Today in Commodities: When Will It End?

Matthew Bradbard submits: Traders need to have a strong stomach as 1-2% swings is becoming a common day occurrence. November Crude hit our target at $83.50 today trading as high as $84.09. We are at a crossroads as a settlement above the August highs likely would mean $90 but if we fail at these levels we should a move $5-7 lower. We would lighten up on longs and for new entries we would wait for signs of the next move. Same story on the distillates…follow Crude’s lead.

Matthew Bradbard submits: Record moves in a number of commodities. Are you taking advantage of this asset class? I would like to see November Crude remain above the 50 day MA on a closing basis to remain fully invested with clients. We’re still bullish but a bearish inventory report could see a $2-3 slide so just be cognizant of that. We’re still expecting $82 in November futures but it may be a bumpy ride.

Matthew Bradbard submits: What a difference a day can make as commodities come under pressure after a one-way ride the last several weeks. Stiff resistance comes in just above today’s highs in Crude, we suggest booking profits on longs and moving to the sidelines anticipating a correction. After a $3 pullback we would advise re-establishing longs. Additionally we advise hedgers in RBOB or heating oil to lighten up as we would think a 10-15 cent correction is coming.

Matthew Bradbard submits: If investors are not interested/confident I am a seller. When August Crude took out $77.70; the 9 day MA mentioned yesterday buyers disappeared and as of this post prices are below the 20 day MA down 3.40% on the day. The path of least resistance is down and this leg could drag prices back to $73/barrel. We see light support at $75; last weeks low but we expect it to give way. We will look to get clients long from lower levels.

Matthew Bradbard submits: The indices trading higher should mean the dollar and Treasuries down and most commodities up. That is how we have positioned clients as you can read below. Oil is thru $76 trading near a one month high. The momentum is up but if you are not already long we would not suggest fresh entries at these levels.

Matthew Bradbard submits: The direction of the dollar should impact a number of commodities in the coming session but wait for a confirmation tomorrow. Crude is still waffling back and forth trying to decide on a direction from here. Our bias remains to the downside and being prices were only higher by just over 50 cents with the dollar down nearly 1% today I think I’m right…stay tuned. As we voiced last week we’re expecting $85 from here.

Matthew Bradbard submits: A 10% move in one day without any leverage…ouch. Moves like today is reason not to fully margin your commodity account. Continue trailing stops on longs in Crude but we would not suggest throwing any more logs on the fire until we get a set back. That it not say get short but a trade back to the 20 day MA about $4 lower is not out of the question.

Matthew Bradbard submits: Intra-day Crude futures were down just over $2 but as of this post it looks like we’ve pared losses about 50%. We think a settlement below the 100 day MA at $80.63 signals a correction coming. As we’ve said in previous posts, we think a trade down to $77/78 is likely. Aggressive traders could gain bearish exposure in October or November contracts.