Day to Day…Hour to Hour 10/28/10

The indecision and day to day…hour to hour volatility is unprecedented. Never have I seen such sloppy trade. Again Crude fails to hold onto its gains as the 20 day MA capped rallies once again. In the coming sessions we expect a trade down to $77/78. Natural gas was higher by almost 4% today making an attempt at the 20 day MA. Prices have not settled above that MA since early August so this milestone would be a big deal. Traders with some patience could remain long December and/or January looking to add on a settlement above$3.93 in December. Inside day in the indices with stocks unchanged in today's session. We would suspect a settlement below the 20 day MA to get sellers active. Those levels come in at 10985 in the Dow and 1168 in the S&P. In the last three sessions cocoa has lost nearly 3% as the 100 day MA is now serving as resistance. Some clients are positioned to take advantage of a further 5% depreciation. Aggressive traders could purchase puts in cotton willing to cut losses on a new high. We feel a 15-20% correction will happen but the question is from what level? Keep your size small as picking a top is dangerous. Bear put spreads in March 11′ coffee; $1.80 is our target. Fade the rally in Treasuries as we suspect there is more downside; target is 127'00 in 30-yr bonds and 124'00 in 10-yr notes. Respect the 20 day MA in live cattle to see if it supports in the coming sessions. We've yet to make a move for clients but if last week's lows hold we may start to re-establish bullish plays in February lean hogs with clients…stay tuned. Gold rallied off the trend line but has yet to close above the 20 day MA. A close below $1320 or above $1344 should set the tone moving forward. We're still in the camp of a larger correction is coming. Silver was higher by 2.40% today closing back near $24/ounce. The 20 day MA at $23.40 needs to give way to see more downside. We're looking for $21/21.50 in the coming weeks. Wheat continues to be the leader as corn and soybeans lag again today. Clients will gain bullish exposure in 2011 corn and soybeans in the coming weeks but ideally from lower levels. Early next year we expect to see $14 soybeans and $6.50 corn but from here we should be able to get a long entry 3-5% lower. The US dollar gave back virtually all of the gains from the previous two sessions closing back under the 20 day MA. While the wind was taken from the bulls sails we still expect a trade up to 81 in the coming weeks. Continue to fade rallies in other crosses. We would only cut losses on new highs. Examine the 20 day MA in all crosses on the daily charts as it acts as support or resistance…trade accordingly. Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

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. The United States Heating Oil ETF was up 0.15% in today's session.