Commodity Trader

Europe...So goes the Market

2012-05-16T23:34:21Z

Energy: Crude oil is down 3.2% this week and almost 13% in the last three weeks but I think we're close to an inflection point. I am not calling a bottom as I think it possible we trade to $90/barrel but I will be a buyer with both hands for clients if we trade closer to$90 and that level holds. Looking at the weekly chart of WTI $90 not only serves as 50% retracement for the last three years but it also coincides with a trend line that has held for the last three years. RBOB is approaching a 61.8% Fibonacci retracement just under today's lows; at $2.89 in June. Likewise my take is we are close to finding a value zone for this distillate. Heating oil traded down 1.2% closing below $2.90 for the first time in 2012 on the June contract. I have already advised clients to lightly start legging into longs and to establish upside hedges as I expect prices to be much higher in the coming months...trade accordingly. I said play the breakout in recent posts on natural gas...I was just wrong on the direction and that my friends is why you need to listen to the market and check your opinion at the door. June broke above $2.50 trading up to the 100 day MA, a level that prices have been below since July 2011. This would be a serious change in sentiment on a settlement above this pivot point...stay tuned.

Stock Indices: Stocks traded lower for the fourth consecutive session as prices continue to slide down the slippery slope. I expect weakness to continue as regular readers already now. Targets remain 1285 in the S&P and 12125 in the Dow.

Metals: Gold hit my target trading as lows as $1527 in the June contract. Looking deeper into the chart a triple bottom around today's lows could be forming. The last two times prices have been at these levels prices bounced $250/ounce or better than 15% inside of three months. Past performance is not indicative of future results. I would be an aggressive buyer on a further set back or even at these levels as long as $1515 held on a closing basis. Silver under $27.50 which we are currently at has silver longs on my radar. I want to see if we see anymore downside as catching a falling knife in silver is not advised. I lost a good chunk of change last September trying to do exactly that for clients...I vowed never again. Prices are down twelve of the last thirteen sessions...don't be a hero. Let's see if $27/ounce holds in the July contract. Copper broke $3.50 and I see lower ground but do not rule out a dead cat bounce. Follow the flow here to help with other trades as they do not call it Dr Copper for nothing.

Softs: Depending on stop placement recent short entries could have been stopped out at a loss in cocoa as prices did penetrate the 100 day MA today. I expect more weakness but stay the course and if stopped out remain out. Sugar has gained the last three sessions picking up 1.6% today. I like bullish exposure to potentially capitalize on a 4-5% appreciation. Weakness may continue in cotton but I advised taking profits on a trade to 80 cents which happened yesterday. Sometimes booking profits means leaving money on the table but I am ok with this. Next support is eyed at 74 cents in July. Coffee has had trouble trading above the 50 day MA the last two days. I expect this to be short lived and look for a further appreciation to allow selling from higher levels...stay tuned.

Treasuries: Broken record I know Treasuries continue to trade up until they don't. I would only get short with clients in 30-yr bonds or 10-yr notes on a settlement below the 9 day MA. Those levels are 145'12 and 133'03 respectively. Euro-dollar prices are stabilizing but as long as we do not make a new high traders can remain in bearish trade in 2013 and 2014 trades in my opinion.

Livestock: Cattle continue to tread water and until we determine direction or I get fundamental news that I interpret to be market moving I suggest looking elsewhere. Lean hogs continue to grind higher...I suggest bullish exposure. Contact me for trade ideas in futures and/or options.

Grains: I was looking for a rally in corn and wheat (see previous post) I just did not anticipate the market to deliver in one day. Traders that gained bullish exposure trail stops and see if the market will give your more...this was a gift. July corn picked up 3.8% trading up to the down sloping trend line that has held for the last three months. A trade above $6.25 in July could mean $6.50/bushel. Wheat gained nearly 5% today getting back the last two weeks losses. The down sloping trend line in wheat is just shy of $6.50 in the July contract. Soybeans have danced the trend line that has held all of 2012 the last three sessions. I am not a believer yet only because I prefer buying beaten down AG products like wheat and corn as opposed to beans at elevated levels. That being said those that do not own corn or wheat could be long here as the fundamental story is likely the most bullish in soybeans. Pick your poison.

Currencies: The dollar is making its way to 82.00 a level not seen since the first week of 2012. I think we hit that level but as for further ground I am doubtful being prices are already overbought and the worst case scenario is already factored in...in my opinion. Additionally the selling in most crosses which would be the inverse relationship to the dollar appear to be slowing. That is for all currencies with the exception of the Pound and Loonie. I don't like bearish plays in the Loonie unless established over one week ago but the Pound hit my target and just broke a trend line today...I like it.

Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific's investor's needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions ("Forex") before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

Damage Already Done

2012-05-15T22:38:26Z

Energy: A $2.50 range in Crude today with prices down just shy of 1% ...a settlement below $94 is not bullish. Prices need to hold at these levels or I see a trade down to the next support at $90/barrel. RBOB finished slightly lower as well but prices appear to be consolidating just under $3. I just wish the 40 cent move on the wholesale level would be reflected in prices at the pump. Prices should be lower by 10-15 cents /gallon in my opinion. As I voiced yesterday on a further decline I see solid support just under $2.90 so I would not expect too much more downside. Heating oil held its own closing marginal higher on an inside day. Prices will need to regain $3 to think we are out of the woods but with prices oversold I have advised hedgers to make sure they have upside hedges. I think when prices turn this contract has the most potential out of the distillates and Crude to see appreciation. Natural gas snapped back bouncing off its 8 day MA. Prices will need to break above the 50% Fibonacci level or below the 38.2% Fibonacci level to determine the next leg. I think there is more risk for a retracement but my advice is let the breakout determine the direction.

Stock Indices: In early dealings it appeared prices would see higher ground but a mid-day reversal put the indices under water with prices closing near their lows down 0.40-0.50%. We are roughly 5% off levels from two weeks ago but now that we've breached the March lows I would expect this leg lower to continue. A 38.2% retracement would drag the Dow to 12125 and the S&P to 1285...trade accordingly.

Metals: June gold closed lower but $16 of its lows on the day with prices almost clawing back to positive territory. Sentiment remains bearish as I still expect to see price challenge the December lows approximately $25 from today's closing price. Silver closed 1% lower but cut losses in half as prices were down 2% in early dealings. On its lows prices were within 7 cents of my $27.50 target. Tomorrow we will see but if prices start to climb, from here that may be as close as we get...stay tuned. I have not issued any fresh buy/sell recommendations. Copper found mild support at $3.50 but I anticipate that level to give way and for copper to trade closer to $3.30 in the coming weeks.

Softs: Aggressive traders can continue to fade rallies in cocoa with stops just above the 100 day MA currently in July at 2295. Start scaling into bullish plays in sugar...this is for a counter trend bounce not necessarily a change in trend. I priced out a number of plays today and like longs futures in October and selling out of the money calls 1:1. A 38.2% Fibonacci retracement brings October futures back above 22 cents. Cotton likely has reached an interim bottom...shorts should have been stopped out a nice profit on today's trade above 80 cents. I'm not advocating longs but I open a bounce above 85.00 to re-establish bearish trade. Coffee is approaching the 50 day MA, this pivot point has acted as a ceiling since mid-January. I'm still waiting for a bounce to sell from higher level for clients.

Treasuries: Treasuries look over extended but have for weeks so until we get a settlement below the 9 day MAs stand aside. In June 30-yr bonds that pivot point is 145'0 and in 10-yr notes at 133'00. 2013 and 2014 Euro-dollars showed more declines today as traders can scale into bearish trades looking to add on the way down.

Livestock: Until live and feeder cattle determine their next leg stand aside. Lean hogs have appreciated five out of the last seven session closing today back above their 20 day MA for the first time in 1 month. Work into bullish plays with a target of 89.00 in June.

