RCM Commodity Update

This week will mark the third consecutive week that Crude oil prices close lower. In that time frame prices are roughly $7 of their highs and fast approaching their 100 day MA. The sentiment remains bearish as I am expecting more downside. $97.50 in May is my first target which would complete a 38.2% Fibonacci retracement. RBOB and heating oil have likely put in an interim top as prices should move south as well. I see mild support in futures about 10 cents below current levels. Natural gas prices slid 10% this week closing lower all five sessions. The bottom has yet to be determined and I would not be trying to find it as $1 handle is likely next week. Especially with the WSJ calling a bottom in recent sessions.
Stocks remain overbought but probes of lows all week were met with buying. The 20 day MA needs to be penetrated which would put prices below the trend line that has held all of 2012. If and when that happens I’d be willing to probe bearish plays, until then stand aside. Gold is in no man’s land as I see it $30 from support and $30 from resistance. I am mildly bearish willing to fade rallies as I feel a trade closer to $1600 in June futures is around the bend. As long as silver remains below the 100 day MA in MAY at $32.35 I would remain in bearish trades. The next leg lower should drag this contract under $30… the $1M question is if we trade to $33.50 first.
Book profits in sugar shorts if you have not already taken the trade off. On a trade back near 25.50-26 cents we would re-establish bearish trades. Coffee needs to rally before I want to be short again with clients. As I said all week a trade closer to $2 in May should be viewed as a selling opportunity…the current price is $1.8245. The wounds are fresh I know but the losses should have been minor probing Treasuries this week. Aggressive traders can once again get short 10-yr notes and 30-yr bonds with stops above their recent highs. Cattle was off by nearly 2% dragging feeder cattle under $1.50 for the first time since mid-December. Do not rule out a challenge of $1.45 in May…a level which would have longs back on our radar. June live cattle are at 10 month lows and more downside is expected… a trade closer to $1.12 would have longs on our radar in live cattle. Rice was the lone loser in the AG sector with significant jumps elsewhere.
Corn even in the face of the largest projected US crop ever gained 6.5%. Wheat was higher by nearly 8% while soybeans broke out to new highs gaining 3.5%. Those long can add to their position on setbacks as we should see more upside. Corn and wheat have an additional 30 cents and soybeans 60 cents before I see significant resistance. If the dollar holds 79.00 stay short other crosses …on a breach of 79.00 in June reverse or move to the sidelines. The Yen is having trouble remaining above the 20 day MA…take profits on remaining longs. You should have been able to get 1-2 cents out of this trade depending on your entry.
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.

Comments are closed.