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The Weekly Pit Review by PitGuru.com Date: 08/09/10 Estimated Update: 08/16/10 Company: PitGuru.com Phone: 1-866-907-5360 E-Mail: info@PitGuru.com Website: www.PitGuru.com

The Energies Pit Review by PitGuru Daniel Cronin Crude oil did a bit of a sell off on Friday with a healthy pullback to $80 as the non-farm payrolls came out worse than expected with a loss of 140k jobs. The S&P rallied late in the day though to only be down a few points as it retreated off of the 1130 resistance area. This market was trading at 1124 and the chart looks very healthy so I believe crude oil could bounce off this $80 support level and try to trade back to the resistance of $82.50-$83.00. WTI spreads took a bit of a hit on the sell off as Sep/Oct trades down to -48 and Oct/Nov down to -58. Dec/Red got hit pretty hard at as well with this spread trading -400 again. I believe these spreads are on the cheap and I recommend to value buy down at these levels. Everyone wanted to buy Dec10/Dec11 last week and I think this will be the case down at -400 again. Gasoline and heat both liquidated as well as both Sep contracts traded $2.10 and $2.13 respectively and I think these markets should bounce back and rally nicely. The gas cracks have really taken it on the chin with the Sep gas crack down to $8.00 as has been much weaker than crude in recent weeks. I would look for this to continue. Here's the sell off in the Natty that I talked about to close out the week on Friday with the Sep flatprice trading $4.48 looking to head back to the $4.30 level. Down here I would be a buyer of the flatprice just on valuation alone but I think that this market will pop back up to $4.60 by the end of the week. The range trade has been very good and right now I would let it come to the bottom of the range before pulling the trigger.

The Financials Pit Review by PitGuru Frank LaMantia The Federal Reserve will be making comments later this week so trading may be slow until then. Unless economic data comes in strong or misses its target it is wise to sit on the sidelines until the Fed announces its plans. Tyson announced an 89% rise in income which seems a little high. But sales were down significantly due to many people not dining out. Production costs also played a factor in the company’s downturn over the past few years. (1) An article this morning mentioned stagflation! This trader mentioned that a recession is typically followed by little to no growth for 3-5 years. The problem is there are so many variables in the present world that past results cannot be used to define the current economic situation. Many economists like to look backwards to see if a certain mold can be used. The books could be rewritten at any time on economic theory. (2) Germany announced data this morning that sparked a small rally, however, it was short lived as the Fed may downgrade the U.S. recovery from the recession. Throwing money at the world’s problems could catch up to the consumer at a later date. Be prepared for a trade recommendation as Fed announcements typically cause a swing in the market. 1 http://finance.yahoo.com/news/Tyson-3Q-net-income-up-89-pct-apf- 2001781153.html?x=0&sec=topStories&pos=7&asset=&ccode= 2 http://finance.yahoo.com/tech-ticker/inflation-or-deflation-%22yes%22-says-chris-martenson-who-sees- 'stagflation'-coming 535305.html?tickers=tip,tlt,tbt,udn,uup,spy,%5Edji&sec=topStories&pos=9&asset=&ccode= The Softs Pit Review by PitGuru Jurgens H. Bauer During the past week both coffee and sugar led the way up and showed leading strength in the soft complex. Cotton too was up over 3 cents, with more than half of that gain taking place on Friday. All in all it was an impressive and positive week for the soft complex, but are prices reacting to industry fundamentals? Or is the flow of spec and fund money the major force at work? Better yet, does it matter? If you take a look, already this month, in the first few hours of trading KCU has moved from 174.85 up to 181.50 and back down to 176.70. That's quite a move both up and down. My advice? Get used to volatility and be prepared. Coffee still looks like it has potential for additional gains, the big question being can it? Likely there is a reluctance to be aggressively short, but a correction is possible and healthy. My technical objective has been the 182.50 level, and that could be reached soon, but there is also the potential for an even higher move, say 208.00 .Support should be found initially at the 175 area, then at 170-168.50. Harvest is uncovering problems that are being noticed, chief among them quality issues, yet the crop size is big. Sugar, which had a huge run up last year, is not expected to match that move, but the market has produced solid gains and is now forming a new higher trading range. 20 cents is the first target, then the market will have to see, but don't rule out tests for support. Cotton prices have benefited from the tightness in the supply pipeline as demand has returned, but even there the market has seen the recent move up the result of short covering more than industry hedges. Are specs now preparing to get long? It appears so. I feel that this week will allow some chances for the testing of support in the leaders among the complex, but with outside markets also positive, perhaps additional gains are in the mix. The Metals Pit Review by PitGuru Daniel Cronin Precious metals gaining some recognition after rallying, albeit in very minimal increments for the past two weeks now after getting liquidated to $1,157 in gold. Gold has traded up to $1,208 and looks to be testing the resistance of the $1,215-$1,2020 area. What’s helping the precious metals right now is the weaker USD. The dollar traded near the weakest level in three months against the euro after a U.S. report showed companies hired fewer workers than forecast, signaling the labor-market recovery will be slow to take hold. The dollar traded at $1.3284 per euro from $1.3280, after touching $1.3334 on Aug. 6, the weakest level since May 3. (1) I think this looks like it will continue the trend and all of the shorts who were short the USD are now getting out and squeezing this market a bit. I like the silver play and I am looking for this market to go to $19. I think gold will have a tough time breaking through the $1,215 level. I am looking for sellers to hold this market below here. Copper still going strong even after a bit of a speed bump Friday with the non farm payrolls. The market looked like it would be headed to $3.30, liquidating a bit as the S&P was down more than 15 points but suddenly had a nice comeback in the afternoon to keep the base metal afloat. $3.40 is a very big number but right now the market trades only a few pennies shy of that at $3.38. Stockpiles however are shrinking on the LME and this is what’s causing a lot of the buying recently other than just the rallying equities. I am looking for copper to test the $3.40 mark early in the week. 1. http://www.bloomberg.com/news/2010-08-09/gold-may-gain-as-weak-dollar-surging-food-prices-spurs- invetsment-demand.html Disclaimer: Past performance is not necessarily indicative of future results. The risk of loss exists in futures and options trading

