News of further bailouts in Europe goose the markets today. Crude advanced to a three week high today trading towards our target of $103- 105/barrel in the July contract. Aggressive traders can buy dips in Crude as well as the distillates. Natural gas appreciated an additional 3% today as prices are approaching levels not seen since early May. We feel the easy money has been made on longs and have advised clients to lighten up on longs or at a minimum to tighten their stops. A correction of 4-6% we will likely re-establish longs for those clients that have already exited their longs. The indices are back over their 20 day MA's and likely headed for a re-test of their highs in late April. The dollar index is lower by nearly 0.50% today trading to a three week low. We look for continued weakness and traders can stay the course buying dips in the European crosses; the Euro, Swissie and Pound. A new currency recommendation today is buying the Loonie. After the near 4% correction in the last months we feel we could see a retracement higher, our target is 1.04/1.0450.

Livestock traders can work their way back into longs in lean hogs and live cattle. We would remain long as long as the recent lows hold. Our favored play would be live cattle, either June or December contracts. We advised clients that were previously long metals to move to the sidelines in both gold and silver today. Both cocoa and sugar were higher today but remain long as we are looking for more appreciation. In cocoa our target is 3150/3200 in the July contract and as for sugar we expect 24.50/25.00. Lifting a ban on exports in Russia contributed to falling wheat prices today losing nearly 5%. Weakness spilled over to corn and soybeans as well with corn down1.45% and soybeans 0.25%. Aggressive traders could be short corn looking for an additional 20-30 cents. More conservative traders should be looking for long entries in new crop on that break. Exit your short futures trades in the debt complex and look for a correction to cut loses in your September put options.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Bonds and notes rallied moderately sharply in the face of higher equities and lower safe havens (greenback and gold). There seems to be a transformation in market psychology and more importantly psychology. In the coming days we will know if the timid trade in Treasuries or the risk on trade was the right call.

In the short-run, we have to lean toward some sort of intermediate term top in bonds and notes. The economic recovery is more like Swiss cheese than a building block for the future but that isn't a surprise. The markets have been operating with this knowledge for months (even years) so it doesn't make sense to assume we'll see a sudden influx of fixed income buying at pathetically low rates of interest without some sort of shoe dropping in Europe.

In economic news, the second estimate of GDP was a little weaker than most were expecting at a growth rate of 1.8% but again...nothing shocking here. Similarly, initial claims for weekly jobless claims moved up to 424,000.

The Treasury issued $29 Billion in 7-year notes to an eager group of buyers. The yield came in at 2.429% and the bid to cover a healthy 3.24. The news enabled bonds and notes to turn positive and that seemed to trigger rather swift short covering.

COT data in recent weeks suggests large speculators (smart money?) are adding to short positions in the 10-year note and small speculators are gradually covering their shorts. They might be running out of margin, money or both but it is the small spec category that tends to be getting out when it should be getting in and vice versa.

We've been calling for this move to see the mid 126's in the June 30-year bond future and near (or maybe a little above) 124 in the June 10-year note. At the time of this writing, prices were getting near our targets...accordingly, we will be monitoring trade tomorrow and looking for a possible bearish opportunity.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does.

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations
**There is unlimited risk in naked option selling.

Flat

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)

Carley Garner

Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

July soybean futures at the Chicago Board of Trade are presently in a pause mode on the daily bar chart, following last week's strong gains that pushed prices to a three-week high of $13.96 a bushel. The present pause is not bearish and does suggest the bulls are building up energy for another upside assault soon. The next upside technical objective for the soybean bulls is to produce a close in July futures above major psychological resistance at $14.00 a bushel. Just above the $14.00 level is located a stiff layer of technical resistance, starting with the May high of $14.02 1/2, at $14.17 3/4 and then at the April high of $14.27. A drop in July soybean futures prices below near-term technical support at $14.65 would begin to dent bullish near-term technical enthusiasm.

