Add Commodities to Your Diet 9/3/10

If its edible chances are it’s on the move; corn, wheat, coffee, live cattle, etc. Crude closed virtually unchanged on the week but the real story was the $4 trading range as traders are deciding on where from here. There appears to be a tug of war; followers know where we stand we expect a push higher in the coming weeks. Natural gas could get some legs from here; the chart pattern for fresh long entries looks like a Picasso. We suggest November futures with stops below the recent lows and purchasing November call spreads. We’re anticipating a 10-15% move in the coming 45 days. The Dow is above the 200 day MA and we expect to see a challenge of the early August highs in the coming weeks; about 2% higher from here. The S&P has yet to surpass that level but that hurdle at 1107 should be overcome next week. We are anticipating a trade to 1125/1135 and may entertain shorts from there…stay tuned. Cocoa gained for the last four sessions; we may take a stab at longs in December with clients again next week. Clients are down in their March sugar puts but we still like the idea; it may take a few weeks to play out. OJ lost just over 3% today briefly trading at a 6 month low before paring losses. We could see more downside into next week. Not a bubble but a correction in 10-year notes and 30-year bonds. Our targets in the December contract are 121’00 and 127’00 respectively. We will re-visit the idea of bearish exposure in December live cattle next week anticipating a 5% correction. The last three days we’ve cautioned longs in gold as we expect a correction. A $40-50 setback in the coming weeks. Silver made a fresh 2010 high gaining nearly $2/ounce in the last 2 weeks. A trade over $20 is upon us. Some clients remain long other will be looking to re-establish longs on a set back. $18.75-$19.10 would be our suggested buy zone. Agriculture soared today with corn higher by nearly 4%, soybeans 2.6% and wheat by 4%. Our suggestion is to gain bullish exposure in corn and wheat. Remember there is a USDA report out next Friday. Re-read yesterday’s currency suggestions…the Euro was higher by 80 ticks as of this post and the Loonie 150 ticks.