Extended Period

Another FOMC meeting has passed with no change in rates or verbiage. The lack of inflation comments are comical as gold will most likely flirt with $1200/ounce and oil is approaching $90/barrel. As a trader one cannot fight the Fed but they are just kicking the can down the road in my opinion by keeping rates this low this long. They want to see signs of employment improving, the real rate of unemployment is closer to 20% yet the NFP # says under 10% so go figure.
Now for the markets: Solid showing in oil on a bearish inventory report. Unless $82 gives way in the next few sessions we should bounce from here to near $87 in June. June natural gas is probing $4.43; an upside breakout just around the corner? Stocks were slightly higher, the 20 day MA should serve as the pivot point. Aggressive traders could sell rallies but institute stops! We expect a set back to drag prices in the S&P back near 1150 but we would suggest cutting losses on a settlement above 1200. July sugar is below 15 cents for the first time in 10 months; wait for a bottom before buying. Coffee grinded higher by 2.25% today. We’re expecting another 5 cents in the futures and then would be looking to book profits on longs for clients.
We were not brave enough to move on futures but some clients did buy June 30-yr bond puts expecting a trade closer to 116′00 by the end of next week. Corn was higher by nearly 3% on rumors of more buying from China. We will be looking to offset the July short hedges for clients on a setback. We are still suggesting buying July calls and long December futures anticipating $4.50/bushel. Aggressive traders could sell rallies in KCBOT or CBOT wheat with stops above the recent highs. The 20 day MA seems to be supportive in June live cattle; clients may enter longs tomorrow with stops below that level on a closing basis…stay tuned.
We have positioned clients to take advantage of what we view as a 3-5% drop coming in lean hogs filing the gap from late March. Clients were reluctant buyers of gold on today’s breakout; they bought August $1200/1275 call spreads expecting this leg to lift prices back over $1200/ounce. Nothing done on silver as of yet as we are perplexed on the divergence between the two metals. Our targets were hit on the British pound today and clients were advised to book profits of 30%.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.