Copper Update - Plus Everything Else

Copper, which broke down through key support yesterday has closed below $2.90 per pound and is behaving as I hoped.

I also thought I'd update some of the calls and observations I've posted here over the last few weeks.

The dollar index, the set up which I was most excited on Tuesday about has stalled over the last few days. But the setup is still valid and yet to be disproved.

Silver sold off hard last Friday and continued down on Monday. Has since been a small consolidation zone, but looks like it could continue down.

Gold is still not showing any clear trend at the moment, but if the other metals continue down, it could follow suit. This is counter intuitive to the dollar downage... so we'll see.

Cotton which broke out of a rough basing pattern last Friday on very low IV, is continuing to look bullish. Not a parabolic trend, but very workmanlike.

Orange Juice - Rumours of OJ's demise have been greatly exaggerated. I was a tad enthusiastic in calling a top there... buuuuttt at least it hasn't bolted higher and humiliated me.

Cocoa is still looking bullish, but some profit taking eveident.

Crude. You knew I meant NEXT Christmas, right?

Coffee. Made enough to pay off my tab at the local Cafe'.

This will be my last post before Christmas I think, so HAVE A GOOD ONE!

Analysts Bearish on Base Metals

From TickerSense:

2007 Expected Commodities Price Changes

The table below highlights the consensus opinion on where commodities prices will go in 2007. The estimates are from numerous analysts polled by Bloomberg. The expected percent change for each commodity is calculated by the difference in the year-end 2007 consensus and the current price. Interestingly, the only three commodities that are expected to rise in 2007 are the three tracked mostly by the mainstream media -- oil, natural gas, and gold. All other commodities are expected to decline, with lead expected to fall the most.

How to Prove Yourself Right About Crude

I have already stated how to prove yourself wrong in trading; simply make a public call and the market Gods will do the rest.

However there is a way to prove yourself right about a call.... well two ways actually.

1/The first method is to aquire a television or radio program, make a plethora of predictions, and then only highlight the winners. This method is already well known and suffers frequent exposes' from on-the-ball bloggers and other citizen journalists. (You know who you are ;-) )

2/The 2nd method requires a little more effort but it's worth it if one wants to attain guru status on the cheap. Make an initial prediction and then change that prediction as events dictate. This way the original call for oil to go to $67 before Christmas, can metamorphose into a call for oil to tank to $47 by Halloween if necessary; claiming that the realized scenario was what was really meant all along. lol

Anyway, lets have a look.

Before we start, lets get one thing clear. I think Fibonacci retracements, candlestick patterns and other technical analysis techniques are all bunkum...

...unless of course, they support my hypothesis. lol. So now we have tweezer bottoms at exactly the 38% fib, we have hammers, spinning tops, the whole shebang. We also have a a breakout of the flag/pennant/whatever in the electronic market early this AM.

Far from changing my mind, so far I'm sticking to the original call. But the Gods will not be pleased with this, so I tip my hat to the $64 resistance, perhaps do some burnt offerings; maybe they will turn a blind eye.

How To Prove Yourself Wrong About Crude

Proving yourself wrong is a relatively easy thing to do in the commodity markets (or any market for that matter). Simply make a public prediction. lol

The Gods will ensure that said prediction goes spectacularly wrong, particularly when accompanied will self-assured arrogance and self-aggrandizement. Which is why I'm trying a bit of humility and self-deprecation, perhaps this will appease the trading Gods.

Anyway as detailed in the days succeeding the US mid-terms, I'm bullish on oil and remain in a convoluted tangle of option legs which I'm pretty sure is bullish lol. In fact oil is the only market followed by the great unwashed masses (a.k.a. those people who believe all they hear on BubbleVision, a.k.a. the mums and dads) that I'm actually bullish on.

As a further offering, I haven't even put a lot of thought into this and will be short on verbosity. So here goes:

Oil is in a bullish pennant, has bounced of 38% fib retracement level and is set to go to ~$67 before Christmas in a measured move.

That's it.

Trading Gods, do your stuff!

Bugger Commodities

How about Commodities Exchanges!!

Marketwatch: Nymex IPO rallies more than 100%

NMX135.95, +76.95, +130.4% ) IPO is up more than 100% after opening at $120, above its $59 price. The stck gained strength in the open market by rising to $140 a share. The performance marks the best opening-day gain by a U.S.-based new issue since Transmeta (TMTA :

transmeta corp del com

Nymex is the exchange where the energy and various metals contracts trade. I wish I had bragging rights for having subscribed to this, bus alas, no.

Train Stories

Freight Train of the Day

Frozen Concentrated Orange Juice - Getting very close to the all time high today, closing up 8.55c @ 205c on the January contract. This is a commodity that was around 50-60c in 2004 so anyone with a trend following system and nice wide trailing stop is making a motza out of this contract. Sad to say thats not me.

Train Wreck of the Day

Crude Oil - This is a market that many traders say should be rallying... including me :( My "glitch" turned out to be a derailment. As luck would have it, it happens to be the most dreadful looking chart of the energies. Unleaded, Heating Oil and Natural Gas maintain their basing patterns whereas the bottom has dropped out of crude. I still maintain a position with some adjustments to further limit losses while maintaining upside potential.

A Slight Glitch in My Crude Oil Hypothesis

It seems that the "International Energy Agency trimmed its 2006 global oil-demand growth forecast, citing lower third-quarter demand from China and some industrialized nations " as reported in Marketwatch today.

This has put a bit of a dampener on all of us who are long Crude with what seems to me to be a veiled projection of an approaching recession. I'm quite prepared to go along with that scenario, but I still see other upward pressures on Crude; not the least of which is the prevailing US foreign policy, either directly or indirectly. I don't think the Democrat win in the mid-terms will change much on that front.

I'll be staying long, and options are cheap enough to put a floor under the price action.

Oil Can Now Rise!

Well now that the US mid-term elections are out of the way, there is now no compelling and urgent reason for the price of crude oil down be under $60.....

.....oops! Did I insinuate something there? Nah! I'm sure it was just normal market forces :)

Anyway, Oil has broken out of its downtrending channel (with Unleaded and Heating Oil looking similar) as indicated on the chart.

IV is rock bottom of its two year range at 26% and with Statistical Volatility at 31%, options look cheap here. Any long vega, long delta strategies look good to me.