Major Commodities ShakeOut - Dec 2004

[DaveT]

An Almost sector-wide rout in commodities prices today -

Gold -$17
Silver -67c+
Copper -500c+
Oil -88c

Most softs are down in sympathy, too. Grains vulnerable at the open.

All triggered, no doubt, by a strong recovery in the dollar today. A very healthy correction in the SECULAR commodities bull-market of the 00's, IMO.

After the correction is over, my (LONG-SIDE) attention will turn to Coffee in the short-term, and the grains next year (esp wheat) . The cheap dollar will fuel exports in the medium term.

The Metals should recover once again, IMO. When Silver finally breaks $8.00-$8.50 resistance, the acceleration phase will begin in earnest.

All IMHO, ofcourse.

 

[cabrito]

[hehehe...
sory to jump in late but ithat was caused by the low volumes present over the holiday season when one house squeezed longs knowing that market players were on hol.I was long crude and found myself deep in the red.I managed to hold on to mid jan and recovered plus some.Of all my 5-6 years of trading that was the scariest part of all.Theres money in commodities..on the long side..but volume is very important ..and thanks to those Opec guys.

 

[DaveT]

Hi cabrito -

interesting.

I'm glad you came thorugh with your Crude position.

We are just now starting the next leg up in this Secular Commodities Bull market, IMO. The CRB Index has broken out to the upside, after finding support at the 3-year trendline. On the Monthly, we are nudging the 1984 highs, with the 1980 all-time highs the next target.

The leaders in this next phase could be Softs and eventually Grains. I'm doing very well in Coffee since late last year (Coffee could go to 170-200 before end-2005), and anticipate a good opportunity in the Wheat later in the Spring/Summer.

I agree there will still be lots of great opportuntites on the LONG side of commodities for some time to come.

Cheers.

 

[jimbo57]

Crude oil trough

Just noticed this thread- haven't looked on the boards for a while.

Agree with Dave T that grains look very interesting going forward, however the main reason for replying is the comment earlier about the crude oil trough at the end of 2004.

My understanding of this is that is was more to do with the Mexican hedging deal that went through at the end of the year, leaving several ibanks with length to sell, to lock in profits against WTI puts they has written to the Mexican government. This deal also has implications for the spread/structure in WTI, as well as the relative values of WTI/Brent. FWIW