Non event in the markets today but it does feel like markets are taking a breath for a big move…I am just torn on what direction. As trades develop I will try to keep you informed. Crude will close above $97 on the March contract today which puts the bulls back in control. Support is seen between $97-98 and aggressive traders can reverse their bearish trades and start scaling into long trades. RBOB is approaching $3…a level not seen since last April so expect momentum traders to lift this distillate further if we see a trade above that critical level. Heating oil was higher for the fifth straight session but failed to make a higher high. I am the minority but I’m thinking we need the distillates to come off 15-20 cents/gallon before any substantial upside. I have advised clients that trade here to hold off on purchases waiting for a break in prices. No interest in natural gas..the moves are too sporadic.
It sounds like a broken record and by no means fall asleep at the wheel but I remain friendly to stocks until the 9 day MA is penetrated. How high do prices go I have no idea as they have already exceeded my expectations. June gold continues to run into resistance between $1760-1765. I think there is a risk of a $50-75 correction though I’ve been voicing that for a week to non-believers. Silver also looks ripe for a correction but I reserve the right to change my mind on consecutive settlements above $34/ounce in March which has yet to happen. OJ has closed lower 10 out of the last 12 sessions after reaching record highs nearly 3 weeks ago. The near 15% depreciation in my opinion is just the beginning of a deeper fall that could drag prices in March closer to $1.70.
The 20 day MA’s are the pivot point in Treasuries so with 10-yr notes and 30-yr bonds closing back below that level I shift slightly bearish. My clients have no exposure we as we view better opportunities elsewhere. Ag was flat today anticipating tomorrow’s USDA report. I would open the opportunity to buy a break in this complex but clients have been advised to go into the report flat. Any longs should have tight stops and do not rule out a limit up/limit down open. The report comes out at 830 AM and the market is closed until 1030 AM so the position you are in at as of 730AM is the position you hold into the report. Live cattle were slightly higher while lean hogs were slightly lower. As for trade I would suggest buying a break in pigs and cows.
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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