Grains: With corn prices still under $6 let's jump on a light long position. I think we can get a quick 15-20 cents out of the trade with moderate risk. I would not put on a big position because we may get one more washout before next month's USDA...but in case we don't let's at least get some skin in the game. On a new low I would cut losses. Wheat appears ripe for a bounce too gaining 1.7% today. As long as $5.95 in July holds on a closing basis I like bullish exposure. A trade back to the down sloping trend line that has capped prices since February would fetch longs 30-35 cents. Soybeans bounced off the trend line that I've mentioned in recent posts around $13.85 in the July contract. I'm not convinced yet that it will hold so the sidelines is the trade in legumes currently.

Currencies: Hello Mr dollar...the greenback surged to four month highs gaining 0.80% today. Now prices are through 81.00 we may make an attempt at 82.00 in the June contract. Look for the risk on/risk off trade to influence as well as the FOMC minutes released tomorrow. The Cable broke the trend line that has held much of 2012 as prices should continue lower. Weakness should continue in all crosses as long as the dollar stays in favor. Tighten up stops on remaining shorts in commodity currencies. My take is most of the damage is done in the commodity markets and these currencies can turn on a dime.

Europe Sneezes - Markets Catch a Cold

2012-05-14T22:22:44Z

Energy: Crude oil will trade down by just better than 2% dragging prices to 4 ½ month lows with prices hitting my next support level; a 50% Fibonacci retracement at $94. If this level gives way expect the next stop to be the 61.8% level at $90/barrel. Those scaling into longs should have been stopped on their first leg when $95 gave way. I will be looking to re-enter longs market depending in the next few sessions...stay tuned. RBOB broke down as well failing to re-take the 8 day MA. I only bring this up because a fellow trader I was speaking to today pointed out how well the 8 day MA has been working as a pivot point in recent weeks...check this out in the entire energy complex. Next solid support in the June contract comes in at $2.88/gallon. Heating oil reached a 5 month lows losing 1.6% today. I see solid support at $2.85 and expect this contract to find value just under today's prices. Natural gas lost 3.6% with prices rolling over and stopping at the 8 day MA. As I said last week a break below $2.35 or above $2.50 would set the tone. From where I stand it looks like we will get a retracement of the recent 50 cent appreciation...trade accordingly.

Stock Indices: Stocks globally felt the pain of Europe today with US indices breaking to their March support levels losing just over 1%. I think we can see 12450 and 1310 respectively in the Dow and S&P in the session to come. If things get really sticky a 38.2% Fibonacci retracement off the lows from October and highs in March would not out of the question. That would drag prices to 12125 and 1285. My suggestion would be too lighten up on profitable trades in your stock portfolio. To take it a step further look to at some allocations in commodities on this pullback or managed futures. Inquire to get the track records on specific managers.

Metals: Gold lost 1.7% today as gold is fast approaching its December 2011 lows just as forecast. Expect this pressure to continue. The key to me will be how the market reacts as prices near $1530/1535 in the June contract. The 100 day MA on the weekly chart comes in at $1515. A level that has supported since prices got above that pivot point in December 2008. Silver has lost ground 10 of the last 11 sessions notching a loss of just over 10%. Prices are now within 75 cents of my target of $27.50. We should see that level hold but be patient because if it gives way $24/25 could come into play. Every $1 move in futures on the standard contract is $5,000 so tread lightly until there is evidence of a bottom. Copper lost 3.7% today trading within ticks of $3.50. My target at $3.30 stands and the quicker equities fall apart the quicker that objective should be reached.

Softs: Cocoa fell off from overbought conditions. The inverse relationship to the dollar and correlation to the Pound should accentuate this move. Trades approaching 2300 should be sold with a target of 2150 In July. Sugar held onto slight gains but I still want more evidence of a bottom because although I expect a bounce the fundamental picture is far from bullish. Let's give it a few days to make sure the 20 cent level will hold. Book profits on any remaining shorts in cotton on a settlement above 80 cents in July. Prices are 1.4% below that level as of today's close. Coffee prices continue to tread water. It will take at least a 4% appreciation for bearish plays to be back on my radar.

Treasuries: Yields broke down and prices surged on the long end of the curve lifting 30-yr bonds to 9 month highs and 10-yr notes to contract highs. Approaching 1.5% on 10-yr yields are you f-in kidding me. The market is forcing investors to take risk...not the best scenario. An investor asked me today how high can we go...my response was until it cannot. That being said the trend remains up and until we get settlements below the 9 day MA prices are headed higher. In June 30-yr bonds that level is 144'6 and at 132'24 in 10-yr notes. For a trade it appears 2013 and 2014 Euro-dollars are headed lower. Traders should be short with stops above the recent highs. On a further depreciation look to scale into more size.

Livestock: There are no trading opportunities in live or feeder cattle from my standpoint. By that I mean prices could go either way so until I get a clearer picture I'm content on the sidelines. Continue to scale into bullish plays in lean hogs. Prices have appreciated 3% but I view this as just the beginning. My suggestion is long exposure with futures with some type of stop protection with options; either selling calls or buying puts.

Grains: I am waiting for corn to either bottom at these levels or take another leg down. Once it is determined an interim low was established expect bullish trade recs. Ditto on wheat as prices appear that they are starting to stabilize. Soybeans closed under their 50 day MA for the first time since December 2011 when prices were $2/bushel cheaper. However the trend line that has supported prices since December held, let's see how this holds up in the coming sessions. I am still looking for more downside but like the other grains I would be interested in gaining length once a bottom is determined. In November that would likely be closer to $12.50.

Currencies: Weakness and uncertainty in other markets contributed to the dollar's advance today and will lift prices higher if it persists. Above 81.00 the next resistance is seen at 82.00. Weakness should continue in all other crosses with the exception of the Yen as long as the dollar catches a bid off the fear premium. The Aussie and Kiwi will continue to be the biggest losers on further commodity weakness. The Pound stalled today but on a breach of the 34 EMA I think my target of 1.5950 comes into play.

Thank God it's Friday

2012-05-11T23:07:29Z

Energy: Crude will finish the week lower but the key to me was June held onto the $96 level heading into the weekend. Prices have gone from overbought to oversold in less than two weeks by shaving off 10% in value. My take is traders can scale into longs looking to add to the trade when prices get back above $98.50. On a trade below $95 cut losses. RBOB continues to dance around the $3 level. I cannot rule out sideways action as RBOB will likely look for guidance from Crude. A settlement above $3.05 in June will get bulls back in control. Heating oil like RBOB is sideways in a 5 cent trading range just under $3/gallon. Being we've completed a 61.8% Fibonacci retracement and prices are holding their own I think we can wade back into longs. $2.95 will need to hold for me to keep my bullish conviction. Natural gas competed a perfect week gaining all five sessions but until prices can get above $2.50 the 50% Fibonacci level be cautious of setback. Those long trails stops under $2.35 and then under $2.25. If prices can break above $2.50 the next stop should be $2.65.

Stock Indices: Securities finished lower again this week dragging prices on their weekly charts to the 20 day MA. I am in the camp that we break this week's lows and take prices 3% lower from current levels. My targets remain 1310 in the S&P and 12450 in the Dow. I typically do not watch Cramer but I caught him last night and he was speaking in regards to a coming spike in the Vix and that foreshadowing a correction to come in stocks and I agree.

Metals: In less than two weeks gold has come down nearly $100/ounce to drag prices to 4 ½ month lows. There is mild support at $1575 but I'm still expecting $1535 in the coming weeks in June futures. $1600 should serve as resistance. Silver lost ground all five sessions this week losing a total of 4.7%. Now with prices under $29 I forecast a move to $27.50 in the coming weeks. Depending on how prices react at that level would dictate if I recommend buying...stay tuned. Copper held on all attempts at $3.60 but I expect that level to bust next week and see prices trade to fresh 2012 lows. A 50% Fibonacci retracement drags prices to $3.55 while 61.8% puts July back at $3.45.

