Market Reviews and Opinion Reports

[jmound]

Webster’s Dictionary defines the adjective volatile as tending or threatening to break out into open violence; explosive. I cannot think of a more appropriate term for what is underway in the commodity, FOREX and stock markets.

Without volatility there is no opportunity. If price does not change and is not expected to change then there is no reason to speculate and no reason to buy or sell options. Varying degrees of volatility exists in all futures markets, and the greatest opportunity exists when the current or anticipated volatility is drastically different than the reality of the future volatility. This can work in either direction, and if volatility is expected to decline then the opportunity would be to sell option premium. The logic is that if volatility is high and expected to decline then current option premiums are overpriced and the lack of future volatility will allow for a higher probability of successful premium collection. However, this opportunity presents defined profit with unlimited risk exposure. While this strategy and market environment can potentially be a profitable one, it is a ticking time bomb waiting to explode when that volatility changes, and few traders, if any, are truly capable of always identifying that shift ahead of time.

The real opportunity exists when that volatility scenario is reversed. When current and anticipated volatility is far below what will actually occur, a trader can then take advantage of the imminent premium expansion in options. This is where a forecast for volatility expansion can be more important than forecasting a trend or channel. Long options and certain option spreads are critical instruments in this environment.

In 2008, when volatility expansion took the ill-prepared stock and commodity investor by storm, the typical investor found themselves in a form of quicksand. So with tons of new volatile market variables and little recent history to guide the average investor on what to do, many investors found themselves stuck in plummeting stock and commodity positions. Stuck and sinking – quintessential quicksand characteristics – this is not a good experience for most investors as they watched their holdings plunge 30, 40, 50, 60, 70% or more in some cases. The worst part is that while investors found themselves stuck and panicking this was actually the time to take action and to speculate. Remember, where there is volatility there is opportunity, and an educated investor has to have a sense of timing.

Well, I believe that timing is right now.

The 2nd half of 2011 should provide some of the most extreme price moves I have ever seen in several key commodity sectors, stocks and FOREX. There is a perfect storm brewing, akin to the 2008 credit crisis, but on a totally different, and potentially more extreme, level.

The reality is only a percentage of you will see the logic in buying my Mega Volatility Eruption Forecast, even fewer will heed the warning within it, and only a small percentage will execute the trades I recommend. It is unfortunate but some will simply not agree with the importance to act or see the opportunity I present. I believe it is one of my most significant reports to date – more significant than the U.S. dollar career bet in 2008, the Japanese Yen career bet that followed, the Coffee breakout forecast in 2010, and even the bear forecasts made in cotton, cocoa and coffee last quarter. While I have to contain the number of traders that will utilize this critical market forecast, I want to make it accessible to just about everyone, so to that end I am offering 70% off my forecast thru Tuesday at 5pm ET. It is just $69 – plus buyers get two incredible bonuses with a value exceeding $100.

James Mound
James Mound Trading Group LLC

 

[jmound]

A Market Review and Opinion Report For July 24, 2011

Energies

Crude oil supplies fell this week, while distillate production is rising above estimates, suggesting demand is beginning to wane in this sector. A fall in the stock market is likely to pressure oil prices, especially if the foundation for the fall is based on a weakening economic outlook for the U.S. Rising interest rates in the U.S., which can be one of the resulting effects of a credit drop sparked by this debt ceiling issue, would be an unintentional monetary tightening that would curb spending and disrupt growth. Even the potential for this, let alone the reality of it, should be enough to pressure crude oil prices to test and break recent lows.

