The Dollar’s last stand 11/29/10

A near 7% appreciation in the month of November in the dollar caught me off guard but the bulls are staring to look tired. Crude is now above the 20 day MA having gained just over 5.5% in the last three sessions. Momentum may carry prices an additional $2.50-4.00 but we do not expect much more than that in the immediate future. Clients are advised to be in either January or February bullish plays and should start looking for an exit door with our next target near the early November highs. Chart damage was done on natural gas today with prices trading 4.10% lower as of this post. Those trading stops should have been stopped out of their longs today. We recommend the sidelines with the expectation that we would re-employ longs for clients on a trade 5-7% lower. Impressive reversal in the indices today as prices are going out just off their highs and able to hold the 50 day MA’s. We advise the sidelines here as well until we get a clearer picture. The US dollar continues to climb the wall of worry having completed a 38.2% Fibonacci retracement as of today. I’m not advising shorts just yet but I cannot imagine there is much more gas in the bull’s tank. A 50% retracement would lift the December contract to 82.40. On signs of an interim top we would be advising longs in other crosses…stay tuned. On our radar currently are the Loonie, Yen and Aussie. We’ve advised livestock traders to exit their longs in recent weeks wait for a set back and the re-establish longs. After a 3% price correction live cattle and lean hogs would be back on our radar. Gold traded higher today but we would like to see consecutive settlements back over the 20 day MA to convince us clients should be long; in February that level is $1372. While the 20 day MA capped gains in gold today it served as support in the silver market; in March at $26.60. We have numerous bullish plays on with clients in silver expecting a trade back over $28/ounce in the coming weeks. We have a moderate position with clients long corn and have a small position short January soybeans. In the coming weeks we expect a 7-10% appreciation in corn and 4-6% depreciation in soybeans…trade accordingly. Bearish engulfing candle in cocoa today with more downside likely to come. We started working out of some of our longs in sugar with clients today and on a higher trade in the coming days we will be liquidating the remainder. If cotton continues to consolidate around these levels we will start exploring longs in mid-2011 contracts…stay tuned.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Read more at MB Wealth