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Commodities Recap For The Week Of December 21, 2018 – iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX)

Commodities Recap For The Week Of Oct. 12, 2018 - ProShares VIX Short-Term Futures ETF (NYSEARCA:VIXY)

The story of this week:

Danger Off- Numerous issues to consider over the vacations

It was not the week markets had hoped for with the Christmas vacation subsequent Tuesday. On Wednesday, we heard from the U.S. central financial institution as they elevated the Fed Funds price by 25-basis factors to 2.25-2.50%. The transfer was the fourth of the yr because the Fed continues to tighten credit score in response to GDP and employment knowledge.

Within the leadup, to the transfer, many excessive-profile market leaders and the President of america virtually pleaded with the Fed to pause and rethink additional rate of interest hikes in 2019. Nevertheless, the central financial institution is an apolitical and unbiased physique the reasserted itself on Wednesday. The market didn’t reply properly. Shares plunged, the worth of oil continued to make new lows over the previous week. The greenback’s kneejerk response was to maneuver larger, after which it turned decrease over the prospects for a U.S. authorities shutdown that would hit markets on Friday, December 21 at midnight. Along with an undesirable Fed fee hike and authorities shutdown, modifications within the Trump administration continued with Protection Secretary James “Mad dog” Mattis handing in his resignation on Thursday. It appears that evidently each occasion today is a cause for promoting within the inventory market which is the hallmark of a bear market.

I’ve been advocating shopping for the iPath S&P 500 VIX Brief-Time period Futures ETN product (VXX) on all dips since October. The VIX associated product acts like a put choice on the inventory market as volatility tends to extend on the best way down. The fund abstract for VXX states:

“The investment seeks to provide investors with exposure to the S&P 500 VIX Short-Term Futures™ Index Total Return. The S&P 500 VIX Short-Term Futures™ Index Total Return (the “index”) is designed to provide access to equity market volatility through CBOE Volatility Index® futures. The index offers exposure to a daily rolling long position in the first and second month VIX futures contracts and reflects the implied volatility of the S&P 500® at various points along the volatility forward curve.”

VXX is a extremely liquid product with $833.16 million in internet belongings that trades a mean of 51.718 million shares every day.

Supply: Barchart

Because the chart exhibits, all dips within the VXX product have been a shopping for alternative since October. On Friday, shares have been on the lows, and the VXX was on the highs.

On the subject of the world of commodities, the present setting within the inventory market has ignited a interval of danger-off conduct in lots of uncooked materials markets. The worth of crude oil has been falling steadily since early October and closed the week on the lows for 2018. Copper is under the $2.68 per pound degree. With the greenback index far and wide today, however not far off the current highs, commodities have suffered. The two exceptions are the wild volatility in pure fuel which is a perform of the every day climate forecasts, and gold. Gold is bucking the development of December lows from 2015-2017, this yr the ultimate month has been a nightmare in markets and gold and U.S. bonds has been the beneficiaries. Gold reached its highest level since July when it probed above the $1270 degree on Thursday and closed round $1260 on Friday, considerably above the lows for 2018.

As we head into Christmas subsequent week and New Yr’s the week after, we’ve got rather a lot to consider for 2019. The horizon continues to be cloudy with commerce points, home political divisiveness in america, and a world filled with challenges. Markets mirror the financial and political landscapes which imply we might see much more volatility in 2019. In relation to my weekly report, I might be making modifications for the New Yr. I shall be slicing again the variety of items I write for Looking for Alpha by way of the overall channel within the New Yr. My weekly report will solely be out there to subscribers to my Market service starting on Friday, January four. The excellent news is that I’m providing the service at a 30% low cost for an annual subscription via the top of this yr. Please contemplate signing up earlier than New Yr’s Eve so to proceed to obtain my weekly abstract report and strong commodities report every Wednesday.