Softs: Sugar failed to break 20 cents but I do not like today's close. Let's re-evaluate long entries next week. I expect to have bullish ideas very soon but do not rush it. This was one of the worst weeks I can remember in cotton losing just over 10% dragging prices near 2 years lows. I do to see any solid support for another 5%. After a 40% drop in OJ we could get a decent bounce from oversold levels. A ratio spread would be an inexpensive way to play a potential bounce to $1.40 in the coming weeks. Contact me for exact pricing but the idea would be to sell at the money calls and buy several out for the money calls if the math works. I'm still waiting for a bounce to sell coffee.

Treasuries: Like clockwork 30-yr bonds and 10-yr notes bounced off their 9 day MAs and we're trading back to the contract highs the next day. Until that level is penetrated the bulls are in the driver's seat. In 30-yr bonds at 143'24 and at 132'19 in 10-yr notes. Traders should be scaling into bearish plays in long dated Euro-dollars. At these levels have stops above the contract highs and have ¼ of the position you ultimately want to have on.

Livestock: Live cattle finished lower on the week as prices fell after reaching overbought levels. I expect sideways sloppy trade and would look elsewhere for now. Feeder cattle closed lower for the fourth day running dragging prices back under $1.50. I expect lower trade but there is not much there and the risk is too great so this is a no trade as well. June lean hogs settled back over their 9 day MA having bounced nearly 3% off their recent lows. I have advised traders to start gaining bullish exposure anticipating June could appreciate 4-5% in the coming weeks.

Grains: Corn is approaching 14 month lows down 45 cents in the last three days. From here I think July can trade closer to $5.50 before we would need to be initiating longs. Stay tuned as longs will be on my radar on a further deterioration in prices. Soybeans gave up over 3% today to come within pennies of my first target; the 50 day MA in July at $14.00.I am looking for the trend line at $13.95 to be challenged on this contract next week and eager to see how the market reacts. Remember a 38.2% Fibonacci retracement drags prices to $13.60 in July. July CBOT wheat closed under $6/bushel for the first time in 2012 to close out this week. I am close to issuing a buy recommendation but with corn and soybeans both falling apart I have held off because wheat has been a follower of other grains not a leader...stay tuned.

Currencies: The dollar index is overbought and having trouble with the same resistance level it had trouble with in April...next week will be decision time. As long as commodities come under pressure the Loonie and Aussie should taper off. My suggestion for shorts is have stop levels just above their 20 day MAs. The Pound has lost ground eight of the last ten sessions closing below the 20 day MA today for the first time since mid April. I am looking for the trend line to be challenged and the Cable to trade below 1.5950 next week.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Back in the Green

2012-05-10T23:03:13Z

Energy: For the first time in seven trading sessions Crude made a higher high and higher low as prices will close virtually unchanged today. Sales between $96-97 continue to get rejected. I would not rule out a sideways congestion and on a settlement back above $98 I would venture to say increase bullish exposure. For now I would be lightly scaling into longs as long as $96 holds on a closing basis in June. RBOB failed to remain above $3 closing slightly lower today. Next support is seen at $2.97...that level needs to hold in June. Heating oil lost 0.80% closing in the middle of the recent range. Support in June is seen at $2.95 with resistance at $3.02. Natural gas added another 0.50% today but could be running out of gas no pun intended as prices have been unable to overtake $2.50. The 50% Fibonacci level has acted a resistance for the last two sessions. It could go either way from here if long tighten up stops. The next leg should be determined on a trade above $2.55 or below $2.35 in the June contract.

Stock Indices: Equity prices were able to gain marginally. I am looking for more downside but cannot rule out a probe at the 20 day MA in the coming sessions. If prices stay below that pivot point in the Dow at 12990 and in the S&P at 1375 I would stay short. On a leg lower my targets remain 12450 and 1310 respectively.

Metals: A trade back above $1600 was rejected with June gold settling $5 below that pivot point. I'm still anticipating a challenge of the late 2011 lows approximately $60 from current levels. Silver closed lower for the fourth consecutive session as the slide continued to drag prices closer to my target at $27.50 in July. Copper is finding mild support around $3.64 in July. I see a break lower but it will likely coincide with a decline in the stock market so key off trades in the equity market. Ultimately when $3.55 gives way we should move towards $3.30 but it may take several weeks if not months in my opinion.

Softs: If July sugar holds 20 cents into the weekend I should have some bullish trade ideas next week...stay tuned. Cotton was down the daily limit today losing almost 5% to drag prices to 17 month lows. It looks like we should be under 80 cents very soon...a level not seen since 2010. Coffee gained 2% but as I've been consistent it will take a trade closer to $1.90 for short plays to be back on my radar.

Treasuries: In early dealings it appeared Treasuries were rolling over but to the tick 30-yr bonds and 10-yr notes bounced off their 9 day MAs. Continue to use those levels as your pivot point; in June bonds at 143'17 and in notes at 132'17. Long dated Euro-dollars closed below the 20 day MA as traders could continue to wade into these contracts willing to trail their stop down on a further depreciation.

Livestock: Live cattle gave back some recent gains today but as long as prices remain above their 20 day MA, in June at 114.75 I think we have more upside. My initial target per previous posts is the 38.2% Fibonacci level at 118.15. Feeder cattle lost for the third straight session as prices in May are approaching 150.00. We are trending towards support at 149.60 but that level should hold. For some reason if it breaks expect a test of 147.00...trade accordingly. Lean hogs appear to be forming a solid base as we saw prices trade above the 9 day MA the last two sessions. All it takes is a bearish article in the WSJ today and we should see prices jump in the coming weeks. My target is a trade back over 89.00 in June in the coming weeks.

Grains: Corn has lost nearly 6% in the last two days trading below all support level that held in 2011-2012. With the USDA reporting a larger crop and more ending stocks I see further downside. Hold off gaining bullish exposure as we will likely get a much better long entry. CBOT wheat barely held on to the $6/bushel level but if we find support here I will have buy recommendations in the days to follow in CBOT and potentially KCBOT wheat...stay tuned. Expect wheat to react more so to the corn and bean market as circumstances for wheat on its own remain neutral. Soybeans were the big winner today gaining 1.7-2% lifting July back to its 20 day MA. This was largely a reaction to a bullish outlook for new crop.

Currencies: Tighten up stops on any remaining short plays in the Loonie and Aussie. The Cable is having trouble breaking the 20 day MA; in June at 1.6115 but I expect this to be temporary as my target is 1.6000 followed by 1.5850 in the coming weeks.

Tug of War

2012-05-09T23:06:32Z

Energy: Crude closing lower today makes it six days in a row but more so than that what I picked up today was that again selling being rejected. On average in the last three sessions prices in June futures have closed almost $1.50 off their respective lows. My suggestion would be scaling into long futures with some type of option protection. Possible ideas would be a long in a forward futures months and selling either out of the money calls or buying out of the money puts. I would abandon this trade at a loss on a settlement below $95 in June. RBOB has already carved out a bottom and started to bounce, higher by 11 cents from Monday's lows. As long as $2.95 support June I am sticking to my guns saying an interim bottom is in. If that is how this plays out expect the next advance to find its first resistance at $3.11 in June. Heating oil is trying to make a bottom as well...on a settlement above $3.01 I would be more convinced. I've advised hedgers to take advantage of the 25 cent break to make sure they have at least 1/3 of their hedges in place. If this support holds I will be attempting to put my client's hedges up to the 50% level before we get back over $3.10/gallon. A trade at $2.50 in June futures completes a 50% Fibonacci retracement in natural gas. Next resistance is seen at $2.65. As long as the 40 day MA supports just below $2.30 I am friendly.

