Energy: Crude finished under the 8 day MA, and though the 18 day MA was probed the last 2 days, it has held on a closing basis. I expect a trade under that pivot point would lead to more selling -- that level is just above $96. The selling was short lived in RBOB, as prices recouped most of yesterday's losses today. We will need to see the 8 day MA breached to see more selling, in my eyes. A trade below $3/gallon in March should lead to a trade back near $2.90. Heating oil broke out to fresh highs, gaining 1.18%, as prices are approaching 5 month highs. I suspect we are very close to a tipping point, and would advise longs to tighten stops. Natural gas closed higher by better than 2.5% at its 18 day MA. I like scaling into bullish trade, thinking we could see a quick 20-30 cent appreciation.
Stock Indices: The S&P is back above its 9 day MA, closing higher by 0.84% and putting prices back above 1500. My target is the 50 day MA/38.2% Fib level at 1445 in March futures… trade accordingly. The Dow also got back yesterday's losses, picking up 65 points today. For the last 3 days, the 9 day MA has been the line in the sand, but a breach of that level should open up the flood gates. I think there are a large number of retail traders that are being sucked into chasing returns, and they will puke on what appears to be the start of a correction. Time will tell, as I hope I'm not speaking my position.
Metals: Gold made another attempt at the 50 day MA, failing once again. A trade above $1690/1695 in April would signal extended upside, but I remain in the camp that we see a trade lower before that happens. I think April futures trade under $1640 in the coming weeks. A higher low and higher high puts silver in favor, as prices pushed above their 50 day MA. Trades above $32.25 have been rejected in recent weeks, and that should remain the case, in my opinion. I have an interest in bullish trade closer to $30.50/ounce.
Softs: On the 2.46% appreciation today, cocoa is at 1 ½ week highs and closed above the down sloping trend line that had capped upside since the first week of December. I like bullish trade, thinking we could see an additional 7-10% from here. Sugar gave up 0.91% to close under its short term MAs. Buy this dip, as the prospect for higher trade in the coming weeks to months is good to me. This will be a grind, but for patient traders, a good fit and a value under 19 cents/lb. Albeit a marginal loss, cotton has finished in the red the last 4 sessions. Prices are under their 9 day MA and poised to move under their 20 day MA -- in March just under 3 cents lower. March OJ is running into resistance just under $1.25… I would buy a dip and try to play higher action in the coming weeks. Coffee is nearing oversold levels on the daily chart and with the stocks/usage relatively tight, I think bullish trade needs to be on your radar with prices near $1.40.
Treasuries: 30-year bonds did a u-turn and gave back yesterday's gains. To me, a base appears to be forming to launch a move higher in the coming weeks. 10-year notes were unable to penetrate the down sloping trend line that has capped upside since early December. I expect this to change in the coming sessions. Again, my stance is equities lower should equate to higher Treasury prices.
Livestock: April live cattle should fill the gap formed last week, which puts cattle under 1.31... until that happens, stand aside. Feeder cattle have gone nowhere of late, but lower trade looks likely here as well. March would need to trade under $1.46 for me to re-explore bullish trade for clients. Lean hogs are lower by almost 3% in the last week, but I do not see stiff support in April for an additional 2-3%.
Grains: Corn is down the last 3 days, and if we break the 20 day MA just under today's lows, more selling should persist. On bearish weekly numbers, do not rule out $7/bushel. Lighten up on bullish trade in soybeans. I am not advising bearish trade, but after a 10% appreciation in recent weeks, I think a setback could play out. Not to mention the $15 level has contained upside of late, and this is a big psychological hurdle. The easy money has been made on bearish wheat trade, so start scaling out of shorts and reversing, as I see limited downside from here.
Currencies: The dollar probed its 20 day MA, but failed to take out that level, March needs to get above 79.80 to see further upside. The euro remains a sale in my book, as I'm targeting $1.3300 in the coming weeks. The pound may continue to get beaten up, but I prefer the idea of booking profits on remaining shorts. The yen is a dog and will continue to be a dog… refrain from picking a bottom, as it will stop going down when it does. I thought a move to par was farfetched, but not so much. Only an additional 6.5% loss on top of the 17% loss we've seen in the last 4 months. Again I tip my cap to trend followers… between OJ, which they should be out of, the yen and stocks, it has been a great start to the year.
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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.