Sometimes in trading I would take luck over talent. It boils down sometimes going with your gut as technical and fundamental research are necessary tools, they alone do not insure success in trading. Crude is back above the 20 day MA advancing 3.5% today. Buy dips as we anticipate a trade over $105 in May in the coming weeks. Call it short covering or perhaps as a result of a bigger draw in today’s AGA report but natural gas was higher by 5.5% trading within 1 penny of our target at $4.25. Hitting a six week high was good enough for us to book profits with clients. We see the 100 day MA at $4.25 as resistance and see support at the 20 day MA at $4.00.The 100 day MA has supported the indices now for three days running. We favor buying dips and expect a 2.5-4% rally from here.
After a 8% advance in five sessions we are prepared to reverse the trade in the Yen…exit longs at a profit and get short. We advised aggressive clients to purchase bearish ratio spreads to capitalize on a retracement back near 1.2400 in June futures. The Euro and Pound also are sales at these levels in our opinion. Positive trade in lean hogs and live cattle which are both buys; we suggest gaining bullish exposure in June contracts with respective targets at 102.00 and 118.00. The picture is unclear for us in silver so we would tighten stops or move to the sidelines. As for gold aggressive traders can buy with stops below the recent lows. Our advice is April futures or purchasing June call spreads.
Softs got a bounce today but we continue to feel this will be the weakest performing sector so pick your points for bearish trading opportunities. Ideally you used the recent set back to buy agriculture because we should trade north from here. Today corn was higher by nearly 5%, soybeans 3.75% and wheat over 7%. Clients are long corn and wheat via futures and options and still own soybean spreads that should fight back on this advance. Traders willing to weather some volatility could venture back into NOB spreads (short 30-yr bonds /long 10-yr notes). Or play the short end of the curve with bearish plays on long dated Euro-dollar contracts.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.