Record Level of Overvaluation Confounds Bears

Written by Al Martin Monday, 05 August 2013 14:40

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(8-4-13) We saw the Spoos finally move to break the 1700 barrier in Friday’s trade. We were sellers on our standing orders at 1703.50 and would expect the Spoos to back off for a 5-handle trade in Sunday’s overnight session.

The Sep. Long Bond contract –  good rally on 32.10 eight lot buy order at fill in Thursday night’s trade. We were sellers on our standing orders at 133.24. We also sold the Bonds again on our standing order at 133.25.We would expect the Bonds to back off for a test of the 133.09 area in Sunday night’s trade.

Good back-off in the Sep. Dollar index – the Dollar Index now locked in the 81.30 - 82.30 range. We expect however this range will be broken as we suspect the Euros are going to start marching south again.

The Sep. Oil contract – good short covering with those who were not out on a test of 103.00 and getting squeezed out on the retest up at 107. Oil is once again overbought. We are looking to short the Oil on any moves back above 107.00.

Dec. Gold contract – we had sold the contract on the break of the 1308 in Thursday overnight session. We also sold again on our 1299.90 stops, covering both on the test of the 1283 support area. Of course the unemployment numbers Friday morning brought short covering action into the Gold. We are shorting again on the close at 1312.

The Aug. Sugar contract – coming down once again off recent tests up in the 16.95 area. We would expect Sugar to work lower throughout the week.

Sep. Orange Juice – also moving lower. We had shorted again at 1.4605 and would be looking to cover on a test of the 1.40 area.

Sep. Lumber – we also expect the Lumber to continue to move south as it doid last week. We do not think that 300 will hold.

Feature trade of the week was the Nov. Bean contract which we had warned was severely overvalued at current levels. Beans, now having broken under $12, with global Bean crop expected to reach record levels, we think the Beans can work down for a test of the 11.60 area in the coming week’s trade.

Also we continue to carry our short Dec. Corn positions and will be watching the 4.60 area for any support

The Sep. Silver continues to get backed off on rallies to 20.00. Due to the weakness of the Silver relative to the Gold, we continue to look at 20.00 – 20.20 as a shorting zone.

The Sep. Copper contract – once again turned back on a test of the 3.19 area. With Copper severely overbought once again, we would expect the Copper to work lower.

In line with our last week’s predictions, the Sep. Coffee contract  can come down to establish a new low in Thursday night’s trade in the 1.15 area before short covering came into Friday’s session . We think the Coffee is again a short at current levels.

The Sep. Cocoa contract – we continue to short the contract on rallies to 2304 or better covering on $10-20 dips. We think the 2300 area is now the new prime shorting zone.

Dec. cCtton continues to get turned back on rallies back to 85.00. We continue to be sellers of the Dec. Cotton at 85.50 or better.









 

Don’t Be Fooled by Continuing Strength in Gold, As Commodities Continue to Move South

Written by Al Martin Sunday, 28 July 2013 21:39

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(7-28-13)  Sep. Long Bond contract – now being supported on dips to the 133.24 area. We were buyers again at 133.24 in Thursday’s session, selling on our standing order at 134.24 by the end of day Friday. We think the Bonds continue to be a buy on dip trade

The Dollar Index, although having fallen below 8200 – we think it’s still a long trade. We are consistently selling the Euros as previously stated on moves to 1.3250 or better. We think that this notion that the Euros can make a move up to 1.34 is nonsense.

The Sep. Oil contract continues to move off its recent highs. We are now consistently selling the contract on moves back to 106, whereas we had been selling the contract on moves to 108 a week earlier, contract now establishing a series of lower lows -- and we believe the contract is still $10 overbought, relative to underlying supply/demand fundamentals.

The Aug. Gold contract continues to hold dips and has now twice held dips to the 1313 level. We continue to short the contract on moves above 1336, as we think that Gold can not be sustained at current levels for long.

The Aug. Sugar contract – we were once again trading the contract on the short side throughout the week on 10-20 point scalps. Sugar closed strong on Friday. We continue to believe that this is short covering, however, as Sugar fundamentals are as bearish as they have ever been in history.

Sep. Orange Juice – we continue to short the contract on moves up to 1.46 or better, covering on 2-4 cent dips. We continue to look at this trade to be held as we do not expect 1.50 to be breached.

Sep. Lumber contract – late week short covering having taken the contract off the lows, we continue to look at that 332 area for fresh shorting opportunities.

Nov. Beans – we had been warning of severe overvaluation in the Beans. Indeed we saw the Beans get cracked last week. We were short on the last effort   in the Beans up at 12.92 in Wednesday’s trade, covering on our standing orders at 12.12 in Friday’s action. We think the short covering bounce in Friday’s action represents a fresh shorting opportunity. Indeed we sold the contract on the close at 12.28.

The Sep. Silver contract – once again acting weak relative to the Gold. We would look to sell the contract again on any moves above 20.30.

The July Platinum contract also fell sharply. We had warned of overvaluation both for Platinum and Palladium contracts. We still believe Platinum is coming back down for a test of 1400.

We had also been warning last week of overvaluation in the Sep. Copper contract, the contract having been turned back this week in the key 3.23 area, precipitating a 13 cent decline in two days. We were short from 3.23 on our standing orders, covering on a test of 3.10 in late Friday’s liquidation trade. Copper is now coming back to supply/ demand reality, We think that any rallies back to 3.16 should be shorted.

