Game Changer 11/4/10

The Fed spoke and the markets have listened. Buy with both hands...stocks, Treasuries and commodities should trade higher till' the end of the year. This does not mean buy and fall asleep at the wheel but we will be issuing more buy then sell recommendations moving forward. Crude oil has broken out and should make its way to $90/barrel. On a set back we will be getting clients out of shorts at a loss and suggesting bullish futures and options entries. Natural gas fought back in late dealings to close marginally higher. On a settlement above the 20 day MA we suggest adding to longs in January futures. Options traders should be in January contracts as well. Bulls are in control in the indices, on a moderate set back clients will cut losses on their ES put options but for now we wish not to get long. Cocoa was unchanged after being up most of the session. On a trade lower tomorrow clients will be advised to exit their bearish plays. The appreciation in cotton and sugar continues but clients will wait to get short as opposed to jump on the train at these levels as longs are far too late in our opinion. Coffee broke out to fresh 15 year highs; exit all shorts as this move could turn parabolic similar to sugar and cotton. 10-yr notes rallied to new contract highs and 30-yr bonds look destined to do so. Clients will not get long but that is the play from here. Aggressive traders could be long live cattle or lean hogs; our pick is lean hogs thinking we could see 3-4% appreciation from here. Clearly a breakout... maybe a short squeeze but traders in metals should be long NOT short. We tried to get cute playing a correction and got run over. From here maybe $30 in silver and $1450 in gold. We're skittish so we will keep our size down but clients will be gaining bullish options and futures exposure. Some clients have been buying silver and selling gold. For example over the last two months gold has appreciated 20% while silver has gained nearly 45%. The idea is you would make more money in silver than you lose in gold. Gain bullish exposure in grains ahead of next Tuesday's USDA. At this juncture we would be OK long '11 wheat, soybeans or corn. The dollar rally was short lived and at this point lower ground looks likely. The ECB left rates alone at 1.0% and the BoE left rates at 0.50%. Be alert as tomorrow we have two unemployment reports; here in the US and Canada.

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 views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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