Financials

Stocks should see a wild week ahead, a pretty immediate confirmation of the forthcoming volatility that I anticipated in Tuesday's Mega Mid-Year Commodities Forecast (available by visiting http://www.futurespress.com/Mega_Ema...ndingPage.html). The focus of the debt ceiling issue should now turn to a credit downgrade and interest rate increase issue, which will then become a growth restricting monetary tightening issue. The short term volatility aside the stock market is overbought and likely to see a volatile correction while bonds could diverge from its inverse correlation to stocks if the reason for a stock decline is due to the credit rating drop which would pressure treasury prices on rising interest rates. The dollar remains a buy on dips on its way to a critical resistance level just below 80. The euro, pound, peso, and Canadian and Aussie dollars are all sells. The Japanese yen is on a fast track to test the highs and a break above 130 could catapult the yen into a massive rally to my 140 target, hitting my forecast that:
The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Hot and dry weather versus collapsing economy and strengthening U.S. dollar - and the winner is...(hint: not grains). I anticipate strong selling in grains in coming weeks, focusing on beans as it approaches the tipping point of a consolidation pattern.

Meats

Hot and dry weather, Japanese radiation hay, and a spike in global demand - surely enough to push cattle to fresh highs, but is it enough to keep it there? I believe this is a critical turning point for cattle and the market has penetrated support. Sell. Sell. Sell. Hogs on the other hand are in breakout rally mode, but are getting close to a put buying opportunity, if they are not there already.

Metals

Gold and silver remain a flight to quality safe haven during this debt ceiling crisis (I think we can call it a crisis at this point) but without a real fundamental logic. Sure if stocks selloff and confidence in the U.S. crumbles then investors may flock to these safe havens, but the reality is a higher interest rate means monetary tightening and less inflation risk. Metals are a sell across the board using a defined risk options play.

Softs

Coffee broke key support and should see significant liquidation and a move to 220 relatively quickly. Cocoa remains a sell with some volatility and momentum on its side after coming back into a channel following a bull breakout. Cotton is in a freefall but I would avoid it. OJ and sugar are both riding high and both worthy of put buying accumulation.

____________
Jame Mound
MoundReport.COM

*Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For July 31, 2011

Energies
GDP numbers showing slower than expected growth in Q2 helped to turn stocks, and growth focused commodities like crude oil, bearish on Friday. I expect a choppy volatile slide to continue in crude oil, rbob and heating oil, with rising supplies and a strong dollar helping to pressure prices. Also, a continuation of a hurricane-free Gulf of Mexico should help shorts reenter the market. Natural gas remains a contrarian buy with long term call options to play the volatility pop on a spike rally.

Financials
Stocks took it on the chin last week as a bad GDP number put growth fears into the forefront of investors’ minds. This will be short lived as the Obama Sunday night deal on the debt ceiling will likely be all the market focuses on for the next couple of days as the House and Senate do their political musical chairs to get this passed before the August 2nd deadline. I recommend selling into a Monday rally in the S&P as this is really just the beginning and doubt will quickly reenter the market. Bonds remain avoidable, but should see buying on a weaker stock market. Obviously the attention of the world markets will be on the U.S. debt ceiling issue, but I believe that the debt ceiling issue is not the issue at all. The most important component of this debt ceiling issue is that a credit rating issue and inflation forecast adjustment will come out of this whole thing. The dollar remains a buy on a dips, hitting a cycle low earlier this year and setting up a big rally. The euro and pound are sells, but the best short opportunities might be found in the Canadian and Australian dollars as they approach a critical cyclical turning point. The Japanese yen is in a clear bull breakout and could become very volatile, spiking in the near term to potentially hit my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains
The global growth outlook remains key to the grain puzzle as the heat wave passes and traders focus on demand. Look for strong selling across the board in grains, with particular attention on soybeans and corn.

Meats
Hogs and cattle both offered bullish trends last week, a pattern that should end this week with significant selling on the horizon. Look at December cattle deep out of the money puts and shorting Dec lean hog futures at current levels with a stop above 92.

Metals
Gold and silver remain choppy but bullish as investors use it as a flight to quality safe haven. You can argue that gold is an inflation hedge all you want, and that gold has not kept up with the price of inflation over the last several decades, but the reality is that a debt consolidation by the federal government sets the stage for an epic collapse in these metals markets. Timing aside, which I have admittedly pegged wrong here for some time, it is recommended that put positions in gold, silver, and copper are established at current levels ahead of this debt ceiling issue being resolved.

