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Europe. And commodity charts.

Two things are obvious:

1) European leaders cannot agree on the ultimate deals that experts suggest will be needed to stem the crisis, suggesting this wasn't the summit to end all summits.

2) European leaders have accepted that the market is their boss, and today they were forced to reveal their obedience.

Knowing full well they weren't going to get the German Chancellor to budge on Eurobonds or a fiscal debt pact, they needed to do something to keep the market from applying even greater pressure on the button that's making their situation that much harder to handle: interest rates.

Spanish and Italian 10-year rates have been hovering around the critical 6 to 7 percent threshold. As it stands now, Spanish debt is likely to exceed the all-important 90 percent of GDP at which case the debt begins to notably subtract from economic growth. If Spain's borrowing costs are not kept under control, the debt will rise well above the 90 percent debt-to-GDP mark.

Commodities Essential. 29 June 2012

Trade Essentials.

No new recommendations or adjustments at this time.

Commodities Essential. 8 March 2012

Do-or-die on gold? Time already to second-guess China? Do geopolitics mean anything? Ha!


I think the inverse head-and-shoulders set-up on the gold chart has the potential to support price and send it to test its all-time highs this year.


Of course, a broad sell-off in risk appetite has the potential to drag gold down with other assets. But it might be worth keeping in mind that gold held up relatively well in 2008 when markets collapsed; the following chart shows the price action of gold, euro, copper, crude oil and the S&P 500 after the credit crunch: 

Commodities Essential. 8 March 2012



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No new recommendations or adjustments at this time.


Alert: crude oil due for technical retracement.

Let’s add DTO.


Looking at crude oil’s technical picture, I think we may see it sink as far as $101-$102 per barrel. Increasing talk of a diplomatic solution to Iran-led Middle Eastern tension may allow the technical pull-back to play out as near-term risk premium diminishes.


Let’s play this short-term potential by adding a position in the PowerShares DB Crude Oil DoubleShort ETN (DTO). I recommend staying pretty tight on the stop-loss considering the geopolitical uncertainty that could allow this position to run against us quickly.


 


****** 



Trade Essentials.


DTO (Last Price: $35.13)


Buy shares of PowerShares DB Crude Oil DoubleShort ETN, symbol DTO, at the market. Then place an order to sell all your shares of PowerShares DB Crude Oil DoubleShort ETN, symbol DTO, at $33.47, STOP; this order is good till cancelled. 

Commodities Essential. 2 March 2012

Chinese demand: real or fabricated?


We’ve consistently warned about the risks of continued reliance on investment to compensate for scattered external demand for China’s exports. It’s just that the government doesn’t have a viable way to expedite necessary and sufficient consumption-led growth that will allow them to rebalance their economy. And because of this, they are even worse off, i.e. they are more heavily dependent on debt and investment to drive growth than they were when the global credit crisis struck 3 and a half years ago. 


Commodities Essential. 2 March 2012


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No new recommendations or adjustments at this time.

Alert: a palpable and meaningful shift in sentiment today?

Let’s secure some gains.


Is the LTRO priced in? Does it suggest things are even worse in Europe than some thought? Is Bernanke hinting that additional QE may not be needed? Is it time for a rethink of the latest risk-appetite move?


Maybe. Enough so to warrant adjusting stop-losses and exiting with gains. Details follow.


If it appears this is a re-think of risk appetite, there will be some nice short-term opportunities to play in the other direction. Stay tuned.


 


***** 



Trade Essentials.


UCO (Last Price: $45.33)


Sell all shares of ProShares UltraShort Crude Oil Fund, symbol UCO, at the market! 


JJC (Last Price: $50.04)


Sell all shares of iPath Copper Total Return Fund, symbol JJC, at the market!


IAU (Last Price: $16.72)


CANCEL AND REPLACE your order to sell all shares of iShares Gold Trust, symbol IAU, at $15.87, STOP. NEW PRICE: $16.20, STOP. This order is good till cancelled. 