There is chart support located at $13.50, with stronger support seen at $13.40. The soybean market and the rest of the grain futures markets will continue to keep one eye on the key "outside markets" that have had such a strong influence over the commodity markets in recent months--the U.S. dollar index and crude oil futures. If crude oil futures can sustain an uptrend and the U.S. dollar index resumes a downtrend, that would likely help propel July soybeans back toward the contract high of $14.74 1/2, scored in February. If crude oil embarks upon a fresh leg down in prices in the near term, and the U.S. dollar index continues to rebound from its recent 2.5-year low, then upside price potential in the soybean market would be limited, barring a major weather scare in the U.S. soybean-growing region. Stay tuned!--Jim Wyckoff

Is risk off indefinitely, could this be a change in the market dynamic? We think it is a temporary pause but time will tell. Inside day in Crude oil with prices back near the bottom of the recent trading range down 2.6% today. Looking at the charts this level has been supported in the last two weeks but will history repeat itself? Aggressive traders can scale into longs and remain long if $95 holds in July. Some aggressive clients were buyers of August bull call spreads today. Natural gas advanced approximately2% depending on the contract month as we advised traders to start scaling out of their bullish plays. We think it is possible to see an additional 3.5-5% appreciation but if in a profit lighten the load.

The indices broke on renewed fears in Europe as both the S&P and Dow traded through their 50 Day MA's which should serve as pivot points. Those levels come in at 1321 and 12335 respectively. The dollar traded to a two month high today but I do not understand all the buzz...the move in the last three weeks has only been 5% and we think it is overdone and would expect an about face almost immediately. Clients are fighting back on their Aussie dollar shorts looking to cut losses this week ideally from lower levels. Client are down on their Pound longs from last week as it was off by 1% today...stay the course for now.

Live cattle and lean hogs were down limit today for most of the session. The lack of demand is evidently being factored into pricing but as for live cattle anyway we feel we're due for a bounce. It may not be the resurgence of a bull market but at least a traceable bounce...in our opinion. We expect a 4-6% bounce in the August and December contracts...trade accordingly. The trend line has been respected in gold so as they say the trend is your friend. The fact that gold caught a bid even in the face of an advancing dollar is bullish. We suggest bullish exposure as long as $1500 holds in June...look for trade recommendation to follow. Silver continues to dance along the 100 day MA...aggressive traders can gain light bullish exposure... our favored play has been purchasing September bull call spreads for clients.

In the last three weeks cocoa has depreciated nearly 15% and as we said lat week we feel this is not justified. Clients have been accumulating longs and are down on the trade. We continue to like building a bullish position in September via futures and options depending on your account size and risk tolerance. In a bull market we generally would rather be long or on the sidelines so at this juncture because we could see a set back in agriculture we would book profits and move to the sidelines in corn and soybeans. We will be suggesting to buy a dip in new crop for clients. Clients are holding losing bearish trades in the debt complex thinking we're forming an interim top as we speak. Clients have positions in options in 10-yr notes and 30-yr bonds and futures in long dated Euro-dollars...all bearish plays.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Related articles

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• I'd rather be Lucky than Good (commoditytrader.com)
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• Reversal Day (commoditytrader.com)

Option expiration in Treasuries and equities likely contributed to today's trade. Although, it is difficult to say whether it capped what could have potentially been a much larger rally in bonds and notes, or it actually held prices stable. Our gut tells us that it is the former.

Gold and silver rallied sharply as flight to quality buyers scrambled to react to a free falling Euro and Middle East protests. Although the traditional relationship suggests that gold and the Euro would move together, new debt realizations triggered safe-haven buying. I guess some have already forgotten that the purchase of metals is speculative and might turn a nice profit, but it is in no way a safety play. Nonetheless, people are creatures of habit.

It was a painfully quiet news day. There weren't any releases during the session and there won't be anything of substance to chew on (from a data stand point) until Wednesday of next week. In the meantime, it feels like trade will be dominated by overseas development (specifically the Euro zone debt debacle) and currency trade (although the two are related).

We aren't putting too much credence into Friday's trade due to the fact that it is the end of the trading week and option expiration. So we will rely on Thursday's price action for guidance...accordingly, it seems as though the Treasury correction (although a bit more shallow than we had expected) might quickly have run its course. The odds look to be favoring another run at new highs.

Our target lows of 123'14 and 121'20 weren't quite met, but were within the vicinity. Therefore, clients of ours were recommended to offset short Bond calls yesterday morning on the large dip to lock in a profit. We hope to have an opportunity to resell them at a better price in the coming week or so. Fills were coming back near 11 ticks. Depending on entry this yielded a profit of anywhere from $280 per contract before transaction costs to about $200.

If we are right about the Treasury rebound, the rally could see 126'09 in the June Bond futures and 123'16 in the June note.
* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations

**There is unlimited risk in naked option selling.

5-5-2011 - Clients were advised to sell the July 128 calls for 24 ticks or better.

