Volatility to Continue

There may be a number of reasons why but the bottom line is volatility in the commodity markets is here to stay. June Crude oil is back above the 20 day MA having gained $4 on its way to $87 in our opinion. RBOB and heating oil are on the verge or breaking out to new highs; we suggest taking profits on up days because IF we get a correction the distillates are more of a challenge to trade out of. Natural gas was lower by nearly 8% today on a bearish inventory report; on a new low take a loss on long futures. Clients just missed their entry order on their September 50 cent call spreads today, they will try again tomorrow.
Indices are back above the 20 day moving average; continue to use that level as the pivot point. Fresh short entries should have taken a small loss being we settled above 1200 in the S&P. Sugar looks to be making a bottom and after 11 straight down weeks it is about time. Clients will be approaching October from the long side next week if we see more positive action tomorrow. Make sure you put in profit orders on your coffee as this market can be quite volatile; we’re anticipating a trade of 5 plus cents to the upside. Clients 30-yr bond puts got hit a little today. We suggested holding as we still see a trade closer to 116′00 in the June contract next week. More buying from China helped corn in early dealings but we did taper off by days end closing only 1.4% higher. July outright calls are picking up as well as December futures but some of our clients still need to lift their short July hedges. We suggest on a setback to do so even if it is at a small loss and expect to make that up on your December longs.
We continue to feel KCBOT ad CBOT wheat are a sale above $5. Lean hogs were lower again today but we think more sellers will appear on a breach of the 20 day MA; in June at 83.45. Clients hold a small long in gold options expecting $1200 in the coming weeks. Silver was higher by 2% today recouping the losses from the prior three sessions closing at $18.50 today. Clients have very minimal long exposure in futures. We will be looking to buy dips but may need to raise our buy objective…stay tuned. Copper has failed to break the 10 day MA the last two sessions, when it does look for 10 cents quickly. Clients were able to but the same June Pound put options liquidated yesterday at a profit back on close to their original entry price. We are looking for prices to fall off again into next week.
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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