest fresh entries at these levels. The market feel like it has another $3-5 left in it but if the dollar was to rally or the indices were to run out of gas the most recent$7 advance could reverse on a dime. Those already in the trade continue to trail stops. Natural gas cut thru $5 with ease gaining an additional 3.50% today lifting prices to 3 1/2 month highs. We suggest long exposure in September on a set back but at these levels we would be chasing the market. Filling the gap from two days ago would take prices back to $5.79; use that as a buy objective. Indices are above the 200 day MA’s and appear to be moving higher. Our upside objectives are as follows: in the S&P 1125 and possibly 1145 and in the Dow 10475 and then 10635. If we see a trade at those levels we would start unwinding all longs and start reversing for clients. If sugar were to retrace 4-6% we would look to re-establish longs in October for clients. Aggressive traders could continue to sell December futures in cotton with tight stops. We prefer buying December puts with our clients. September coffee has advanced 19% in the last three sessions on freeze concerns in South America. If this is true expect much higher pricing, if this proves to be a false alarm prices could come down as quick as they advanced. Clients have NO long or short exposure currently. Treasuries made a new low for the week and in our opinion poised for a trade lower. Clients are in NOB spreads anticipating 120/121 in September 30-yr bonds. Live cattle traded to a one week high; this could be the beginning of the next up leg. Traders are advised to buy December options and futures. The 20 day MA and trend line are acting as solid support in August gold as prices gained 0.80% today. Client’s exposure is December $75 call spreads anticipating a new high. July silver hit a two week high today inching closer to $19/ounce. In the coming session if prices can get thru $18.90 we feel $19.30 should follow. On that we would likely lighten up on longs and advise clients to tighten stops. Additionally we would use that window to roll from July to September for clients. A move of 40% in oats in five days we feel is unsustainable, that being said we lightly bought July $2.50 puts for clients for $200 expecting prices to retrace in the next 10 days. If you follow us on the trade we have a target of $450-500/per. December corn gained for the sixth consecutive session today…continue to add length as we think prices have an additional 40-60 cents of upside. If the indices continue higher we would expect the Yen to breach 1.08 this week. Traders long the Euro from yesterday our target is 1.2525-1.2600 this week.

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

Playing Correlations 6/14/10

Matthew Bradbard — Mon, 14 Jun 2010 19:58:27 +0000

For the time being indices are in the driver’s seat and as long as stocks are moving higher RISK is on. A falling dollar should also lend support. Oil made a higher high and higher low today but as we posted in our weekly commentary we need to see a settlement above $76 in July to think higher trade is ahead. Longs already in the market should remain long as long as the 9 day MA holds; current level $73.50 in July. At this time we would not recommend new entries until we get a clearer picture. The distillates should continue to track Crude oil higher or lower. As for the magnitude expect heating oil and RBOB to move 3-4 cents per $1 move in Crude futures. Natural gas advanced just over 5% today lifting prices to 4 1/2 month highs. We are still looking for a set back before re-establishing longs for clients. We have moved our buy objective up 20 cents from $4.40-4.60 to $4.60-4.80 in the September contract. Moody’s downgrade of Greece and the fact that prices could not hold the 200 day MA contributed to the failed rally in the indices today. We’re advising clients to sell rallies but we would like to see more upside to do so. Clients have no exposure currently. We view 1120-1145 as a sell window in the S&P. Sugar traded above but closed just below 16 cents today. We advised clients to start lightening up on their longs. Though there is likely more upside we could get some back and fill action after the 12% advance in the last two weeks. Cotton is making new 2010 highs; aggressive traders can get short with tight stops or buy December puts. We could see more upside in the immediate future but in the coming weeks we expect cotton to be 6-10% lower. OJ has advanced five out of the last six sessions with prices gaining 6%. Clients will start working long September and November contracts this week expecting an additional 7-10% appreciation in the coming weeks. Coffee exploded to the upside on freeze concerns in Brazil lifting prices 4% higher today. Clients have no exposure. Treasuries were lower on the day but unable top make a new low. Clients are short expecting support at 122’17-122’19 in 30-yr bonds to give way. Our target is a trade to 120/21 in September futures. Continue to scale into longs in live cattle via futures and options as we think prices are undervalued. August gold was slightly lower today but as long as the trend line and 20 day MA hold near $1215 clients remain long. A failed rally in silver has prices in July back under the 50 day MA. Clients that are long remain long futures and options still thinking $19/ounce is in the very near future. July copper prices are back above the 200 day MA for the first time in two weeks. If prices are able to push thru $3 expect $3.25 shortly thereafter. Agriculture has been the most consistent sector as grains have been consistently gaining in the last week. We suggest longs in corn, soybeans, soy meal and we will be trying to buy clients a CBOT/KCBOT wheat spread this week. See commentary for more details. We started to work out of client’s longs in the Aussie today when prices failed to get thru .8575. The Yen was in our favor in the morning and then reversed after lunch. This trade is predicated on a rally in the indices. If we break down in stocks we will advise clients to cut losses in their Yen puts. Aggressive traders were advised to buy the Euro today as we feel it is possible to see a squeeze in the coming weeks lifting prices to 1.2600.

