Remember trading is a marathon not a sprint. It is about how much money we can make long term not every trade. Crude finished lower for the third consecutive day today trading below but closing above the 9 day MA. As we voiced yesterday on a penetration of that level expect the next stop to be the 20 day MA; in May closer to $83. Today’s trading range was $2.25 or $2,250 per futures contract so be careful. At this juncture we favor buying dips expecting a trade to $82/83 in the coming days.
Natural gas finished the week strong gaining just over 4% today carrying prices back above the 9 day MA. We advise clients to lightly buy dips in May or June futures and/or July 50 cent call spreads. Assuming last weeks low serves as an interim bottom we are positioned to take advantage of a 50-75 cent appreciation in the coming weeks.
Assuming sugar does not make fresh lows next week we should have some long ideas in options and futures…stay tuned. As promised yesterday if the trend line held in OJ we would look to make a move on behalf of clients; today clients started buying July $1.20/1.40 1:2 call spreads. We may look to add to the position next week and have some trading suggestions in futures. OJ finished 2.50% higher in today’s session. Mixed trade in Ag today with corn and wheat slightly lower and soybeans slightly higher. We still favor long exposure in corn; July calls and December futures. On a failed rally in wheat next week we may look to be a seller for clients so stay alert.
Both cattle and hogs finished at new highs this week lifting both contracts to fresh 2010 highs. We will be looking for an entry from higher levels to gain short exposure in the weeks to come. Live cattle could challenge the 2008 highs about 5 cents higher before we make a move and on hogs the 08′ highs are still over a dime away so be patient.
Gold has been nothing short of spectacular of late gaining ground 10 out of the last 11 sessions. In fact today June traded at a new 2010 high; there is likely more upside but we suggest trailing stops and lightening up as nothing moves up in a straight line. Use $1145 as support and $1190 for your next upside target. May silver got within spiting distance of $18.50 an ounce today when we advised clients to exit all remaining July options at a profit of 25-30% net. We will be now looking for dips in gold and silver before re-establishing longs for clients.
The US dollar index broke the 20 day MA and closed just above the 34 EMA. On a breach of that level at 81.00 on the June contract look for the Euro, Pound and Swissie to continue moving north. Aggressive traders can be short the Loonie with stops above the recent highs though this has bit us a few times of late we do feel a 2% fall could happen at any moment. We welcome a rally in the Yen and will be looking to sell in the next week or so for clients. We see upside resistance between 1.0850-1.0910.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.