I’m not sure it is lifestyle choices or the wild swings in the market but I chose to lighten up on numerous positions today because I have not been sleeping well the last few night. The sentiment is clearly bullish but fasten your seat belts and be prepared for volatility if trading in the Oil arena. Clients remain in their bullish positions but on another 3% plus appreciation as we’ve seen in recent sessions we will be taking partial profits for clients. Strong support appears to be forming in natural gas…we suggest working into longs and adding to a winner if and when prices begin to appreciate. Our suggestion remains scaling into May futures and/or May bull call spreads.
I expect to see more downside follow through in the indices so aggressive traders can fade rallies. We’ve lost 3% and could see an additional 2-4% in my opinion. If the dollar breaks below the recent lows look to buy the Swissie or Yen. We advised clients cover their live cattle shorts at cost. Why because a seasoned cattle trader called me and said he was buying. We’ve yet to get clients long but expect that to be the trade in coming sessions. Gold and silver were higher…what’s new…I don’t trust these prices and think a correction is coming. Cotton came off limit but still finished down 2% on the day. We feel there is more downside to come…trade accordingly. Coffee also gave up nearly 2% today; we suggest bearish exposure here as well.
We suggested Ag traders to buy May soybean oil and December corn futures and options today. The 100 day MA held in soybeans and soybean oil and the recent 10% correction may be all we get before higher ground. We anticipate a new contract high in new crop corn so scale into longs.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.