PreMarket Prep: Commodity Charts The Old-Fashioned Way With Al Kluis

When you interview someone about the markets, it is always good to know the person is an honest one. That certainly can be said for Al Kluis, managing director of Kluis Commodity Advisors, an introducing broker for Wedbush Futures. 

How Honest? A familiar question that is asked of veterans of the trading floor is “do they have a PG-rated floor to share? 

Speaking with Benzinga's PreMarket Prep on Wednesday, Kluis recalled his first day putting on his trading jacket at the Minneapolis Grain Exchange and finding three $100 bills in his pocket. Instead of keeping the money, he inquired about who last used that jacket.

As it turns out, a floor trader — who was also a bookie — had last used the jacket and mistakenly left the money in the pocket. Kluis returned the money to him, for which he was thankful, and embarked on his career in the commodities world.

The Old Fashioned Way: In the complicated and always-changing world of charting software, Kluis prefers the old-fashioned way. He has been doing his charting by hand for the last 40 years and still uses the same techniques taught to him decades ago.

One item he shared regarding his charting regiment is that he alternates red and black days when drawing in the price action. The reason: it helps distinguish a potential trading pattern for the week.

The Grain Markets: Kluis specializes in the grain markets and some of his clients are some of the biggest producers of grains and employ complex hedging techniques.

Besides the technicals, he pays special attention to weather patterns, USDA crop reports and The Commitment Of Traders reports. The combination of the three enables him to derive significant price levels that can be used for hedging and planting purposes.

Crude Oil: In addition to the grains, Kluis tracks the energy markets. For the time being, he forecasts to be in a longer-term trading range between $65-$85. At $65 the supply tends to be too tight and at $85, the supply tends to get bloated as oil producers attempt to take advantage of the higher prices when presented with the opportunity.

S&P 500 Stock Index: With the overall state of the economy being central to the supply and demand for commodity prices, Kluis closely follows the S&P 500 index. In his opinion, the index is a stair-step uptrend that will be intact until the index closes below 4,720.

Kluis is confident that despite the rising rate of inflation, the Fed will be able to keep in the 2%-3% range moving forward.

The entire interview with Al Kluis from Wednesday’s PreMarket Prep Show can be found here: