Commodities are trying to hold onto the gains they have had as you can see in the CRB index. The CRB is building a bull flag on the daily charts. However, we do not see immediate upside follow through any time soon. We remain biased to expecting a pullback in commodities in the near term. This is partially due to the stabilization we have seen in the Dollar as well as the fact that upside momentum in commodities is slowing considerably.
Crude Oil:
Crude oil has so far been unable to retest the highs near $135. As we mentioned in past issues we do expect this market to pullback more in the near term. We are looking for a bull flag to form between 100-135 for some time to come. We are therefore light sellers of rallies this week. We say light because confidence is still not high on this one as volatility remains extreme.
Natural Gas:
Natural gas is trying to break out above last weeks highs. We do not expect upside follow through so we would look to sell into any break out with stops above 12.55 targeting a move back towards 11.00.
S&P500:
We remain long from last week at 1375 and have now moved stops from 1350 to entry. We will begin to exit on any move above 1400.
T-Bonds:
Bonds briefly dipped below 114 last week and we did get stopped out of that trade when they did. We still prefer to be long this market with stops below last week’s lows but we will be patient and wait for a pullback to buy into.
Metals:
We did enter gold on the dip last week and are now long from roughly 880 stops started at 850 but will be moved if we close above 900 to entry. From there we expect to begin to scale out of this trade between 921-955. We also went long silver at 16.89 with stops started below 16.00. If we trade above 17.34 we will move stops to entry and begin scaling out above 17.55. Copper could see a bit of a bounce off of support near 350. We do not expect this bounce to follow through but we could see 400 retested.
Grains:
We remain long Wheat from below 8.00 from last week’s issue. We are moving stops to entry if we close above 834. We are still targeting a move back to 9.00. Corn is a sell early this week with stops above 634. We are still looking for the range between 575-625 to hold in the near term. Soybeans could be poised for a possible upside breakout. If July can close above 1415 we could see a fast run back to 1600. That being said we would be light sellers at 14.00 with stop and reverse orders above 1421. If 1415 holds as resistance then we would look to cover those shorts below 1350. If stops are hit we would be long from about 1421.
Softs:
OJ continues to try and find a support level. We may have found it at the 105 level but only time will tell. We remain on the sidelines here until we get some kind of retest of these lows that holds. Should that happen we would again become buyers. Cocoa found support at 2600 rather than following through as we had expected. We now have a range between 2600-2800 so since we are approaching the upper end we would be light sellers near 2800 with stops above 2834. We ended up long coffee last week from 132.50 and are now moving those stops to that entry point and also beginning to exit above 137.50. We will hold a small portion of the trade as we could see an upside breakout above 140 later this month. We went long Sugar at 8.89 last week and have now moved stops to entry and will begin exiting on a push above 10.55. We did get stopped out of our cotton as we expected we would and for the time being will wait on the sidelines for a new signal.
