Commodities Moving, Stocks Are Not 9/14/10

Record moves in a number of commodities are you taking advantage of this asset class? I would like to see November Crude remain above the 50 day MA on a closing basis to remain fully invested with clients. We're still bullish but a bearish inventory report could see a $2-3 slide so just be cognizant of that. We're still expecting $82 in November futures but it may be a bumpy ride. To see higher ground in RBOB prices need to penetrate $2 in the next few sessions and a settlement above $2.15 in heating oil. November natural gas traded to a 3 week high in early dealings but will likely close flat on the session. Continue to scale into longs in November and purchase 50 cent call spreads. $4.50 and then $4.75 is expected in the next 3 weeks. The highs from early August seem to be acting as resistance in the S&P. If this continues for the next few sessions we would suggest more bearish exposure in the S&P. I do not want to carry too heavy a position into next weeks FOMC meeting unless prices start to roll over. Our only clients exposure is the November is 1100/1000 1:2 put spreads. Cocoa advanced by 2.6% today as some clients are in December call options. Our targets are as follows 2810, 2875, and 2940. Sugar has advanced 10 cents/lb.; over 70% in the last 4 months. As one of our followers pointed out we advised buying March 2011 puts several weeks ago. Traders who followed are down on the trade but with 5 months time they are not out. What one should take away is that YES sometimes we're wrong and we may be wrong on this call. Traders are sometimes wrong and far from perfect…me included. If Treasuries continue to rally clients would be willing to re-explore shorts in 30-yr bonds above 133'00 and in 10-yr notes above 126'00. I do not like the action in the live cattle market…well let me restate if you are short. I was with clients and we cut losses today; just over $500 loss per contract including fees. We will likely be looking to get clients long in the coming sessions. A cattle trader on the floor that we communicate with on a regular basis with over 4 decades of experience thinks live cattle will make a record high by years end so I want to get clients long…stay tuned. Record high in gold today with prices gaining nearly 2%. Clients have NO exposure. Silver also was higher picking up 1.68%. We could see a test of the 2008 highs about 75 cents from the current levels. Clients were advised to exit all their bullish option plays in recent sessions and have lightened up considerably on their futures. We are OK missing $1 thinking we will get a nasty correction any day now. If so we will re-deploy the money in March 2011 contracts for clients. December 2010 corn will likely print $5.00 any day now but like silver we think a correction could come at any moment. Prices have gained over 40% in the last 60 days with virtually NO pullback…we do not think it is sustainable. Clients are eager for a dip to get re-positioned long 2011 contracts. If the dollar continues lower it should set up some good selling opportunities for some of the other crosses; we are tracking the Loonie, Aussie and Swiss franc but have not committed capital yet.

MB Wealth Corp. is not responsible and does not endorse anything outside of the content of this article authored by Matthew Bradbard; President of MB Wealth. Benzinga Recommends that you take a look at the CurrencyShares Australian Dollar Trust

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