A Yawner 7/20/11

Little excitement in today's activity but stay alert as big moves MAY be around the bend. A bearish inventory report and Crude still holds its own gaining slightly today. When markets do not react to bullish or bearish data that is generally a tell on the conviction in the market. We remain cautiously bullish looking for $3.50-5 further appreciation. Natural gas has traded lower now the last three sessions…we feel just a matter of time before a wash out which we would use as a buying opportunity. A trade closer to $4.25 in the September contract. Indices should gain slightly based on the technicals but we have NO exposure with clients and will remain on sidelines unless we choose to scalp intra-day. We echo the same advice as yesterday…short plays in the Swissie and Loonie with tight stops to protect from an upside breakout. The near 5% appreciation in the last three weeks in the CAD in our opinion is NOT justified. Both gold and silver closed marginally lower but they pared their losses much better than I would've anticipated. With gold currently $17 off its lows and silver nearly $1.70 off its lows. My opinion is there still needs to be more work done to the downside but I'm very impressed with the metals resilience. If gold gets above $1610 and silver $41 overnight we would no longer think a correction would come first…stay tuned. Lena hogs lost 1-1.5% today depending on the contract month. Continue to sell rallies as we think a an additional 2.5-3% dip is due. Sugar remains on our sell list and cotton on our buy list. In October sugar we anticipate trade below 26 cents and as for December cotton $1.10 maybe $1.15 depending on outside market influences. We're still anticipating more downside in the Ag complex so either get short or look to be a buyer from lower levels. Long dated Euro-dollars are the only viable play we see in the debt complex. A short in 30-yr bonds and 10-yr notes are on our radar but we feel it will take some type of catalyst to shift the momentum south…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.

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