Stock Indices: Stocks finished .50% lower but well off their intra-day lows. The pattern is similar to oil as further selling has been met with buying. The difference being is I think bears win this tug of war and take stocks 2.5-4% lower. My target on the downside in the S&P is 1310 and in the Dow my target is 12450.

Metals: Gold closes below $16000/ounce today giving up almost 1%. Prices are down over 5% in the last two weeks but I think we challenge the December 2011 lows approximately another 4% from today's close. July silver traded below $29/ounce for the first time since early January. While we closed above that pivot point I think in the coming session we penetrate that level and head towards my target of $27.50. Copper is lower by 10 cents in the last two sessions but I do not see any support for another 10 cents so expect further selling. Though I rarely trade this instrument it is one of the best barometers of overall sentiment so a 20 cent loss in one week is bearish...trade accordingly.

Softs: Let's see if July sugar can hold the 20 cent level the next few sessions before buying. Coincidence or not check out a weekly chart of sugar. Prices bottomed last year around this price and in mid-May only to gain 50% within four months. Past performance is not indicative of future results. Continue to trail stops in cotton but do not initiate fresh positions as prices are oversold. I remain bearish as long as July futures remain below 88 cents. OJ is showing signs of life managing its first positive close in eight sessions. Trail stops just above $1.25 in the July contract as to not give back too much. I am still waiting for a bounce to gain bearish exposure in coffee for clients.

Treasuries: 30-yr bonds and 10-yr notes are showing signs of exhaustion with both instruments closing well off their highs. If we see June 30-yr bonds close under 144'00 and 10-yr notes less than 132'00 I'd be more inclined to call a top. Until then it is too risky to wade into outrights. Traders wanting exposure in this complex could try a NOB spread; short 30-yr bonds and long 10-yr notes 1:1. I would not suggest this as the spread has blown out almost 2 basis points in the last week. This could be a big trade but I think we're still too early. Trade recommendation: scale into shorts in late dated 2013 or 2014 Euro-dollars with stops above their contract highs. Great risk to reward...contact me for specifics.

Livestock: Live cattle broke out of the flag and pennant formation I spoke about yesterday. We should see further buying lift prices to the next resistance at 118.15 in June. I am on the sidelines with clients. Feeder cattle went the other direction losing 0.50% today to close back under the 20 day MA. One would think we get further deprecation but I do not expect too much of a divergence in prices between live and feeder cattle so I would be on the sidelines here as well. Lean hogs have appreciated for the last three sessions and traded above the 9 day MA for the first time in one week. A settlement above that level; 85.00 in June would reverse my expectation from bearish to bullish. Traders could scale into longs in June with a 89.75 target running stops just under 84.00 if we get a close above 85.00 this week.

Grains: Corn got hit for 2.5% today erasing all the previous week's gains. A trade under $6/bushel and buys are back on my radar...stay tuned. I just want to insure that we hang just under that pivot point because if we bust support under $6 there is another 60 cents before prices meet any serious support. Wheat is at $6 so let's see what the next few sessions bring. Similar to corn I do not want to rush a buy because if prices clear $5.85 there is likely 40-50 cents more of selling. The idea would be to have long exposure at the best price possible heading into the June UDA report which is still 6 weeks away. Soybeans appear to be closing lower for the second week in a row which had not happened since early January. Prices are down by roughly 75 cents but I think this first leg is only half way done so expect further depreciation. A trend line that has held all of 2012 comes in at $13.95 in the July contract. Expect this to come into play this week or next.

Currencies: The dollar index traded to 80.40...a level that had previously acted as resistance. The test will be if we can clear 80.50 in the coming sessions. My inclination is if we see a leg lower in equities the dollar makes its way towards 82.00 in the June contract, if we see an orderly sell off we stay below 81.00...trade accordingly. The Aussie and Loonie continue to see weakness so long as commodities are pressured so if short trail stops. Trails tops in the Cable as well willing to add to the trade on a settlement below the 20 day MA; in June just above 1.6100.

Europen Contagion

2012-05-08T22:17:13Z

Energy: With Crude oil collapsing over $10 in the last week we've gotten the correction I had anticipated. If readers remember I was calling for $97.50 4-6 weeks ago. The next support level is $94 followed by $90 in the June contract. Based on the buying the last two days lifting prices to close near their highs I think most of the easy money has been made on bearish trades. I've advised energy traders to book profits on shorts. I've yet to issue a buy recommendation but I notice some guys I communicate with are wading into longs. That may be the right move but a low is yet to be determined. High to low in terms of wholesale prices RBOB price came down nearly 50 cents in just over two months. Prices are now oversold and I do not see much more depreciation. Consecutive closes above $3 would get me feeling that an interim bottom was set...stay tuned. While heating oil had only lost 35 cents /gallon a 61.8% Fibonacci retracement has occurred and if $2.95 can hold in the June contract this week I say the damage is done here as well. Natural gas has been sideways for the better part of a week but as long as the 40 day MA holds we could see a grind higher. Once that support at 2.29 is breached I would move to the sidelines.

Stock Indices: In the last week stocks have lost ground four out of the last five sessions depreciating roughly 3%. With the Dow below 12900 and the S&P back under 1365 bearish plays are back on my radar. Aggressive traders can scale into bearish trade but be willing to risk a trade back over the 20 day and 50 day MAs which come in around the same pivot points. In the Dow at 13000 and in the S&P at 1380. On a further leg down my targets would be 12500 and 1315 respectively.

Metals: Gold closed lower by 2% today dragging prices to four month lows. June gold futures had not traded below $1600/ounce since the first week of 2012 and it does not look like prices have set a bottom yet. I'm not ruling out a challenge of $1550 in the coming weeks. Be patient...I am advising long entries from lower levels. Silver also was lower by just over 2% as prices are approaching my $29 price target. On a breach of $29 I anticipate a trade to $27.75. Like gold I am more interested in buying from lower levels with clients as opposed to bearish trades in the precious metals. The sentiment in copper is starting to shift bearish as prices are 15 cents from an interim high one week ago. If July breaks $3.65 on a closing basis I anticipate the next support to come into play around $3.55.

Softs: Sugar traded to a fresh 17 month lows with prices in July approaching 20 cents/lb. I expect prices to find their value around these levels so on signs of an interim low I should have some buy recommendations soon. Cotton has lost 6% in the last two weeks and is on its way to a fresh 2012 low very soon...in my opinion. Continue to hold shorts though I would be trailing stops as we often experience violent bounces for no reason in cotton. For seven straight sessions OJ has been in the red as prices have lost over 40% ytd. A 61.8% Fibonacci retracement has been completed but do not rule out an attempt at the $1 mark. Even though I am bearish until we get a bounce in coffee that would set up a sale from higher levels walk away.

Treasuries: 30-yr bonds and 10-yr notes have ascended to contact highs as projected in recent weeks. Sales in 30-yr bonds are on my radar with prices above 144'00 but I would suggest waiting for signs of an interim top before trying to pick a top. Perhaps a volume spike or key reversal would be a preliminary indicator. Same story in10-yr notes although a close back under the 9 day MA in either product would get me interested in pricing out NOB spreads for clients again.

Livestock: Looking at the daily chart in June live cattle and using a bit of your imagination we could have a flag and pennant formation for the last four days activity. Being prices have only appreciated 3% and we've gone form oversold to nearly overbought I would back off until we get a clearer picture. Feeder cattle are in neutral territory so I would not force a trade on either side of the market. Further sales the last few sessions have been rejected in lean hogs but I would not be a buyer just yet. Shorts should be out at a tidy profit on a settlement above the 9 day MA in June currently at 85.25 if we see a bounce.

