Premature Victory Celebration

The recent acceleration in various asset classes has been nice in Q1 but my opinion is it may be too early to claim victory or announce a recovery. Crude oil continues to dance just above its 9 and 18 day MAs. Tomorrow’s inventory report will be the next catalyst. My inclination remains a break lower is far over due and I’ve advised clients to wade into bearish trades expecting a trade bear $100/barrel. Continue to pay attention to outside markets but as long as the distillates do not see higher ground I remain bearish. Natural gas remains the laggard having lost 3 out of the last 4 sessions closing at fresh contract lows. Stocks traded to new contract highs before backing off to close near their lows. Once again I would not pick a top but on a close below the 20 day MA I’d be willing to re-establish shorts. Those levels are 13005 in the Dow and 1382 in the S&P.
The 100 day MA halted any further upside in gold with prices closing marginally lower today. $1700 should act as resistance while I see support at $1640 in June. Scale into bearish trades on a trade above $1700 with stops just above $1720. It was not the 100 day but rather the 50 day MA that capped rallies in May silver; that level is $33.45. A close under the 100 day MA would signal this was a failed rally attempt; that level is $32.35. Sugar lost 2% today and is off 6.5% in the last three sessions since I’ve been advising bearish trades. This move should continue as our target remains 23 cents in May…trails stops. Coffee has closed higher the last 3 sessions advancing nearly 5% today alone. There should be more appreciation before selling re-emerges. The down sloping trend line since August should cap significant upside around the $2.00 level in May futures…trade accordingly.
If June 10-yr notes and 30-yr bonds test their 20 day MA tomorrow and fail scale into bearish trades with stops just above those levels. In 10-yr notes at 129’23 and in 30-yr bonds 138’21. Cattle are through their 9 day MAs so you should have been stopped at a profit on all remaining shorts. Remain on the sidelines until further notification. Ags were lower across the board with wheat the biggest loser giving up 3%. If you notice the mid day reversal yesterday in all products this could be the start of a correction we wanted ahead of the USDA report at week’s end. I’ll keep you posted but I want at least another 20-30 cents before the report to entertain longs for clients…stay tuned. As I voiced yesterday the Yen needs to hold 1.2000 for me to remain friendly. No other crosses have a clear buy or sell signal in my opinion.
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.

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