Today in Commodities: Crude Advances

Matthew Bradbard submits: If and when new highs are made and new lows are forged investors must react. Understand the cure for low prices is lower prices and the cure for high prices is higher prices. November Crude is above the 50 day MA for the first time since August 12th. In the last 2 weeks prices have advanced nearly $7/barrel. We have moved our upside objectives to $82 followed by $84.50 in the November contract.

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.

Matthew Bradbard submits: After making a new high Crude failed and closed almost $2 off its’ intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We’re not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we’d been calling for today; at $5.865 on the August contract.

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: In case you were not aware the FOMC is meeting today and tomorrow so stay alert as even inaction can be a market mover. We’ve advised aggressive clients to scale into longs in Crude futures and to gain bullish options exposure; today some clients bought May $95/100 bull call spreads. The 100 day MA held today just above $86 and the trend line comes in just below that level.

Matthew Bradbard submits: With the recent sell off in the US dollar and Treasuries it appears investors are putting risk assets back to work in securities and commodities. A further 1.4% appreciation today with prices in Crude fast approaching the early November highs. On a settlement above $89 in January we should see a print in the mid $90′s in the next few weeks.

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.

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.