Highlights in commodities:

  • Gold posts a 1.35% achieve on the week on a flight to high quality shopping for
  • Silver strikes zero.44% greater since final week however trails gold
  • Platinum posts a 1.34% achieve for the week and was buying and selling at a $462.30 per ounce low cost to gold
  • Palladium corrects 1.10% on the week however places in a brand new document excessive at $1245.00 per ounce through the week earlier than pulling again on Friday
  • Copper falls three.20% on the week on danger-off pressures
  • January iron ore futures transfer 1.42% larger since December 14
  • The BDI strikes three.44% decrease because the final report
  • Rotterdam coal down 1.88% on the week
  • Lumber rebounds four.23% on the week
  • February NYMEX crude oil strikes 11.42% decrease since December 14 as promoting continues
  • February Brent crude oil down 10.90% in comparison with final week because the knife continues to fall
  • The premium for Brent over WTI in February closes the week on the $eight.12 down $zero.68 on the week
  • Gasoline falls 9.18%, whereas heating oil was 6.21% decrease since final week on the February futures contracts
  • The gasoline crack unfold in January strikes 1.19% decrease whereas the January heating oil crack positive factors four.34% on the week
  • Pure fuel stabilizes and strikes zero.77% to the upside on the January futures. The EIA reported a withdrawal of 141 bcf out of storage on Thursday for the week ending on December 14.
  • Ethanol falls 1.43% since final week on weak spot in gasoline and corn
  • January soybeans fall 1.75% on the week as shopping for runs out of steam
  • March corn down 1.62% on the week
  • CBOT March wheat posts a three.02% loss on the week. March KCBT wheat buying and selling at an 11.25 cents low cost beneath CBOT wheat up zero.50 cents from final week because the unfold stabilizes
  • March sugar down 2.45% on the week
  • March espresso down 2.49% since final week’s report
  • March cocoa strikes 1.52% larger on the week
  • March cotton plunges eight.07% on the week and falls via help
  • March FCOJ futures fall 6.91% decrease since final week and settles under $1.30 per pound
  • Reside cattle achieve simply zero.25% since final week on February futures
  • January feeder cattle edged zero.17% decrease because the earlier report
  • February lean hog futures transfer 5.23% decrease on the week and fall to the underside of the buying and selling vary
  • The December greenback index futures contract strikes zero.47% decrease since final Friday because the dollar ignores widening fee differentials
  • March Lengthy-Bond futures buying and selling at round 144-27 up 2-06 for the week
  • The Dow Jones Industrial Common closes at 22,445 on Friday, December 21 down 1,656 factors on the week as volatility continues. The VIX strikes 7.82 larger and was buying and selling at 29.69 on Friday as worry and uncertainty rise of fee hikes, the federal government shutdown, and overwhelming bearish sentiment.
  • Bitcoin closes at $three,807.39 Friday up $635.04 or 20.02% since final week because the crypto lastly rebounds after weeks of promoting
  • Ethereum bounces to $106.33 up 28.68% because the final report

Worth Modifications for the week:

GSG closes the week at $14.10 per share, down 99 cents since final week’s report back to a brand new low for the yr as danger-off weighs on most commodities

Supply: Barchart

GSG is the iShares S&P GSCI Commodity-Listed Belief which represents a diversified basket of commodities futures contracts, has internet belongings of $1.25 billion and trades a mean day by day quantity of 841,190 shares. The fund abstract for GSG states that it holds a “diversified group of commodities futures.” Quantity elevated as the worth fell within the GSG product over the previous week which is a bearish sign.

Merry Christmas to all!

Any funding includes substantial dangers, together with, however not restricted to, pricing volatility, insufficient liquidity, and the potential full lack of principal. This doc doesn’t in any approach represent a suggestion or solicitation of a suggestion to purchase or promote any funding, safety, or commodity mentioned herein, or any safety in any jurisdiction through which such a suggestion can be illegal underneath the securities legal guidelines of such jurisdiction.

The Hecht Commodity Report is probably the most complete commodities reviews obtainable at present from the highest-ranked ranked writer in each commodities, foreign exchange, and valuable metals. My weekly report covers the market actions of over 25 totally different commodities and offers bullish, bearish and impartial calls; directional buying and selling suggestions, and actionable concepts for merchants and buyers.

For the remainder of this yr, I’m providing a one-time sale worth. Anybody who indicators up for a one-yr subscription will obtain a 30% low cost ($490 per yr) off the present fee and can by no means expertise a rise so long as they continue to be a subscriber.

Disclosure: I/we’ve no positions in any shares talked about, and no plans to provoke any positions inside the subsequent 72 hours. I wrote this text myself, and it expresses my very own opinions. I’m not receiving compensation for it (aside from from Looking for Alpha). I’ve no enterprise relationship with any firm whose inventory is talked about on this article.

Further disclosure: The writer all the time has positions in commodities markets in futures, choices, ETF/ETN merchandise, and commodity equities. These lengthy and brief positions have a tendency to vary on an intraday foundation.

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