Commodities Essential - June 10, 2011


Alert: Looking down on sugar and crude.


Add a short on SGG; add a long on DTO


 I recommend you add two new positions today:


1) Short sugar prices via the iPath DJ-UBS Sugar Subindex Total Return Fund (SGG). I believe sugar has defied its long-term fundamentals recently because of short-term events. I also believe the recent move has reached overbought territory and is now facing technical resistance. I expect sugar prices to roll over soon.


2) Short crude oil prices via the PowerShares DB Crude Oil Double Short Fund (DTO).  Crude oil is forfeiting is recent gains after the much-talked-about OPEC stalemate. I think the take away here is that supplies are currently sufficient and OPEC could act if needed to keep crude oil prices from rising much. Technically crude oil looks weak. 


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Trade Essentials.


SGG(Last Price: $80.10)


SELL SHORT shares of iPath DJ-UBS Sugar Subindex Total Return Fund, symbol SGG, at the market. Then place an order to BUY-TO-COVER ALL your shares of iPath DJ-UBS Sugar Subindex Total Return Fund, symbol SGG, at $87.00, STOP. This order is good till cancelled.


[Please note that a margin account is required in order to ‘sell short’ a position in SGG.]


DTO (Last Price: $48.00)


Buy shares of PowerShares DB Crude Oil Double Short Fund, symbol DTO, at the market. Then place an order to SELL ALL your shares of PowerShares DB Crude Oil Double Short Fund, symbol DTO, at $43.85, STOP. This order is good till cancelled 


[Please note this is a 2x-leveraged, inverse ETN which means it will move roughly twice as fast, and in the opposite direction, as the underlying price of crude oil; for those who do not wish to take on added leverage on this bet but do wish to position for declining crude oil prices, consider SZO instead.