Commodity ETFs fall as bears take control

iPath DJ-UBS Copper (JJC):
10/12/2012 Closing Price: 46.83
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.30
Trading 128,000 Shares

I.T. ANALYSIS:

• Initial trade risk was $188,160 or .38%. Current trade risk is $0. Current trade profits are $467,200 or .93%.
• JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
• Price action followed through as expected last week, trading lower and stopping out our long JJC position. Total trade profits were $379,840 or 0.76%, twice the amount we initially risked on the trade. We locked-in profits three times during the trade, totaling more than $125,000. The final 60% of our position was exited, closing profits of $236,040. Price action was bearish last week, with a much lower-low and much lower-high, compared to the previous week. Last week traded below 46.64, confirming a top had formed and a correction has begun. Expect lower trading this week, moving towards our new downside target of 44.51.

United States Oil (USO):
10/12/2012 Closing Price: 34.00
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: 2.22
Trading 100,000 Shares

I.T. ANALYSIS:

• USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
• For the third week, USO has failed to establish a clear direction, closing near the weekly midranges without any substantial movements. Price action last week was slightly bullish, violating the previous week’s high and barely closing above the midrange. Failure to trade below the previous week’s OVB low indicates prices may have found support above 32. Our long-term objective is still to the upside and we believe the current correction will not trade below 31.68. We currently await higher quality trade opportunities before entering the market.

United States Natural Gas (UNG):
10/12/2012 Closing Price: 23.16
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 19.83 on 09/25/12. STOP @ 21.46
Upcoming Cover: COVER 22,500 (15%) @ 23.57 
Current Upside Target = 23.57 – 24.11
Projected Weekly Range: 1.76
Trading 150,000 Shares; COVERED 22,500 (15%) @ 21.98

I.T. ANALYSIS:

• Initial trade risk was $142,500 or .29%. Current trade risk is $0. Current trade profits are $472,950 or .95%.
• UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
• In only three weeks, our current long position in UNG has generated $472,950 in total profits and locking-in more than $250,000. Our second profit-taking price of 23.57 was only 0.20 away from being fulfilled; look to cover 22,500 shares this week. The trade entry was based on a very profitable I.T. pattern that occurs less than twice a year: buying the first correction following a bullish trend reversal. Price action was bullish last week, opening low on Monday then rallying for the rest of the week. Friday’s close at 23.16 confirmed the price action and is the highest weekly close since January 2012. Trading should continue making new weekly highs for the foreseeable future, but expect resistance to come into play within our upside price targets.

CurrencyShares Euro Trust (FXE):
10/12/2012 Closing Price: 128.71
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: LONG @ 128.87 on 10/08/12. STOP @ 127.45
Upcoming Break-Even Price: 130.30; Cover 10,000 (20%)
Current Upside Targets = 132.20
Projected Weekly Range: 1.53
Trading 50,000 Shares

I.T. ANALYSIS:

• Initial trade risk was $71,000 or .14%. Current trade risk is the same. Current trade losses are $8,000 or .02%.
• FXE seeks to track the movement of the Euro currency.
• We entered a conservative long position in FXE last week, buying in at 128.87. Monday’s gap lower open provided the opportunity to enter the market at a more desirable price point, reducing initial trade risk and lowering the break-even price. If 130.30 trades this week, we will exit 10,000 shares (20%) and move the STOP up to our entry price. Price action was bearish divergent last week, violating the previous week’s low yet closing above the midrange. The restricted trading range and reduced volatility resulted in a VRCB, a range less than the preceding eight weeks. Pay attention to the current stop price of 127.45 as trading could be lower this week.

iShares MSCI Emerging Markets Index (EEM):
10/12/2012 Closing Price: 41.27
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Target = 48.19 – 49.23
Projected Weekly Range: 0.94
Trading 135,000 Shares

I.T. ANALYSIS:

• EEM seeks to replicate the performance of the MSCI Emerging Markets Index by investing in the underlying international securities.
• Price action for EEM has been very choppy the previous four weeks, reversing directions for the fourth week in a row. Still trading within the very bullish weekly range ending 09/14/12, EEM has completely failed to move in a clear direction. Last week’s price action was bearish, making a lower low and lower high. Friday’s close at the midrange indicates the sideways movement should continue this week. EEM also formed a Reduced Volatility Compression Bar last week, indicating buying and selling pressure were nearly equal. Trading volume was average, leading us to believe trading will be largely within the previous week’s range, or slightly lower.

SPDR S&P 500 (SPY):
10/12/2012 Closing Price: 142.89
INTERMEDIATE TERM (I.T.) SIGNAL:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Upside Targets: 154.21 – 159.39
Projected Weekly Range: 3.31
Trading 39,000 Shares

I.T. ANALYSIS:

• SPY seeks to track the movement of the S&P 500 Index.
• As with many other markets, SPY has displayed uncertainty over the last four weeks. Just when prices find support, bears reverse the trading pressure and prices fall back down. Last week’s price action was bearish, confirmed by Friday’s close below the midrange, below the previous close and below the open. The current correction continued lower, making new weekly lows and closing in the bottom 10% of the weekly trading range. Although price action indicates trading should be lower this week, nondirectional movement has plagued the markets and leads us believing this will continue for the remainder of the year. Over the last nine weeks, ETF analysis and trading has resulted in $1,615,614 (3.23%) in total profits, $1,199,039 of which is closed and locked-in.

Parrish-Hicks 2012 Performance Report