RCM Commodity Update: Expect A Rebound In Major Metals

started the week with a bullish engulfing candle gaining nearly 1.5%. The 8 day MA continues to act as support as prices track to their recent highs approximately $1.50 for today’ settlement. Do not rule out a probe of $100/barrel. Products were higher and worked in my client’s favors that are in crack spreads as we expect RBOB to gain on heating oil. The August crack spread gained ¾ of a cent as the worst should be behind us. I think we could pick up 300-500 points in the coming weeks. Natural gas gained for only the second day in the last eight sessions. Could an interim bottom be in the making? Those in bullish trades should have options protection in my opinion. A return to the 18 day MA lifts futures 20 cents.

Stock Indices: The first trading day of Q3 is behind us and fairly uneventful. The 50 day MA was probed in the S&P failing at that pivot point the last three sessions. Will 1614 in September prove to be a difficult hurdle? If prices turn south expect a trade back to the 100 day MA...at 1572. I expect a tug of war until we break above or below those levels. Same story in the Dow just different levels; the 50 day MA upside resistance is seen at 14955 and the 100 day MA or support comes in at 14575.

Metals: Today’s chart of the day gives a brief touch on all 5 major metals as I anticipate a rebound short-term across the board in this complex. Gold is $75 off Friday’s lows with more gas in the tank in my opinion. I expect this leg to lift futures over $1300/ounce and have started to price out a few bullish strategies - expect ideas in the coming sessions. Silver gained on the day but closed well off its highs running into the same resistance that capped upside last week. Lighten up on longs just purchased (that were part of the last 4-7% rally) as we are not out of the woods just yet. I expect volatile two sided trade but have a $21.50/22 target short term in September futures.

Softs: Inside day in cocoa as support continues to keep September above 2125/2140. Scale into bullish trade as I expect a 4-6 % advance in the coming weeks. Sugar is off 3.5% in the last 3 session as the Indian monsoon season is off to impressive start. I see limited downside but would keep bullish trades on a short leash as there is not a huge bullish catalyst so a big risk is not merited. Cotton gained 1.82% and remaining shorts should have been stopped at a profit as we closed above the MAs suggested as stop levels. This market has shifted from a sell rallies market to a buy dips market…trade accordingly. I like scaling into bullish trade in September and November OJ. Last week’s chart of the day had actionable recommendations. Coffee followed up its first positive weekly close in seven weeks with a 1% gain today. Prices have gone nowhere of late but a solid base appears to be in the making…the question is where from here? A trade back to the 50 day MA lifts September to $132.85.

Treasuries: A slight gain today and 30-yr bonds closed above their 9 day MA for the first tie since 6/17. Coincidence or not I think futures are headed back to where we were at that time around 139’00. We must fist hit my objective at 137’16. 10-yr notes closed just shy of that pivot point but appear to be on their way to 128’00 in the coming weeks. I’ve started to prep clients to fade a rally in the Eurodollar if we trade up to the down sloping trend line; in March 16’ near 98.5000.

Livestock: I am operating under the influence that an interim top was reached in August live cattle last week. A 50% Fibonacci retracement on this contract puts prices at 120.50. Lean hogs closed under their 9 day MA for the second day running probing its 20 day MA for the first time since 5/22. Those that felt the pain in bearish trade in May and June are finally getting some redemption. Do not rule out a trade under 95 cents this week.

Grains: Corn got within 1 cent of a $5/bushel building on Friday’s weakness. I’ve yet to make a move and at this point I may be a seller of rallies as opposed to buying this dip…back off for now. November soybeans hit the 50 day MA as forecast in recent weeks, currently at $12.44. A failed probe lower may be looked at as buy signal…stay tuned. Selling appears to be abating in wheat as we closed just 0.34% lower today. Wheat remains on my buy list; long futures with some sort of options protection. When oats stop going down I may have an interest in adding to bullish wheat trades for clients and also this will help me determine what to do in corn and soybeans. December oats are lower by 13% in the last 2 weeks, currently trading very close to contract lows and support that held on the last two attempts. Past performance is not indicative of futures results.

Currencies: An inside day in the US dollar today…could a correction be just around the bend? A trade back to the 20 day MA puts September at 82.10. I think the Swiss and Euro bounce from current levels…this would be confirmed on a trade over their 50 day MAs; 1.0600 and 1.3090 respectively. The Yen has completed a 61.8% Fibonacci retracement...exit bearish trade or tighten stops. The Loonie can be bought with stops under the recent lows. A trade back to the 20 day MA lifts the CAD to .9650. The Mexican peso has appreciated the last 7 sessions completing 38.2% Fibonacci retracement on its highs today…more appreciation should follow. Now that my clients have taken their loss in the Aussie we may trade higher from here. I have no exposure but as follower you know I think we rally as risk appetite returns. I will be a spectator as the wound it too fresh.

Risk Disclaimer: This information is not to be construed as an offer to sell or a solicitation or an offer to buy the commodities and/ or financial products herein named. The factual information of this report has been obtained from sources believed to be reliable, but is not necessarily all-inclusive and is not guaranteed to be accurate. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more than your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results. This report contains research as defined in applicable CFTC regulations. Both RCM Asset Management and the research analyst may have positions in the financial products discussed.