FREE SAMPLE COLUMN-SUBSCRIBE NOW Precipitous Falls in Commodity Prices as Shaky PIIGS Roil Markets

Written by Al Martin Sunday, 07 February 2010 22:03

(2-17-10) Last week we saw a continuation of the now ensconced 30-day trading pattern followed by 4-5 day declines, followed by 1-day “dead cat bounces” in both equity and commodity prices. These bounces have represented and will continue to represent fresh shorting opportunities in equity and commodity prices as well as fresh buying opportunities in Treasuries and Dollars.

We continue to trade the Treasuries from the long side on dips, as we have done this continuously for the past four weeks. Indeed we were buyers of the Treasury Bonds Friday morning on the pullback, buying the March Long Bonds at 118.14 and selling them at 119.14 in late session trade, taking $1000 per contract in profit out of our positions.

We also bought the Dollars Thursday night, as the Dollars came up above 80.25. We were sellers of the Dollar at 35 ticks higher in Friday’s trade. We expect that now that the Dollar contract has traded above its 12-month moving average, fresh short covering will propel the contract higher, as the remaining Dollar bears are squeezed out.

We shorted the Oil Thursday night at $73.25, and again at $73.50, covering below $71 in Friday’s dip. We saw the March Oil come under $70 for the first time in a long while. We would expect the contract to trade back to $72, wherein we will be looking to short it again.

Gold, which we have also been trading from the short side, fell precipitously in early Friday trade, as equity prices turned around on late short covering. However, we will be looking to re-short the Gold in the April contract on rallies back to $1075 or better.

The March Sugar contract, which we had been short at 30 cents for the last 8 days, fell back to fresh lows at 26.17 in Friday’s session, despite shilling by Sugar Bulls who continue to look at near-term supply tightness. However sugar is not immune from the sell-off in the rest of the boards and perceived supply tightness isn’t as acute as Sugar Shills would have us believe. We think the Sugar is coming down to 24 cents.

The March Orange Juice, which we had also shorted again last week, as the contract fell back below 140. We suspect it has further to decline.

The Grains continued to fall back, but found some stabilization late week. Although we continue to think that the March Soybeans will come below $9.

The March Silver contract, which we have been most heavily short of any commodity, fell below $15 in Friday’s session. We covered the shorts we had put on earlier in the day above 15.50 at 14.93. We would expect Sunday night a continuation of Friday’s late short-covering rally and would look to sell the Silver again on rallies back to 15.50.

The March Copper contract, which we had been trading from the short side aggressively in the last 10 sessions, also rallied back slightly to go back out at 2.880. We expect this contract to trade down to $2.40 in the next 30 days.

We had been warning the March Coffee contract would break the 1.33 support area. Indeed this occurred on Thursday. We were short the Coffee at 1.3290 on our sell-stops. We covered at 1.2890 in Friday’s trade. We would look to resell the Coffee on any trade back to 1.33.

The March Cocoa also broke precipitously as fund liquidation continued. We were short the Cocoa on Friday at 3060, taking nearly $100 out of the contract. We would now look at the 3030-3060 area for fresh shorting opportunities.

March Cotton also broke significantly in Friday’s trade as we had been warning. We have been consistently short Cotton, since Thursday morning at 70 cents. We now believe that any trade back to 6850 or better in the March Cotton contract represents a fresh shorting opportunity.

Choice & Tasty Trading Opportunities as Commodity Boards Sell Off Sharply

Written by Al Martin Sunday, 31 January 2010 23:20

(1-31-10) As we recommended in the March Long Bond contract – we were buyers early Friday morning at 118.06 and lower. We sold the Bonds at 119.04-119.06 on the late Friday rally, taking one whole point out of the Bond contract, as the contract responded to increased global economic tensions. With this week’s Treasury auctions having all gone well and no fresh supply coming, the Bonds still look good to the upside.

Read more: Choice & Tasty Trading Opportunities as Commodity Boards Sell Off Sharply

Fresh Fortunes Made in the USH & DXH Contract on the Long Side; Sell Short Dead Cat Bounces

Written by Al Martin Monday, 25 January 2010 00:46

(1-24-10) As we have been recommending for weeks and weeks, the USH contract continues to be a buy-on-dip trade. We saw this trade again all of last week with the Bonds ultimately trading up to 119.00 in early Friday morning trade. Bonds finally did weaken a little in Friday late trade in recognition of $118 Billion of fresh Treasury supply coming this week. However, the Bonds, as we have noted before, do not seem to be frightened of new supply and insofar as this new supply coming next week is all at the short end, we believe that the Long Bonds are still a buy-on-dip trade and that they are now becoming a bellwether for global economic stress.

Read more: Fresh Fortunes Made in the USH & DXH Contract on the Long Side; Sell Short Dead Cat Bounces

Commodity Complexes Turn Lower

Written by Al Martin Sunday, 17 January 2010 22:17

(1-17-1 0)  In our last week’s missive, we warned that the March Long Bond contract would rally this week. We did see a substantial rally off the lows, after a series of reasonably good Treasury auctions. We consistently traded the Bonds from the long side with the March Long Bonds going out at 117.12 in Friday’s trade. With no fresh calendar this week and equity markets under pressure, we continue to think the Bonds to be a trade on the long side.

Read more: Commodity Complexes Turn Lower