The Commodities Review For the Week of October 17, 2011

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The Softs Review
For the week of October 17, 2011

By Jurgens H. Bauer

This was my second weekend in a row with lots of driving, this time to Baltimore and back, and my granddaughter's birthday was great! Elsie Jane is 1 year old! Great party, wonderful food, all in all a special time. Speaking of driving, what is driving the markets? Weakness in the US dollar seems the best response to give for this past week, as several soft markets performed what began as short covering corrections well enough, to give rise to work at turning trends around. Coffee heads that list, with cocoa and sugar right behind. And even Cotton didn't fall apart after receiving a negative crop report, but it still doesn't look to have the positive potential seen elsewhere in the soft complex. For the week ahead it will be important to see a follow through and higher prices. It also will be important to withstand any bearish efforts to press values.

Granted much traction was gained from a weaker dollar, but is the Euro out of the woods? While America sure has its share of problems, it has been Europe where the sovereign debt issue got its start. Crude oil prices have a decidedly positive look and that market often leads. Stock prices too appear prepared to advance. With both of those important outside markets setting a positive tone I tend to lean likewise towards the soft markets. If KCZ manages to travel above 246, 250 and 260 become valid targets. Sugar and Cocoa are also showing signs of positive appeal, both also may be correcting from their oversold conditions, yet finding encouragement as they too have staged advances. CCZ needs to show itself able to rise over 2700, while SBH will have to weather any setback although given the action last week the trend looks up. Cotton looks locked in a range, although even there traders saw a market able to recover after a bearish crop report.

So for the week ahead it will be a matter of continuing to make progress price wise for the soft complex. Will outside markets continue to offer help? Can prices withstand some set backs? I cannot say I am confident that they will, but they sure performed well enough last week to have a positive feel for a change. The big question is can they continue? I still can't believe that another shoe isn't about to drop on the world stage, so I remain skeptical. In sum, the positive tone that is trying to emerge needs to show it is able to continue, otherwise selling is apt to return and drive values lower. Bottom line I am a skeptic and may look at selling.

***chart courtesy
Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.


The Financials Review
For the week of October 17, 2011

By Frank LaMantia

For the past few weeks, stocks have been up on hope which in this trader's books does not constitute reason enough for a rally. Today, the market is down but could turn green due to Citibank's higher third quarter profits. The bank showed a $2.2 billion in revenues and does not need as much to cover bad loans. Well Fargo showed a 22% gain in profits but did have a decrease in revenue. The protest on Wall Street, Times Square, and Zuccotti Park has funding of over $300,000 and they have supplies. (1) This is also spreading to other countries. In Rome protesters caused millions in damage to property. Some have good intentions but when masses of people congregate it just takes one to spark a riot.

Kinder Morgan has agreed to buy El Paso Corp. for $21.2 billion which would create the largest pipeline of natural gas in the United States. Barclays PLC has offered to lend Kinder Morgan the funding it needs to transact the purchase. It is estimated to be around $11.5 billion in cash.(2) The euro is down against the dollar as a resolution is postponed until the Oct. 23 summit. The euro is down 0.7% to $1.3790 and was high as $1.3917. It was up 3.8% last week. (3) Earnings and the euro crisis could send the market in either direction quickly so one must be ready to act.

1) Morning Reading: Wells Fargo, Citi Earnings | Daniel Gross - Yahoo! Finance

2) Kinder Morgan to Buy El Paso for $21 Billion in Cash, Stock - Businessweek

3) Euro Drops as Germany Sees No Quick Resolution to Debt Turmoil - Businessweek

***chart courtesy
Gecko Software’s Track n’ Trade Pro
Past performance is not necessarily indicative of future results.


The Metals Review
For the week of October 17, 2011

By Daniel Cronin

Precious metals have continued to consolidate and climb on the COMEX the last two weeks as Gold pushes higher towards that $1,700 level. The USD has had some significant pressure put on it the last few weeks as it comes up to the critical level of $1.3900. Gold and Silver will have a bit of a time trying to break new levels to the upside here but I believe they are poised to do this. I might look to get into some OTM Gold calls as I believe this market is headed higher. There may be a brief pause in the beginning of the week with the Euro/USd trying to hold the $1.3900 level but I believe the metals will overcome this and rally towards the end of the week.

Copper looking very strong above the $3.40 level but there is some good resistance at $3.50 so I would suggest taking some off the table here as equities are at the top of the range right now. Consecutive closes aboive 1224 in the S&P will confirm the rally.


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.