RCM Commodity Update: Will Bears Take Another Shot At Gold?

gained on the day probing its 8 day MA closing just under that pivot point. I see support in August at $94 with my next upside target at $97. Natural gas is trading at my green support line drawn in yesterday's energy research. Depending on your stop placement, a small loss may have been taken on August contracts. As for September give it a few more cents as you should have sold calls as your protection. It looks like the products trade higher from here unfortunately heating oil gained on RBOB today. I still like the crack spread which in August is at -1367 as of this post, the widest margin in 5 months.

Stock Indices: The 100 day MA supported again today as stocks may rebound from current levels. As long as 1568 holds in the S&P and 14540 in the Dow I think we grind higher. If the 5% reversal in the Chinese stock market is any indication of how quickly the tide can shift remain alert. Hell is just 17 seconds last evening 2 goals were scored by the Chicago Blackhawks to capture a Stanley cup so seconds do matter. From here I think we make a run at the 50 day MAs…stay tuned.

Metals: Today’s chart of the day was on copper and though there is not a trade recommendation in copper there is plenty to take away as copper is viewed as barometer of the entire economy, domestically and abroad in my eyes…give it a read. The cliff notes are we may have established an interim low and we rebound from current levels. Is gold finding support at current levels or are the bears just taking a breath before their next flush? August will need to re-take $1300/ounce in the next few sessions to make me a believer…stay tuned. Silver again remained above $19.25. I do not want to buy outright longs but I like the idea of back ratio spreads in September. Selling $20 calls and buying multiple $22 calls has been the game plan. I will likely move tomorrow.

Softs: Bullish trades can be probed in September cocoa as I see a return to the 50 day MA in the coming weeks. Sugar probed its 50 day MA for the first time since 3/15 when prices were 10% higher. Wade into bullish trade and be willing to add to the trade when the market confirms you’re right. Continue to trail stop in open cotton bearish trades. Futures gained 2.13% today and it will only take an additional 0.50% to lift prices above where your stops should be…just above the 50 and 100 day MAs. OJ cut through its 100 day MA like a hot knife through butter losing 4.39% and dragging prices to 3 month lows. Another 3-5% decline and I will be shopping bullish trades for clients. Coffee is a bit like watching paint dry of late but trust me I’d rather have consolidation as opposed to more selling. I continue to advise bullish exposure in September and December contracts thinking a 15-20 cent leap will happen in the coming months.

Treasuries: Treasuries retraced about 2/3 of the prior day’s gains and are feeling pressure in the overnight market. Yesterday I called an interim low and now I am questioning that as today should have delivered a confirmation follow through. On a new low we will have to go back to the drawing board as a low has yet to be established. In full disclosure I am not currently trading log or short 30-yr bonds or 10-yr notes for clients. However I am hoping to see a bounce in the short-end of the curve to re-establish trades in 16’ Eurodollar contracts that were exited at higher levels last week.

Livestock: Higher trade was rejected in live cattle today and all attempts this week to carry 121.75 have been met with selling. Is it a coincidence this is the 61.8% Fibonacci level in August futures? I see 1.5-3% deprecation around the bend. Lean hogs are showing signs of exhaustion as the 9 day MA has been probed the last 4 sessions and stochastic have rolled over on the daily chart. If the recent high serves as an interim high I anticipate a trade back under 95 in the coming weeks. This painful trade for clients may have a happy ending after all. If you can’t stand the heat get out of the kitchen.

Grains: Corn has given up ground the last 4 sessions but yet the 50% Fib level has supported the last 2 days. Unless we see a trade closer to $5.30 in December I will not re-establish bullish trades for clients ahead of Friday’s USDA report. I would like to see 20-30 cents lower trade in November beans to entertain a bullish recommendation for clients. December wheat near $7/bushel is my loan buy in the Ag sector…I have various futures and options ideas. Reach out depending on your risk tolerances, size of account and investment objectives will dictate the exact game plan.

Currencies: The greenback failed again at its 50 day MA and 50% Fib level which both come in at 82.75/82.80. I expect lower trade in the coming weeks with September futures closer to 81.00 than 83.00. The Euro probed its 20 day MA while the Pound and Swiss remained above that key pivot point. As long as the Yen remains under 1.03 remain in bearish trades targeting a trade under par. The Loonie is trading at 2 1/2 year lows…expect these levels to be short lived. I view this cross as one of the most undervalued majors. Use outside markets as guidance for positioning as I predict 2-4% appreciation in the coming weeks. In the last 3 days the Australian dollar appears to be establishing a base between .9100 and .9200. I am a buyer with an upside objective of .9600 in the coming months.

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.