Commodity ETFs face resistance, some upside visible

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

iPath DJ-UBS Copper (JJC):
09/07/2012 Closing Price: 46.23
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: LONG @ 43.67 on 08/21/2012; STOP @ 43.67
Current Upside Target = 47.91; Cover 19,200 (15%)
Projected Weekly Range: 1.99
Trading 128,000 Shares; COVERED 25,600 (20%) @ 45.49

I.T. ANALYSIS:

  • Initial trade risk was $188,160 or .38%. Current trade risk is $0%. Current trade profits are $308,736 or .62%.
  • JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
  • JJC finally made a substantial move, breaking through the strong technical resistance level of 45. Price action was decisively bullish and Friday’s close in the upper 1.5% was only three points off the weekly high. Our limit order to sell 20% at 45.05 or better was filled on Friday’s gap open at 45.49, locking in $45,592 in profits. Once 45.26 was traded last week, the I.T. trend was reversed to bullish, forming a higher top. Trading should be higher this week although we believe strong resistance near 47.25 will prevent another wildly bullish move. Look for our upside price target to be filled within the next two weeks.

United States Oil (USO):
09/07/2012 Closing Price: 35.88

INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: SHORT @ 35.45; STOP @ 36.46
Upcoming Break-Even Price: 34.44; Cover 31,800 (20%)
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.14
Trading 159,000 Shares

I.T. ANALYSIS:

  • Initial trade risk was $160,590 or .32%. Current trade risk is the same. Current trade losses are $68,370 or .14%.
  • USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
  • Price action was slightly higher and virtually nondirectional as predicted last week. USO closed out the week only one point lower than the previous week and slightly above the midrange, giving little feedback for future trading. Our current position is yet to meet its break-even price of 34.44, even though the initial risk was only .32%. After two weeks of stagnant movement and coming within ten points of getting stopped out, we have become slightly pessimistic about our current position. Trading 34.96 will form an I.T. top and build momentum for our current short trade. Trading 36.46 will stop out our trade and continue the bullish rally from late June.

United States Natural Gas (UNG):
09/07/2012 Closing Price: 18.12
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: SHORT @ 20.39 on 08/09/12. STOP @ 19.50
Upcoming Cover Price: 17.27; Cover 40,000 (40%)
Current Downside Targets = 17.27 – 16.36
Projected Weekly Range: 1.26
Trading 100,000 Shares; COVERED 20,000 (20%) @ 18.35

I.T. ANALYSIS:

  • Initial trade risk was $204,000 or .41%. Current trade risk is $0. Current trade profits are $222,400 or .44%.
  • UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
  • After coming within six points of stopping out our trade, UNG sold off to close out the week in the bottom 25%. Price action was bullish divergent, meaning last week made a higher high and a higher low, yet the weekly close was below the midrange and the previous week’s close. Friday’s intellectual close indicates prices should be definitively lower this week, trading 17.68 before 19.45. If selling pressure obtains, look for our downside price target of 17.27 to be achieved. 17.27 is also our second profit-taking price, where we will cover 40% of our original position.

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