Status Quo from Fed

Nothing new to report from Uncle Ben and his cronies but at least there was more talk of inflation with rising commodity prices. The $2.50 range carried on in Crude again today as traders try to figure out what direction from here. Our bias remains bearish as we’re expecting June to trade back near $109 in the coming weeks. We’ve yet to make a move shorting the distillates with clients as both heating oil and RBOB advanced today. When we see signs of an interim top we will be looking to gain bearish exposure…stay tuned.

Aggressive traders can continue to gain bearish exposure in natural gas as we’re anticipating a break of 20-30 cents in the coming sessions. The dollar weakness persists but we do not expect much more and caution of a short squeeze in the immediate future. We will be fading rallies in the Yen as we think an interim top was made in today’s session. Live cattle gained 1.3% today…we are advising bullish exposure in June and December with the 20 day MA being our respective targets. A $21 range in gold and nearly a $2.50 range in silver…that is not for me. We think once the dust settles prices continue a correction but at the moment we recommend the sidelines. Copper broke 2% today, on a settlement below $4.20 look for a trade to $4/lb. Cocoa appreciated 2.4% lifting prices closer to our target in June at 3300…trade accordingly.

Sugar traded below but closed above the 200 day MA…continue to buy at these levels. Cotton gave up just over 4% today and we expect more downside to come. Agriculture remains a sale across the board…corn, soybeans and wheat. Clients remain short 10-yr notes and were light sellers of 2012 Eurodollars looking for lower pricing. We may be out of shorts on the long-end of the curve next week but as for the short-end we may stay with the trade for several weeks if not months…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.

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