Grains: Corn and wheat were able to squeeze out marginal gains while soybeans gave up nearly 2% in today's session. From current levels I'm interested in probing longs in July under $6/bushel in either CBOT wheat or corn. In just over one week soybeans have lost 70 cents and with today' s close under the 20 day MA for the first time since late January I am comfortable calling an interim high. A 38.2% Fibonacci retracement could drag prices in July to $13.60...a further 5.5% depreciation.

Currencies: With commodities correcting and more bad news out of Europe I'm expecting further depreciation across the board with the exception of the Yen which marches to the beat of its own drum. My favored plays to capitalize on further commodity weakness would be bearish trades in the Loonie and Aussie. As for the European crosses being the Pound had the most upside it has the most potential to falter. Even though the bad news it out of France, Spain , and Germany and not directly the UK we can group the Cable as a European currency and expect it to be influenced by major happenings out of that region.

Drop Ahead of Jobs #

2012-05-02T22:49:15Z

Energy: Inside day in Crude oil closing lower by nearly 1%...this is not bullish. On a close back under the 40 day MA; in June at $105.25 aggressive traders could initiate shorts again. It seems like I'm jumping back and forth but my friend that is the market. I advised some clients today to get short July futures and sell out of the money puts against 1:1. June RBOB tested and held the 100 day MA but if $3.06 gives way I would anticipate a trade under $3...a level not seen since early February. Heating oil has lost ground the last four session closing today under the 18 day MA. I'm expecting a trade down to the 100 day MA in June at $3.0945. If we see prices totally collapse I'll advise hedgers to roll their options down...stay tuned. Upside resistance was met at the 38.2% Fibonacci level in natural gas. A breach of the 40 day MA today...traders should cut their exposure in half and exit the remaining longs back under the 18 day MA. That is if willing to give up 12-14 cents and still make the trade profitable...that would be my suggestion.

Stock Indices: Stocks have halted in their tracks in anticipation of Friday's jobs #. You know my take I say prices are unsustainable at these levels but I'm on the sidelines with clients. I would be willing to wade back into bearish plays on a break lower. The S&P closing back near 1365 and the Dow near 12900 would be confirmation for me.

Metals: Big candle in copper with prices failing to hold their short term MAs. If you rode the rally I would move to the sidelines. I'm not advocating reversing but rather book profits on longs. June gold is $20 off its recent high trading back near $1650 today. I see resistance at $1670 with support at $1630. Silver gave up the ghost losing ground for the third session in a row approaching $30.50 again in July. If $31 is able to cap gains into the weekend we should see $29 in short order.

Softs: July sugar is approaching 20 cents/lb. I have advised traders to either book profits on shorts or trail stops because like a rubber band stretching I think we get a snap back in price very soon. On the weekly continuation chart there seems to be solid support around 20 cents. If I'm wrong and the current glut breaches that level 15 cents could be the next level so do not rush a buy just yet. The 50 day MA in July coffee needs to be cleared at $1.8275 first but next stop on a trade above that level is the down sloping trend line at $1.90 in my opinion. I have bearish trades on my radar in futures and options closer to that level with clients.

Treasuries: 30-yr bonds and 10-yr notes gained today recouping the previous day's losses. For outrights I would not have bearish exposure. As for the NOB spread today was loser of 17 ticks from yesterday which is just over $500 per spread. Traders with tight stops may have been stopped out. I would like both instruments to settle under their 20 day MA to initiate this trade as opposed to just 30-yr bonds like we saw yesterday.

Livestock: Live cattle lost ground today but as long as the recent lows hold traders could have a small long position at these levels weighing the risk to reward. Same story with feeder cattle as long as $1.48 holds on a closing basis I am mildly friendly the May contract. Lean hogs were lower by 1.6% today making fresh lows taking prices to levels not seen since January 2011. This pig is trading like a dog and likely has more room to fall.

Grains: Finally the break I've been calling for in grains with corn notching a loss of 2.8%, wheat lower by 4.4% and soybeans 1.25%. Corn and wheat under $6 would put buys back on my radar but let's see how low this break can take prices. There is no rush as I have until the end of June that I want to be long by, into the USDA #s. If July corn breaks $6/bushel with conviction we may have an opportunity to buy near $5.70. As for wheat if $6 gives way $5.65 comes to mind...a level that has held twice in the last five months. Medium term traders could look to the soybean spread buying November and selling July to play a potential break in grains prices.

Currencies: Day three of the dollar appreciation and albeit a dead cat bounce the next test should be the 20 day MA at 79.55 in June. All other crosses with the exception of the Yen look poised for lower trade. The Pound settled below 1.6200 so longs should be peeling off their exposure. Aggressive traders could have small size short crosses expecting the dollar to gain but I will be in cash with clients into next week.

MAYbe Time to Sell

2012-05-01T22:40:59Z

Energy: Crude oil closed above the 40 day MA for the first time in three weeks approaching the $106 level in the June contract. I advised all shorts to get out on this move. Seasonally should the market set an interim top ...yes and do the fundamentals justify prices at these levels...no. I learned a long time ago that sometimes that does not matter and the market currently says higher not lower. RBOB is getting hit looking like we will get a test of the 100 day MA very soon. Demand is not there and prices should roll over. My expectation is that on a settlement below the 100 day MA the sentiment will shift bearish; that level is $3.06 in June. Heating oil has been stuck in a 2 1/2 cent range but should move out of that range on tomorrow's inventory report. A trade above the 40 day or below the 18 day MA will likely set the direction. Those levels in June are $3.2285 vs. 3.1730. In just over one week natural gas has appreciated almost 19%. This is the quick pop I had mentioned in previous weeks that I wanted to be in for. Trail stops on longs and with prices now above the 40 day MA for the first time since late February don't be shocked for another 5-10%.

Stock Indices: The Dow has traded to a fresh 2012 high while the S&P and NASDAQ lag. All indices are appreciating but the S&P and NASDAQ have yet to reach their March highs. I am not comfortable at these levels and with NFP this Friday I would be in cash into the report unless carrying a healthy profit on longs. Sell in May and go away may not hold true this year but there is a compelling track record and history sometimes repeats itself so stay alert. Do not rule out an interim top in the next few sessions.

Metals: Copper likely is in the eighth inning of the current move as the market is starting to look tired. On a settlement below $3.80 in June prices should start retreating back to $3.60...the level prices bounced from in recent weeks. Until that happens I am mildly bullish. It will take outside markets moving lower to get copper moving south again so monitor other metals, energies, Ags, etc. As long as gold remains below he 100 day MA; $1676 in June I suspect we start to see prices back off. Not a total meltdown but a trade back to the recent lows. What cannot go up will in most instances move down and that seems to be the case in silver failing to maintain $31/ounce in July.

Softs: Cocoa reversed yesterday's losses gaining 4.5% today to stop out any recent shorts on today's five week high trade. This was the second failed attempt...look elsewhere. Cotton can be sold but do not have high expectations as the risk /reward is about even so this is not the best trade option. OJ lost over 6% today to bust previous support and drag prices to 20 month lows. Viewing the weekly chart we've completed a 50% Fibonacci retracement. A complete 61.8% would drag prices lower by an additional 10.5%. Coffee gained 2.5% today making it the third positive session in a row. The trend line comes in just above $1.90 in July and as prices approach that level bearish plays would be back on my radar.

Treasuries: 30-yr bonds will close under their 20 day MA today which is a preliminary sign of an interim top though the 10-yr notes traded to that pivot point and held. I would like to see both instruments below that pivot point to call an interim top. Aggressive traders can initiate NOB spreads; short 30-yr bonds/long 10-yrnotes 1:1. It is too early to say this is the top but when Treasuries roll over I expect there to be a 1 basis point or $1000 of profit in the NOB spread. As for risk you could get away risking about half of that premium in my opinion.