Softs
Coffee is below key support but hasn’t collapsed just yet, however I continue to recommend put positions here with a sub-$2 target before year’s end. Cocoa fell back into its channel and should see significant downside on a break below 2850. Cotton remains bearish but is a market to avoid. OJ is a strong sell with straight puts recommended. Sugar is also significantly overbought and is a strong sell with straight puts. Lumber looks ugly on a technical level and is a sell.

_____________
James Mound

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[imp]

Energies
GDP numbers showing slower than expected growth in Q2 helped to turn stocks, and growth focused commodities like crude oil, bearish on Friday. I expect a choppy volatile slide to continue in crude oil, rbob and heating oil, with rising supplies and a strong dollar helping to pressure prices. Also, a continuation of a hurricane-free Gulf of Mexico should help shorts reenter the market. Natural gas remains a contrarian buy with long term call options to play the volatility pop on a spike rally.

Financials
Stocks took it on the chin last week as a bad GDP number put growth fears into the forefront of investors’ minds. This will be short lived as the Obama Sunday night deal on the debt ceiling will likely be all the market focuses on for the next couple of days as the House and Senate do their political musical chairs to get this passed before the August 2nd deadline. I recommend selling into a Monday rally in the S&P as this is really just the beginning and doubt will quickly reenter the market. Bonds remain avoidable, but should see buying on a weaker stock market. Obviously the attention of the world markets will be on the U.S. debt ceiling issue, but I believe that the debt ceiling issue is not the issue at all. The most important component of this debt ceiling issue is that a credit rating issue and inflation forecast adjustment will come out of this whole thing. The dollar remains a buy on a dips, hitting a cycle low earlier this year and setting up a big rally. The euro and pound are sells, but the best short opportunities might be found in the Canadian and Australian dollars as they approach a critical cyclical turning point. The Japanese yen is in a clear bull breakout and could become very volatile, spiking in the near term to potentially hit my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains
The global growth outlook remains key to the grain puzzle as the heat wave passes and traders focus on demand. Look for strong selling across the board in grains, with particular attention on soybeans and corn.

Meats
Hogs and cattle both offered bullish trends last week, a pattern that should end this week with significant selling on the horizon. Look at December cattle deep out of the money puts and shorting Dec lean hog futures at current levels with a stop above 92.

Metals
Gold and silver remain choppy but bullish as investors use it as a flight to quality safe haven. You can argue that gold is an inflation hedge all you want, and that gold has not kept up with the price of inflation over the last several decades, but the reality is that a debt consolidation by the federal government sets the stage for an epic collapse in these metals markets. Timing aside, which I have admittedly pegged wrong here for some time, it is recommended that put positions in gold, silver, and copper are established at current levels ahead of this debt ceiling issue being resolved.

Softs
Coffee is below key support but hasn’t collapsed just yet, however I continue to recommend put positions here with a sub-$2 target before year’s end. Cocoa fell back into its channel and should see significant downside on a break below 2850. Cotton remains bearish but is a market to avoid. OJ is a strong sell with straight puts recommended. Sugar is also significantly overbought and is a strong sell with straight puts. Lumber looks ugly on a technical level and is a sell.

_____________
James Mound

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

these market view is only for niche, i mean in malaysia or globally?

 

[jmound]

A Market Review and Opinion Report For August 7th, 2011

Energies

Crude oil is in a freefall following the stock market’s collapse as the global economic outlook turns ugly. This is the volatility collapse I wrote about in my mid-year forecast and it is quite possibly just the beginning. Look for sub-$80 crude oil prices in the near term and a major collapse in rbob and heating oil that could see 5% declines or more this week alone. Natural gas remains a contrarian buy on this selloff, accumulating deep out of the money calls with loads of time to expiration.