5-19-2011 - Our target lows of 123'14 and 121'20 weren't quite met, but were within the vicinity. Therefore, clients of ours were recommended to offset short Bond calls yesterday morning on the large dip to lock in a profit. We hope to have an opportunity to resell them at a better price in the coming week or so. Fills were coming back near 11 ticks. Depending on entry this yielded a profit of anywhere from $280 per contract before transaction costs to about $200.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)

Carley Garner
Senior Analyst / Commodity Broker
DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

twitter.com/carleygarner
www.linkedin.com/in/carleygarner
www.DeCarleyTrading.com
www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Markets do not need to trend higher or lower to trade if you trade both from the long and short side. Inside day in Crude oil as prices should close down approximately 1.50%. As we said yesterday prices could go either way; a trade below $96 would likely signal lower ground and a trade above the 100 day MA at $101.65 would likely signal higher trade. Natural gas is lower by nearly 5% in the last three sessions ...clients are down on their longs but will stay the course as we do not expect much more downside. Until we get a settlement above the 20 day MA or below the 50 day MA in the indices we would recommend the sidelines. Those levels in the June S&P futures are 1342 and 1320.

Lower low and lower high in the dollar index today as prices appear to be rolling over...our target is 74.00 on this leg. The play would be in our opinion to be long the Euro or Pound. Live cattle traded to a fresh 2011 low...not exactly a bull market. But we feel the 12% slide in recent weeks is far too exaggerated. Clients have started to bet long August and December via futures and options and are currently under water on their trades. Gold remains in no mans land as prices could go either way. The fact that we could not muster a rally with dollar weakness is not a bullish signal. Silver closed above the 100 day MA again today...we have advised light bullish exposure with clients via September bull call spreads in recent sessions. With dollar weakness it appears cocoa is forming a sold base so we advised clients to start gaining long exposure today.

Our suggestion was to purchase out of the money calls or to get long futures and sell at the money calls, both trades were done in September contracts. Sugar was hit today...on a further sell off we would be looking to re-establish longs in October contracts for clients that exited July yesterday. Coffee has lost nearly 15% i the last two weeks as chart damage has been done, do not rule out a trade to the 200 day MA, another 12% lower. Take profits on all longs in agriculture and look to get back in at lower levels. This mainly pertains to traders in new crop corn and soybeans that are carrying profits. Major price swings generally happen at a market turn...is that what happened in Treasuries today...time will tell. Some clients are positioned short 10-yr notes, 30-yr bonds and Euro-dollars.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

June live cattle futures on the Chicago Mercantile Exchange on Tuesday gapped lower on the daily bar chart and hit a fresh five-month low of $106.67 a hundredweight. Prices did manage to recover a bit by the close Tuesday and finished moderately lower and nearer the daily high. Price action this week has seen a bearish downside technical "breakout" from a recent sideways trading range on the daily bar chart. A six-week-old downtrend is also in place on the daily bar chart for June live cattle futures. The bears have the overall near-term technical advantage as the path of least resistance for prices is presently sideways to lower. The cattle market bulls' next upside price breakout objective is to push and close June futures prices above solid technical resistance at the March low of $110.65. The next downside technical breakout objective for the bears is pushing and closing prices below solid technical support at Tuesday's low of $106.67. First resistance for June live cattle futures is seen at $108.30, which is the top of Tuesday's downside price gap, and then at $109.00. First support is seen at $107.50 and then at $107.00. Stay tuned! Jim Wyckoff

Is a 4.5% rally in the dollar index all we get...we think so? Look at the charts, the last three times July Crude futures have tried to violate the $96 level selling has been rejected...should we read into this? With prices approaching over sold levels we have longs on our radar but my suggestion would be wait to see if we can find an interim bottom. Food for thought a 50% Fibonacci retracement is $95.25 and a 61.8% retracement drags July to $90.80...stay tuned. The 100 day MA capped movement in natural gas yesterday and today. At these levels we still like buying with stops below the recent lows or purchasing August bull call spreads.

The S&P traded down to the 50 day MA at 1319 before finding support while the Dow got within 50 points before losses were pared. Our suggestion would be to cover any remaining shorts and move to the sidelines. Our clients were out of their shorts a few sessions ago at a minimal profit fyi. The dollar indeed appears to be forming an interim top and on a trade under 75.00 in the coming sessions we would execute shorts here or longs in corresponding crosses, i.e. the European currencies would be our favored plays. Live cattle closed marginally lower today but almost 1% off their lows. If this is not just a one day fluke we think cattle should be bought if we see follow through. This would likely mean a trade back near 111.00 in the August contract. June gold traded below the trend line but heel on as of the close...the next few days will be critical.