The Grains Pit Review by PitGuru Matthew Pierce Good Morning; Late last week the market saw some lucidity come back into the wheat market with a limit down day allowing for expanded limits which will not be needed to start this week. Corn and beans remained flat after chopping around all session leaving both short of weekly range highs. The Goldman roll was uneventful with locals in place to take advantage of the volume flows with this continuing through Thursday this week. The bean market continues to see strong demand with China and unknown sources taking over 700TMT of new crop beans pushing the weekly total over 1.0 MMT with only new crop taken. The overnight session saw wheat collapse early only to regain a bit of ground following bullish information from Russia. Corn continues to chop due to bearish weather versus strong demand with beans moving moderately higher actually pulled by bean oil. Palm continues to rally moving over 15 month highs pulling bean oil higher continuing to widen the share with veg oils very popular right now. Meal chopped and closed virtually unchanged. The day session looks to open in line to slightly stronger in row crops with wheat in danger of fresh profit taking and bearish entries. Following today the market has to look for crop progress this afternoon with the traditional shift lower all but expected by the trade. On Thursday the WASDE should be very interesting for international crops, not ours. I do not expect any major changes from the USDA concerning yield or total production with this still too questionable to make dramatic changes. There is plenty they have to do on the international front with the obvious drop in Russia expected with the FSU and EU wheat production totals expected to fall drastically. South American crops should see another small increase in production with beans expected more than corn. Looking at weather, there is no real threat to the US crop with beans getting a boost from 3 separate rain events forecasted over the delta in the next 10 days. This all but sets the crop in the northern half of the US and will set the delta if the expected rains do come. There is excessive heat to start this week but the long term forecast for temps is average to below average not offering any heat stress concerns after the greenhouse breaks camp early this week. Central Asian weather remains very dry with Russia concerned that if this trend continues, winter wheat will be affected when planting comes. This is something to keep a very close eye on as the market moves into the WASDE report on Thursday. Australia remains very dry in the NW offering a mild handhold for wheat bulls with that area responsible for a majority of the Australian crop. Looking at options, I see only 18 DTE for Sep making the sale of straddles, strangles or straight volatility an interesting play in wheat and corn. The call slope is losing to the put slope in wheat which makes sense and I think it should continue through this week if wheat continues to move back to lucidity. Overall the trade is caught between bearish domestic fundamentals for row crops and wheat, bullish international momentum for wheat, bullish momentum for crude and a weather problem possibly forming in NW Australia. There is growing talk of world inflation with foreign currencies gaining versus the USD at a solid pace. This is interesting to watch and will be led by crude, currencies, copper and movement in Gold. I like the downside in wheat with spreads looking to correct in a big way. I like corn to stabilize heading into WASDE with beans looking at new crop strength versus old crop time constraints. I favor bean oil over meal as I think spreads in meal are sure to fade with maturation. I think the overall trend should be higher into the report except wheat with the rest of the floor correcting relationships on profit taking moves.