Energy: For the last three days Crude oil has been range bound between the 61.8% Fib level and 38.2% level. Play the breakout and I’m thinking to the upside under the impression a trade above $95/barrel in May should lead to $97. The 8 day MA capped upside in RBOB as prices failed today falling to 3 ½ month lows. Solid support is not seen for 8-10 cents. Heating oil broke support dragging prices to 8 month lows. The only viable trade I see in products currently is long RBOB/short heating oil 1:1. Support at the 8 day MA has held the last three sessions with natural gas probing fresh highs. I don’t agree but higher ground looks likely. I will not take the trade with clients.
Stock Indices: The train continues to advance but when will it derail? Lower IR and uncertainty in overseas markets continues to entice flow into US equities but I will be absent for any further upside. My stance remains we will get a 10% correction sooner rather than later. It will take a trade under the 9 day MA for this to be confirmed, in June S&P at 1557 and in the Dow at 14510.
Metals: Gold bounced off the same support that held last week around $1550 in June futures. Bulls are digging in their heels and now that weak longs have been shaken out I think we can resume a trade higher. I am the minority but I think we get a bounce to at least $1590/ounce in the coming weeks. A settlement above $1590 and $1620 would be challenged. Even with positive close silver has a lower high and lower low. We need to see prices get above the down sloping trend line that has capped upside the last three sessions. Current longs be willing to cut losses on a trade below $27/ounce. This willing to stay the course don’t be discouraged by the volatility as I see prices near $29 by Independence day.
Softs: Cocoa is at a nine week high as prices approach my 2300 objective in May. As long as the dollar continues south we should gain traction. Cotton gave up nearly 0.90% but 84.50 remains the line in the sand. A breach of that level should lead to a trade near 82 cents in May. Higher trade was rejected in OJ yesterday as prices are a dime off their highs trading under the 9 day MA for the first time in one week. $1.34 is my short term objective in May futures. May coffee appears to be establishing a base in May at $1.36. A close above $1.38 gets me intrigued in bullish trade once again.
Treasuries: 30-yr bonds have slid three out of the last four days and the 38.2% Fib level that was support know is resistance. A trade under 145’00 is my stance short term. 10-yr notes also appear poised for lower trade closing under the 9 day MA the last two sessions. The next support level is seen at 132’00…my next objective. Scale into bearish trade in long date Eurodollars.
Livestock: The 3.2% depreciation in live cattle the last two weeks may be enough to attract buying. $1.20 has held in June but I’ve yet to make a move …let the dust settle. Seven out of the last eight trading day’s feeder cattle have been in the red. At this juncture I am not ruling out a probe of the March lows. Sentiment remains bearish in pigs and until lean hogs retake their 9 and 20 day MAs I am in the bear camp.
Grains: Corn failed to hold onto most of its gains but we managed to close in the green now for four days running. We should see at least a partial fill of the gap but I’m not convinced the lows are in on old crop just yet. I’ve been consistent I prefer trading new crop anyway. Soybeans have reclaimed their 9 day MA closing above $14/bushel the first time since we breached that level two weeks ago. Aggressive traders could be long with tight stops. My favored play however would be July soybean meal as $390 has supported on all attempts. Check out oats and my recent report higher the last five sessions and challenging the 20 day MA today. A settlement above $3.75 should lead to follow through and foretell more green in Ags…in my opinion. Wheat futures have held the 9 day MA the last two sessions as a trade around $7/bushel seems to be a value zone in May futures. I encourage the buying of new crop wheat.
Currencies: The dollar is lower seven out of the last ten days closing under the 34 EMA for the first time since early February. The 50 day MA is 81.95…expect that level to be challenged. The Pound is approaching the 38.2% Fib level but this move is likely in the 8th inning…tighten up stops on longs. The Swiss is above its 50 day MA so we may see momentum traders lift it further. The Euro met its match at the 50 day MA but on further dollar weakness expect more upside. The outperformers today were the commodity currencies with the Kiwi and Aussie making fresh 13’ highs. Today’s chart of the day is the Loonie…read for more precise guidance. The Yen remains dog with fleas.
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