Weekly Commodity Strategy Review 11/14/2014

This week’s theme was the same as last week, expecting that some of these markets had gone too far, too fast and were ripe for a turnaround. Like last week, our strategies have continued to be on the wrong side of the markets.

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We began Monday’s trade based directly on carryover from Friday’s trade in the Bond market. Our TraderPlanet article focused on last Friday’s outside bar key reversal in Bonds. This hasn’t shown the follow through we’d hoped for. We’ve offset the position this morning for a small loss but, another loss nonetheless. The technical chart formation along with the commercial trader sentiment remains positive as long as the December contract can remain above 140^08.

Tuesday’s setup in the soybean futures for Equities.com showed we were a day early in our expectations of commercial traders capping the soybean rally. Their selling ahead of last week’s WASDE report tipped their hand to being stuck with crops left to get sold. While our early resistance failed to hold, the topping action this week has still been pretty clear in the January soybean futures. Furthermore, based on the overnight trade, it looks like our discretionary COT Signals model (Free Trial Available) will be issuing a sell signal in December corn futures for Monday’s trade.

Finally, our main report took a look at the record currency positions that commercial traders are building. Deconstructing the U.S. Dollar Index as it approaches a multi-year breakout shows that the Japanese Yen and the Euro Currency are responsible for 70% of its movement. We examined the tremendous and opposing builds in the commercial traders’ position in all three of these markets both collectively and separately in, “Timing the Dollar’s Run.”


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