Commodity ETFs fall as bearish signals strengthen

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

IPath DJ-UBS Copper (JJC):
11/02/2012 Closing Price: 44.01
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.41
Trading 128,000 Shares

I.T. ANALYSIS:

  • JJC total trade profits since 07/25/2012 equal $379,840 or 0.76%.
  • JJC is an ETN that holds only a single commodity, the Copper High Grade futures contract.
  • Trading was as expected last week and continued the correction. Price action has been bearish confirmed for the last four weeks, a very strong sign of the exceptionally bearish sentiment. Expect lower trading this coming week as price action continues to be a reliable and successful indicator. JJC has retraced back to July price levels, giving back all profits to anyone who remained long. Our trading strategy prioritizes risk minimization then attempts to lock-in a high percentage of profits. While long only investors are currently flat since July, our trading strategies have capitalized on the JJC rally and exited before the correction. 

United States Oil (USO):
11/02/2012 Closing Price: 31.35
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: 1.43
Trading 100,000 Shares

I.T. ANALYSIS:

  • USO total trade losses since 07/25/2012 equal $160,590 or 0.32%.
  • USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
  • Fully retracing back to midsummer lows, USO has nearly completed its correction cycle. We believe prices will continue to find strong support above 30 and shouldn’t trade much lower. Like many other markets, last week’s restricted trading range formed a VRCB. Although this can be attributed to reduced volume on only three trading days, VRCBs naturally form at the top of rallies and the bottom of corrections. This could be a sign of intrinsic support coming into the market. We strongly believe the current correction will fail to violate the previous bottom at 29.02.

United States Natural Gas (UNG):
11/02/2012 Closing Price: 21.89
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 18.88
Projected Weekly Range: 1.39
Trading 150,000 Shares

I.T. ANALYSIS:

  • UNG total trade profits since 07/25/2012 equal $353,450 or 0.71%.
  • UNG seeks to replicate the price movement of NYMEX Natural Gas by holding futures contracts.
  • After attempting to find support for our long trade, UNG stopped out the remaining 85% of our position at 21.52, profiting $263,850 or 0.53%. The position was generated off a very profitable trade strategy to buy the first correction following a bullish trend reversal. Last week formed a top by trading 21.73 and further confirmed it by closing below this price. UNG, officially in a correction, is expected to trade down to 18.88 but certainly not below 17.69. The bullish I.T. trend has already made its yearly trend reversal and we do not expect another one this year. If price action obtains this week, trading will continue lower, closing below 20.81.

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