China Going on Vacation

IS there a bubble in China I do not think so as it relates to commodities but expect volatility as they will be absent from the markets next week. Though past performance is not indicative of future results I recall last year big swings and would expect the same this year. All things being equal volatility is already present so just a heads up. As for the markets oil finished lower but pared its losses. Our clients have NO exposure but we will be buying dips in the weeks to come given the opportunity. A trade below $70 should be bought! We like the action natural gas today. In the next 2 weeks we will be looking to gain long exposure in the May contract for clients via options and futures. In years past when natty bottoms in mid-winter we’ve seen a trade higher into late April (15 out of the last 19 years). Past performance is not indicative of future results. Over the next 2 weeks on a trade between 1090/1100 in the S&P we will be looking to gain short exposure with clients. Most likely by purchasing the June ES 1000 puts.
Mixed bag in the softs today; sugar held the 50 day moving average but on a breach of that level we could see a 2-3 cent drop. We are torn on if clients should be long or short this market so have chosen to stand aside. Clients were advised that did not get long exposure to coffee yesterday to get long May today as we are expecting a trade up above $1.40 in the coming weeks. Soybeans, soy meal and corn held their own today. We feel there is more upside in all 3 products though our favored Ag play is corn as most readers already know. We decided to gain more bearish exposure to live cattle by getting clients shorter today; purchasing April 90 cent put options. We are expecting a trade back to the 20 day moving average at 89.30 relatively quickly.
Silver and gold though down on today’s session both finished higher on the week. If the Greece situation straightens itself out next week we should have a clearer picture but at this point we are still waiting for confirmation of an interim bottom. Clients are slightly long May and July silver and are waiting for consecutive closes above the 50 day moving average in April gold at $1095 to be a buyer. In currencies the dollar was higher with all others in the red today; we expect that to be reversed next week. The one exception is the Yen should continue to exhibit an relationship to the stock market. Look at our commentary that will be published next Tuesday for subscribers for more concise support and resistance levels.
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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