Our feature trade of the week: we had been consistently shorting the Sep. Coffee contract at 1.26. We sold the contract again at 1.2570 in Friday’s session, covering MOC, we were filled at 1.223, taking more than 3 cents out of the contract. Continue to look at the 1.26 area for fresh shorting opportunities.

We continue to short the Sep. Cocoa on moves to 2360 or better, covering on $10-30 dips. We think the Cocoa is now topped out in that 2360/80 area.

We continue to short the Dec. Cotton on moves above 86.00 as we have been doing for the past month. We shorted the contract again at 86.12 in Thursday’s overnight session, our standing cover order at 85.12 hit on Friday’s close, and we continue to short the Cotton on rallies above 86.00.

We were shorting the Corn consistently around the 5.00 - 5.10 area in recent weeks’ trade. We had warned the Corn was overvalued and would come down to test 4.70. Indeed we saw a test there Friday. Corn should be shorted now on any new rallies back to the 4.90 area. We also believe the Sep. Wheat contract is now overvalued. We are short right at current levels at 6.50. The Wheat contract can easily fall another 30 cents.









 

Repeated Rounds of Short Covering in the Gold Represent Prime Trading Opportunities

Written by Al Martin Sunday, 21 July 2013 23:08

 (7-21-13) The Sep. Long Bond contract continues to hover near its recent range top in the 1.36 area -- although it is now consistently being turned back from that area. We continue to look to buy the Bonds on dips down to 134.26 and had bought the Bonds twice at that level in last week's trade, taking a point out of them each time. We would continue to look at that level for long trade.

The Sep. Dollar contract continued to bounce up to test 82.00. We suspect that the contract will be able to get above 83.00 in the current week’s trade.

The Aug. Oil contract continues to go wild as speculative long positions continue to build, and despite increasingly negative fundamentals, we continue to look at the Oil as a buy on dip trade. However we are now above the previous high in the Oil and with the planet swimming in the stuff, watch out for that $5 one-day break.

The Aug. Gold contract continues to trade in the 1273-98 zone. We have been consistently selling the contract on moves above 1293, covering on $10-20 dips. This continues to be short covering action in the Gold, but we do think the Gold will get turned back once again for a retest of the 1273 area in the coming week's trade. However traders should continue to maintain their 1310 buy stop in that a break out above 1300 would clear the way fore a test of the 1320 area.

The Aug. Silver bounced several times off the 16.00 level and establishing a spike high in Thursday’s action at 16.45. We were sellers Thursday above 16.30 as we have consistently been and would look for a retest of the 16.00 level in the coming week’s trade.

The Sep. Orange Juice – now also being capped on efforts at the 1.45 area. Juice also overbought at current levels. We would look to sell on any continuation up to the 1.47 area.

Good short covering action came into the Sep. Lumber contract late week. However we continue to look to sell the Lumber on moves to 332 or higher.

Grain action continues to stabilize, although the Nov. Beans continually holding 12.60, we think the 12.60 level will give way. We continue to believe that the Dec. Corn, which we have been consistently selling on rallies to 5.08 or better, covering on 10 cent dips, will also start to move lower.

The Sep. Silver contract continues to be turned back on rallies to the 19.60 area. Silver is now in a broad $1 trading zone, but we continue to like shorting the Silver on moves above 19.50 as we did in late week trade.

Sep. Copper – we continue to look to sell the contract on moves up to the 3.18-3.19 area, Copper being consistently turned back at that level. We have been covering on 4-5 cent dips. We would expect the Copper also to work lower.

Feature trade of the week was the Sep. Coffee. We had been consistently selling the Coffee on our standing order at 1.2890 in both Thursday and Friday’s trade. Friday we hung on to our 8-lot position and were able to take 6-1/2 cents out of the contract. We had warned that the contract would likely break in this week’s trade. We think the contract is coming down for a retest of the 1.20 area.

The Sep. Cocoa contract – we were sellers at 2370 in Friday’s session and were able to take $10 out of the contract. Cocoa is also severely overbought at current levels. However we would expect the Cocoa would come back down in line with the action in the Coffee in the coming week’s trade.

 The Dec. Cotton contract – back above 86.00. Indeed we were sellers on our standing order at 86.20 in Friday's action. We’ll be looking to cover the contract on a retest of the 84.20 area in the coming week's trade.




 

Late Week Lift & New Highs in Equities Yet Commodities Move South

Written by Al Martin Sunday, 14 July 2013 21:39

 (7-14-13) In midweek trade we had yet another opportunity to get long the Sep. Bonds on a retest of the 132.26 ten-day low. We held on to the Bonds and were sellers on our standing order at 134.26 in Friday’s session. We would look to buy the Bonds again on any move back below 134.00.

Read more: Late Week Lift & New Highs in Equities Yet Commodities Move South

 

Second Quarter Action Sets Up for Fresh Trading Opportunities

Written by Al Martin Sunday, 07 July 2013 19:11

(7-7-13) Our short stops in the Sep. Long Bond Contract were run under the recent contract lows at 133.04 in Friday's session, allowing us to take nearly a point out of the contract. We would be looking to get long the contract now on any move down to 131.30 in Sunday's overnight session. We would also be looking to short the Spoos on any move up to 1640, also in Sunday’s overnight session.

Read more: Second Quarter Action Sets Up for Fresh Trading Opportunities

 

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