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 Settle In 5/24/10

Matthew Bradbard — Mon, 24 May 2010 19:45:23 +0000

The markets have relaxed but as investors you must not. Their will be wild gyrations in the weeks to come so start thinking long and hard how you want to be positioned. At the moment $69 appears to be the line in the sand on front month Crude oil; July as of this post is at $70.20. Aggressive traders could buy futures with stops below the recent lows. We prefer to be buyers of August and September $5 bull call spreads for our clients. On the August contract we expect to see a trade over $78/barrel in the coming weeks. We have started to advise clients looking to capitalize on movements in the distillates to get long; if our analysis is correct in Crude we should see a bounce 20-25 cents in heating oil and 15-20 cents in RBOB. As for natural gas it is not high on our list but traders wishing for exposure should continue to trade the 40-50 cent range. Continue to sell rallies in the indices; our downside targets are 1050 and ultimately 1000 in the S&P, 9600 in the Dow and 1710 in the NASDAQ. This could be a bumpy ride and we may see a rally back to the 100 day MA before the next leg lower. This comes in at 1135 in the S&P, 10545 in the Dow and 1895 in the NASDAQ. Cocoa closed above the 9 day MA today for the first time in two weeks; expect bullish trade recommendations in the days to come. Another 2-4% correction in sugar and we will start getting clients long October 10′ and March 11′ contracts. We likely will be sellers of cotton this week for clients so stay tuned. OJ closed lower today for the first time in eight sessions; could this be the beginning of the correction we’ve been calling for? We’re pricing out bearish play in Treasuries with futures and options but as of yet we’ve yet to price out a viable play. Based on the last two sessions we want to be selling rallies for clients but have yet to decide on a futures or options strategy…stay tuned. The short end of the curve remains a sell as we’re advising clients to buy long dated puts or to sell futures. It appears the market is starting to price in higher interest rates. We will be looking to unwind the remainder of client’s short August lean hogs on a drop of 1.50-2.50%. Gold traded higher for the first time in eight sessions gaining virtually $20/ounce on the session. We see light support at $1170 in June but have yet to establish any positions for clients until we get further proof that the recent 6.5% correction has run its course. July silver was higher by 1.90% on the day but has yet to take out previous support which is now acting as resistance at $18/ounce. Needles to say we’ve advised clients to start working lightly long again via July futures or September $1.50-$2.00 call spreads. In Agriculture we suggest longs in September and December corn, November soybeans and December soy meal; for specifics contact us. The US dollar and Euro will likely set the tone this week as other crosses look for guidance. At the moment clients only exposure is longs in the Pound via July options.

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