Sloppy Action

Light volume and a holiday week so do not read to much into the action this week. As we’ve stated for the last few weeks we’re expecting more downside in the immediate future and welcome rallies as selling opportunities in most products we trade with clients. We remain bearish Crude oil with the same advice as yesterday. Expect the 9 day MA to act as resistance at $98.65 with support eyed at the 18 day MA at $96.25 in the January contract. We expect in the coming weeks to see oil make its way to $92 and potentially under $90/barrel…trade accordingly. Being we’ve seen a 20-25 cent break in the distillates we’ve advised those needing to hedge to re-establish a 50% hedge. We could see lower pricing but the fact that we have seen the depreciation we’ve seen we see it prudent to have partial protection…trade accordingly.
Echoing yesterday’s advice aggressive traders can start scaling back into bullish trades in natural gas. A settlement over $3.65 should signal a trade back to $4.00 in the coming weeks. The 50 day MA continues to act as a pivot point capping rallies in the S&P today and the Dow has bounced around that level all day. We see further downside on light holiday volume to finish out the week. A 61.8% Fibonacci retracement drags the S&P 25 points from current levels and 325 lower in the Dow. Gold held yesterday’s low gaining 1.25% today. If the 100 day MA caps any further upside at $1710 expect new lows. Silver advanced just over 5% today and settled above the 40 day MA. This action has made us less bearish but we still would like to see a trade above $33.50 in December to believe there is not further downside.
The dollar and Yen look like traders could be sellers at these levels while all other crosses appear to be finding mild support. Our suggestion is exiting remaining Pound shorts while remaining short he Yen. On a positive day in cocoa tomorrow continue to scale into March bullish trades. Tighten stops in Euro-dollars and let the market stop you out if we get a rally from oversold levels. If in a profit in grain shorts book profits and move to the sidelines. Lean hogs are approaching over bought levels…on a probe above 92.00 in February book profits. We have yet to get clients re-positioned long but we may need to buy at higher levels than previously reported based on the recent action…stay tuned.
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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