Recently in livestock Category

This phrase is coined for the college basketball tournament but I think it is an accurate description of what to expect as a trader this month. At its highs today oil was less than $3/barrel from making new highs on the year. Being bearish for the last 1-2 weeks has made our clients NO $ but we still feel a trade to $75/76 is imminent. We are not disputing a trade in summer is likely up to $90 but first a correction. We still favor $5 put spreads. Natural gas should finish down 3.5-4.0% lower on the week. That is not too bad! Clients have a small long position in April futures and June call spreads and at the moment are all under water. We expect the next 2 weeks to be better to us in energies; that means crude down and natural gas up. Are you kidding me that we only lost 36,000 jobs and unemployment did not change?

The equity market is being propped up by the powers that be and if the free market determined prices we would be at least 10% lower. Clients are down on their June ES puts but will stay the course being they have over 3 months time. Sugar closed up 2.4%; we suggest being long May and July via options looking for a move back to 26 cents. For the first time in 4 weeks cotton will finish lower; clients are positioned to take advantage of a set back to 75/76 cents in May. Treasuries were hit hard today and we do think more downside is likely in the coming months but we still feel one will get the opportunity to put on shorts from higher levels. If the recovery is underway which I question and there is more talk of the Fed raising rates traders should re-visit the idea of short Euro-dollars. The charts look like in the next few sessions Agriculture will trade lower. Aggressive traders could use that to get short while I would prefer getting long from lower levels.

USDA report out next Wednesday. Our current positions for clients in Ag include long corn, long soybean meal and short soybean oil. We have no positions in lean hogs with clients but it appears a double top could be forming around 74 in the April contract; that level acted as stiff resistance in mid-January as well. Live cattle finished about 1 penny higher on the week; clients remain short expecting a trade back near 89 cents in April. We caution any exposure in gold as we could see a $50 move either way. If lower we would suggest buying the dip. May silver closed at the 100 day moving average today about 15 cents off its highs. We like being long but would prefer to open fresh longs on a set back to $16.50. If we do see a retracement that holds we would think the next leg up would lift prices to near $18.50 mid-summer. Clients were advised to take profits on their Yen shorts today as prices have peeled off 3 cents in the last 2 sessions. We advised those still interested in currencies to get short the Loonie. We are looking for a move in the Loonie back under 95 cents. We are operating under the influence that stiff resistance comes in at .9750/.9800.

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

Crude was down just over 1% today closing almost $2 off its highs. We continue to suggest selling near $80/barrel expecting a trade near $75 in the coming weeks. We suggest on futures to have stops above $81, in options clients own May $75/70 put spreads. Natural gas was lower by almost 3% and though we are playing with fire we still like lightly buying April futures; buy 1/4 to 1/3 of the ultimate position you want to own and then add to it when the market confirms you are right. As for option traders we suggest purchasing the June $5/5.50 call spreads.

We remain unconvinced a trade higher in Indices can hold and have advised clients to sell into this strength. We suggest scaling into shorts in the S&P at 1111 and 1125. Clients own June 1050 and 1000 ES puts and are slightly under water. We advised clients to buy back the remainder of their 30 cent sugar calls today. They booked a profit on their short 30's and know hold May 25 cent calls and need a rally. The 200 day moving average held today in May at 21.92. Prices are oversold and have remained above the 200 day since April of 2009 when prices were under 15 cents/lb. Cotton was higher today but did mange to close 1.30 cents off its highs. Clients are positioned to take advantage of a break back below 75 cents this month. Bearish engulfing candles formed in the daily corn and wheat charts so a trade lower in the short term is likely.

Those that have yet to get in corn we suggest using this set back to get on board. 5 days running live cattle have closed lower; we may get a brief rally but sell it as a trade to 89.00 cents is what we are predicting in the April contract. I am confused in the metals; prices could go either way. We have clients lightly long both gold and silver but would be quick to exit on a close below $1106 in April gold and below $16.08 in May silver. For new entries we suggest trading light! The currency market is absolutely madness as 1-2% daily swings are common place in a variety of crosses. We continue to think the dollar is topping and as long as the Euro-currency can hold the recent lows we think a moderate bounce is likely; 1.38/1.39. The Pound remains the dog and should be sold on rallies but only for traders with a high tolerance for risk.

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

For the last trading day to be on the 26th of the month just doesn't seem right. Needless to say based on the market action today there seemed to be some month end window dressing, It will be interesting how we start the month of March next Monday. Oil remained range bound ending the week near the top of the recent range. We are still advising being a seller near $80 and expect a trade near $75 in the coming weeks. Clients own May $75/70 put spreads; as a side-note they do not need to go intrinsic to make money unless they chose to hold until expiration. As promised we advised clients to start buying April natural gas futures today; filled around $4.80. We are looking for a move of 50-75 cents higher in the next 30/45 days.