CORN (Last Price: $41.12)


CANCEL AND REPLACE your order to sell all shares of Teucrium Corn Fund, symbol CORN, at $36.90, STOP. NEW PRICE: $40.40, STOP. This order is good till cancelled.

Commodities Essential. UPDATE 28 February 2012

Update on crude oil and UCO.


Crude oil is down for the second consecutive day after rising sharply for most of this month. You currently hold a position in UCO that is showing nice open gains. While crude oil had become extended and perhaps due for a correction, like we’ve seen yesterday and today, I’ve wanted you to hold on just a bit longer to play for another upward push in the price.


But now that crude has pulled back nearly $3 per barrel, I’m getting close to recommending you cut the cord on this position and take gains. I don’t want to tighten up the stop-loss or exit UCO just yet; but I will consider making a move first thing tomorrow morning if crude doesn’t firm up as I expect it to.


Be sure to stay tuned. 






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No new recommendations or adjustments at this time.




Commodities Essential. 17 February 2012

Time to take a stand on gold.


First, look at where the moving averages converge - that is where I think gold will ultimately find a near-term bottom if it hasn’t already.


Second, the move above the 200-day moving average back on January 10th and above the 100-day moving average back on January 25th likely provided catalysts for all those overtly bullish headline quotes I listed above. But above all, the Federal Reserve provided even more fuel when they extended their ‘extended period of low rates’ to the end of 2014.


Commodities Essential. 17 February 2012

Alert: copper offering us a buying opportunity? gold?

Let’s play for it and add JJC and IAU …


We’ve seen a relatively contained and  steady pullback in the last two weeks — both in gold and copper. It looks like the makings of merely a correction and not the beginnings of a major move lower … so far! 


Basically, I think commodities will extend a little higher for a few more weeks/months and now seems to be a good time to get in. Let’s add two new positions today; I’ll provide more details for these recommendations in an issue later today.


****** 


 


Trade Essentials.


JJC (Last Price: $47.80)


Buy shares of iPath DJ-UBS Copper TR Fund, symbol JJC, at the market. Then place an order to SELL ALL your shares of iPath DJ-UBS Copper TR Fund, symbol JJC, at $44.77, STOP. This order is good till cancelled. 


 


IAU (Last Price: $16.80)


Buy shares of iShares Gold Trust, symbol IAU, at the market. Then place an order to SELL ALL your shares of iShares Gold Trust, symbol IAU, at $15.87, STOP. This order is good till cancelled. 

Commodities Essential. 10 February 2012

News and comments … mostly relating to oil.



Another yank from underneath the crude oil storyline. It is starting to look like crude prices are unjustified by global fundamentals, as the above chart suggests more economic slowdown ahead. I imagine the market might shift away from ‘reasons not to be bearish’ in favor of ‘reasons not to be bullish.’ That would open the door to sellers; Europe and China may help push it open as well.


Commodities Essential. 10 February 2012




Commodities Essential - February 3, 2012

Policy in China and US to dictate commodity prices for now.


 


The expectations for near-term Chinese and US policy actions seem to cancel out; but I’ll argue that the Federal Reserve will not be quick to abandon their policy for fear that recent economic improvement cannot be sustained. The moment the consensus gets a whiff of new and potentially systemic events shaking up Europe, they’ll look straight back to the Federal Reserve. I don’t anticipate consensus expectations for Fed policy will change much. As long as US data doesn’t a) shoot out the lights or b) fall out of bed, the Federal Reserve is still on the table.



I think ultimately risk comes back and commodities take a big turn lower. But it seems as though the medium term (at least through the end of Q1) will see higher prices. If the downturn for commodities comes sooner, I think it will be sparked by an event in the eurozone that exposes the vulnerability of its sovereigns … again; if the downturn for commodities comes later, it could very well be sparked by a sharper dip (or sharper forecasted dip) in Chinese growth.



 


Commodities Essential. 3 February 2012


 


 


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No new recommendations or adjustments at this time.


 


 


 

Commodities Essential - January 31, 2012

Update on Natural Gas and UNG.