Financials

Stocks collapsed as anticipated on the debt ceiling resolution that has now led to Standard & Poors downgrading U.S. debt to AA from AAA. This is a first move and the PR that is downplaying the importance of this event should be ignored. Moodys and Fitch may be late to the party, and could abstain from the downgrade after being beaten to the punch by S&P, but it will do little to prevent a shift in portfolios, global investments and general confidence in the U.S. A recent article suggested that the U.S. would be relatively unaffected by the credit downgrade because all it does is make AA rating the new AAA, suggesting that there is no better place for investors to purchase debt than the U.S. and there is no more stable institution than the U.S. government. I hate to be anti-American but the facts are the facts – we are not the best bang for the buck at the interest rates provided here at the good old U.S. Treasury and investors will demand more for the increased risk – and get it. Bonds spiked on the stock market destruction but I do not expect further upside. The dollar should trade opposite fundamental logic here – this is a screaming buy in the U.S. dollar and the euro should see fresh near term lows. The Japanese yen intervention feels like a replay of a previous poorly conceived sitcom and will likely not last the week before testing and potentially breaking the highs. Using the last intervention as a guide, the market could chop around a 300-500 point range for a few weeks before breaking out, but I do believe the market will expedite the process and break out sooner rather than later. I remain confident in my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains
The corn/wheat spread has flipped on the September contract and is dangerously close on the December contract – suggesting this historical spread is offering an excellent opportunity to play long wheat and short corn. Grains in general offer a bearish outlook backed by lower prices in oil and a weakening global economic outlook. Soybeans and corn offer strong shorts and wheat may be a value play by comparison, offering a good corn/wheat spread or just straight put plays in corn and soybeans. Rice remains a sell.

Meats

Cattle and hogs both chopped last week, offering congestion ahead of likely market failures that should begin during the week ahead. Straight puts are recommended in cattle while a short hog future is recommended with stops above the recent highs.

Metals

Gold and silver continued to surge amid the stock market meltdown and realization that the U.S. is not as safe of a haven as once believed. The escalation of upside volatility is the type of market action that is needed to squeeze buyers out of the market. Countries like India are entering a heavy demand period and this is a recipe for demand-side disaster as prices skyrocket and buyers disappear from the market. This is the time when last minute investors think they are getting into a runaway bull market when they are likely just popping the bubble. Copper should see long term downside on weak global buying demand.

Softs

Coffee prices bounced on frost concerns out of Brazil, but the market will likely be unable to sustain prices amid a general commodity selloff and Vietnam supply holdback hitting the supply lines. Cocoa supplies are surging this year and it should not be a shock to anyone that follows commodity cycles. The reality is that 3rd world countries find a way to produce more during periods of sustained high prices, and cocoa has maintained incredibly high prices for an extended period. However, a key support level above 2850 must be penetrated to continue the downtrend, something I expect to happen this week. Cotton remains a sell but is avoidable based on the risk exposure to volatility with futures and overpriced option premiums. Sugar and OJ are strong sells with straight puts recommended.

_____________
James Mound
James Mound Trading Group LLC.

Disclaimer: There is risk of loss in all commodities trading. Please consult a James Mound Trading Group Broker before you trade for the first time. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. James Mound Trading Group, or anyone associated with JMTG or moundreport.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (clients or otherwise). Past results are by no means indicative of potential future returns. Information provided are compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending August 14, 2011

Energies

A violent near term bottom was set in oil and rbob on Tuesday, following an FOMC statement that had the markets whipsawing into a rally. The bad news is out? Hardly, but the reality is the market needed a dead cat bounce after crude oil’s 25% freefall in just over two weeks, and that’s exactly what happened during a four day 15% rally. Those chasing this rally will likely experience a hard reality this week as the oil market turns south to retest the Tuesday lows. The volatility presents a unique opportunity to play short condors.