We maintain that indices are a sell rallies market and expect to see a trade less than 1000 in the S&P by Memorial Day. Clients are sellers on futures at 1111 and 1125 and are positioned in June puts. May sugar closed on the trend line that has held since last June. We are cautiously optimistic and have clients positioned in May calls looking for a trade back to 26 cents. Cotton was higher again today; gaining almost 3 1/2 cents or 4.3% on the week. We expect prices to make their way back below 75 cents on the May contract in the month of March. 30-yr bonds quietly gained almost 3 handles this week and no ones is paying attention. That leads me to believe there is more upside; clients are not advised to partake in the upside but will be eager to sell from higher ground.

A portion of your commodity portfolio should be in grains more specifically corn if it is not already. May corn closed at a 6 week high today and looking at the weekly chart this could just be the beginning. Take a look and draw your own conclusion. Live cattle were down on the week but higher on the day. We have clients positioned short futures and long puts to take advantage of a lower trade. May silver traded up to major resistance near $16.50 today; next week will tell the story if we can get thru those levels. On a close above $16.50 we should see a trade back above $17/ounce, perhaps as high as $17.50 before any major resistance. April gold is above both the 50 and 100 day moving average but we still need a settlement over $1128 to confirm the downside is done. The dollar traded below the 20 day moving average but until we get a close below expect sideways action; that level is 80.25 on the March contract. The waters are murky in terms of other currencies; clients only have light longs in the Euro via April options expecting 1.39 next week.

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

These markets seem to change minute to minute...hour to hour...day to day. The 40 day moving average that we quoted yesterday was re-visited today and held in oil. Being that we did not make a new high we are still operating under the impression that prices need to move lower before we get any substantial upside. We would expect on a breach of $78 in April to see a trade down to $75/75.50. Clients are currently not long or short oil and are looking to buy on a dip. We did not move on natural gas futures today though we expect to be a buyer before the weekend. Instead this week those wanting exposure we are advising June $5/5.50 call spreads.

For the last 4 sessions stocks have been range bound between the 50 day and 100 day moving averages. We expect for prices to turn south and have positioned clients to take advantage of such a move. A close below 1090 in the S&P should signal a trade back to 1050. Sugar gained 3% today closing back above the 100 day moving average. As long as yesterdays low holds in the May contract at 23.49 we like being long. Unfortunately we did not get filled this morning buying back the 30 cent leg. Clients are still taking advantage of the upside but we would like to buy back that leg in the coming sessions.

July cotton was lower by almost 1% today; clients are positioned short expecting a trade back near 75 cents. We do not think Treasuries have moved high enough to sell but a trade closer to 118′00 in June a sale of 30-yr bonds should be on your radar. Agriculture recouped yesterday's losses; the standouts were corn gaining 2%, soy meal 1.9% and wheat 1.6%. We continue to feel being long corn via options and futures heading into the next USDA report on March12th makes sense. Live cattle were lower for the second day in a row closing 1.7% off their 2010 highs from last week. Clients are positioned in options and futures to take advantage of a trade down to 89.00 in April.

A move above the 200 day moving average was rejected today in March silver. Prices could go either way; use $16 as resistance and $15.50 as support to help you navigate these treacherous waters. A close below $1100 today in April gold means we should see at least an attempt at lower ground; support is seen at $1080 followed by $1065. We still cannot rule out a trade back to $1045; a level seen just 2 weeks ago. We are not establishing new longs at this point but are holding August $1150/1250 call spreads and are slightly under water for clients. As to not miss a move higher in the Euro-currency in case we get one which we do think is long over due, we lightly bought April 140 calls today for clients for $762.50/per. On a move to 140 in the next 1/2 weeks these should be worth $1350-1500/per. We are not comfortable with futures being if things unravel in Europe a trade to 1.33 could happen. Worse case these options can go worthless; and again clients have a very small position.

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

All eyes will be on the US dollar as the risk aversion trade and news whether a bailout will or will not happen out of Europe continues to be the driving force. As noted in our commentary Monday we expect some type of resolution and the flow of money that went into Treasuries and the dollar last week to find its way back to equities and commodities.

Now for the trades: Oil put in an impressive showing today closing virtually 3% higher. We would still suggest waiting for the inventory number this week before committing fresh capital. We should have some new suggestions in the coming sessions. RBOB was higher by 2%; clients are long June call spreads anticipating a trade back near $2.15/2.20. Natural gas could go either way; we will look at longs closer to $5 and shorts closer to $6. In the middle of the range we have NO interest. Indices are rallying; we expect 1084 and then potentially 1100 in the S&P. On that we will be buying clients June 1000 puts. Today's price $1800, we will be working limits for less in the coming days. USDA report was friendly to most agriculture products; as for softs cotton was up the daily limit and OJ a gainer by 2.5%.Clients own no cotton but they are long OJ. They are still looking for a trade up to $1.50 and have gtc profit orders working.

If we get a bailout in Europe expect Treasuries to fall back; we may look at selling NOB spreads in the coming sessions (short 30-yr/long 10-yr).Clients continue to scale into shorts in long dated Euro-dollars. I would've hoped for more out of corn today though prices were still higher on the day. We did not get a bullish reaction from the USDA but in 2 weeks if we get talk of planting delays or 6 weeks from now we get a bullish planting intentions report these levels may not be seen for some time. We like long exposure with a 3-6 month time frame. Clients were advised to take off their April live cattle calls at a profit today and to buy June futures against their April shorts. We expect this trade to play out with a move lower from here (exit April) and then a resumption of the uptrend (long June). On the exit clients made approx. $600 which is about the same amount they are down on their April futures. The difference is they raised cash and lowered their exposure and margin. April lean hogs were unable to penetrate the trend line and closed back below the 20 day moving average. For now sit on your hands.