 


Between yesterday and today, our open gain in UNG has eroded and we’re back to square one. But with our stop-loss already adjusted somewhat, I think it makes sense to hold on and play for a renewed push higher. Click the link below for an audio/visual explanation of the technical set-up in natural gas futures.




Commodities Essential. UPDATE 31 January 2012


 


 


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No new recommendations or adjustments at this time.

Commodities Essential - January 27, 2012

Being George Soros.


 


The internet is abuzz with George Soros’ latest admissions to Newsweek. Because when it comes to major investing and economic themes, the world looks to Soros. I don’t blame them.


 


Additionally, the recent FOMC announcement dominates news headlines since it pretty much surprised the consensus. It should provide support going forward until a new hurdle pops up in the eurozone and/or George Soros is proven right in some capacity.


 


I am near-term bullish on commodities, and will be looking for reasonable entry points on new positions in the days ahead.



Commodities Essential. 27 January 2012 


 


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 Adjust the stop-loss on UNG …


 UNG (Last: $5.64)


  CANCEL and REPLACE your order to sell all shares of United States Natural Gas Fund, symbol UNG, at $4.77, STOP. NEW PRICE: $4.97, STOP; this order is good till cancelled.


 


 


 


 


 

Commodities Essential - January 20, 2012

Natural Gas: Like catching a falling knife?


 


These items taken together can help reduce the glut of current and future natural gas supplies. What will make a difference is whether price waits for substantially improve numbers before taking a turn higher … or if expectations will change enough to anticipate reduced supply and beget a higher price. It’s tough to say … but I am betting on the latter here.


 


For starters, I get the feeling that risk appetite will go on a little streak and buoy assets like stocks and commodities. While risk appetite can’t fully counter bearish fundamentals, it could combine with technical levels to support price while the fundamental drivers shift.




Commodities Essential. 20 January 2012


 


 


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No new recommendations or adjustments at this time.

Commodities Essential - January 17, 2012

Alert: natural gas oversold? I think so. 


Let’s add UNG …


 


Between new shale gas production and an unseasonably warm winter so far, natural gas has been getting no love. Its supply is rising as its demand is plateauing. Naturally, price has reflected this well. But the more prices react, the more the fundamentals can change. 


 


Prices have reacted … and perhaps even over reacted after a 13% plunge last week and as much as a 7% plunge today! 


 


To be sure, I am doing some bottom-calling here, as it appears natural gas is oversold and ready for at least a corrective rally. But I think as we get further through winter and crude oil prices remain high, we may begin to see natural gas production and usage expectations change in a way that is less bearish for natural gas prices.


 


Let’s add UNG (United States Natural Gas Fund)  at the market to play for a corrective rally and perhaps more if increased risk appetite and changing fundamental expectations come into play. 


 


 


******


 


Trade Essentials.


 


 


UNG (Last Price: $5.39)


 


Buy shares of United States Natural Gas Fund, symbol UNG, at the market. Then place an order to SELL ALL your shares of United States Natural Gas Fund, symbol UNG, at $4.77, STOP. This order is good till cancelled. 


 


 


Regards,


 


JR Crooks

Commodities Essential - January 13, 2012

Iran, China and Crude.


 


Note that China is already the largest buyer or Iranian oil. If Iran defies the sanctions, it will mean they need to sell more oil to Asia. But does China, in particular, want to increase their dependence on Iranian oil as their domestic consumption slumps. If they want to be a major world player, they may look at this a bit more diplomatically and think twice about increased business with Iran in the face of new, tougher sanctions. [Remember: US Treasury Secretary Timothy Geithner went to Beijing this week to discuss China’s relationship with Iran, among other things.]


 


So even if Iran is able to sell more oil to China and Asia, it’ll likely mean they sell that oil at a significant discount; or they sell less of it because China’s growth slump equates to less demand. Either way, it seems like revenues from Iranian oil exports are bound to shrink. I’m not sure they can handle that. All together this could mean some of the geopolitical premium could escape from the current price of oil. But …




Commodities Essential. 13 January 2012


 


 


Trade Essentials.


 


No new recommendations or adjustments at this time.