Financials

The stock market had what some might view as a capitulation event (mass exodus thereby removing all the sellers) on Tuesday, rebounding dramatically following a horrendous Fed statement. This was not capitulation in my book as there are plenty of potential sellers left here. This is wave number 1 of possibly 3 waves down. The current technicals are indicating a Mound Ladle Formation developing which means a move to 1260 is possible before a violent retest of the lows. A close above 1199 on the S&P indicates a likely move to 1260, otherwise I remain bearish and expect continued pressure and volatility in this sector. The Fed’s announcement that rates will remain unchanged through to 2013 should not be a surprise and I suspect it is the tip of the iceberg of what is to come in the way of monetary policy shocks that illustrate just how bad things are getting. One interesting side effect of the announcement is the possibility that loans will be more accessible as investors seek out opportunities to acquire debt since they know the intermediate term prospects are not there for rising rates. This could create spending and help out the situation near term, but it will be difficult to see this impact the market for several months. Bonds, on the other hand, have limited upside and I would consider there to be equal-weighted risk on the buy and sell side. Volatility and choppy trade should remain, but for those with high risk tolerance a short strangle is worth a look.

The dollar is choppy but remains bullish and I suspect this week will offer a strong rally as the euro currency experiences some pressure while Asian currencies chop. The Canadian and Australian dollars remain strong sells. The Aussie crumbled nearly 10% off the highs in a matter of days, showing the potential collapse that awaits this market. The Swiss Franc had one of the most impressive currency moves I have ever seen, as an FOMC play sparked an 8% rally in a day but was met with even more impressive selling as a clear top was put in. This market could see some impressive liquidation in the coming days. The Japanese yen performed as anticipated, erasing the intervention selloff in a matter of days. Following recent history the likelihood is for a chop around this 130 price range before heading higher. Expect a range between roughly 127-132 but don’t let the choppy trade scare you out of the long as I remain confident in my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Grains

This past week’s WASDE and crop production reports led to an extremely volatile and whipsaw Tuesday, but a reality is likely to soon set in for this sector. Oil prices have topped, already breaking 35% from the highs in just over 3 months. This affects ethanol demand which thrives when price extremes exist in oil but crumbles when oil prices retrace. Overall the commodity markets are susceptible to declining global demand, with grains seemingly lagging this outlook and sustaining prices amid a shift in demand outlook. Sell corn and beans while using long wheat as a spread against either (1 to 1). Rice is worthy of a put play here.

Meats

Cattle is fast approaching topside resistance on the Dec contract, and I anticipate strong selling to come in early this week. Put plays are recommended. Delivery hogs for August have continued to scorch higher, but back months are not seeing the same support. December hogs broke key trendline support but rebounded dramatically late in the week, and I recommend waiting for a fresh low on the December to reestablish a short. In case you missed the final oinks from the pit, pork bellies can now rest in peace as the CME put that futures market to bed permanently, begging the question as to what market is next to walk the plank?

Metals

During the panic of the past couple of weeks the flight to quality in gold has been strong, but the increased volatility prompted the CME to raise margins once again. The margin increase and a rush of profit taking coincided with a bounce in the stock market to bring a bit of selling to end the week. Volatility premium is thru the roof, but naked option selling is too risky a proposition in these markets at the moment, so look to sell an ITM call spread to pay for two OTM bear put spreads on an even money skewed option play to position for a volatile downside move. Copper remains a strong cyclical sell with straight puts.

Softs

Orange juice is in a freefall, collapsing on strong supplies and weakening demand with no crop-destroying hurricane in sight. More downside is expected. Coffee is chopping around while quietly establishing fresh lows every few weeks. I recommend puts here with increased downside momentum expected shortly. Cocoa broke key support at 2868 but recovered quickly late last week. I believe there is a high likelihood of a crash in this market in the next few weeks, but on a purely technical level the market is a near term buy with a double stop reversal below last week’s low. Cotton remains a sell on bounces, along with sugar.

----------------
James Mound

*Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending August 21, 2011

Energies

Oil prices quickly retraced and are fast approaching the 2011 lows set earlier this month. Where the global economic outlook goes so goes oil prices. Significant downside should be anticipated on a break below the August 9th lows. Rbob and heating oil should follow suit, but expect natural gas to begin to trade opposite as that spread between crude and natty tightens.

