Crude oil was higher for the first time in 4 sessions but we only gained 70 cents after the $7 route that is not much. It appears that buyers are emerging but we would suggest waiting for the inventory # this week before establishing fresh positions. For now $70 should support and $73 should act as resistance in the March contract. Natural gas reversed to close down almost 2% on the day. Clients are flat though we think lower pricing is likely we wish to have no exposure. Clients are starting to buy June RBOB call spreads anticipating prices to get back above $2.20 in the coming months; we like this trade and clients currently own $2.16/2.28 spreads. We will be looking to sell rallies in the ES and SP for clients; we see resistance at 1069, 1084, 1100.
For the most part softs and ag’s were bid up today ahead of tomorrow’s USDA report. Sugar closed back above the 50 day moving average but well off its highs today gaining 1.6%. We are still looking for a trade lower and are pricing out May and July calls to purchase if we get a break. On a trade near $1.50 in May OJ we will be looking for an exit on clients longs. Corn a gainer by 1.3%, wheat by 2.25%, soybeans up by 1.75%. Clients are positioned long corn and soybean meal. Continue to scale into short exposure in the Euro-dollar! We are continuing to get mixed signals in live cattle; the fundamentals say lower and the technicals say higher so be careful. Clients are in a delta neutral strategy in April live cattle. April lean hogs are back above the 20 day moving average but failed to get above the trend line. We have no exposure with clients and would suggest giving the trade a few days before making a call on direction.
Silver and gold were slightly higher but we still have yet to be 100% convinced that the selling is over. Clients are lightly long silver and have no gold exposure unless they put the trade on themselves. Clients were advised to go long the Aussie today via June 90 cent calls; today at just under $1400/per. Additionally currency traders are still long the Euro and short the Yen. This trade got a little better today but clients are still under water.
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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