Month End Window Dressing

For the last trading day to be on the 26th of the month just doesn’t seem right. Needless to say based on the market action today there seemed to be some month end window dressing, It will be interesting how we start the month of March next Monday. Oil remained range bound ending the week near the top of the recent range. We are still advising being a seller near $80 and expect a trade near $75 in the coming weeks. Clients own May $75/70 put spreads; as a side-note they do not need to go intrinsic to make money unless they chose to hold until expiration. As promised we advised clients to start buying April natural gas futures today; filled around $4.80. We are looking for a move of 50-75 cents higher in the next 30/45 days.
We maintain that indices are a sell rallies market and expect to see a trade less than 1000 in the S&P by Memorial Day. Clients are sellers on futures at 1111 and 1125 and are positioned in June puts. May sugar closed on the trend line that has held since last June. We are cautiously optimistic and have clients positioned in May calls looking for a trade back to 26 cents. Cotton was higher again today; gaining almost 3 1/2 cents or 4.3% on the week. We expect prices to make their way back below 75 cents on the May contract in the month of March. 30-yr bonds quietly gained almost 3 handles this week and no ones is paying attention. That leads me to believe there is more upside; clients are not advised to partake in the upside but will be eager to sell from higher ground.
A portion of your commodity portfolio should be in grains more specifically corn if it is not already. May corn closed at a 6 week high today and looking at the weekly chart this could just be the beginning. Take a look and draw your own conclusion. Live cattle were down on the week but higher on the day. We have clients positioned short futures and long puts to take advantage of a lower trade. May silver traded up to major resistance near $16.50 today; next week will tell the story if we can get thru those levels. On a close above $16.50 we should see a trade back above $17/ounce, perhaps as high as $17.50 before any major resistance. April gold is above both the 50 and 100 day moving average but we still need a settlement over $1128 to confirm the downside is done. The dollar traded below the 20 day moving average but until we get a close below expect sideways action; that level is 80.25 on the March contract. The waters are murky in terms of other currencies; clients only have light longs in the Euro via April options expecting 1.39 next week.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

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