Financials

The stock market tested, but failed to close above, the critical 1199 mark on the S&P I had discussed last week. Concerns over European stability continue to plague the markets which are seemingly fighting the reality that the world is in a recession. Friday offered a critical indicator as to the market’s psychology and momentum as it destroyed a decent rally attempt by the close. On a technical level there is little to suggest anything but a retest of the 1077 lows on the Sept. S&P set back on the 9th. Bonds remain bullish during this stock market mayhem, but I would look to spread 1 short mini S&P500 against 1 short 30yr T-Bond to play a lack of upside in bonds versus the downside exposure in stocks. The dollar remains a buy on dips as the congestion that is playing out offers a bunch of misleading short term signals. The long term outlook continues to be bullish, pressuring the euro, pound, Canadian and Aussie dollars. The yen is a buy on dips as well, but there should be a congestion period for a brief time as the market fights against the intervention area from just two and a half weeks ago. I continue to standby my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Grains should experience serious pressure as slow exports and a weakening global economic outlook change the demand side of the equation in this sector. Look for corn and beans to get beaten down with volatility to the downside while wheat remains a spread buy against either. Rice remains a sell with puts.

Meats

Cattle turned bearish in a hurry last week and I expect significant downside through much of the remaining part of 2011, making this a bear market to jump on early. Hogs turned south once again and broke to fresh near term lows only to recover somewhat on Friday. Look for a fresh low closing price before entering into a short, which is as simple as a close below Friday’s low.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Metals

Gold and silver continue to scorch higher on a flight to quality play. This bubble is just getting bigger and bigger as the stock market tumbles and the euro falls. The problem is gold is priced globally in U.S. dollars which means if the euro is set to take a big hit then there will be a bigger gold bubble forming for the rest of the world than the one we see here in the U.S. For example, if gold is at $1850/oz and the euro drops 10% then those holding euros will see gold trading closer to something like $2,035/oz. Now let’s say gold rallies to $2,500 and the euro drops 30%, then those holding euros will see gold trading something closer to $3,250 – now we are talking one serious bubble. Silver, similar to gold, would experience currency-related pressure as the bubble gets bigger amid U.S. dollar strength. However, at what point does the inflated price of gold get ignored during a global panic and stock market meltdown? This will be the question that lies ahead. Copper remains a bear market amid a global demand slowdown. The current congestion pattern is likely to break this week.

Softs

In typical orange juice fashion the market went from freefall to v-shaped recovery all in about two weeks. The market is unlikely to maintain support and should be shorted on this bounce with straight puts. Coffee has rallied substantially on supply concerns and is fast approaching a critical resistance area, likely holding below 280. Cocoa remains a technical buy with a double stop reversal below the August 11th low. Cotton might congest with the current levels being the high of that anticipated range. That could offer a swing trade short here with stops about 400 points off Friday’s high and a target near 98. Sugar is a sell with straight puts.

_____________
James Mound

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending August 28, 2011

Energies

Crude oil continues a congestion pattern that suggests a bear break is coming during the month of September. I anticipate front month to stay under $90 as the U.S. dollar forms a base and the S&P resists out below 1200. Momentum should increase dramatically to the downside on a technical break below $79. RBOB and heat should follow suit. The lack of dramatic hurricane impact in the northeast should help let the shorts back in. Natural gas remains a contrarian buy with straight calls on an anticipated volatility pop.

Financials

The S&P should see significant technical resistance at 1199, with a close above that indicating a move to 1260. I suspect the market will not make it through that price again. Bonds offer premium collection opportunities to those willing to take the risk as I believe the market is stuck between 120 and 150 for the foreseeable future. The dollar is a strong buy at current levels, being near a congestion bottom. I expect to see the euro and pound selloff this week and the Australian and Canadian dollars to weaken as well. In the next two weeks the Japanese Yen should breakout to new highs once again and I recommend buying the dips, standing by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

The grain sector is in a clear bull run as corn and beans have broken out to the upside as of Friday’s price surge. Hedge funds and institutional trade is helping to break price out on fears of declining yield in soybeans and corn. At this point the technical short covering momentum alone could help to escalate volatility to the upside. I do not expect the supply side will ultimately win out here and I believe declining export demand will ultimately kill the grains, but the trend is clearly up in the short term. Use this move to establish bear put spreads on the way up, perhaps as early as this week if Nov. beans hit $14.54 or Dec. corn hits $7.78. Rice remains a sell while wheat is a value spread buy against short corn or beans.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Meats

Cattle and hogs are both in technical bear trends, which are expected to continue for several months. I recommend developing put positions in both markets.

