Weekly Update: May 27, 2015

| May 27, 2015

Weekly Update: May 27, 2015

 

Big Picture Outlook:

The surging US Dollar is creating some dramatic headwinds for commodities.  As the greenback jumped 1.4% over the past week, the price of oil, gold, and silver have fallen 4.7%, 1.4%, and 2.2% respectively.

Clearly, investors are taking a cautious attitude towards commodities until there’s some clarity on the Greek debt situation.

In case you’re unaware, Greece is scheduled to make a $329 million loan repayment to its European creditors on June 5th.  It’s the first of four payments the highly indebted country is expected to make in coming months.

But there’s considerable doubt the country can afford to make any payments at all.

It’s a dicey situation that could throw the currency and commodity markets into extreme turmoil in coming weeks.  If Greece defaults on their debt, it could be the start of a very volatile summer for the markets.

Let’s see how some of our open positions are faring…

 

Portfolio Highlights:

Editor’s Note: I won’t update every open position in every update.  I focus on the positions with significant news or price movement. 

. . . . US Natural Gas Fund $UNG July 17, 2015 $14 calls 

Natural gas is back under the $3.00 mmBtu level.  However, according to the most recent forecast from the National Oceanic and Atmospheric Administration, there’s a rather intense heat wave expected to consume most of the US over the next two weeks.

While I don’t expect temperatures to get blistering hot this early in the year, we’ll likely see a considerable increase in cooling demand.  As a result, natural gas demand will likely see an increase in coming weeks.  Of course, that means the price of the commodity still has plenty of upside potential.

Remember, conservative investors have already locked in gains of 100% on their July $14 $UNG calls.  If you’re aggressive, keep holding any remaining contracts for another natural gas rally!

. . . . Southwestern Energy $SWN June 19, 2015 $28 calls

As I mentioned in last week’s update, if $SWN were to trade below $26.24, you should close this trade.  Unfortunately, the natural gas producer did just that in yesterday’s trading session.

As a result, this trade is officially closed.

. . . . iShares Silver Trust $SLV July 17, 2015 $16.50 puts

Our $SLV put trade is panning out nicely…

The price of silver fell below $17.00 an ounce in recent trading thanks to the strong upturn in the US Dollar.  The silver downturn has $SLV trading below $16.00, which is solidly in the money for our $16.50 puts.

Should the US Dollar continue higher, there’s a distinct possibility of $SLV dropping to the bottom of its multi-month trading range at $15.  Remember, our profit targets lie at $15.50 and $15.00.

Keep holding your $SLV puts for further downside in the price of silver!

 

***Editor’s Note*** You’ll see two new high profit potential trades in your e-mail inbox by the end of this week!

Category: Commodity Trading

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