We would expect the 50 day MA at $1467 to act as stiff support as it has for several months. On a settlement below that level we feel it could be a game changer. For now we remain neutral on gold. Silver is down 1% as of this post ...about smack dab in the middle of a $1.50 trading range. We like gaining long exposure at these levels as prices have come off a tumultuous 32% in the last three weeks. WARNING...only for extremely risk tolerant investors. In late dealings sugar was able to muster a rally and close positive nearly 4% off its lows.

We're suggesting long exposure and may be willing to add to clients existing longs on a trade above the 20 day MA; in July at 22.06. A nice move higher in Ag today as new crop corn and new crop soybeans have got the bulls back in the driver's seat. December corn is 6% off its lows last week while November soybeans are trying to gain some traction. We anticipate a trade back near $7/bushel and $14/bushel respectively. At the moment any bearish plays in Treasuries are losing client's money and we've told clients to look for an exit door to cut loses on the next correction lower.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

July corn futures at the Chicago Board of Trade on Monday morning were seeing a strong rebound from recent selling pressure that last week drove prices to a two-month low of $6.59 a bushel. Short covering and some bargain-hunting buying were featured. While the bulls on Monday have regained some fresh upside near-term technical momentum, they have some more heavy lifting to do in the near term to suggest an uptrend prices can be re-established. The daily bar chart for July corn futures shows prices are still in a five-week-old downtrend from the April 11 contract and all-time high of $7.88 3/4 a bushel. It will take a move in July corn futures prices back above the last "reaction high" on the daily chart, located at last week's high of $7.23 3/4, to negate the aforementioned downtrend and provide the bulls with better upside technical momentum. Near-term technical support for July corn is located at $6.95, at Monday's low of $6.88 3/4, at $6.85 and then at $6.80. Near-term chart resistance is located at Monday's high of $7.06 1/4, at $7.10, $7.12 1/2 and then at $7.15. Stay tuned! Jim Wyckoff

As a trader I would not consider myself too superstitious but on a day like Friday the 13th I'd rather be lucky than good. Wild trade activity in Crude again today but we still have not been able to re-take the 100 day MA; in July at $101.40. We remain mildly bullish with a short term target of $104/105 in that contract, but prices will need to trade above that pivot point early next week or we will likely move to the sidelines with clients. Aggressive traders can start working back into bullish positions in natural gas. Two trade ideas today were given buying June $4.40 call options and August 70 cent bull call spreads thinking we could see a violent 5-8% appreciation in the next few weeks. We would not recommend a large allocation but just light exposure in case. As of this post the indices have traded below the trend line and look to settle under the 50 day MA. If this is the case we are back on the sell side next week...stay tuned.

A bullish engulfing candle in the dollar today lifted prices to one month highs but we're re fast approaching over bought levels. The short term trend is clearly up but as we said yesterday the easy money has been made on longs and our target from a few weeks ago at 76.00 was obtained today so do not expect much more. We are absent with clients but all crosses could be sold against the dollar with the exception of the Yen with tight stops. Next week we should find out if cattle and hogs are basing out to reverse higher or taking a breath and continuing lower. This week some clients were light buyers of August and December cattle thinking we bounce from here...stay tuned.

Assuming we're right use the 20 day MA's as your targets; in August at 114.10 and December at 121.10. Silver managed to hold onto gains today but the key will be if we settle above the 100 day MA; in July at $34.55. Aggressive clients have light bullish exposure thinking we could get a trade back near the 50 day MA in coming weeks; in July at $39.10. Gold tested the trend line and held today but we suggest the sidelines as we're still getting mixed signals. A trade down to $1450 that holds would be considered a long entry in our opinion.

