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CRUDE, COPPER, AND CATTLE


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CRUDE, COPPER, CATTLE

JUNE 6, 2019

As we enter the last part of the week I thought it might be beneficial to take an abbreviated look at just a few commodities that have caught my eye.

COPPER: According to our model Copper is in a confirmed downtrend. It will need a close at or above 2.9420 tomorrow Friday, 7. I think you would agree not likely to happen. What I would point out is that without some form of fundamental good news Copper looks to be under pressure for at least the next five weeks if not longer. Our model also shows should Copper close at present value ($2.63 as this is being written) the negative indicator will penetrate the second standard deviation of the 198 week average. What to do? The penetration of the second standard deviation is significant but not necessarily negatively overstretched. Given the strength of the downtrend I would look for rallies to sell until the negative indicator shows the standard deviation entering positive equivalency.

CATTLE: According to our model Cattle are in a confirmed downtrend. It will need a close at or above $116.55 tomorrow Friday, 7. I think you would agree not likely to happen. Like Copper without some form of fundamental good news Cattle looks to be under pressure for at least the next five weeks if not longer. Friday last the negative indicator penetrated the second standard deviation of the 197 week average, which for Cattle is a bigger deal than Copper. Over the last 197 weeks the negative indicator penetrated the second standard deviation eight times but only once did it go to the third Standard deviation. So what do we know? We know that the negative indicator can go to the third standard deviation, but it is extremely rare. We know that Cattle are in a long term downtrend unlikely to reverse for the next several weeks. What to do? In the near term given that the negative indicator penetrated the second standard deviation I would look for short term counter trend values to buy. In the longer term once the market readjusts I would look for values to sell.

CRUDE: According to our model Crude is in a confirmed downtrend. It will need a close at or above $73.83 tomorrow Friday, 7. I think you would agree not likely to happen. Like Copper and Cattle without some form of fundamental good news Crude looks to be under pressure for at least the next nine weeks if not longer. As of Friday last the negative indicator had penetrated the second standard deviation, and as of this writing should Crude close tomorrow at the levels trading today Crude will penetrate the third standard deviation of the 198 week average. This will propel the negative indicator into positive equivalency. What does that mean? In simple terms it may be time to look for short term buying opportunities.

If there is a commodity you would like me to address you can call me at 1-877-304-1369, or email me at lee@efggrp.com.

There is significant risk involved in trading futures and/or options on futures. Futures and/or options of futures trading may not be suitable for all investors. Investors should consider these risks and evaluate their suitability based on their financial conditions. Past performance is not indicative of future results.



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About the author


Lee A. Gaus is a forty year veteran of the commodity futures industry.  After graduation from Illinois State University Lee began his professional career with Cargill of Minneapolis and then moved to Archer Daniels Midland of Decatur, Illinois.  After stints in the areas of animal nutrition, soybean processing and grain merchandizing Lee began specializing in commodity futures trading.  After being transferred to Chicago Gaus rose to the position of Senior Vice-President.  In 1992 Gaus was a founding member of EFG Group, and later International Futures Group.  Gaus has always had a deep interest in what appears to be the random movement of numbers.   Today Gaus combines old formulas with formulas of his own design in an attempt to discover fair valuations.  

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