Energy: Crude oil lost nearly 2% today, trading under $95 in April for the first time in 30 days. The bears may be taking control of the steering wheel, and on a trade under the 50 day MA -- identified at $94.20 -- expect selling to intensify. Heating oil gave up nearly 1%, trading under its 18 day MA for the first time in 1 month. I see further depreciation, with an objective of $3.05-3.09 in April. RBOB closed lower for the third session in a row, off by 1.71%, closing under its 8 day MA. This is a major development, and could signal an interim top. My target in April is $3.12, and possibly $3.05. Natural gas futures were unchanged, but did hold the 8 day MA. I'd like to see a probe above the 18 day MA, and maintain a trade above $3.50 should play out in the coming weeks.
Stock Indices: The S&P is today's chart of the day, and should be read by any investor that has a sizable equity portfolio. The 6-7% appreciation ytd was a gift, and profits should be booked, in my humble opinion. March futures closed under a key pivot point -- the 9 day MA -- and I think this signals an interim top. Bearish exposure is the trade, as I am anticipating 1470, 1435 and potentially, 1415. In the Dow, a bearish engulfing candle on the daily chart with a close 0.84% lower, and nearly 150 points off the highs. The 9 day MA was also breached here, as selling should pick up in the coming sessions. 13400 is my objective in March futures.
Metals: Gold closed lower by 1.63%, at its lowest level since mid-July. I see solid support about $20 below today's lows and at this point, I am not convinced we will even challenge those levels. A number of investors are calling for a trade in the $1400s... I just do not see it. I could be wrong. I've advised clients to continue scaling into bullish trade out in June, August and in some instances, even in December. Traders that had some downside options protection were advised to book partial profits on their hedges today. Silver lost 2.72%, dragging prices under $28.50/ounce for the first time in 6 months. I see value in silver under $30/ounce, so I certainly like it at current prices for longer-term swing traders. Keep your size small, as this market can be unforgiving, and we do not have evidence of a bottom yet. Get creative and use options to hedge positions. I typically will implement options against futures when constructing a trade in such a volatile environment. Contact me for details or assistance. Platinum was lower by nearly 3%, trading to its 50 day MA, and could see lower ground. In April futures, next support levels are $1629, followed by $1603.
Softs: 8 days running, cocoa has been in the red. On a mean reversion trade to play even a bounce, aggressive traders could gain light bullish exposure. A trade back to 2300 should play out, in my opinion, in May futures. Sugar futures were higher by 0.95%, back above the 9 day MA. If we retake the 20 day MA, this should attract more buying interest. May back above 19 cents could happen sooner than most think… in my opinion. Though May cotton continues to probe 85 cents, I am a seller at these levels for clients. I anticipate May under 80 cents in the coming weeks. May OJ bounced a touch after yesterdays swoon, but lower trade is my call… targeting a trade near $1.18 before longs would be on my radar. Coffee appreciated 2.35%, probing its 9 day MA. Aggressive traders should be probing bullish trade with an objective $1.48/1.50 in May.
Treasuries: I anticipated more of an inverse reaction in Treasuries as equities rolled over. Once debt traders believe a correction is happening, we should see these instruments catch a bid. I am eager to be a seller in either 30-year bonds or 10-year notes from higher levels… stay tuned. In March, 30-year bonds closer to 146'00, and in 10-year notes, above 132'16.
Livestock: Live cattle were lower by 1% to register the lowest close in 7 ½ months. With equities losing ground, we may challenge last Aprils lows, so hold off on fresh long entries. March feeder cattle gave up 1.71% to another fresh closing low. I am expecting a grind lower, and would not have bullish trades on until we get a settlement above the 9 day MA -- in March at $1.4280. April lean hogs lost ground, but lower trade was rejected, with futures closing 1% off their lows. Aggressive traders could probe bullish trade. My only suggestion is to have a slight cushion... perhaps selling calls or buying puts against your futures in case prices challenge the May 2012 lows.
Grains: Corn continues to base out finding buyers, just under $7/bushel in May futures. On a settlement above the 9 day MA, gain bullish exposure. Assuming we bounce from here, May futures are back at $7.25 in a hurry… in my opinion. In the last 10 days, soybean futures lost 90 cents, only to do a u-turn and then gain 75 cents. Plenty of volatility, but be careful with your timing. From here, it looks like we could see further upside. The 20 day MA should support in May at $14.45. Wheat is forming a base as well in a 20 cent range now the last 6 days. A trade back above the 9 day MA should get buyers more active -- in May at $7.45. I've advised scaling into bullish trade in May and July contracts, thinking we are over $8/bushel in the coming weeks.
Currencies: I ate crow today, as I expected the U.S. dollar to trade south and it did the opposite, breaking higher on a bullish engulfing candle today, gaining 0.76%. Do not rule out a trade to the November highs at 81.60… current price 81.15. All European crosses were hit, with the most notable being the pound, off by 1.17%, putting prices at the lowest levels since October 2011. The euro broke the trend line and closed under its 50 day MA. Next stop is $1.3200 if dollar strength persists. The commodity currencies broke lower, and with metals and energies under pressure, expect more selling. My take is metals are almost done moving lower, so it could be a tug of war with energies lower and metals stabilizing. Pay attention to outside market influences when trading these crosses.
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.