Monitor Relationships

Base and precious metals no longer appear to be correlated, Treasuries inverse relationship to indices no longer exist, dollar up equals commodities down right…wrong. When things do not make sense take your position size down.
Mixed results in Crude today with the front month lower and back months gaining. Take for instance just the first 2 months at the beginning of April this spread was at a 25 cent discount and today it is approaching a $3.00 discount. We got the trade over $87 in June we were looking for but without a new contract high over $87.59 in the coming sessions we expect a set back. We are still advising energy traders to use the most recent spike higher in prices in the distillates to take off longs. Last weeks lows have held so far in natural gas as prices picked up nearly 2% today. We’ve yet to make a move but for the right price in the coming sessions we like buying clients August and September call spreads. Contact us for more precise details.
Inside day in the indices but the bounce back is impressive. Continue to use the 20 day MA on the daily charts as your pivot point. We’ve been anticipating a correction like most but it has yet to materialize. Coffee was higher by 2.4% today lifting prices back to the 100 day MA. On a trade above $1.40 in September clients should hit their profit orders…check back tomorrow as today’s settlements should come in about $100 less than their limit. Not yet but at some point this week clients will likely be buyers of October 10′ and March 11′ sugar…stay tuned. Euro-dollars were off nicely today; aggressive traders could be short futures with stops above the recent highs. Clients will be using this rally in Treasuries to get short futures…stay tuned.
Clients are long June 30-yr bond puts expecting a trade closer to 116′00 in the coming weeks. Agriculture was in the red today with soybeans and soy meal suffering the most. Expect to buy this correction but from lower levels; closer to $265 in July soy meal and $9.40 in July soybeans. June live cattle traded higher for the third session today back near 96 cents. We may not get the correction anticipated in cattle so we need to go back to the drawing board…stay tuned. If hogs fail to rally tomorrow we will most likely be adding to shorts for clients.
We’re still thinking the gap in the charts about a nickel lower needs to be filled. Gold traded to fresh highs but it just does not smell right so we advised clients to liquidate their long future and options at a small profit and move to the sidelines for the next 24-48 hours. We are still waiting for a correction in silver to get clients positioned long. We missed the most recent correction and seem to be reminded of it every day. That is not necessary and we should be there next time. Copper broke the 100 day MA today and has given up over 30 cents in the last month; clients remain short looking for more.
We advised clients to take a profit on their Pound shorts today around 1.5250. We expect currencies to trade off the dollar this week; a close above 82.50 expect more upside and on a close below 82.00 expect more downside. The RBA should raise IR 0.25% tomorrow so trade accordingly.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.


Comments are closed.