The week started with little excitement but its only Monday…After four negative sessions Crude appears to have claimed a small victory trading slightly higher as of this post. If the 20 day MA holds in the next few days, in May at $99.50 we will explore gaining bullish exposure for clients again. In early dealings May natural gas approached $4.10, a two week high. We advised some clients to offset their $4 calls. Those holding futures should trail stops and we also advised those holding the $4.25 strike or higher to hold their ground. As of this post the indices are off by approximately 1%…clients were advised to book profits on their shorts being we could not forge a new low. On a rally we will likely get those clients short once again.
The US dollar must hold last weeks low or we could see the flood gates open…stay tuned. The only new trade in forex I see is buying the Yen as a new contract high is likely in the coming weeks. Continue to buy dips in live cattle…some aggressive clients today bought June contracts anticipating a trade north of 1.20. Gold and silver could go either way…we favor a break lower but have been wrong on that recent forecast.
Sugar and cotton were hit hard today giving up 3.7% and 3.5% respectively. While we have no current interest in sugar with clients we do think cotton could continue to track lower. A close below the 20 day MA should confirm a break lower; in May at 196.50 and 187.25 in July. Mixed bag in agriculture but most Ag’s were slightly positive. Clients were buyers of May corn call options and December futures today. The trend line that has held for several months has been tested twice and held. We suggest gaining bullish exposure before the “Planting Intentions” report at month end.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.