From what I hear the large swings for the most part to the downside have been caused by margin calls and forced liquidations as a number of investors are redeeming their monies from funds. Those that can have fresh powder on the other side should have some excellent entry points but who knows how long this last. My recommendation remains to keep your size small. Crude failed at the 9 day MA again today as a dollar rally and what appears to be a forced liquidation has Crude approaching $80 again. We view dips as buying opportunities for aggressive traders but expect crazy moves so keep your size down. We’ve opted to trade mini contracts in some instance and even to trade a combination of futures with options in this environment. $77-80 is your buy zone in November contracts. Natural gas continues to base out…but to remain bullish even though prices are extremely low we would like to hold last week’s lows . If we post a new low on a settlement basis we would re-evaluate long exposure. The 20 day MA was too much to overcome as we breached that pivot point today and  yesterday but we could not overcome that hurdle.  We still anticipate a sideways range bound market but perhaps the range is 1100-1200 in the S&P and not 1100-1225 as previously forecast. The metals market is manic and I’ve told myself once I get out of the open silver positions with clients I am not touching gold or silver until the volatility shrinks. 5-10% daily swings is  no fun at least for me especially when you compound it with the leverage. A trade below $1585 should signal lower ground in gold while a trade above $1650 should mean higher ground. The break down levels in silver is $29.50 while the breakout level is $33.00. We are fairly confident we see a trade back to $35 in the coming weeks it just is hard to say from what level and if we see another test of the lows before that plays out. Those that are not currently in metals remain on the sidelines for now. Inside day in the greenback as we expect 79.00 to act as stiff resistance. Our short term target remains the 20 day MA at 77.30 in December. Currency traders that took our advice with longs in the Pound, Loonie and Swiss should close positions or tighten stops until we get a clearer picture in the dollar and out of Europe. Cocoa closed down 2% today giving back the previous day’s gains. We like scaling into longs in March contracts with the 50 day MA as our upside target. In our eyes we’ve yet to see a big enough price appreciation in sugar or coffee to re-establish shorts but those trades are still on our radar. Continue to use the 20 day MA as your pivot point in Treasury trades. 10-yr notes remain below that level and it looks like 30-yr bonds will settle on about that level…trade accordingly. Grains got hit today with fund liquidation, rumors of  higher yields and a faster than expected harvest. Corn broke the 200 day MA on the downside so we will need to closely monitor clients open long positions. As long as wheat holds its recent lows we remain friendly. We’ve refrained from longs in soybeans and left our clients shorts too prematurely BUT after a 17% deprecation in the last 30 days and the fact that buying in early October has proved a profitable transaction for several years we will be looking at longs next week in January contracts. ..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.