Hopefully this does not fall on deaf ears but stocks, metals and energies should see further downside…a correction not the end in my opinion. A near 2% break in Crude today with a close below the trend line mentioned in previous posts. We also challenged the 40 day MA a level that has supported Crude futures for going on two months. A breach of $105 in May should confirm a test of $100 in the coming weeks. The distillates also appear to be breaking down so without their spillover strength expect depreciation in the energy complex moving forward. Natural gas continues to fall as whispers of a sub $2 trade are being heard again…run far away. Stocks did close lower but were able to dance above the 9 day MA. This is support level one with the 20 day MA being the true test. My contention is we breach both levels in the coming sessions and see prices retreat 3-4%…this is my opinion.
Until prices close below 1383 in the S&P and 13010 in the Dow I would suggest the sidelines. Gold gave up 1.3% closing back in the middle of the recent trading range. Fade rallies with stops just above $1700 in June. May silver is back under its 100 day MA making its way to new lows in my opinion. Once prices clear $31 I expect quick work until we see $29/ounce. I remain bearish sugar and view today just as a pause in the downward acceleration. After a 5% advance yesterday coffee trimmed gains today losing 3%. On a trade near $2.00 in May I would be willing to re-establish bearish trades…until then I’m a spectator.
Aggressive traders can gain short exposure in June Treasuries with stops just above their respective 20 day MAs on a closing basis. In 10yr-notes that level is 129’23 and in 30-yr bonds at 138’21. Cattle has yet to make up its mind but my mind is made up I am a seller from higher levels for clients so sit on your hands until that plays out. Wheat lost 1.4%, corn nearly 2% while soybeans were only marginally lower. I prefer more downside but time will tell especially in corn which has retraced 61.8% almost to the penny from H to L in 2012. The next few sessions will be critical and then a USDA report on Friday. CBOT corn has priced in a monster crop so I might be willing to buy closer to $6/bushel…stay tuned.
The commodity currencies look the most vulnerable but I’ve yet to put out short trade recs. The Yen remain a buy but I need to see a settlement above the 20 day MA very soon to hold onto remaining longs. That level in June futures is 1.2130.
Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor’s needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.