Same old same old… 8/17/10

Nothing too exciting today as markets settle in waiting for the next catalyst. We’re not overly bullish but prices did rise in Crude oil today for the first time in six sessions. We expect an interim low to be made this week and a $4-6 bounce from here. That should equate to a 15 cent appreciation in the distillates. We continue to feel natural gas futures and or options are a buy at this level. Are we calling a bottom; NO that is impossible but we do feel in 45-90 days prices will be 10% higher…trade accordingly. Day two of the rally in indices; we’re anticipating an additional 2-4% upside before prices turnover again. As for the S&P our assumption is an 1125/1025 trading range moving forward. Lumber advanced 4.16% today; we’ve hinted that a small long allocation in November lumber makes sense at these levels. This may not be on your radar but a trader searching for a value play may find it here. Respect the trend in gold; as we’ve said as long as the 50 day MA holds at $1214 the momentum could carry prices higher. Clients have No exposure. Our favored play in metals remains silver as opposed to gold. Some clients have a small long position in futures and are positioned in December call spreads. Wheat broke the trend line that has held since the June 30th bottom. In just over the last week wheat prices are down 23% off their highs. We could see an additional 50-70 cent decline in my opinion. The conundrum today with wheat down almost 2% soybeans and corn still managed to keep their heads above water. Our favorite in this sector remains corn; contact us for exact strategy but bottom line we are bullish corn longer term. It is not a direct play on corn but if BHP Billiton is willing to pay $38.6 Billion for Potash (a fertilizer co.) maybe as an investor you should take the Agriculture sector more seriously. We expect it to be one of the standout commodity sectors in the coming years. We have no feel whatsoever on the current currency market so we would refrain from any new trades.