Today In Commodities: Risk Unwind Underway

Matthew Bradbard submits: For the time being indices are in the driver’s seat and as long as stocks are moving higher RISK is on. A falling dollar should also lend support. Oil made a higher high and higher low today but as we posted in our weekly commentary we need to see a settlement above $76 in July to think higher trade is ahead. Longs already in the market should remain long as long as the 9 day MA holds; current level $73.50 in July.

By Matthew Bradbard: Stocks and commodities got hit today and there should be more to follow. Stocks, energies, even metals were not spared as Risk OFF was the theme today. Crude failed to make it to higher ground as prices were rejected and the reversal that we’ve been expecting may finally be under way. Aggressive clients started to gain bearish exposure in January contracts. As of this post oil is down 3.7% trading back under $100/barrel.

By Matthew Bradbard: Today’s’ bounce in most commodities and equities in my opinion should be viewed as nothing more than that, as my expectation is for a further decline. April Crude rebounded off the 38.2% Fibonacci retracement level gaining 1.4% as of this post. I’m still expecting more pressure and as long as prices remain under the 9 day MA at $107.25 I would remain in bearish trades.

Matthew Bradbard submits: I am torn on oil therefore have no positions on for clients. In the August contract we violated the trend line that has held since mid-May but quickly rallied back to close slightly lower in today’s session. We’ve seen a 50% Fibonacci retracement at today’s lows but have a sneaking suspicion we could see a probe at $73 before we resume moving higher.

Matthew Bradbard submits: Perhaps you remember Mr. Miaggi “wax on…wax off” well this is a bit different but the theme of late appears to be whether investors want risk on or off. It looks to me like oil is trying to carve out a bottom…yes this is a gutsy trade because we’re suggesting to catch a falling knife but being most of our exposure with clients is in August options we are OK being a few days early.

By Matthew Bradbard: Energy: November crude oil is trading under its 100 day MA as of this post, lower by 1.15% and trading to near a seven week low. Prices are nearly $10 off their highs from less than two weeks ago. A 50% Fibonacci retracement on this contract puts prices at $89.25, while a 61.8% retracement drags prices to $86.80. RBOB moved in the other direction, gaining 1.25% and closing back above its 8 day MA.

By Matthew Bradbard: Energy: I know it sounds like a broken record but it’s all about the 100 day MA in crude oil. Currently the 100 day MA in the June contract is $102.85. I remain bearish, looking for a trade below $100 this week or next. Both RBOB and heating oil finished lower today and it’s my opinion that weakness in the distillates will spill over into crude. I’m looking for a 10-15 cent break in the distillates.

Matthew Bradbard submits: As long as indices tread water or move higher money should flow back into commodities and out of Treasuries and the US dollar. Crude followed thru today and now has the 20 day MA in its sights. As we said yesterday as long as equities move higher we think we could see Crude appreciate $3-5 relatively quickly. As of this post August is higher by $1.70.