Sleeping Giants

It will not likely make headlines because it is not energy or metal but look at the last few days in some of the soft commodities. OJ and cocoa higher by 17%. This is what commodities is all about…timing. by The 9 day MA has supported Crude the last three days but unless we make a new high this week I would expect that level to give way. I have advised the sidelines and have told clients to buy the breakout or sell a a settlement below $100 in February…trade accordingly. New contract low in natural gas…where is the bottom? I do not see much more downside but I may be talking my clients position as they are long from 25 cents above current levels. With prices nearing 27 month lows how low do we go to entice buying is the question?
Five month highs in securities as we approach the Summer 2011 highs the grind higher should continue. As long as the 9 day MA acts as support expect higher ground. Gold picked up $25/ounce today making the appreciation in the last two week s over $100 with the highest closing price since mid-December. Another $35-45 I feel is in the cards. Silver gained nearly 4% today on the verge of a breakout advancing $3/ounce in the last two weeks. Further upside should be around the bend as I expect $2-3 additional upside…trade accordingly. Day two of a dollar decline but it will take a settlement back under the 20 day MA for a true correction to be underway. It could go either way but to play a correction my best idea is buying the Euro with stops below the recent lows. The best performers today were the commodity currencies so follow the action in commodities and then play the Aussie, Kiwi and Loonie accordingly. I have no currency exposure with clients that I direct.
Cocoa jumped 7.5% today to trade up to the 50 day MA for the first time in two months. See previous posts for buy recommendation and target at the 50 day MA. From here we could see more in my opinion, use today’s low as stop on new entries. Back to back limit moves in OJ with prices higher by 17% in two days. This could get ugly with prices above $2 for the first time since 2007. Thank goodness for stops as I advised shorts to take losses on yesterday’s breakout…further evidence that the market is always right. Grains should meander sideways until Thursday’s USDA. I expect fireworks but will likely be on the sidelines and react as opposed to outguess the USDA. The livestock sector found support today with feeder cattle, live cattle and lean hogs all higher on today’s session. Take remaining shorts off in live cattle on a trade above 122.00 in February.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.