Dollar down should = Commodities Up
byon 07-13-2011 at 08:48 PM (1687 Views)
Crude will close off its intra-day highs but the key will be if we can get a settlement above the 9 day MA; in August at $97.60. A trade above $99.50 we should hit out target of $102/103 shortly after. The immediate direction will likely be paved buy outside market influence i.e. equities and the dollar. We’re suggesting buying dips and bullish exposure NOT selling rallies and bearish exposure. Day four of the natural gas acceleration as a rounding bottom is left in the rear view mirror all it would take is a bullish AGA tomorrow and we’re off to the races. A 5% appreciation from current levels is our call. Two side trade in the indices as the 50 and 100 day MA’s continue to serve as the pivot point. Coin toss we recommend the sidelines. The dollar clearly failed at 77.00 and while the 20 day MA supported today we’re thinking a trade back under 75.00 in the coming weeks…trade accordingly. The Yen remains our pick of the litter and this bounce in commodities may allow clients to fight back in their Loonie call option trades…stay tuned. Nothing to report in lean hogs or feeder cattle but we like bearish exposure in live cattle in either futures or options in October expecting to capitalize on a 2-4% depreciation. Gold printed a new records high today… clients were advised to lighten up and book profits on a portion of their bullish trades. Are we looking for more the answer is yes but $100/ounce in about a week may be too much too fast…trade accordingly. Silver gained 7% today..book partial profits as a $4/ounce move in two weeks has been nice but nothing goes up in a straight line. We will be buying dips in both metals for clients. Cocoa gained nearly 4% and another positive showing tomorrow and we will exit clients remaining longs. Sugar lost less than 1% but on a day almost all commodities appreciated significantly a close nearly 4% off its highs…maybe a blow off top? Some clients remain short looking for a big break. Cotton could be bought just as a trade as we should see a bounce from oversold levels. Our favored play is to wait for a bounce and sell from higher levels in the coming weeks. The appreciation in Ag’s this week has been stellar but we advised longs in corn, wheat and soybeans to book profits today. We will stay the course in soybean oil and look to buy back in on the other products on a retracement. Off their lows corn has bounce d $1 bushel, soybeans 90 cents and CBOT wheat $1.25. All of these contracts when trading futures are $50/penny. Again in Treasuries we will likely be a seller from higher levels…stay tuned.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
MB Wealth Corp.
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