The Softs Review
For the week of October 24, 2011
By Jurgens H. BauerThere are two basic forces at work; the weaker dollar and the poor world economic climate which has raised concern about demand. Add to those the liquidation of fund participation in commodities (although there are some who believe funds are showing signs of attraction to the long side) and you see an environment that has become thin and susceptible to stage swift price moves on reaction to news from the 24 hour news cycle. As a result, look for volatile times this coming week.
Friday's sharply weaker dollar spurred buying on Friday lifting coffee prices sharply. Sugar failed to respond in similar fashion. Cotton firmed on Friday, but was down 5 cents on the week with open Interest rising in cotton by over 2500 contracts, signaling new shorts were the driver behind Thursday sharp price drop. Cocoa languished at week's end after reaching new lows for the season earlier.
As for the surge in coffee, technicians seem focused on a chart pattern referred to as Andrew's Pitchfork, which should Friday's highs (247) get taken out decisively portends a swift move to 265 or 275. A failure should result in a pull back to 230. Volume was superior, validating the move.
Read where one Bank of America analyst thinks that another downgrade of America's debt rating is on the way when the "Supercommittee" blows up in late November or early December. "The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes".
Read more
here.
The dollar will likely fuel the next big move in the markets, so that should be the focus of attention. Traders continue to anticipate the EU coming to some kind of solution in the debt crisis. However, any final plans are again up in the air as Germany and France are now looking for another meeting on Wednesday, having delayed plans for this past weekend. That leaders are in such disarray and that this weekend's meetings were set back only add to the uncertainty and tension and the potential for calamity. That leaves much hanging upon the result and sets the tone for a sharp reaction to take place in either direction.
The Energies Review
For the week of October 24, 2011
By Daniel CroninWhat a crazy week it was in the energy markets as crude rallied in the early part of the week to the resistance of $89.50 but fell big on economic uncertainty to $85 along with the stunning news of Qaddafi's death. The flat price is now higher on the Sunday night session to over $85 in Dec CL as this market just does not want to give up. Every time it gets knocked down it keeps getting back up and the $89.50 level is in jeopardy this week. The Euro/USD is looking to creep back up and break the resistance of $1.39 and if it does I believe Crude will try and test $90. The equities markets have broken the old high of 1225 and I believe this could have more to run on the upside. The DOE numbers will be very interesting so look for these coming out on Wednesday. For right now crude is stuck in a bit of range but I believe the price will have look to try and climb higher with all of the major resistances being breached.
The Metals Review
For the week of October 24, 2011
By Daniel CroninA very odd week for the metals. They looked to have all the makings to rally with a shaky equity market and a rallying Euro but instead Gold decided to go in a free fall from $1,670 to $1,600. I loved Gold down at $1,600. I believe it should be bought around those levels, but it was very strange to see Thursday's action with gold falling more than $40 mid week but recouping the losses to trade at $1,650. I still like this market and would look to buy some OTM calls this week, aiming for the $1,700 and above calls.
Copper came down hard to test the lows of $3.00 and held there again before rallying back up some 30 cents to $3.45. Look for copper to continue consolidating and gaining ground as the equities look to be stronger after they broke the 1225 level in S&P.
Disclaimer: Past performance is not indicative of future results.
Trading futures and options involves substantial risk of loss and is not suitable for all investors. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. The use of stop loss or contingent orders may not protect profits and may not limit losses to the amount intended. Certain market conditions make it difficult or impossible to execute such orders.