Livestock: It may take a little work for live cattle to get moving but if you look at the risk to reward dynamic in June with stops below the recent lows and a target of a 38.2% Fibonacci retracement. You are looking at 4 ½ cents of profit ($1800) and 2 ½ cents of risk ($900). Scale in lightly and let the market prove you right. Same advice in feeder cattle scale in as prices are now above the 20 day MA I expect follow through. On the May contract prices should lift back near $1.52 into next week. Lean hogs are ugly and expect lower lows. The 15% drop in recent months should be reflected in lower bacon prices so stock up because we all know bacon makes everything taste better.

Grains: Corn dropped nearly 1% but I want much more...like a trade closer to $6 in July to consider longs again for clients. As I'm always looking at spread opportunities in the grains I think I found one that merits your attention. Buy November and sell July soybeans. July has over $1 premium to the deferred month and just over one month ago the spread was half that level. If you are concerned about risk of a trade higher in July maybe manage risk with buying calls in July. Those traders not wishing to get creative can remain long November as long as the trend line holds; it comes in at $13.50. Wheat lost almost 2% and another 3-5% I may be interested in probing longs again for clients...stay tuned.

Currencies: I thought we would see a challenge of 78.50 in the June dollar index but we may get a bounce from just above those levels based on the current action. A settlement over 79.00 the next few days would lead me to believe a further bounce is due...stay tuned. The commodity currencies experienced some pressure...can they be used as a forward indicator predicting a trade lower in key commodities? Trails stops in the Pound as when prices correct we could get a large candle lower as we've seen a 3% appreciation with very little give back in the last 2 weeks. If and when we see profit taking prices should trade back to at least the 20 day MA at 1.6020 in June. There is no reason to give back that much in my opinion.

Good Bye April

2012-04-30T21:52:14Z

Energy: Crude looks poised to get above $105...a level that has not been breached in three weeks. Today prices will finish slightly lower but well off their lows and another 50 cents puts futures over the 40 day MA which should trigger more buying. I would have stops in any remaining shorts just above that pivot point. RBOB lost 1% as $3.15 continues to act as serious resistance. I expect the sideways 10 cent range to persist until Crude gets moving. Heating oil was the lone positive gaining for the sixth consecutive session albeit marginally. I do not see any significant resistance for another 10 cents in heating oil. The 18 day MA held on all attempts the last three sessions as prices were back on the move today gaining nearly 5% in natural gas. A trade above the 40 day MA at $2.31 in June would likely cause another leg lifting prices in futures near $2.50 into next week. A 50% Fibonacci ytd would lift futures to $2.51 while 61.8% puts prices at $2.65.

Stock Indices: Stocks are consolidating near their recent highs. It is too early to see if the markets are catching their breath before an attempt at the March highs or we're starting to see signs of exhaustion. Time will tell. As I've said in recent posts I'm a spectator with clients not trusting these levels. It will take a close back under 1360 in the S&P and 12900 in the Dow for me to have an interest in bearish trades...stay tuned.

Metals: As long as July copper stays above $3.80 I remain friendly. More so as a guide to trade other markets as I typically do not venture into these waters because the volatility and lack of liquidity. Gold pared losses to close flat but $20/ounce off its lows. It was a mildly positive sign but until prices trade above the 100 day MA at $1677 in June I expect muted action. Silver lost 1% today closing just above $31/ounce in July futures. I see limited upside but remain neutral. It will take consecutive closes back under $31 for me to be back in the bear camp.

Softs: Cocoa collapsed 4% today falling off from overbought levels. Aggressive traders can short around 2250 in July with stops just above the recent highs. This would be our second short probe attempt. A new high take you loss. On the downside if things calm down in the Pound and the dollar can stabilize we should see 2050 in the coming weeks. Cotton appears to be rolling over...aggressive traders can gain bearish exposure with stops above 93.00 in July. Other options include a bear put spread or selling futures while simultaneously selling out of the money puts 1:1. Contact me for exact pricing. New lows in OJ...stopped out on any long entries. Let coffee work higher before initiating fresh bearish trade.

Treasuries: 10-yr notes and 30-yr bonds are at elevated levels but until we get a settlement below the 20 day MA stand aside. Those levels in June contracts are 131'28 and 142'10 respectively.

Livestock: I am going to call an interim low in both live and feeder cattle. I do not claim to have a crystal ball but it looks like a good risk to reward starting to probe longs with stops below the recent lows. Start with a small position in futures or have some option protection until this thesis is proven. Lean hog prices continue to slide losing .80% today. Now that the recent support has given way we should see momentum traders drag hogs even lower. Do not attempt to pick a bottom here.

Grains: Corn advanced 1.4% today closing above its 50 day MA for the first time in three weeks. I expect July to challenge $6.50 in the coming sessions. CBOT wheat closed higher for the third session as prices look like we could a see another 20-25 cent advance this week. May and July soybeans settled above $15/bushel while November appears it's on its way to a close above $14. Traders could be long November as long as the trend line holds. It really has been the relentless move in soybean meal that has carried beans but it does not look over posting a fresh contract high today. I do not like buying grains until we get a dip but I may leave money on the table being absent.

Currencies: A breakout higher in the Yen lifted prices to two month highs. Today's highs nearly completed a 50% Fibonacci retracement but the bulls should make an attempt at 1.2700 this week or next. The Pound closed lower for the first time in eleven sessions. I would suggest staggered stops on longs booking a profit just under 1.6200 on a portion of positions. Give another day in the commodity currencies from the sidelines as I did not like the action in the Loonie, Aussie and Kiwi today. I had mentioned last week that I may want to be a buyer.

Bad News Equals Positive Movement

2012-04-27T22:02:15Z

Energy: On the week Crude will finish higher by only $1 failing to make its way back to $105 in June. I had been short with some clients for several weeks and based on the action in Crude and outside markets I advised clients to lighten up yesterday. A trade above $105 and I will likely exit shorts and reverse. Until then I remain mildly bearish. RBOB stayed in a nickel range for the entirety of the week. I'm waiting for a move and once we get out of the current range I would expect 15-20 cents in the direction of the breakout. Heating oil will finish higher by almost a nickel but unable to take out the 100 day MA to the upside. This was the leader in the energy complex this week but without the help of Crude heating oil will likely not appreciate much more than current levels. Natural gas had its first positive week in the last six gaining almost 10%. That seems like a big move but it is all relative being prices are so devalued. As long as the 18 day MA holds on pullbacks trail your stops and remain long.

Stock Indices: A positive week for stocks which makes it two weeks in a row. I would not rule out a test of the previous highs but I'm advising clients a position on the sidelines...just not a believer. The situation will remain friendly in securities until the Dow breaks 12950 and the S&P breaches 1375 in June futures.

Metals: Dr. Copper is back on the move gaining 20 cents/lb. in the last four session lifting prices to three week highs. Copper sets the sentiment for a number of commodities and as long as copper is advancing expect commodities to remain in favor. Gold traded above but failed to close above its 40 day MA. I see resistance at $1665 followed by $1677 the 100 day MA. Silver like gold has picked up in recent sessions but still cannot get out of its own way. The sideways grind that exists in both precious metals is expected to continue...trade accordingly.

Softs: Sugar traded below21 cents for the first time in fourteen months but losses were pared by the close. I think we are close to a turning point so expect me to have buy recommendations around the corner. I have not advised ratio spreads in a while but it would be an inexpensive way to potentially participate in some upside in OJ. Sell at the money calls and buy multiple out of the money calls against your sale. Contact me for exact pricing.

