Stock Indices:
A further advance yesterday has equities almost challenging their highest levels seen in 2012. As previously stated as long as prices remain above their 9 and 20 day MA there is no reason to be short but I do not see a catalyst to lift prices much higher. Could a solution out Europe do that or QE yes on both respects but I do not see either scenario likely in the immediate future. Remain defensive and I got an idea use the 10% appreciation in the last 3 months to book profits and take some money off the table.
Metals: Gold failed at the 100 day MA closing slightly lower yesterday. $1620 in December will continue to act as a pivot point moving forward. On a close above that level my expectation would be $1600/1665. Silver gained for the third day running but in that time frame prices are only $1 higher with a settlement just north of $28/ounce yesterday. Further upside is expected as long as prices maintain $27.50 I am mildly bullish. Copper appears to made an interim bottom as prices have appreciated 15 cents in the last 3 sessions. I do not see resistance for another dime.
Softs: Cocoa continues its streak adding another 2% yesterday lifting prices to fresh 5 month highs. Bulls remain in the driver’s seat but continue to trail stops. Sugar hit my target trading under the 50 day MA for the first time in 5 weeks. Since calling for a retracement several weeks ago prices have depreciated just over 10%. Cotton failed to make it to higher ground but I suspect there is still gas in the tank as my target is 2-3 more cents higher in December futures. Play the break out or break down in coffee as I expect a 10-15 cent move once prices break above the 100 day AM or below the 50 day AM.
Treasuries: 30-yr bonds and 10-yr notes were losers again yesterday dragging prices to four week lows. My interpretation is we’ve experienced approximately 60% of the current leg. That being said 30-yr bonds should see 145’00 and 10-yr notes should see 132’00. Those willing to be a bit more patient and play the short end of the curve could be in bearish trades in 2013 and 2014 Euro-dollars with stops above the recent highs.
Livestock: Live cattle are below their 9 day MA and in my opinion headed lower. A 61.8% Fibonacci retracement on the move we had in the last 2 weeks puts October back near $1.22. My stance in feeder cattle is neutral to bearish. I don’t expect upside but there should not be too much downside either as a solid base looks to have formed in the last 3 weeks. A fresh lows in lean hogs as the route continues temporarily dragging hogs under 75 cents. Selling appears to be slowing but it is premature to call a bottom. Those in bearish trade should lighten up in my opinion.
Grains: The 9 day MA continues to be the line in the sand in December corn. When $8 gives way for whatever reason I expect the weak longs to be shaken out and like a snowball rolling down a hill for the selling to intensify. Do not rule out a volatile move dragging price closer to $7/bushel. November soybean futures are nearly $1/bushel off levels seen last week and my target is yet to reached. $15.20 followed by $14.70 are my first two price objectives. Wheat held its own managing to hold onto the 20 day MA for the last 3 days. On a close below $8.90 I think we see an additional 50 cent bushel reduction…trade accordingly.
Currencies: The dollar has yet to breach 82.00 but it is on its way in my opinion. I’m getting mixed signals in most crosses so I would tighten stops or move to the sidelines. The only clear signal I have is bearish trade in the Yen with stops above the recent highs. I think we could see a 2.5-4% deprecation in the Yen.
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