Commodity ETFs diverge; grains and gold turn bullish

INTERMEDIATE TERM SIGNALS & MARKET ANALYSIS

IPath DJ-UBS Copper (JJC):
11/09/2012 Closing Price: 43.45
INTERMEDIATE TERM (I.T.) SIGNAL:

Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 44.51
Projected Weekly Range: 1.25
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.
  • Copper has closed in the bottom quartile of the weekly trading range for six weeks in a row now, displaying an extremely bearish investor sentiment. The correction continues lower and is yet to provide any evidence of slowing down, although we believe support will keep prices above 41.70. Price action was bearish confirmed for the fifth consecutive week. Currently at the same price levels as early summer, JJC has taken back any profit made on the previous rally. Our trading philosophy believes in locking-in profits as quickly as possible with short trailing stops and continuous profit-taking cover exits.

United States Oil (USO):
11/09/2012 Closing Price: 31.73
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bearish.
Current Position: FLAT
Working Order: BUY @ 32.26; STOP @ 30.99

Break-Even Price: 33.53; COVER 20,000 (20%)
Current Upside Target = 35.85 – 37.87*Extended Upside Objective
Projected Weekly Range: 1.66
Trading 100,000 Shares
I.T. ANALYSIS:

  • USO total trade losses since 07/25/2012 equal $160,590 or 0.32%.
  • Initial trade risk is $127,000 or 0.25%.
  • USO seeks to replicate the spot price of WTI light, sweet crude oil and primarily holds futures contracts.
  • Trading followed through as expected last week, finding support off the previous week’s VRCB. USO experienced a very volatile trading week, rallying big on Tuesday, falling back down on Wednesday, then closing out the week near the midrange. The trading volatility resulted in the formation of an OVB, a strong buy signal at the bottom of a rally following a VRCB. This normally indicates that selling pressure is beginning to be overpowered by buying pressure. We believe the current correction has found an I.T. bottom and will begin to rally higher. For these reasons we have issued a Working Order to BUY 100,000 shares of USO at 32.26, risking only .25% of our core position.

United States Natural Gas (UNG):
11/09/2012 Closing Price: 20.63
INTERMEDIATE TERM (I.T.) SIGNAL
:
Intermediate Term Trend is bullish.
Current Position: FLAT
Current Downside Target = 18.88
Projected Weekly Range: 1.19
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.
  • UNG fell further last week, continuing the current correction. Price action was bearish and confirmed by the weekly close below the midrange, below the open and below the previous close. The weekly close has a very strong correlation with the early trading direction of the following week. Price action continues to be a reliable indicator; therefore trading is likely to continue lower this week. Last week formed a VRCB due primarily to the equalization of buyers and sellers, not a significant reduction in trading volume. This means support could be reentering the market and rally could soon begin.

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