Metals

Gold plummeted over $200 after hitting a high of $1917.9 on the Dec. contract. A more than 20% 3 day collapse was met with heavy buying on Friday and sets up a week to remember. Gold and silver have both shown tremendous resiliency and anyone who believes this is the top has probably believed the top has been set several times before. However, this time we have volatility escalation on both sides – the rally then the selloff. Even the current one day bounce has an element of panic to it and is indicative of a market that will soon experience a fear-filled run for the exits. Silver appears ready to tumble as well but both markets should quickly retrace Friday’s rally if the selloff is in fact on. Copper remains a sell on declining global demand.

Softs

OJ got little help from Irene and should resume its freefall. Coffee continues to surge higher on supply concerns which at this point have the momentum of a short covering rally behind it. Cocoa may not have much left to its bounce but remains a technical buy until the market penetrates the low at 2846, at which point it is a strong long term short. Cotton is avoidable and the congestion lacks a direction. Sugar is a sell with straight puts.
______________
James Mound

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending September 11, 2011

Energies

The energy sector as a whole seems underwhelmed by the global currency shift currently taking place. There should not be congestion here but as the S&P goes so goes oil and I believe it is just a matter of time before oil must break free of the correlation and trade on this euro move. Oil prices throughout the EU are high relative to many parts of the world including the U.S., and the drop in the euro emphasizes this differential. If the euro cracks 130 oil prices should see a considerable drop in demand. The dollar index has resistance below 80, but a break above that could panic euro traders and escalate volatility to the downside in the euro and pressure oil prices into a volatile downward spiral.

Financials

Throw out the jobs plan, ignore GDP, get rid of your election analysis, and definitely forget about U.S. debt. This is all about the fall of the euro and the impact it will have on the global economy as the story plays out over the course of years rather than weeks or months. I know its always about the center of your world, but unless you are in the euro zone then I’m sorry to deflate your ego. The ECB jumped the gun raising rates and now they are going to pay the price. As the euro falls from grace two things will continue to plague the markets – buying demand evaporation and a currency shift. The U.S. dollar strengthening will pressure the U.S. economy and in turn the stock market. The yen barely moved during a week the U.S. dollar gained dramatically on the euro, a good indication that yen strength is forthcoming on any near term dollar dip, possibly escalating in volatility in the near term. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

Two weeks ago I wrote about the grain rally: “Use this move to establish bear put spreads on the way up, perhaps as early as this week if Nov. beans hit $14.54 or Dec. corn hits $7.78.” Corn hit a high of 7.79 and beans hit an intraday high of 14.65 before pulling back. Now grains become very exposed to a v-shaped market reversal which means extreme downside volatility potential. Straight put and ratio put front spreads are recommended and one specific trade rec will be detailed in this week’s premium trade recommendation report Mound Trade Signals – click here for access.

Meats

Cattle and hogs both bounced last week, offering what I feel are good entries into additional short positions – puts are recommended on this bounce across the board.

Metals

Gold and silver are congesting near the highs, supported by a flight to quality out of stocks with bonds offering little alternative for the conservatives. At what point does the dollar rally impact gold and silver demand and at what point does the market sell an overbought situation? Now. Copper is a strong sell with a 30%+ drop anticipated in the next 6-8 months.

