July 31, 2008
Is the Bottom Nearing for the U.S. Dollar?
By Phil Streible
The latest data on weekly unemployment claims and gross domestic product has pushed both the stock market and the U.S. dollar down, but I have a slight inclination to believe the dollar will see a rebound before year-end. A Federal Reserve policy meeting is coming up next week, and the market could be volatile. A straddle in the Dollar Index Futures would be a good strategy to play dollar volatility in either direction, or consider a call spread if you are bullish.
A straddle involves buying a call and put at same month and strike price. What you are looking for is increased volatility—you don’t have to pick a direction. If the Dollar Index Futures, traded at the ICE Futures Exchange, gets down to 72, that’s what I’d look at in terms of setting up a straddle.
Read full article.
Second-quarter GDP came out lower-than-expected at a 1.9 percent annualized rate, according the Commerce Department. First-quarter GDP was at 0.9 percent. The Commerce Department also reported a recession may have begun in the final three months of 2007, as GDP was revised downward to show a contraction of 0.2 percent. It marked the first drop since the recession of 2001.
A separate report from the Labor Department showed initial claims for unemployment insurance soared to the highest level in more than five years last week, rising by 44,000 to 448,000.
The stock market doesn’t like what it sees this morning, and futures are retreating after two days of gains. From a purely technical view, Lind Plus Senior Market Strategist Jeff Friedman says momentum readings, the stochastics and Relative Strength Index (RSI), remain neutral to slightly bullish, but a close above 1291 in the September S&P futures, the three-week high, would be needed to restore some confidence. A close below 1235 would open the door to further losses, possibly down to 1202.
“We may see a minor rally off these lows (today), but I think you have to sell any rally,” he said.
July 30, 2008
Gold futures took a bit tumble today, with the August COMEX contract closing down $13.60 at $902.90 an ounce, after hitting a one-month low intraday. The financial press cited a stronger U.S. dollar and equity market rally as reasons gold has lost some of its appeal today. Lind Plus Senior Market Strategist Dan Pavilonis gave his take on metals market action in a Dow Jones article by Allen Sykora.
July 29, 2008
Blake Robben, Senior Market Strategist with Lind Plus, believes that price declines in several commodity markets have provided buying opportunities for those that have been waiting to go long. Blake recently presented a webinar analyzing the stock market and commodity markets. You can read his commentary here: Stocks Still Bearish; Commodities Bullish.
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Consider Corn Call Spread
By Phil Streible
After peaking at record highs about a month ago, corn has been under pressure. But as the growing season wears on and hotter weather is upon us, it seems a bounce is likely, and a bull call spread is way to play that trend with defined risk. (Read full article, including Phil’s options trading strategy for corn)
July 28, 2008
Gold has fallen about 10 percent from its peak above $1,000 an ounce in March, but a number of market participants seem to think the yellow metal’s bullish days are not yet over. Lind Plus Senior Market Strategist Phil Streible notes that open interest in gold call spreads has been building, and there has been strong buying seen in 1000/1050 and 1000/1200 bull call spreads. The December 1000 options show 15,864 contracts in open interest (outstanding positions) while the 1050 strike shows 12,678 and the 1200 strike shows 29,932 contracts. “Keep an eye on that spread,” he says. There may be reason to remain bullish as the U.S. dollar hasn’t been able to sustain lasting gains, and gold remains appealing as an inflation hedge. See related Reuters article, “Gold Options Point to $1,200.”
December NYMEX gold futures were last trading near $935.20, while October was trading at $930.10 and August $925.20.