Plenty of Interest 12/17/10

Based on the market action today there does not seem to be any slow down or lost interest in the commodity sector. Oil is still range bound trying to decide a direction from here. Our bias remains to the downside but we’ve moved our target in the February contract from $85 to $86. After a near 15% correction it may be time to explore outright longs. Our clients took a loss on their futures spreads. If we see the lows that previously held just below $4 we may start to explore bull call spreads and long futures with tight stops…stay tuned. As we’ve voiced all week we’ve yet to suggest outright shorts but some of our more aggressive clients have started to purchase March ES put spreads. The dollar index has started to signal that we may get an upward move from here but we suggest waiting for confirmation into next week. We’ve yet to make  a play for clients but shorts in the Pound, Swissie and Loonie are on our radar…stay tuned. If February lean hogs and live cattle open around the same levels Monday as today’s close we may start scaling into longs…stay tuned. The 20 day MA held again in silver today; continue to use $28.50 as your pivot point. The 50 day MA supported February gold; that level is $1370. We still think there could be a probe lower into years end but we reserve to change our mind if February gold settles over $1385 and March silver above $29.50. Aggressive traders could be scaling into long futures in 30-yr bonds or 1o-yr notes or into NOB spreads with their bias in 30-yr bonds. We could see a appreciation to 123/124 in March 30-yr bonds and 122/122’16 in March 10-yr notes. We advised clients to cover all their shorts in wheat at a very minimal profit in early dealings. Agriculture is back to a buy on dips market but we will likely not be involved until the first of the year. The standout sector today was the softs market with sugar higher by 4.86%, cotton 2.75%, coffee just over 4% and lumber 3.45%. The only loser was cocoa lower by 1.73%. We used the limit move higher in cotton today to start scaling into bearish ratio spreads in March thinking we are close to falling off again.

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

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