Softs

OJ is setting up a price collapse, but for the time being a short strangle or a bear call spread is recommended. Large put buying helped to spark heavy futures selling in coffee as locals slapped on offsetting positions. The idea behind option action triggering futures movement is twofold. First, the option volume must be relatively large compared to the underlying futures volume. Second, the locals would need to put hedges on to sell those options to the put buyers – a hedge would be a short futures to balance a short put position. So a speculative put buying position creates a short futures demand and therefore becomes a self-fulfilling prophecy, not unlike heavy one-sided trade volume in futures. Now the market could see long liquidation and a technical top or a possible immediate Monday recovery. I say this is the beginning of the end of this rally and join the put buyers. Cocoa is crashing, possibly turning into a hyperbolic liquidation situation as early as this week as the market gives up on the recent rally effort amid a dollar bull run. If Dec. cocoa breaks 2846 then watch out for a serious collapse. Cotton remains avoidable. Sugar is a strong sell with straight puts recommended.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

______________

James Mound

Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some option strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Past Performance is not indicative of future results. Information provided is compiled by sources believed to be reliable. JMTG or its principals assume no responsibility for any errors or omissions as the information may not be complete or events may have been cancelled or rescheduled. Options do not necessarily move in lock step with the underlying futures movement. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the express written consent of James Mound Trading Group LLC.

 

[jmound]

A Market Review and Opinion Report For the Week Ending September 18, 2011

Energies

Plunging inventories in crude oil should be digested with a grain of salt as rising distillate production converts a relative oversupply of oil. Energy prices remain strongly connected to the stock market moves, but the potential US dollar breakout will pressure the euro currency and shift oil’s correlation to a currency connection. I continued to anticipate more downside in crude oil, RBOB and heating oil. Natural gas remains an alternative play to the upside with straight calls recommended.

Financials

Stocks continue to have a wide chop, constantly recovering from sharp price corrections. Stay short on these bounces until this market clears 1265 on the S&P, at which point the trend would be reversed. Bonds remain avoidable except for possibly a short strangle. The dollar is a buy on dips as it is on its way to test 80 and beyond on the index. The euro is failing and the world recession’s epicenter is located in the heart of the EU. The Canadian and Australian dollars are sells as their bull runs have likely come to an end. The Japanese yen remains a buy, as it holds support during dollar rallies and then surges on dollar pullbacks. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains

The latest WASDE: http://www.usda.gov/oce/commodity/wasde/latest.pdf

Highlights (courtesy of www.CommodiNews.com):

U.S. rice production in 2011/12 is forecast at 190.9 million cwt, up 2.8 million from last month due entirely to an increase in yield.
Global wheat supplies for 2011/12 are projected 7.6 million tons higher mostly on larger beginning stocks in Canada and increased production for Canada, EU-27, and Ukraine.
Corn production for 2011/12 is forecast 417 million bushels lower with expected yields down from last month across most of the Corn Belt.
Soybean production for 2011/12 is projected at 3.085 billion bushels, up 29 million due to higher yields. Soybean ending stocks are projected at 165 million bushels, up 10 million as higher supplies are only partly offset by increased exports.

I continue to see weakness across the grain sector through harvest and anticipate expanding volatility to the downside in coming weeks.

Meats

Cattle and hogs both bounced last week, offering what I feel are good entries into additional short positions – puts are recommended on this bounce across the board.

Past performance is not indicative of future results.
Charts courtesy of Gecko Software's TracknTrade​

Metals

There is still a congestion fight in metals as the stock market remains directionless. It will be difficult for the stock market to determine the future of gold and silver prices if the dollar breaks out to the upside, which in turn pressures foreign demand for metals. Bear put spreads are recommended in both markets. Copper is a long term short with China growth stunted and a global recession greatly diminishing demand.

Softs

Coffee is in a full-on nose-dive, offering a nearly perfect v-shaped market reversal. It is key for the market to break Friday’s low, after which there is little supporting the market above 240. Cocoa broke major support and should experience a wave of liquidation in coming weeks. Cotton is showing support but is not worthy of a buy here, rather the puts are finally losing some of their overpriced premiums and should be accumulated on rally days. Sugar is a sell having technically reversed the bull trend. OJ has plenty of downside potential here and puts are recommended.
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James Mound
Head analyst for MoundReport.com

Disclaimer: Trading in futures and options involves a substantial degree of a risk of loss and is not suitable for all investors. Past performance is not indicative of future results. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. does not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.