Same song and dance we've been voicing all week buy sugar and sell coffee. Corn and wheat finished down on the week while soybeans were virtually unchanged. While the USDA report was bearish we do not trust their assessment and still like buying dips in new crop corn and soybeans. The weather, flooding of the Mississippi and lack of activity in the fields should catch up to prices on the CBOT in coming weeks. A failed new high in Treasuries could signal an interim top but of course I may be talking my position as some clients are still short 10-yr notes and Euro-dollars losing money. Stay the course for now.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

The dollar has appreciated 4% in the last week but has the easy money been made on longs? Crude oil should to close about 0.70% higher in today's session but we would like to see a settlement back over the 100 day MA before thinking this correction has run its course. Aggressive traders are buying retracements as we think a $5 run higher is feasible in the coming weeks. Hedgers are using the recent set back in the distillates to leg back into their fall hedges...wade back in though as a 15 cent move either way would not shock me. A trade lower failed but I think it is still premature to be bullish natural gas...stay tuned. For the second day the indices failed to penetrate the 50 day MA...we advised clients who were short to move to the sidelines at a slight profit to re-evaluate...stay tuned.

The dollar once again traded above the 50 day MA but failed to hold onto those gains. At this point we think the easy money on longs has been made and we expect sloppy two sided action and would have no fresh currency exposure until next week. We remain on the sidelines in livestock with most clients but based on the chart formation forced into the market we would rather be long than short. Next week we will likely be buyers of July lean hogs and December live cattle ...stay tuned.

Gold held the same support trend line that held last week and managed a marginal gain as we remain neutral at the moment. Silver touched a trend line that has been in place since August of 2010. We will need to re take the 100 day MA at $34.50 in July futures into the weekend to feel that the near 35% correction is enough. We have advised clients to start wading back into longs via future, bull call spreads and selling puts under the market. This is not a trade for everyone as the recent daily range is approaching $15-20,000 per futures contract.

Cotton traded down the daily limit today...if and when we get a rally we will likely be sellers for aggressive clients. Coffee remains on our sell list even as prices are approaching over sold levels. Sugar bounced nearly 2% today...continue to buy dips in July and October contracts. Hold off on any wheat purchases but continue to buy new crop corn and soybeans,. We advised clients to offset their soybean meal at a scratch as to concentrate on their corn and soybean trades. You know the story in the debt complex as clients are holding onto losing trades in 10-yr notes and Euro-dollars looking for prices to roll over...nothing has changed in our view.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

With a bit of leverage and wild swings traders have been forced to manage their trades more than ever .i.e. cutting losses and taking profits. The 100 day MA appears to be the pivot point in Crude oil; in the June contract that level is $100.55. We are cautiously optimistic and have bullish positions on with some clients thinking we can appreciate $3-5 more in the immediate future...trade accordingly. Natural gas picked up nearly 2% today... we have yet to establish longs but we likely wade long July futures tomorrow with stops below the recent lows with aggressive clients...stay tuned. Equities traded to their highest level in one week and appear poised for fresh highs... we will look to be a seller from higher levels in the S&P and NASDAQ with clients. As for currencies we would be selling bounces in the Yen and Swissie; our targets are 1.2150 and 1.1100 in June futures. Continue to scale into long in lean hogs and live cattle with stops below the recent lows. We anticipate both pigs and cows to make their way back to the 20 day MA; in the June contracts those levels are 97.25 and 113.25 respectively.

Gold and silver were higher for the third consecutive session as there is likely more upside on this leg. The next test in silver is if price action can lift prices back over the 50 day MA; in July at $39.05. We say yes and could see $41.50/ounce this week but we expect it to be two sided action. A trade above $1525 would likely lift gold back to $1550/ounce...trade accordingly. As a trade we would likely lighten up on longs if we saw that level in the next two sessions. Sugar was higher by nearly 4.5% nearly re-taking the 200 day MA. Some clients are long July and October expecting another 5% in the coming weeks. Sugar remains on our buy list and coffee on our sell list. Food for thought we feel coffee could drop 25% in the next two quarters so we will be building bearish positions for the coming weeks with clients that are wiling to stay with a trade that long. Old crop wheat, old crop soybean meal, new crop corn and new crop soybeans are what were advising clients to buy.

Tomorrow we will have the USDA supply/demand report so expect some fireworks overnight and on the open tomorrow. Finally our patience is paying off in bearish plays in the Treasury complex...via 10-yr note put options, short futures ad bearish plays in the Euro-dollar. If this week serves to be an interim top we would look to add to these positions for clients.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Related articles

• Commodity Correction (commoditytrader.com)

Is the commodity bull market back or is this just a tradable bounce...I do not care either work for me. Crude oil got the bounce we were looking for advancing just over 6% as of this post. Trail stops on longs as traders do not want to give up all of a $6,000 move/per futures. We advised clients in June options to roll out to July to allow the trade to work a little. From here we should make an attempt at the 50 day MA; in June at $107.30...trade accordingly.

