Is the commodity bull market back or is this just a tradable bounce…I do not care either work for me. Crude oil got the bounce we were looking for advancing just over 6% as of this post. Trail stops on longs as traders do not want to give up all of a $6,000 move/per futures. We advised clients in June options to roll out to July to allow the trade to work a little. From here we should make an attempt at the 50 day MA; in June at $107.30…trade accordingly.
With RBOB up 7% today and heating oil nearly 5% ideally hedgers started legging back into their fall hedges. The closer natural gas gets to $4/BTU the more interested we are in re-establishing longs for speculators…stay tuned. Clients have no exposure in the indices but we have a slightly bullish bias and would continue to use the 50 day MA as the pivot point; which is now support. In the S&P at 1332 and in the Dow at 12475. The Cable traded down to the trend line and held in early dealings so we advised clients to book profits on their shorts. A trade below 74.30 or above 75.50 would likely dictate the direction in the US dollar from here …trade accordingly.
Echoing last week aggressive traders could get long lean hogs and live cattle with tight stops below the recent lows. Our favored play is bullish exposure in December live cattle with a $122.00 target. We expect more appreciation in both gold and silver from here and recommend bullish exposure thinking we could see another $35-50 move north in gold and $3-5 in this leg in silver respectively. We’ve advised a combination of options and futures plays depending on the clients account size and risk tolerance. Sugar remains on our buy list and coffee on our sell list. Continue to use set backs in corn, soybeans and I guess wheat as well to be a buyer. We may re-examine buying KCBOT wheat against CBOT wheat in future sessions…stay tuned.
We are closer to crying uncle with our bearish plays in the Treasury complex if we do not turn south very soon…stay tuned. Some clients are short 10-yr notes and Euro-dollars which are both losing propositions.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.