Seeking Alpha
Contrarian, value, special situations
Profile| Send Message|
( followers)

Energy: Crude oil was a slight gainer today, picking up just shy of .50%. We will need to see prices to remain under $98 for me to remain bearish. It will take a settlement back under $96 in March futures for bears to re-emerge. Inside day in RBOB as the 8 day MA remains the line in the sand. A trade under $3.0225 should lead to a wash out, dragging prices 10-15 cents lower, in my opinion. The other distillate also had an inside day, with heating oil remaining under $3.25/gallon for the third session in a row. On lower trade, I see a trade back near $3.12… trade accordingly. The 8 day MA is acting as a ceiling as opposed to a floor in natural gas, with another close under that pivot point. I would not rule out a challenge of the January lows, which would amount to a 4.6% loss. Clients hold onto April call options, but are under water and looking for a bounce in the coming weeks to cut losses. Could it turn into a winner… yes, but it will take a 10% move in the coming weeks, which is possible, but not likely, in my opinion.

Stock Indices: Today's chart of the day needs to be read… not because it will give you a trading idea, but put things into perspective in terms of where we have come in the last decade, and what has happened to equity markets the last 2 times prices were around these levels. The line in the sand remains the 9 day MA in the S&P and the Dow. In March futures, those pivot points come in at 1506 and 13905, respectively. I think we could see a 500-plus point and 60-plus point depreciation around the bend.

Metals: Gold held its 61.8% Fib level again today, closing marginally higher. Aggressive traders could start scaling into December contracts if willing to stay the course and look for a longer-term appreciation, but for more active traders, I would be looking towards the June contract thinking we could get a lower long entry. I may change my mind if prices start to trade north from here... stay tuned. Silver gained 0.65% today, closing well off its lows, but still closed under the trend line penetrated yesterday. I still think we see a trade under $30.50 in March futures... be patient. The closer we get to the January lows, the more aggressive of a buyer I'd be. Another 1% gain in platinum. Tomorrow, I will likely take a stab at shorting April futures again with clients. I think a sale over $1730; looking for a trade under $1700 is worth the risk of a new high.

Softs: Lower trade was rejected in cocoa with buyers stepping in at around the same level they supported 2 weeks ago. I like scaling into bullish trade out until May and July. A bearish engulfing candle in sugar drops prices nearly 2% with its lowest close in 2 ½ years. On a settlement under 18 cents, I would stop buying fresh entries and look to offset longs at a loss on the ensuing bounce. Cotton gave up 1.34% to close under its 9 day MA. A breach of the 20 day MA at 81 cents in March, and we should be on the way to our objective at 76/77 cents. The standout in the softs complex today, and even for the last month, has been OJ, higher by 19% ytd. I see limited upside until we get a correction, as I've advised clients to buy a trade back near $1.15. Coffee is trying to find a bottom with lower trade rejected today, as a base is building at $1.40 in March. Aggressive traders can start building small bullish positions and look to add once the market proves you correct.

Treasuries: 30-year bonds closed lower for the first time in 5 sessions, closing back under its 9 day MA. 10-year notes stopped in their tracks at the 20 day MA, rolled over on the day, and closed back under their 9 day MA for the first time in 5 sessions. Short term, we may feel a little pressure, in my opinion, but more upside is forecast… at least by me. The inverse relationship to equities is alive and well, so with stocks moving higher, it has been a challenge to gain any upside traction.

Livestock: Intra-day, live cattle traded to 7 month lows, but that trade was rejected with a close 1.3% off their lows. If we see volumes return and trade back over $1.30 in April, I will start probing bullish trade with clients. Intra-day, feeder cattle traded down their daily limit before paring losses, closing down 1.07%. Feeder should stabilize around current levels as well... stay tuned for trade ideas. Lower trade under $1.25 was rejected in lean hogs, so I have bullish trade on my radar. The fundamentals for pigs are bullish from the supply side, but the biggest variable in the weeks/month to come will be demand.

Grains: Corn settled under $7/bushel for the first time in 4 weeks. The pace of selling has been pretty consistent, but I expect that to abate in the very near future. With March futures within 15-20 cents of January lows, I think we will find a value zone soon. March soybeans have completed a 61.8% retracement, off almost 80 cents in the last week. While the easy money has been made on bearish plays in old crop, I would still not rule out a probe under $14/bushel. I've yet to advise clients to buy corn or soybeans, though I think they should be in the process of exiting any bearish trade. Wheat traded to 7 month lows today, off by 1.28%. I have started to buy dated contracts for some longer-term swing trading clients, thinking we have far more upside than risk at current levels.

Currencies: A bearish engulfing candle in the greenback today, trading off 0.28%. As long as the 20 and 50 day MAs hold, I remain friendly. The euro gained on the session, but was contained by the 20 day MA. I have clients that are positioned short futures selling out of the money puts for a partial hedge in case of a bounce. I am still targeting a trade closer to $1.32 in March. Refrain from picking a bottom in the yen, as tempting as it may be.

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. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.