What Inflation?

The recent bond market sell off came on the heels of Bill Gross’ comments regarding the German 10-year Bund as, “The short of a lifetime.” We had already noted the negative yield situation in mid-
March along with the increasingly negative tone that commercial traders were taking. Positioned accordingly, the bond sell off was a profitable experience. Over the last two weeks, however, there has been more and more talk about inflation and frankly, I just don’t see it coming. Therefore, the generational bond rally may not have come to the screeching halt that the media is leading us to believe.

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Buying the Cotton Market’s Decline

We used a slightly longer chart this week, going back just over a year to highlight the sideways action that has been the dominant feature of the cotton futures market and also to demonstrate the effectiveness of the commercial traders’ actions within this set of circumstances.

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Weekly Commodity Strategy Review

Another week of good calls with two out of three trades well in the money and the third is still hanging on.

We began the week by sending our COTSignals discretionary customers a sell signal in the Australian Dollar on Sunday evening. The market opened Sunday night at $.8026 to the U.S. Dollar and hasn’t looked back. It’s currently pushing $.7800, accumulating more than $2,000 per contract thus far. We detailed this trade for TraderPlanet on Monday in, “Aussie Dollar: A Commercial Trader’s Perspective.”

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Copper Traders Reverse Course

Commercial traders in the copper market have been extremely active through the first half of 2015. It was obvious by the record net long position they set in January that they had big expectations for global growth and the corresponding demand for copper to continue into the summer. However, a growing stream of soft economic data which led to dovish comments by the Federal Reserve Board which led to a dramatic shift in commercial trader sentiment just as the market was approaching solid resistance is now quickly sending this market downward towards its seasonal lows.

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Growing Support for Soybean Meal Futures

The soybean meal futures have been sliding sideways to lower for the last seven months. Historically, this makes all the sense in the world as the harvests are in and supply and demand become the driving factors of price rather than weather and growing concerns. The shift towards planting and summer markets changes the equation and brings us to where we currently stand. July soybean meal has finally executed the test of its support and finds itself strengthening heading into its strongest seasonal period.

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Weekly Commodity Strategy Review

We only published twice this week as my attention was focused on bringing a new Commitment of Traders trading program online. The primary improvement in this version is its ability to lock into large moves and score the occasional big win as opposed to the statistically based days past entry exits we’ve employed for the last few years. I’ll share more after some time trading it on my own account to examine its behavior.

Back to the independent research that separates us from 80% of the commodity trading population. We began this week with a look at the consolidation in the gold futures market for TraderPlanet. We said, “We believe the recent shift towards a more bullish stance by the commercial traders could provide the spark for this market to breach the $1,225 resistance and….”(Yesterday’s high was $1227.7)

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Buying Opportunity on Bond Washout

We’ve been watching the Bond markets closely over the last few weeks. We were ahead of the curve in our discussion of negative interest rates among G7 countries and had already issued trade alerts within this segment prior to Bill Gross’ announcement of the German Bund being, “the short of a lifetime.” The purpose here is not to tout our own research but to provide you with one of the primary tools I use to stay ahead of the markets and the news.

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Weekly Commodity Strategy Review

We looked at the recent commercial buying in the US Dollar Index on Monday, noting that, “Even though commercial traders remain heavily net short, their recent purchases have been strong enough to shift their momentum back to the positive side.” We also looked at technical support that has been tested and held, throughout this week.

You can find the full piece featured at TraderPlanet.

Timing the Dollar Index

Tuesday was probably our best call. Equities.com featured our crude oil analysis in, “Crude Oil Spike is a Selling Opportunity.” We stated that, “our simple take on the way these usually work is that we’ll get one more spike of some type above the recent congestion that has built up. This morning’s trade near $61 is the spike we’ve been waiting on. ”

The market peaked Wednesday around $62.50 and has quickly fallen back near $58 per barrel.

We went macro with our own piece again this week as a follow up to, “The Interest Rate Conundrum” of two weeks ago. Originally, we focused on the world’s central bankers and the recent International Monetary Fund meeting in Washington. Their primary purpose was to discuss what it would take to US and global interest rates to rise and when. Apparently, Bill Gross had the answer and the markets listened in a BIG way. Even if interest rates aren’t your topic, the swings on the charts I posted are truly dramatic.

Interest Rate Conundrum Resolution

Interest Rate Conundrum Resolution

Two weeks ago we detailed the issues facing the Fed’s seeming inability to get the notion of higher rates going forward through the thick skulls of the interest rate market’s participants. Specifically, we referred to Janet Yellen’s approach at the International Monetary Fund’s meeting in Washington two weeks ago. It appears that her primary purpose was to make clear to world leaders what data she would use in determining when the US would raise interest rates. The new era of Fed transparency left the attendees in good spirits and high hopes that they were all on the same page. Until….

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Commodity Futures Trading