Market Outlook & Analysis: Daily Trade Picks
By Al Martin
(Jan 7, 2008) Individual trades for week of Dec 31 - Jan. 4, 2008
In Monday’s trade, we SS-4 SPH 1474.50 C 1472.
In Wednesday’s trade, we went L-2 WH 988.25 S 991.25, L-4 USH 116.10 S 116.14, SS-4 SPH 1480 C 1477.50, SS-4 SPH 1470 C 1467.50.
In Thursday’s trade, we SS-4 SPH 1460 C 1457.50, SS-4 SPH 1460 C 1457.50, SS-4 SPH 1460 C 1457.50, L-8 USH 117.16 S 117.18, L-4 WH 9.35 S 9.45, L-4 USH 117.08 S 117.12.
In Friday’s trade, we went L-4 WH 9.47 S 9.4950, L-4 USH 117.20 S 117.24, SS-4 SPH 1462.50 C 1460, L-4 USH 118.10 C 118.03, L-4 USH 118.02 S 118.06, L-4 WH 9.2750 S 9.30, SS-5 OJH 137.50 C 138, L-5 OJH 136.50 S 137.20.
Our recommendation to trade the USH contract from the long side on dips continued to bear fruit last week, with sharp, late-week rallies, taking the contract up to a 118.20 intra-day high in Friday’s trade. The contract still looks to move higher. Continue to look to trade from the long side on dips.
The DXH contract finally found some stability in Friday’s trade, after consistent declines. Dollar traders now seem to be more friendly to the currency. We would look now to resume our trading of this contract on the long side on dips.
The SBH contract rose sharply in late-week trade on renewed short-covering activity, as Joe 6-pack sucker shorts were squeezed out, with the contract reaching intra-day high of 11.44. However, the sugar has rallied largely on the back of the recent move up in oil. Indeed, sugar fundamentals do not support current prices and we would look to short this contract on any move back to 11.35 or better.
In line with our predictions, the OJH contract fell back sharply in late-week trade, generating substantial profits for those that had taken our suggestion to short the March juice, with the contract reaching an intra-day low of 1.36 in Friday’s trade, down 15 ½ cents from recent highs. Indeed, we feel the juice may be, at this point, a little oversold and would be looking for a bounce back to the 140 area. However, juice fundamentals would still suggest overall lower prices.
Further, our continuing suggestions to trade the LBH contract from the short side continued to bear fruit, as lumber continues to soften, due to nonexistent demand. Contract fell below 250 in Friday’s trade. Indeed, we look to continue to short this contract on rallies back to the 253-55 area.
The HGH contract moved sharply higher in Friday’s trade on the back of fresh short-covering, with the contract peaking at 3.2340 in intra-day trade before getting cracked for 12 cents on the back of Friday’s unemployment report. We have consistently recommended shorting the copper on rallies above 316, and would continue to do so.
The KCH contract, the March coffee contract, fell sharply in Friday’s trade, touching an intra-day low of 1.30. As you know, we have consistently recommended shorting the coffee on rallies to 1.3450 or better, a trade that you could also have made Friday, a trade that was good for 4 cents. Look to continue to short the coffee at that level.
The cocoa contract, after rallying $115 in 2 days, in line with our suggestions, fell back slightly to a close of 2098 in the March contract in Friday’s trade. Cocoa fundamentals still look solid, however, and we would expect the recent top of 2147 to be challenged.
Cotton eased back in the March contract to close at 68.64 in Friday’s session, after reaching fresh highs above 69.00. Cotton is still good to the long side. Look to buy on dips to 68.50 or lower.
The wheat contract rallying back from a sharply oversold condition, to reach intra-week high, Thursday night, at 9.58, settling back to a 9.3150 close in Friday’s trade. Wheat is back on track with fund support. Look for higher prices.