Another one Bites the dust 8/31/10

Eight months are gone and many traders are happy to see this one behind them. Ugly action in Crude with prices approaching their lows from last week after today’s action. The wind has been taken from the bulls' sails but as long as $71 holds on a closing basis we think we’re close to an interim bottom. That being said we expect nothing more than a $8-10 trading range; on the front month we see that as $71-$79/81. Natural gas may be carving out a bottom; we’re suggesting longs in futures with tight stops or purchasing call spreads in the month of November. Say it is not so a triple bottom in the making in US stock indices; in the Dow just above 9900 and in the S&P at roughly 1035. Those that agree should treat this as a trading range buying near 1040 and selling near 1100 in the S&P. Bullish engulfing candle in cocoa with a significant volume spike today; initial signs of a key reversal…stay tuned. Failed higher trade in sugar; clients have been advised to gain short exposure as we expect a 10% depreciation in the coming weeks. Lumber traded down limit; we will be looking for a spike higher in the coming weeks to cut losses for clients. Treasuries rallied today but failed to get back to their recent highs; our only client exposure is puts in December 10-yr notes that are carrying a slight loss. Aggressive traders can get short December live cattle via futures and options with a target of 96 cents in the coming weeks. Upside breakouts today in both gold and silver. The trend is undeniable as a trade to $1265 in December gold and $19.85 in December silver looks inevitable. Some clients remain long December futures and options. On a trade near $19.85 we would likely advise traders to lighten up. We hinted at a set back in soybeans, which appears to be under way; $9.50/9.60 is our target. Use a set back in corn to be a buyer in December 2010 or 2011 contracts. Wheat closed lower today and now looks like it could break; a breach of $6.75 in December should drag prices to $6/bushell. Clients have no exposure. The only currency that is on our radar is potentially probing longs in the Loonie in the days to come if .9350 holds.