Capital Deployment 8/26/10

Matthew Bradbard — Thu, 26 Aug 2010 20:14:31 +0000

Finally it looks like the smart money is recognizing the opportunity in a non-correlated asset class, i.e. COMMODITIES. Crude oil has appreciated 3.7% off yesterday’s lows which we feel will serve as an interim low. Our upside targets on October are $75.85 followed by $77.50. Crude oil, RBOB and heating oil were higher by 1.50-2.25% today. Natural gas prices have been oversold now for almost two weeks but in that time frame prices have come down another 50 cents. I cannot stress enough how past performance is not indicative of future results but if you look at the price action in 2009 and compare it to 2010 it is frightening similar. Last year prices bottomed in early September and then rallied over 50% inside of two months. Disappointing economic numbers were shrugged off by the stock market today; we expect a bounce from here. We anticipate a 30-50 point jump in the S&P and 250-400 points in the Dow. Based on the technicals alone sugar prices could drop an additional 5-8% in the coming week…trade accordingly. November lumber gained 3.19% today; we have a target in November at $240-250. If you missed it yesterday some clients put on a small position in short 10-yr notes via December put options. Silver appears to be a taking its breath for its next surge higher…in my opinion. Clients will remain long December futures and December call spreads. On a trade to $19.75 if you have multiple positions we would recommend lightening up. Impressive exports helped grains bounce today; corn 2.9%, soybeans 1.5% and wheat 1.2%. The wheat chart is ugly and we still expect a further break; another 25-40 cents. We remain bullish corn but would feel more comfortable if prices came down 20-25 cents. Clients do not want to miss the next leg up but if buying we recommend a smaller allocation at these levels. We recognize the trend line since the June 30th low has held and the trend remains up and we may not get the correction. Currencies could go either way so we will be in cash and not adding to open positions. On a GDP number below 2% the dollar should rally and the European currencies and the commodity currencies would likely get hit as well. That would be my prediction from 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.

Happy B-day Abraham 2/12/9

Matthew Bradbard — Thu, 12 Feb 2009 21:14:13 +0000

Natural gas still searching for a bottom; get long March futures with a stop below4.25. We will also be pricing out April calls soon. We would be a buyer of oil under $33 but have little interest in buliding a position yet…could be talked into trading a bounce from oversold levels. Trend remains down until a close above $40. We like June 20 cent call spreads in RBOB. On a close above 1.30 in March we expect a quick move to 1.50. We remain long the Loonie with clients still looking for a penetration of 82. The yen is down on an advance in equities; ideally looking for a long entry near 1.0850. We may look to re-establish longs in the Aussie and Kiwi, stay tuned. Corn and beans look lower into the weekend even with impressive exports, buy this dip. Gold and silver still have some gas in the tank but we continue to be cautious expecting a violent correction. Fade this up move in the Euro-dollar; we issued a special report today. Call for a further explanation. We advised clients to buy this dip in May coffee and covered our short legs on the call spreads at a profit 0f just under $700/per. Sugar had an impressive close , rallying to end 40 ticks off lows. Sweet move! We hope you heeded our advice and bought April and June pigs as they were 2-2.5% higher today.

MBWealth's Commodity Blog » exports

Capital Deployment 8/26/10

Happy B-day Abraham 2/12/9