A Glimpse into 2010

If the first day of trading in the commodity market is any tell of what is to come in 2010 than commodity bulls will remain in the drivers seat. With out reading too much into today’s movement the dollar got clipped and funds were buying. Crude oil rallied an additional $2 today which has prices approaching their October highs. The easy money has been made on longs and we would not rule out a set back on profit taking. We will be looking to approach longs for clients on a $3-5 set back. We are expecting a correction in natural gas and would be willing to explore longs closer to $5.25. We are trying to work out of May longs in sugar for clients and then will look to re-establish longs on a 2-3 cent pull back.
The almost 20% appreciation in the last 3 weeks has prices a bit ahead of themselves in my opinion in the short run. We missed a good entry for coffee longs last week as prices were higher by 4.25% today. We continue to price out bullish plays in May on futures and options…stay tuned.
The stock market raced to new highs today and though we do not suggest jumping in front of this freight train we’re looking to gain short exposure, most likely after Friday’s NFP #. As long as February gold does not break $1080 and March silver stays above $16.80 on a closing basis we like having clients long. For fresh entries put stops below last weeks lows in futures, for options we’re helping clients with strategies with call spreads in both metals out until at least May. As we hinted in this mornings commentary the recent appreciation in oats may be signaling an impending bullish moves in agriculture; today did not disappoint.
Our pick of the litter remains longs in corn. The Euro-dollar technically looks set for a rally…we would suggest fading it. Though we remain bullish live cattle I’m a bit disappointed with today’s activity with February losing almost 1%. Ideally the 20 day moving average at 85.00 should support. Longer term we still expect 89/90 cents.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.