Shortened Week Starts With a BANG

We wanted confirmation before taking a stance in crude and with prices convincingly higher today we are thinking the recent shake out may be all the bears get. Today’s move carried prices back above the 200 day moving average and at the highs we traded to the 40 day moving average. As long as April can hold above $76 on a closing basis we suggest light long exposure via futures in April or call spreads in June. We’ve yet to make a move for clients but the June $80/85 is a spread we may be interested in; today the price is $2000…stay tuned. RBOB was higher by 3% today; clients are long June expecting a trade to $2.15/2.20. We are interested in buying May natural gas for clients on a further correction. A trade closer to $5 most likely gets them in the trade.
Indices are back above the 100 day moving average as of the settlement today. As suggested in our commentary this morning we would use the current rally to trade out of longs, establish hedges or for the speculator to get short. Clients started buying June ES 1000 puts today for $1450/per. Softs were higher across the board; on a settlement above 27.30 in May sugar we suggest being long, clients are positioned long May coffee expecting a trade back over $1.40. Similar to the softs Ag’s were well bid today; corn, wheat and soybeans were higher by 1.50-3.80%. Aggressive traders should buys dips in May soybeans though we prefer long exposure in May or July soy meal and bullish exposure in May, July and December corn. From these levels we anticipate a move of 15% plus in corn futures…trade accordingly. Cattle were not immune to the bullish sentiment commodity wide today with live cattle gaining 1.50%. The spread was virtually unchanged but clients long April puts lost some value today. We would not deviate from the original strategy and still expect prices to fade in the near future.
Perhaps the most active sector was metals; gold higher by 2.80%, silver by 4.50%, copper 4.50% higher and even palladium and platinum joined the party gaining 3.70% and 2.0% respectively. Silver regained the 200 day moving average, we see this leg carrying prices at least $1 higher maybe $2. We would re-evaluate our positions on a trade back above $18/ounce. April gold had the first close back above the 50 day moving as we suggested in recent blogs and commentaries. Ideally we would get confirmation tomorrow and then we will advise prices for futures entries. As for option plays clients were advised to buy August $1150/1250 call spreads today; paid $2850/per. The US dollar got hit today taking prices back to the 31 day MA; use 79.50 in the March contract as your pivot point. We expect more upside in the next few session in the Cable and will look at selling futures around 1.5950/1.6000 for clients. The Euro-Yen spread picked up $2239/per today. Another day like this and clients will be showing a profit on this trade.
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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