With RBOB up 7% today and heating oil nearly 5% ideally hedgers started legging back into their fall hedges. The closer natural gas gets to $4/BTU the more interested we are in re-establishing longs for speculators...stay tuned. Clients have no exposure in the indices but we have a slightly bullish bias and would continue to use the 50 day MA as the pivot point; which is now support. In the S&P at 1332 and in the Dow at 12475. The Cable traded down to the trend line and held in early dealings so we advised clients to book profits on their shorts. A trade below 74.30 or above 75.50 would likely dictate the direction in the US dollar from here ...trade accordingly.

Echoing last week aggressive traders could get long lean hogs and live cattle with tight stops below the recent lows. Our favored play is bullish exposure in December live cattle with a $122.00 target. We expect more appreciation in both gold and silver from here and recommend bullish exposure thinking we could see another $35-50 move north in gold and $3-5 in this leg in silver respectively. We've advised a combination of options and futures plays depending on the clients account size and risk tolerance. Sugar remains on our buy list and coffee on our sell list. Continue to use set backs in corn, soybeans and I guess wheat as well to be a buyer. We may re-examine buying KCBOT wheat against CBOT wheat in future sessions...stay tuned.

We are closer to crying uncle with our bearish plays in the Treasury complex if we do not turn south very soon...stay tuned. Some clients are short 10-yr notes and Euro-dollars which are both losing propositions.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

It has been a chaotic and confusing week for commodity traders, but the Treasury market seemed to avoid the typical spillover of volatility. Virtual crashes in silver, gold, crude oil and the Euro could have easily sparked flight to quality buying into Treasuries but it just wasn't meant to be.

The government reported its latest data on the jobs front this morning to an eager trading community. The U.S. economy gained 244,000 jobs last week to beat expectations of 185,000. Following yesterday's tragic weekly jobless claims, the news was probably viewed as being better than it actually was.

The recent plunge in commodities "should" have put some pressure on bonds and notes given the inflationary implications. Similarly, we were expecting the inevitable reversal in the U.S. Dollar to work against asset prices of all types, including Treasuries...and thus far that hasn't been the case.

There are clearly less obvious factors at work; specifically, Treasury seasonals are relatively supportive to bullish. This is because the proceeds from stock investors that "sell in May and go away" tend to allocate the newly liquid funds into bonds.

The chart tells us a different story; most technicians would probably agree the market is a little overheated and due for a pullback. Current pricing is well above the March "panic" high but this time a majority of the buying seems to be at the hands of liquidation by the shorts. We have been pointing out large net short positions in notes among both large and small speculators. Unfortunately, small specs tend to be position in the wrong direction and are often undercapitalized. It is our guess that this is the primary factor in the latest rally. Accordingly, we can't help but feel a bit bearish up here.

If we are right, a corrective move in the June 30-year bond could see the mid-121's and the note might slide to the mid 120's.

* Due to time constraints and our fiduciary duty to put clients first, the charts provided in this newsletter may not reflect the current session data. However, market analysis and commentary does. Charts provided by Track 'n Trade, Gecko software.

**Seasonality is already factored into current prices, any references to such does not indicate future market action.

Treasury Bond and Note Option and Futures Trading Recommendations

**There is unlimited risk in naked option selling.

5-5-2011 - Clients were advised to sell the July 280 calls for 24 ticks or better.

(Our clients receive short option trading ideas in other markets such as gold, crude oil, corn, soybeans, Euro, Yen, and more. Email us for more information)

Carley Garner
Senior Analyst / Commodity Broker

DeCarley Trading

cgarner@DeCarleyTrading.com

1-866-790-TRADE
Local : 702-947-0701

http://twitter.com/carleygarner
http://www.linkedin.com/in/carleygarner
http://www.DeCarleyTrading.com
http://www.ATradersFirstBookonCommodities.com

*Due to the volatile nature of the futures markets some information and charts in this report may not be timely.

There is substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

The panic deleveraging should subside in the next few sessions and prices will likely turn north again. These moves are violent and not for the faint of heart but remain disciplined as I've seen some of the largest moves in my career in recent sessions...which equates to big money making/losing opportunities. A $10 decline in Crude oil drags prices under the 100 day MA for the first time since late November. Because the magnitude of the move we would book profits on shorts. To take it a step further to play a bounce some aggressive traders have bought June calls with two weeks time expecting a bounce of $3-5 in the coming sessions. RBOB and heating oil were hit hard as well which we predicted in recent posts... we just did not see it happening in one session. Our short target was reached in natural gas today...see previous posts. Scale out and book partial profits.