Treasuries: As long as Treasuries remain above their 20 day MAs I would expect the bulls to remain in the driver's seat. That level in 10-yr notes comes in at 131'24 and in 30-yr bonds at 142'4. A doji star in December 2013 Euro-dollar futures yesterday. As a spec play traders could scale into short futures with stops above the recent highs.

Livestock: Cattle showed some life to end the week but it's still a coin toss if the latest lows will hold. I am holding out to see more signs of an interim bottom. If I decided to trade I prefer buying live cattle to feeder cattle but I've yet to price out a strategy as I'm not convinced the selling has dried up. After last week's impressive bounce hogs failed to follow through closing down this week near fresh lows. Weakness should persist on a breach of the recent lows next week.

Grains: The battle for acreage is very clear as grains are jockeying for position. Today's winners were corn and wheat gaining 3.5% and 2.3% respectively. I've given up trying to time the grains and have taken a longer term perspective thinking we get a break that could be used as a buying opportunity in the next 3-5 weeks. The story today was a surge in old crop while new crop was only marginally higher. As for November soybeans they continue to dance the trend line. I'm the contrarian thinking we get a break but I have no money in that trade. Grains have been extremely challenging at least for me to trade in the latest weeks so I wish to trade elsewhere until we get a break.

Currencies: Next weeks test will be 78.50 in the dollar index...a level that has held on previous attempts. The Commodity currencies ended the week strong and likely have the most upside into next week. The Pounds advance appears to be getting long in the tooth...continue to trail stops but the easy money has been made. Next week we have ECB, RBA and NFP # so keep positions close to your vest.

When in Doubt Go to Cash

2012-04-26T23:29:13Z

Energy: I do not like the action in Crude so I advised clients to cut their shorts in half. Do not misinterpret me I am not getting long but rather lightening up on short trades. Though I do not agree with the acceleration of commodities that we are seeing I refuse to fight it. Hedgers should also start to wade into longs in heating oil and RBOB to protect from upside spikes. My suggestion is a long future against a sale of out of the money calls 1:1. High to low natural gas moved 30 cents. Tighten up stops just below the 18 day MA which should ensure at least a small profit unless we gap down tomorrow. My take is if we break that level we may get a chance to get one more buy below the $2 level...stay tuned.

Stock Indices: The advance the last three days has lifted stocks to three week highs. The next test will be if buyers can push securities to their March highs in the coming sessions. I'll be absent on the sidelines with clients not trusting these levels. Another 25 points in the S&P and 100 points in the Dow mission accomplished.

Metals: Copper advanced 2% clearly penetrating the 100 day MA with conviction so the sentiment is back in the bull's hands. What was resistance should now serve as support; in July at $3.72. Gold also joined the party gaining nearly 1%. As long as stocks hold at current levels if Crude and copper heat up expect prices in the metals complex to gain...including gold and silver. Aggressive traders can gamble with shorts up to the 100 day MA; in June at $1678 but it may be prudent to take it at this level your call. Silver is back above $31 ...exit shorts and look for a higher selling level.

Softs: Sugar lost 3.25% today to drag prices near 1 year lows. I guess I should not have advised booking profits on short in recent sessions. The reality is after a 15% move there is no need to get greedy. I would say we are close to putting in a bottom and I will be shopping bullish plays very soon...stay tuned. All other soft commodities are at levels I don't want to be long or short as a speculator so unless your hedging look elsewhere.

Treasuries: You will notice if you trade long enough there are certain indicators such as moving averages (MAs) work for different commodities. For this complex it is the 20 day and 40 day MA that I have had the most luck. For frequent follower you will recognize I use special time frames for different complexes. Being prices bounced off the 20 day MA in 10-yr notes and 30-yr bonds I would not be short.

Livestock: Confirmed cases of Mad Cow do not affect the cattle market for one day and then are swept under the rug. Live cattle and feeder cattle were lower today and in my eyes eyes will continue to see weakness short term. Some speak of the triple bottom at 111.50 in June but that should be busted in the coming sessions. If I'm wrong next week I will buy with stops just below that level...stay tuned. Lean hogs may be basing out. The first sign that an interim low is in would be a settlement above the 9 day MA; in June at 87.95. After viewing longer term charts, weekly and monthly I remain bearish even if we do get a dead cat bounce from here.

Grains: Talk about manic...Ag markets cannot make up their mind on direction. Just when I expected corn and wheat prices to fall apart and post new lows buyers emerged. Corn and wheat picked up 1-2% depending on the contract months. I'm not a buyer or seller until the ship rights itself and I get a better feel. In a perfect world we get a healthy break in the grain complex so we can buy into late May/early June before the crop report. Old crop soybeans continue to inch higher but new crop has been flat for the last two weeks so I see this move staling for now. There has been so much talk of higher soybeans and I don't like being a sheep. If and when the trend line in November breaks I think it could be ugly. The bulls are in the driver seat but I just was too late getting on this train. The fact that the WSJ is talking about soybean meal prices makes me even more leery of long exposure in soybeans.

Currencies: The grind lower in the dollar index continues with another small loss today. No clear winners in FX today but expect more upside as long as the greenback is out of favor. BOJ tomorrow so it would not be shocking to see a 1.5-2% range in the Yen...be careful.

An OverZealous Fed

2012-04-25T23:35:19Z

Energy: Crude has been in a $4 trading range going on nearly one month and for range traders I guess it has been ideal conditions but as for me and most traders I would prefer a trending market. It does not matter the direction but more movement is all I'm asking for. I remain bearish thinking we are due a trade under $100/barrel. Stiff support remains at the 100 day MA; in June at $102.90. A leg lower in heating oil and RBOB would likely contribute to a leg lower in Crude...stay tuned. Natural gas was higher by nearly 6% today to close above the 18 day MA for the first time since late February. This my friend could be the short covering rally I've spoken to. Do not rule out a trade to $2.40-2.50 in June.

Stock Indices: How I wonder the performance of a stock named after a fruit can have such a grave impact but impressive Apple earnings aided in the stock market surge today. It also helped that the Fed may raise rates sooner than previously expected. Why is this good...well circumstances appear to better at least in the Feds eyes. Indices are back above their short term MAs and likely moving higher but I will be absent as I do not want to be long at these elevated levels.

Metals: Lower trade was rejected in both gold and silver with prices closing virtually unchanged in both metals. To echo previous posts a trade above $1660-1665 or below $1620-1625 would determine the direction of the move short term. I have a bearish bias but would suggest playing the breakout. Silver prices remain under $31 but I expected more follow through after prices breached that level. Needless to say as long as we remain under $31 I remain bearish. The 100 day MA continues to act as resistance in copper with another failed rally attempt today. Use $3.7175 as your pivot point in the July contract.

Softs: After a 15% decline in the last month in sugar prices it has come time to book all remaining profits and move the sidelines. It appears we could get a bounce from over sold levels. Bearish engulfing candle in coffee with today's near 4% decline. I still want to see a higher sales price before initiating shorts for clients.

Treasuries: 30-yr bonds and 10-yr notes traded below their 9 day MAs today but both managed to pare losses and close above that pivot point. Not just a trade but consecutive close would confirm my feeling of an interim top in these instruments. In June 30-yr bonds that level is 141'30 and in 10-yr notes at 131'21. A NOB spread short 30-yr and long 10-yr is the play in my opinion.

Livestock: Cattle held on with marginal gains today after yesterday's bloodbath but an inside day is not exactly bullish. Expect further downside. Both live and feeder cattle should see lower long entries in the days to come...stay tuned. Lean hogs were higher by 1% but volumes remain light so it is too early to call a bottom. Buying hogs is catching a falling knife which I would refrain from in this market currently.

