Energy: Crude oil gained for the first time in four sessions, closing just above the 61.8% Fib level. All sales under $92.70 in May futures have been rejected the last three sessions. I have yet to issue buy recommendations but on a close above $94 on this contract, I would be willing to play from the long side. A higher high and higher low in RBOB today, gaining for the first time in seven sessions. Aggressive traders could wade into bullish trade with an objective at $3.00. Heating oil is finding support around the same level that prices bounced off last December, just above $2.90. This is my pick for energy traders searching for bullish exposure. Natural gas gave up 1% as higher trade was rejected. For an interim top to be in place, I want to see a settlement under the 18 day MA, which supported all of last week. That pivot point comes in at $3.96 in May.
Stock Indices: S&P closed higher by 0.86%, within spitting distance of recent highs. Whispers of 1600 heard, and this would likely become a reality on a trade above last week's highs. The only trade I've advised of late is light bearish exposure in the case you have a large equity portfolio. As for speculative shorts, I've thrown in the towel picking a top. As for the Dow, we were higher by 0.55%, closing within 50 points of the record highs. One day the music will stop and we will all be searching for the remaining chairs, but from what level?
Metals: Gold closed marginally lower after Friday's advance. With June futures above $1560, I remain friendly. I believe futures are on their way back to $1600/ounce. My favored play is long futures while selling out of the money calls 1:1. Even with silver's 0.30% loss today, we closed almost 60 cents off last week's lows. While it is too early to call an interim low, I have advised clients to use the recent setback to gain bullish exposure if they already did not have skin in the game. The weekly chart is ugly and sentiment remains bearish, but I am willing to swim against the tide for now with aggressive clients.
Softs: Today's chart of the day and standout in the softs complex was cocoa. A 38.2% Fibonacci retrace puts May at 2300. Sugar is showing signs of life, but I've yet to commit client capital. We did settle over the 9 day MA for the first time in three weeks today… stay tuned. Cotton broke the trend line mentioned in previous posts that has supported throughout 2013. A trade under 84.50 in May opens up trade to 82 cents. A bearish engulfing candle in coffee today, down by 3.03%. I have yet to buy, but I see limited downside and will likely be shopping longs in the coming session. One of my colleagues that drinks and trades more coffee than I was selling puts under the market today.
Treasuries: 30-year bonds failed at 148'00 today and could have reached an interim high last week. Traders could take a stab with stops above the recent highs. From current levels, approximate risk of $1300 per. 10-year notes also gave up ground closing in the red for the first time in four sessions. Friday's high may prove to be a turning point here as well. My favored bearish play is the NOB spread; short U.S. (30-yr bonds) and long TY (10-yr notes) 1:1. The best instrument, in my opinion, in this complex remains the Eurodollar, as I have suggested bearish exposure in late 15' and early 16' contracts.
Livestock: Live cattle, feeder cattle and lean hogs have more work to do on the downside, in my opinion, before they require our attention. Stand aside for now.
Grains: Corn futures are off more than $1/bushel in the last 2 weeks, but appear to be finding mild support around $6.30 in May. May is not my favored month to trade, as I would prefer buying new crop corn that has yet to be planted; December 13'. May soybeans were higher by 1.19%... lo and behold, take a look -- prices are bouncing off the same support level that held in previous months. $13.90 could prove to be a pivotal level in the May contract… stay tuned. I have yet to buy any beans, as I prefer soybean meal and we're trading the July contract. We are finding support at $390, and I see prices back at $410 in the coming weeks. Four out of the last five sessions, wheat has been in the green, gaining almost 50 cents/bushel. I believe there is an additional 50 cents in the tank.
Currencies: The U.S. dollar gained after three losing sessions, but upside trade was halted at the 20 day MA... what was support is now resistance. The euro is meeting resistance at the 34 EMA and the pound and swiss at the 50 day SMA. Depending on the reaction at those critical pivot points, we will determine the next leg. I'm waiting for more evidence. Mixed results in the commodity crosses as well… go to cash. The biggest loser remains the yen, falling hard the last three sessions and fast approaching par, which should become a reality this week. The last time we were at this level was April 2009.
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.