The indices will close lower but held on better than other markets...all things considered I was impressed. If the trend line from mid-March holds on tomorrow's jobs number we could bounce from here and retest the highs. A dollar rally lifts the greenback 1.50% touching the 20 day MA for the first time in two weeks. We continue to like fading rallies in the Euro, Pound and Aussie. Their decrease in today's session was 2.14%, .83% and 1.72% respectively. Gold is down nearly $100 in the last four sessions touching the 40 day MA which will serve as support; in June at $1462. We think there could be another $30-50 but then we would be an active buyer with clients. A $5 move in silver puts silver 30% lower in just under a week. This is why investors use risk capital and need to understand leverage. A 61.8% Fibonacci retracement has taken place and aggressive clients have started to work back into longs. Our suggestion is scaling into futures or selling puts under the market.

The additional 2% decline in coffee today allowed clients to book a 68% net profit on their options trades from last week. We could see more downside in coffee and most of the soft commodities in the short run but in this market we're all about booking profits when we have them. Agriculture prices were hit today but we suggest using the current set back to be a buyer of new crop corn and soybeans. Clients are holding losing shorts in 10-yr notes and Euro-dollars into tomorrow's jobs number willing to take a little more heat...stay tuned.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

This is a correction not an end pure and simple in my humble opinion. Active traders can play the counter trend investors can wait for a better long entry. Crude closed below the 20 day MA today for the first time in two weeks making its way to the 50 day MA which is our next target. In June that level comes in at $106.80. Look for RBOB and heating oil to track lower; June RBOB should see $3.10 and this set back will likely drag heating oil under $3/gallon...trade accordingly. Natural gas lost 2% today and should trade lower in the coming sessions dragging prices in June back towards $4.25.

The indices traded lower again today but we lightened up on shorts booking profits as we expected more of a set back all things considered. It is ok to remain short but just lighten the load. Our targets remain the same but we chose to raise some cash for clients. The dollar appears to be basing out and as we've said in recent posts this ship seems to be leaning too much one way...expect a dead cat bounce in the greenback. Our suggestions are bearish exposure in the Euro, Pound and Aussie. The Aussie likely established an interim top this week and should track 2-4% lower in the coming weeks. We've yet to get clients long lean hogs or live cattle again but both are on our radar so stay tuned.

Gold gave up 1.65% today and should establish momentum on a trade below $1500 so pay attention to that level and how the market reacts. Silver lost nearly 8% today and is approaching 20% in the last three sessions...where are all the silver bulls? We're expecting another $3-5 decline and then we will likely get bullish once again. In recent sessions we've played options on both sides of the market to capitalize on the volatility so this is always an option no pun intended for active traders. Can you say correction in coffee? Yesterday near a 15 year high and today a 4% break. Aggressive clients who acted should be positioned short looking for approximately an additional 3% drop in the coming weeks. New crop corn and soybeans remain buys...our favored play is December 2011 corn. Another painful day for bears in the debt complex but some of our clients who have kept the faith remain in their bearish 10-yr note and Euro-dollar positions and should get some vindication very soon...in my opinion.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

July soybean futures at the Chicago Board of Trade are presently trapped in a sideways and choppy trading range on the daily bar chart--bound by strong technical resistance at the March high of $14.42 1/4 and by strong technical support at the April low of $13.28 1/4. The direction in which July soybeans "break out" of the aforementioned choppy trading range is very likely to be the next significant near-term trending price move in the market. Veteran traders know the soybean futures market is heading into the critical planting and growing season in the U.S. Midwest. The summer months can produce high price volatility in the soybean market as weather scares develop and play out. Given the extra tight world supply and demand balance sheet for soybeans at present, any potentially adverse weather developments in the U.S. Corn Belt in the coming months would likely provide for strong upside price action. Meantime, before most of the U.S. soybean crop has been planted, the soybean futures markets languishes in the choppy trading range. Near-term technical resistance for July soybeans is located at last week's high of $14.00 1/2, at $14.10 and then at $14.17 3/4. Chart support is located at Monday's low of $13.81 1/4, at $13.75 and then at $13.68. Stay tuned!--Jim Wyckoff