Commodity ETFs run into resistance

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

iPath DJ-UBS Copper (JJC):
09/28/2012 Closing Price: 47.59
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: LONG @ 43.67 on 08/21/2012; STOP @ 46.63 OR Weekly Close Below 47.28
Current Upside Target = 47.91 – 52.23
Projected Weekly Range: 2.26
Trading 128,000 Shares; COVERED 25,600 (20%) @ 45.49, COVERED 19,200 (15%) @ 48.20
I.T. ANALYSIS:

  • Initial trade risk was $188,160 or .38%. Current trade risk is $0. Current trade profits are $459,712 or .92%.
  • JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
  • JJC traded with less than expected volatility and volume last week, falling compared to the previous week’s range. Price action was bearish and slightly divergent, closing above the midrange and open. Last week set up a potential correction by violating the previous week’s low without violating the high. Trading 46.63 this week will form a top, officially designating that a correction has begun. JJC is currently our most successful open trade, closing profits of $133,560 with an additional $246,272 minimum upon exit. Pay close attention to the revised exit price of 46.63, a price one tick below last week’s low. The short and intermediate term trends indicate trading should be higher this week, rallying up towards 49.17.

United States Oil (USO):
09/28/2012 Closing Price: 34.12
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: FLAT
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 2.01
Trading 159,000 Shares

I.T. ANALYSIS:

  • USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
  • USO continued to sell off, following an extremely bearish previous week. Volume and trading range normalized last week, indicating the fallout was only temporary. Price action was bearish divergent, never even rallying up to the previous week’s midrange. Thursday’s gap open and Friday’s close should indicate higher trading this week. Our current extended upside target will remain in place; we believe WTI will find support in the very near future, likely near the 32.46 price point. Due to extreme daily volatility and large gap opens, we maintain our flat position until higher quality trade opportunities arise.

United States Natural Gas (UNG):
09/28/2012 Closing Price: 21.34
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: LONG @ 19.83 on 09/25/12. STOP @ 19.30
Upcoming Cover:
COVER 22,500 (15%) @ Monday’s Open
Current Upside Target = 23.57 – 24.11
Projected Weekly Range: 1.84
Trading 150,000 Shares
I.T. ANALYSIS:

  • Initial trade risk was $142,500 or .29%. Current trade risk is $79,500 or .16%. Current trade profits are $226,500 or .45%.
  • UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
  • Last Tuesday we entered a long position in UNG based on a very profitable I.T. trend pattern. Following a trend reversal, from bearish to bullish, the first correction should be analyzed for optimal buy entries. This pattern has historically proven to be highly profitable with an above average probability of success. The entry price was one tick above a VRCB, minimizing initial risk and allowing greater purchasing power. In only one week, our break-even price had been met and exceeded. We are issuing a 15% cover of 22,500 shares at this Monday’s opening price. Price action was decisively bullish last week without a singly daily low violation. Friday’s close in the upper 4% results in a 95% probability of trading higher with very little chance of seeing 19.30 next week. If bullish price action continues, look to cover additional shares and lock-in greater profits.

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