Crude oil futures have appreciated 8% in the last two sessions; ideally you have taken advantage of this recent surge. It is my opinion that when we get through the highs from early January we will see a trade back near $100; that being said buy dips in futures and/or options. We would still like to see a lower trade in natural gas before buying for clients but we reserve the right to change our mind if prices fail to break the 100 day MA; that level has supported for the last three sessions.
The indices have probed the 20 day MA but the trend line that has held since September supported today’s action. In full disclosure some clients are holding March ES put options at a loss. The Euro and Pound were higher today but we still like the idea of fading rallies in these two crosses. Lean hogs and live cattle continue to surge higher; we are waiting for a set back before re-establishing longs for clients. The likely trade strategy we will implement is getting long futures and selling out of the money calls…stay tuned. Gold was marginally lower and silver marginally higher in two sided trade today. We’re operating under the influence an interim low was obtained in both metals last week and suggest gaining bullish exposure.
Grains were higher across the board today but we’re looking for a lower entry to be a buyer ahead of next week’s USDA report. Most likely in new crop corn and soybeans for clients. We’ve started to get aggressive clients short cotton again, our suggestion is a bearish options strategy in May contracts expecting a trade 10% lower in the coming weeks. As for this sector we have started to get clients short cotton and coffee looking for lower trade.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results