Back in the office after a two day business trip to Chicago. What I took away is the Managed Futures/CTA's the asset class have a bright future and investors need to explore this sector. In the current environment there are a number of options to have commodities exposure in your portfolio with well qualified managers at the helm. We remain defensive on Crude oil as prices have been unable to hold above the 40 day MA. Prices appear to be overbought and unless we get consecutive settlements above $90/barrel we would expect a temporary setback dragging October back near $85/86. The products have completed a 50% Fibonacci retracement in the last five sessions and should hold around these levels as a long as we do not see much downside in Crude. We are advising clients to buy dips in the distillates as well in Crude. Natural gas closed higher by 1.75% but the real story is we finally got a settlement above the trend line that has capped upside since early June. We're anticipating upside follow through in the coming sessions and would remain long your November and December contracts. Domestic securities gained approximately 1.5% but the real movers were in Europe appreciating 5% in most instances. At settlement prices were able to hold onto their 9 and 20 day MA's. We see more upside with a target oin the S&P at 1235 and 11750 in the Dow. Clients remain on the sidelines. Gold closed marginally lower continuing to dance on the up sloping trend line mentioned in previous blogs. We still expect that level to give way and gold to trade closer to $1650/ounce...we currently have NO long or short exposure with clients. Silver remains range bounce back trading in $4 range for weeks now. We favor a break lower and would get confirmation on a close below the 50 day MA; currently at $39.95 in December. We've seen a nice move in recent sessions but being we were unable to take out the 20 day MA again today clients were advised to book their profits on their Loonie longs today. We're getting preliminary buy signals in the Euro and Pound but we've yet to commit client capital...stay tuned. As it stands now our only currency exposure is bullish options exposure in the Swiss franc. After the big break in recent weeks a 38.@ Fibonacci retracement would lift September futures back near 1.2290. On our radar is fading rallies in coffee and sugar...look for recommendations to follow. Cocoa is extremely oversold having lost 8% in the last week...we're expecting a bounce. Not to mention the dollar appears heavy and we get a seasonal buy trade coming in just a few sessions. Some of our clients started scaling into bullish plays today trying to capitalize on a bounce to 3000 in March. Treasuries continue to coil near the top of their recent trading range. Some clients have bearish option trades on but this strategy has yet to prove profitable in recent attempts. It would take a trade below the 20 day MA's for us to believe Treasuries could have an interim top in. Those levels are 138'16 in 30-yr bonds and 129'23 in 10-yr notes. Clients remain on the sidelines in grains as the markets are still absorbing the most recent USDA report. We're pricing out plays and in corn and wheat at the moment and should have some trade ideas in the coming sessions...stay tuned. We advised clients to cut losses on their bearish plays in live cattle today at a loss of $500/lot plus fees. Lean hogs remain a buy dips market as we broke sliced the 200 day MA like a hot knife through butter.
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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.