Energy: Crude oil will finish lower 4 out of 5 sessions this week, closing under its 8 and 18 day MA today. I think we would be down more if it was not for the strength in the distillates and the upward pull from Brent. I still think we can get a trade to $93, but do not overstay your welcome if prices get there, and be ready to take a profit on bearish trade. The 8 day MA has supported in RBOB all week, with prices finishing up 2% near its weekly highs. I have yet to get short, but I have advised any longs to book profits, thinking a correction is imminent. Heating oil has been on a tear lately, ending at 9 month highs, as prices are within 5-6 cents of breaking out again. I would say we are very close to a pivot point, but I have no money on the line at the moment with clients. In the last 3 weeks, prices are up 8% and appear over extended. Natural gas gave up 0.64% to close lower for the last 3 sessions. I think we get pressure short term, so I advised clients to move to the sidelines at a slight profit or B/E on their latest long entries.
Stock Indices: The 9 day MA served as support today as the S&P closed at its highest level in 5 years, making it 6 consecutive weeks. Traders that have ridden this train higher should have tight stops at these levels, so on a move lower, expect selling to intensify. The 9 day MA in March futures is just above 1500. Again, I'm not smart enough to know the catalyst, but a move back to the 50 day MA -- currently at 1450 -- in the coming weeks is not out of the question, in my eyes. The Dow finished higher as well, but failed to get above 14000. Being we are this close, we will likely probe that level very soon. The 9 day MA is the line in the sand here as well. We will need to see a close under that pivot point to see any real downside, in my opinion -- in March at 13390.
Metals: Gold has closed lower the last 2 days, today finishing just under the 50% Fib level today. The 50 day MA continues to act as a ceiling, and I think short term, we trade lower. The 61.8% Fib level on April futures is $1645. Silver is back under its 50 day MA… see chart of the day. My stance is we are headed lower short term, and I express some specific trading ideas. It is way too early to call an interim high in platinum, but shorts that were willing to stay with the trade could get some redemption next week. If prices break next week, which I'm 50/50 on now, I see no solid support in April futures until $1670/1680.
Softs: Cocoa will finish the week above its 20 day MA, but a bigger development is we closed above the down sloping trend line that had capped rallies since December. I like scaling into bullish trade if willing to stay several weeks. Sugar was beaten down this week, closing lower all 5 days, down 3.7%. We should find some value hunters to support these levels, but wait for a turn before adding additional funds. In full disclosure, some clients hold bullish positions and are under water. Cotton closed higher by 1.56% today, back above its 9 day MA. I like bearish trade and feel okay holding on, as long as fresh highs are not established. My objective in March remains 76/77 cents. Higher trade was rejected in OJ with a midday reversal, closing OJ nears its highs just above the 9 day MA. Short term, I am still looking for lower trade. Coffee squeezed out a profit today after 4 losing sessions, higher by 0.53%. The $1.40 level could prove to be solid support in March… let's see next week. Selling puts or scaling lightly into calls is advised.
Treasuries: 30-year bonds finished slightly higher just above their 9 day MA. I see upside into next week, and on a close above the 20 day MA -- currently at 144'16 -- that would be confirmed in March futures. 10-year notes finished just below their 20 day MA, which has capped upside the last 2 sessions. A 50% Fibonacci retracement puts March futures at 132'14 -- my current objective.
Livestock: Live cattle closed 1.06% lower today, dragging April to 2 week lows. It appears we will challenge the January lows, and I am waiting to see the market reaction before making a call. Bearish traders should be trailing stops. Feeder cattle lost 1.49% to register its lowest settlement in 2013. The bearish momentum could pressure cattle prices an additional 1.5-3% relatively quickly, in my opinion. Lean hogs gave up 3.2% on the week, closing at 4 month lows. The easy money has been made on bearish trade, as we are starting to find value around 86 cents in April. I will likely have bullish trade ideas next week… stay tuned.
Grains: Corn has lost ground the last 6 sessions with March futures 37 cents off recent highs. On their lows, we were within 6 cents of $7/bushel. I think we trade under that level next week… trade accordingly. Soybeans closed down 2.3% today to trade to its 20 day MA. This should be start of the recent break I've been hinting at. I think March can trade 25-40 cents lower in the coming weeks. I am very excited to be buying the break in old crop soybeans, as I think we will trade back near current levels after the break… stay tuned. Wheat finished lower by just better than a dime on the week. I think traders can start scaling back into bullish trade, and we would get confirmation of an interim low on a trade back above the 9 and 20 day MAs -- $7.67 and $7.72, respectively.
Currencies: The dollar completed a 50% Fibonacci retracement, closing the week near its highs. With prices above the 50 day MA for the first time in 4 weeks, I expect further upside to come. The euro closed under its 20 day MA for the first time in 1 month, though I think we have more to go. I am targeting $1.3300 and potentially $1.3200 on this leg. The pound has turned around and instead of a seller, I would suggest being a buyer. A trade above the 20 day MA; today's highs should get bulls more interested. I have no client exposure, but am thinking the commodity currencies should trade lower… next week, I am going to price out specific strategies… stay tuned. The yen is showing signs of life, making higher highs and higher lows the last 2 sessions. I have yet to call an interim low, but next week I may step out on a limb and do so. Yen shorts seems like an awfully crowded trade to me.
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.