RCM Commodity Update: Gold Closed Down Nearly 1%

August Crude oil traded within 13 cents of $100/barrel on its highs gaining 6 out of the last 7 sessions. We will likely get a probe above $100 being we are so close but I think the bulls are running on fumes. I had not traded Brent in several months before today. We took a stab in August and September contracts for some aggressive clients (buying Brent/selling WTI). It was today’s chart of the day. The spread is trading around $4/5 at the narrowest margin in 19 months. Both products were higher as our crack spread gained on the day, with RBOB higher by 1.80% and heating oil appreciating by 1.20%. My target is an additional 200-300 points in the August spread. Natural gas gained 2.15% closing just under its 8 day MA. We should see an additional 10 plus cents on this leg which gets recent entries a nice profit.

Stock Indices: The S&P failed again at its 50 day MA…now for the fourth straight day. Until September futures can get above 1616 I would be defensive. Under the market I see solid support at the 100 day MA currently at 1574. Those levels in the Dow come in at 14962 and 14585 respectively. Flip a coin at this juncture as for direction with all the mixed signals perhaps we trade flat until Friday’s NFP #.

Metals: Early rallies could not hold with gold closing down nearly 1%. All things considered with the greenback higher by 0.60% trading to 4 week highs it could have been worse. After an $80 rebound from Friday prices corrected 25% which could just be a healthy correction. On the 60 minute chart we seem to be finding mild support. As long as August holds $1225/1230 we should see higher trade. In full disclosure I have no fresh entries with clients. Silver had a lower high and lower low giving up 1.37%. $19 will need to hold for my friendly sentiment to remain. I do see a $21.50/22 trade it’s just tough to say if we retrace first? Stay nimble and keep your side small until we get a clearer picture.

Softs: This sector is starting to cooperate as today was an excellent day to be my client if you are trading softs. There will be days you wish you were not my client and I recognize you are only as good as your last trade but let’s look at the scorecard. Cocoa higher by 0.88%, OJ higher by 1.69%, coffee appreciated 2.13%, client’s lone loser sugar was hit 0.91%. I continue to like scaling into cocoa thinking we have more appreciation to follow targeting the 50 and 100 day MAs. Sugar posted a fresh contract low down by almost 1%. It is a small position for clients and we are willing to take a little more heat. Do not add to the trade until the market proves an interim bottom has established. September OJ hit its 50% Fibonacci level on its highs closing up by 1.69%. Get long futures and either buy puts or sell calls as a hedge. My next upside target in the September contract is the 100 day MA, currently at $139. Coffee picked up 2.26% to close near 2 week highs. Is the sleeping giant awakening? Can we put in back to back positive weeks? I like bullish trade in September and December looking for 6-10% appreciation.

Treasuries: Make it 5 positive days in 30-yr bonds with consecutive closes over the 9 day MA. 137’16 followed by 139’00 remain my target in the September contract. Today was the first close above the 9 day MA in 10-yr notes that in my opinion have too turned a corner and grind higher. A broken record I apologize...128’00 is my objective in the September contract. I still expect higher trade so we can fade a rally in the Eurodollar. In a perfect world a 20-30 tick rally for the first tranche.

Livestock: August live cattle only gave up 0.23% but the key development here in my eyes was the 9 day MA was tested. On a breach of this pivot point I feel the next stop is the 20 day MA…currently at 120.35. Oh boy lean hog bearish trades are fighting back from the dead. August futures closed under their 20 day MA ...this had not happened since 5/21 when futures were 6% lower. A 50% Fibonacci retracement puts this contract at 94 cents and a 61.8% under 93 cents…trade accordingly.

Grains: December corn traded under $5/bushel for the first time as long as my charts can go back to which is 2 years on this contract. If you asked me one month ago I’d say I would’ve been a buyer at current levels but I’ve yet to make a move with clients as the USDA report from last week was so bearish. I think we will find buying very soon so expect trading ideas in the next few sessions. November soybeans lost ground again today dragging futures to five week lows. We are nearing oversold levels but I would to rule out 25-40 cents of additional selling. Lower trade was rejected in the last 2 days in wheat and we appear are finding value in December futures around $6.70. Wheat remains my clients lone long in Ag as I feel we are 30-50 cents higher in the coming weeks. Oats lost 2.19% as selling continues. In the last 2 weeks December is off by 14%. Once oats bottom maybe it will be time to buy corn and soybeans.

Currencies: The dollar closed higher by 0.61% at 1 month highs. I had expected 83.50 to cap additional upside…it is evident I am wrong, next resistance is seen at 84.50. On dollar strength all other crosses were hit today, the Euro off by 0.63%, the Swiss lost 0.51% and the Pound gave up 0.35%. As I’ve voiced in recent posts I think the selling is almost over in these European currencies. The Swiss and Euro must retake their 50 day MAs to confirm an interim low; 1.0597 and 1.3085 respectively. The Yen gave up nearly 0.90% to close back under par. The easy money has been made on bearish trade, down 10 out of the last 12 sessions. Until commodities outside of just energies can find their footing expect the Loonie and Aussie to chop sideways to down. I attempted to pick a bottom in the Aussie unsuccessfully of late so I suggest refraining from that for now. It will take a settlement over .9525 in the Loonie to signal an interim low…stay tuned.

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.