Commodity Grind

There was little to no big moves just the status qou. Crude turned down today trading down over 2% as of this post. If we see a settlement below $100 I will turn bearish. Next support is seen at $98 followed by $93 on the February contract. Natural gas gave up another 2% today taking prices below $2.70. I never thought we would see this much downside but most of my clients are ready to leave the trade so my gut tells me we’re close to a turning point. The lows from 2 1/1 years ago are still 30 cents lower and at this juncture I cannot rule out a test. After testing the 9 day MA equities crept higher. Look for the grind higher to continue…1300 in the S&P and 12700 in the Dow look like likely targets.
Gold hit the 40 day MA but backed off by the close. I am targeting the 50 day MA which in the February contract is $1684. Silver also hit the 40 day MA closing higher by 0.90%. On this leg I anticipate another 3-4% appreciation. The US dollar is manic erasing previous day’s gains closing back in on the 20 day MA. Use that level as your pivot point, in March at 80.80. On continued green back weakness expect the Swissie and Euro to outperform. Aggressive traders can sell cotton with stops above the 100 day AM. A level that has rejected further upside several times in recent months. In fact March has not settled above that level since mid-June of 2011.
Day two of the OJ correction with prices down limit today . The bubble has burst and more downside is expected…trade accordingly. Treasuries could go either way..walk away for now. Let the Euro-dollar work higher and then establish bearish trades from higher levels in 2013 contracts. A bearish USDA report and markets reacted with the front month of corn down 6%, soybeans lose near 2% and wheat 6%. Further downside is expected in this complex and if prices approach the November/December lows and hold I will be looking for a buying opportunity…stay tuned. Lean hogs tested and held support so on further base building I may re-explore longs for clients.
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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