Head Fake or Reversal?

Whether it is natural gas, corn or the S&P is the last few days’ activity a head fake or reversal? Crude recovered after losses early in the day to end virtually unchanged. We still would suggest a buy dips mentality though you can be patient being a penetration of $84 should lead to a trade closer to $82 in the May contract. Prices in natural gas are back to levels seen one week ago after a 50 cent roller coaster ride up and now back down. We are suggesting May futures with stops below the recent lows and July 50 cent call spreads.
Before making it to lower ground it appears the indices will need to bust the 20 day MA’s which are at 1167 in the S&P, 10775 in the Dow and 1952 in the NASDAQ. We would continue to use the DAX as a leading indicator to help navigate trading US indices. From today’s action it does not look like we need to be in a rush to get clients long sugar as buyers remain skittish. We will be buying July and October sugar for clients but it may be closer to 14-15 cents. Cotton was lower by nearly 3% today; the next support in July is seen at the 50 day MA. The July 80 puts are at $1250 as of today. OJ lost 3% today and is approaching a key trend line that has held since mid 2009. If it holds we will be looking to buy for clients if not a trade under $1.20 is likely. Continue to sell long dated futures in 2011
Euro-dollars with stops above the recent highs. The wind was taking out of the bulls sails in corn as the action today erased most of yesterday’s losses. What I do like about the movement in corn and soybeans is that we are expected to have the largest soybean crop in history and one of the largest in corn in a half a century and these markets have held their own. Clients are buying July calls in corn and December futures in corn. Ideally we see a trade higher in lean hogs and cattle that will set up a selling opportunity. Inside day in silver which is not a bullish development. Still searching for an $18.50 trade to exit all clients remaining July call options.
Gold has gained for the last 6 consecutive days but we may need a new catalyst to keep this train moving. If we are unable to overcome $1170 in the next few sessions we could see a trade back to $1100…stay alert. The ECB and BoE kept rates as is with the ECB staying at 1.0% and the BoE at 0.50%.
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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