 

Commodities Essential - January 13, 2012

Alert: crude at support? 


Let’s add UCO …


 


In this week’s main article, to be released momentarily, I hash out my expectations for crude oil. All things considered, I think we may be looking at a decent near-term buying opportunity right now … to get long crude oil … as recent downside has cleared through key levels.


 


Let’s add UCO (ProShares Ultra DJ-AIG Crude Oil)  at the market. 


 


 


******


 


Trade Essentials.


 


 


UCO (Last Price: $40.70)


 


Buy shares of ProShares Ultra DJ-AIG Crude Oil, symbol UCO, at the market. Then place an order to SELL ALL your shares of ProShares Ultra DJ-AIG Crude Oil, symbol UCO, at $37.59, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged fund which means it will move roughly twice as fast as the underlying price of the DJ-AIG crude fund.] 

Commodities Essential - January 12, 2012

Alert: two new trading ideas. 


Let’s add DZZ and CORN …


 


I’ve noted gold’s correlation with risk appetite over the last few months, but I think it might be time it shakes lose from other risk assets. I think gold can fall here even if other commodities and stocks move higher. Why? Chinese inflation. I’ve noted the correlation between gold and Chinese inflation; and I think recent data suggests Chinese inflation has further to fall, thereby undermining the gold’s investment appeal to Chinese citizens. A position in DZZ will allow us to play for lower gold prices.


 


Today the USDA released their January agricultural report on production numbers and supply/demand expectations. It was taken to be very bearish; corn prices went lock limit down. I took a look at the report and it seems the reaction may have been overdone … especially since it is relatively old news (prices were pressed lower in the 4th quarter due to expectations of lower demand for agricultural commodities.) I think this presents us with an opportunity to play for rising corn prices and at a very attractive level. (Additionally, the risk appetite mood may be shifting to a  more bullish bias … which would harbor improved growth expectations and be supportive of corn prices.) A position in CORN will allow us to play for rising corn prices.


 


Let’s add DZZ (Deutsche Bank AG DB Gold Double Short)  and CORN (Teucrium Corn Fund) at the market. 


 


 


******


 


Trade Essentials.


 


 


DZZ (Last Price: $4.87)


 


Buy shares of Deutsche Bank AG DB Gold Double Short ETN, symbol DZZ, at the market. Then place an order to SELL ALL your shares of Deutsche Bank AG DB Gold Double Short ETN, symbol DZZ, at $4.59, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged inverse fund which means it will move roughly twice as fast as the underlying price of Deutsche Bank gold index.] 



CORN (Last Price: $39.62)


 


Buy shares of Teucrium corn fund, symbol CORN, at the market. Then place an order to SELL ALL your shares of Teucrium corn fund, symbol CORN, at $36.90, STOP. This order is good till cancelled. 


 


[Please note this is a 2x-leveraged fund which means it will move roughly twice as fast as the underlying price of the Deutsche Bank agriculture index.]


 

Commodities Essential - January 6, 2012

Jobs, the US dollar, and the impact on commodities. 


 


A case is developing that favors US assets. Economic recovery will likely benefit US stocks; US treasuries will continue to look better than counterparts until a large degree of safe-haven buying recedes and growth/inflation expectations drive interest rates higher.


 


But there is a wild card - the US dollar.


 


For the most part, the inverse correlation between the US dollar and stocks, as well as the positive correlation between the US dollar and Treasuries, could throw a wrench into the mix.



Commodities Essential. 6 January 2012


 


 


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Adjust the stop-loss on ZSL. I remain bearish on silver, but technically price is at a pivotal area that could change the outlook rather quickly, especially if silver begins to follow the general risk appetite mood which does not appear as bearish at this juncture. I think it makes sense to reduce the risk on this position and move the stop-loss to breakeven entry (roughly $13.58):


 


CANCEL AND REPLACE your order to sell all shares of PowerShares DB DoubleShort Silver Fund, symbol ZSL, at $11.89, STOP. NEW PRICE: $13.58, STOP; this order is good till cancelled.