Silver and gold were higher but we need to see an interim top in the US dollar to feel comfortable adding to client's positions. If gold has consecutive closes back above the 50 day moving average I will reconsider; in April at $1086. Nothing new in silver; clients hold light long exposure. The Euro/Yen cooperated today for a change as clients picked up just over $1800 on their spread. With some luck they will be out of this trade at a profit in the coming 48 hours. A trade to 1.3900 in the Euro or 1.1000 in the Yen is what we would be looking for. The dollar traded below the 20 day MA but closed above; use that level as your pivot point at 79.80.

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

March feeder cattle futures on the Chicago Mercantile Exchange have recently seen a strong upside bounce from the February low of $97.10, which has in turn re-established a two-month-old uptrend on the daily bar chart. Prices Tuesday notched a five-month high of $100.15, as of this writing. Bulls have gained fresh near-term technical momentum the past three trading sessions.

Their next upside price objective is producing a close in March feeders above strong chart resistance at the September 2009 high of $101.55. Above that lies strong technical resistance at the contract high of $102.70. Chart support for March feeder cattle is located at Tuesday's low of $99.37, at $99.00 and then at $98.50. Strong trend-line chart support is located at the $97.50 area. Stay tuned! Jim Wyckoff

Energies caught fire today and finally started to trade the way we've been forecasting in recent sessions. Crude closed 2.5% higher on the day; if March can close above $75/barrel in the next few days that should confirm an interim bottom. Clients are positioned in May call spreads to take advantage. Natural gas was a gainer by 5.5%; as we published in our commentary this morning we're suggesting light long exposure in March futures with stops below last weeks' lows and April 75 cent call spreads. Weather permitting we could get a test of $6 next week. We would wait for more of a bounce and sell Indices; ideally the ES & SP allows a sale between 1105/1115 area in the March contract. OJ prices regained their footing today higher by 1 penny; clients remain long via May back ratio spreads.

Another $50-75 lower in cocoa we suggest taking profits on shorts. If in fact sugar can correct the calendar spreads (long July/short March) should allow traders whom stuck with this trade to book a profit; the spread picked up $571.10/per today. Treasuries remain range bound; we suggest the sidelines here for now. Continue to scale into shorts in Euro-dollars in 2011 contracts. Clients continue to accumulate May and July calls in corn and December futures ahead of the upcoming USDA reports. Still looking for lower pricing in live cattle to re-establish longs for clients. Now that the 20 day moving average was busted in lean hogs we would refrain from trying to get long; next support is seen at 64.80 and then 62.60 in the April contract.

The dollar could be making an interim top. A number of Central banks meet on rates this week so stay alert. At the moment we have no new suggestions but as the week progresses we will..stay tuned. Silver is back above the 100 day moving average gaining 3% on the day. We will be looking to add to clients longs on more upside. April gold is back above the 50 day moving average and similarly if the recent lows hold we would suggest adding to your longs.

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

Any trader who tries to pick tops or pick bottoms is destined to fail. When we buy/sell clients a commodity it is not because we are picking a bottom or top but rather we think either the commodity is undervalued or overvalued so we are looking for a move in the coming hours, days, weeks or months. Oil closed down today near the weekly lows not a great end to the week but we remain confident that this is a good level for traders with a time frame over 4 weeks. As we've voiced we feel we are close to turning higher and expect $80 before the May contracts expire. Aggressive clients started buying natural gas with stops below the weekly lows today. We prefer May call spreads and will have some ideas next week.

The rally I was waiting for to sell the ES and S&P may not come; some of our more aggressive clients are short and I commend them for their bravery. We see resistance at 1082 and support at 1055 followed by 1030. Cocoa was lower by 2.3%, those short look to book profits on trade below 3150 next week. We should know Monday if sugar will correct or not as prices took 3 attempts at 30 cents this week and failed. Clients that hold calendar spreads were advised to buy May call protection against a breakout to new highs. OJ was lower by 5% today though the trend line that has held since October is still intact on the May contract. If that level gives way we may cut losses on client's options next week. March silver held $16/ounce again today and gold was only lower by $2. This in not too bad considering the action in outside markets. Our sentiments have not changed. Euro-dollars end the week back at pre Fed levels; we still suggest lightly scaling into shorts or buying long dated puts.

Clients have no exposure yet in soybeans or soy meal so we welcome the slide lower but corn down 1.5% we do not like as much. December is trading at the lowest level since the first week of October; we're suggesting getting long. Clients went flat on their June live cattle at a small profit; there is too much uncertainty presently. On a break we would look to re-enter bullish plays. Continue to sell rallies in the Pound. Clients took off their Aussie puts today in the morning at a small loss on the Q4 GDP#. I am impressed with the dollars strength this week but moving forward expect a sideways 77/80 cent range NOT the appreciation we've seen.

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