Regular readers are probably tired of hearing this but as for oil we are anticipating a $4/5 correction form these levels. We decided to push some money into the middle with some of our aggressive clients and advised them to buy April $82.50/$75 put spreads. A 38.2% Fibonacci retracement takes prices back to $78.50 on the February contract. Natural gas posted another lower day today; we expect a trade down to $5.25.
Sugar lost just under 2% today, our prediction of a back off looks to be right but the spread worked against clients today. Remember we’re expecting March to lose more than July and that was not the case today. OJ was up limit again today on more talk of freezing temperatures in Florida, we had mentioned potentially going short via options we’ve opted to get out of its way thinking out guessing Mother Nature is too grave of a risk. Silver held the $18 level and posted it’s sixth consecutive showing. We suggested longs and like the idea of May $2/3 call spreads or scale trading futures with a long bias. As long as gold holds the 20 day moving, which comes in at $1113 we like having clients long. Some clients bought June $1170/ $1300 call spreads today for just under $3200/per.
Corn closed up 5′4 cents near the recent highs. If given the chance we suggest lightening up on March longs ahead of next Tuesday’s USDA report. Clients were advised to book a profit on their March soybeans shorts from Wednesday. Following the NFP clients legged out of their NOB spreads booking a profit on their short March 10-yr notes, they currently hold longs in March 30-yr bonds and are under water. From here we expect to see 30-yr bonds advance 2 1/2 – 3 basis points. Sell into strength in the Euro-dollars. We are trading both the September and December 2010 contracts for clients. A reversal of fortune from yesterday with the dollar losing ground and all crosses gaining. Clients remain long the yen expecting a move to 111/112. We most likely will not take the trade but we do expect to see moves north in the Swiss Franc, Euro & British Pound. Nothing new in live cattle…as long as the 20 day moving average holds we like being long; in February at 88.80. If given the chance exit longs on rallies and look to roll out to further months.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
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