Stocks, Softs, Grains, Metals, Energies - many opportunities across different markets

Stocks, Softs, Grains, Metals, Energies - many opportunities across different markets

SUGAR

Last week Sugar finally broke the fulcrum and went down. You can read the rationale for this down move in the post “The Hunt For The Sugar Short is not over. Japanese Yen and Bonds Are Also Presenting Opportunities” from 02/16/2020.

Sugar analysis for 03/02/2020 - 03/06/2020

Now the game is to wait for a pullback and then to take price action short signals. Especially when the latest Commitments of Traders (COT) data shows that Commercials sold more during the beginning of this down move.

CRUDE OIL

No matter the fall (explained in the previous post “Crude Oil, Platinum and US Stock Market” from 23rd of February 2020) the Commercials did not start to buy Crude Oil. Again like in Sugar they sold more, supporting the downturn.

Crude Oil futures analysis for 03/02/2020 - 03/06/2020

The swing target of 44.50 is reached. Now we can expect some pullback but I won't be looking for buy signals here until Commercials show some buying. Next target for the down move is $39. 

COPPER

After I was so wrong about the Platinum in the last week's post, you should take with caution what I am about to say for Dr Copper.

The good, old Dr Copper is showing a cluster of positive signals. This is contrary to the belief that the coronavirus will slow down the world's economy and might even lead to a global recession.

No matter how we interpret it, there are some things which we can not dismiss (see the chart): 

Copper futures analysis for 03/02/2020 - 03/06/2020

  • the stopping volume on the last day
  • the divergence between the price and the On Balance Volume is a clear sign of accumulation;
  • Commitments of Traders data is showing that Commercials are buying while Small Speculators are selling. That's bullish.
  • The seasonal chart is supporting the upside
  • Cycles also suggest an up move can be expected

From a price action perspective, Dr Copper was the only instrument which held ground during the last week's debacle. 

The last bar is showing that on Monday the initial move should be towards the low of Friday. If that low is breached we can expect with a higher probability that Monday would be a down day. If that attempt fails and Friday's high is broken that might signal the beginning of a tradable rise.

SOYBEANS & SOYBEAN MEAL

Soybeans and Soybean Meal analysis for 03/02/2020 - 03/06/2020

Seasonals, volume, and On Balance Volume are showing an upcoming rise in Soybeans. Soybean Meal is stronger than Soybeans and it can be played on the long side as well. Currently, there is a price action setup so the movement might begin shortly.

U.S. STOCK MARKET

Wow, I've expected a fall, but nothing like this. It seems that the Federal Reserve's timing to withdraw some liquidity was really bad.

As you can see from the following chart borrowed from Tom McClellan and published in his latest Chart in Focus, the FED started to depart from the repo market. That is, of course, causing troubles for the market because the fuel is disappearing. 

SP500 and FED

What made the situation even worse is that this time liquidity problems coincided with the global spreading of the coronavirus. And the result was the fastest correction in S&P500 for many years.

Now comes the question what's next?

I believe the Federal Reserve and the US government will act with stimulus and the liquidity problems would be taken care of. But the most important question is can this outbreak cause a global recession? It is too early to answer this.

If they solve the liquidity problem, the next swing should be to the upside. But with so many analysts, revising down their earnings expectations, I don't think we'll see a V-shaped recovery.

Few things to consider:

  • if most earnings are being revised down, maybe we should look for companies whose earnings expectations are unchanged
  • After such a big decline, the next days will very volatile. That means short-term signals in both directions might be worth taking. Stops are mandatory.
  • If you decide to hunt for bargains, be sure to hedge those stocks. Being market-neutral can be a huge advantage in a situation like this.

Enjoy trading and stay safe


Now, let's find your missing piece!

Vassil Banov,
Founder of Piece of Trading



Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer

Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com

TAGS: S&P500, SPY, SPX, Federal Reserve, COT, Commitments of Traders, Platinum, Copper, Sugar, Soybeans, Soybean Meal, Down Jones, Cycles, Fundamental Analysis, Seasonals, Price Action Trading

Find this content helpful? Support our efforts by buying us a coffee!
Top