Grains: With corn on the verge of breaking $6/bushel I would walk away from any longs in maize. Traders that are long wheat from last week could move to the sidelines as we could see back and fill here as well. May and July soybeans posted new contract highs while November looks poised to challenge $14 in the coming sessions. This is the only long candidate in this complex currently in my opinion. Exit the corn/soybean spreads at even or a slight loss. I will attempt to buy this again when corn bottoms as long as the spread does not exceed $8.50.

Currencies: The dollar index continues to grind lower registering losses seven out for the last eight sessions. As long as this continues expect all crosses with the exception of the Yen to track higher. The Pound continues to be the leader of the pack gaining last eight sessions lifting prices to six month highs. The FOMC did nothing with IRs today but indicated they may act sooner than the market had previously factored in. How the Fed telegraphing higher rates is to be interpreted a bullish...welcome to the NEW market.

Risk to Reward that Works

2012-04-25T00:36:28Z

Energy: I know it sounds like a broken record but it's all about the 100 day MA in Crude oil. Currently the 100 day MA in the June contract is $102.85. I remain bearish looking for a trade below $100 this week or next. Both RBOB and heating oil finished lower today and it's my opinion that weakness in the distillates will spill over into Crude. I'm looking for a 10-15 cent break in the distillates. I'm getting a lot of grief for probing longs in natural gas again. Have I attempted this before yes but getting stopped out and trying again is trading. It is not a sports franchise that I care about a win loss record. Taking small losses is the name of the game. For example currently a risk of 10 cents is $250-1,000 per contract depending if trading the mini or standard. If and when we see short covering I expect a quick 40-50 cent move. Risk to reward that works for me even if we need to be wrong 3-4 times first.

Stock Indices: The last two days stocks have been able to recover from their losses late last week. I would be short with tight stops or on the sidelines. The major catalyst that will set up the direction of the next leg will be the FOMC announcement tomorrow afternoon. Could equities advance...the answer is yes but I would fade that rally if it happens.

Metals: After seven straight losing sessions gold finally claimed a small victory gaining $11/ounce today. I see resistance in June at $1660/1665 with support $1620/1625. I still anticipate a sub $1600 trade to come. July silver remains below $31/ounce and my take is $29 will be seen before any additional upside. As long as the 100 day MA caps any upside in copper I am neutral to bearish. That level in July futures is $3.68.

Softs: A short lived trade in cocoa as any shorts should have been stopped at a loss after the 3.6% appreciation today. Coffee advanced 2.5% today and has jumped nearly 6% in the last week. Another 4-6% and I would be willing to start issuing bearish trade recs again. The down sloping trend line that has capped rallies for the last nine months comes in at $1.95 in July.

Treasuries: Not for an out right futures trade but as a NOB spread or getting short futures and simultaneously selling out of the money puts in either 30-yr bonds or 10-yr notes I could be talked into some light bearish exposure. It is very preliminary and I would not have a large position into the Fed meeting but we are seeing preliminary signs of an interim top...stay tuned. On a close below the 9 day MAs I would be eager to increase my exposure; those levels are 141'25 in 30-yr bonds and 131'19 in 10-yr notes.

Livestock: Some clarification yesterday I said lean hogs were bouncing and unfortunately I was looking at a weekly chart and now reviewing my comments and looking at a daily charts I was mistaken. I hope this did not cause too much confusion and no monetary losses on trades...again I apologize. Lean hogs continue to be pressured making new contract lows today and I see further downside. Limit move lower in both live and feeder cattle dragging prices to one year lows in live cattle. Expect more to follow as I do not see solid support until we see a 4-5% depreciation.

Grains: Both corn and wheat gave back overnight gains to close near their lows with corn lower by 0.75% and wheat virtually unchanged but approximately 15 cents off its highs depending on the contract month. This is not a bullish signal and if we do not see a recovery the next few days I would be back on the sidelines in corn and wheat. As for the corn/soybean spread $8.25 needs to hold in the spread or I would be out of the trade. It is not about weakness in corn but rather strength in soybeans. July soybeans posted new contract highs approaching $15/bushel while November held onto the trend line mentioned in previous posts. Years ago I would never pictured buying soybeans in the teens but we could have several more dollars of upside.

Currencies: The US dollar appears we could see further downside which should be positive for other crosses but there are no screaming buys or sales in my opinion. Forcing a trade there looks to be more strength to come in the Cable but we've already seen a 2% advance in the last week so tread lightly. The FOMC meeting is tomorrow and then BOJ to end the week so we could see fireworks in FX the next few days.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.

Natural Gas Flares-Up

2012-04-23T22:11:18Z

Energy: Crude finished negative but well off its lows managing to close back over the 100 day MA. I anticipate a break of the recent lows around $101.50...$100 and then a trade to $97.50 this week or next. The resiliency in oil is impressive but with a failing stock market and growing inventories a setback should play out. If it was not for the comeback in the afternoon on the distillates Crude would have finished under $102 on the June contract. Further depreciation is forecast in the RBOB and heating oil that should pressure Crude. Natural gas gained nearly 5% today with volumes nearly twice what we've experienced in past weeks. That is a mild buy signal as aggressive traders could wade back into longs with stops just under $2. Picking a bottom has not worked in recent months but a small position is worth the risk in my opinion.

Stock Indices: Equities started the week with a near 1% deprecation with stocks approaching two week lows in early dealings. If 1350 is breached in the S&P and 1270 in the Dow selling should intensify. Until then expect a sideways grind. The main happenings on the agenda as I see it this week are the FOMC meeting mid-week and the BOJ meeting at week's end. The presidential election in France may have a short term impact as well.

Metals: Copper reversed at the 100 day MA and appears to be headed south again losing 1.75% today. I'm expecting a test of $3.50 in May futures before we see any sustainable upside. July silver lost 2.6% today closing under $31/ounce for the first time in three months. As I've said in recent posts once this happens I think silver finds its way to $29/ounce...trade accordingly. Today marks the seventh consecutive losing day in gold futures even though the loss has been negligible. I am still expecting a sub $1600 trade and currently not ruling out $1550.

Softs: I remain bearish in sugar but do not establish new positions; those in the trade from higher levels should continue to trail stops down. Aggressive traders can scale into shorts in cocoa with stops above the 50 and 100 day MA which both come in around 2285/2295 in July. OJ dropped 5% today. Those that were long take all remaining exposure off. I do not like to see a move of that magnitude in the opposing direction to my trade recs. Coffee is 11-12 cents away from $1.90...as it approached that level in July I will have bearish plays back on my radar.

Treasuries: 10-yr notes are within ticks of fresh contract highs and 30-yr bonds traded near four months highs. Expect further appreciation as long as stocks are under pressure. I will have bearish plays on my radar in 30 yr bonds on a trade above 144'00 in June. A possible spread trade short 30-yr bonds and long 10-yr notes; the NOB spread...stay tuned.

Livestock: Lean hogs bounced of the 61.8% Fibonacci level to the tick last Friday and now appear to be back on the move. Aggressive traders can buy dips in June with stops just under 80 cents. My bias is bearish in live and feeder cattle but I prefer the sidelines as I am getting mixed signals.

Grains: Corn was higher by 1.6% and soybeans were off by 1% today. Low and behold the corn/soybean spread mentioned in recent weeks is starting to play out. This is my favorite trade in the complex. As I stated in previous weeks I think a more appropriate level for this spread is $6.50 NOT $8.00. If soybeans break the trend line that has been tested the last four days and held for the last five months expect a 60 cent -$1 deprecation. It appears there is a double bottom in July CBOT wheat around $6.15. Aggressive traders can scale into longs with stops below the recent lows.

Currencies: The dollar index is in no man's land as prices could go either way. I am leaning slightly negative only because recent rallies have been rejected but expect a grind lower not a violent drop...in my opinion. I see no clear signals in any crosses and would refrain from any swing trading. On day trades make sure your profit potential is 2:1 or look elsewhere.