Energy: Crude oil is lower by 4% as of this post, retracing to levels not seen since last October/November. If we hold here, I will be shopping bullish trade for clients. If $87 gives way in June contracts, we could see $82.50/83.50. RBOB is lower for the fourth consecutive session, trading to a fresh 13' low. Support is seen at $2.69-2.71. The only exposure I have is long RBOB/short heating oil 1:1. As for heating oil, prices are lower by 15 cents in the last four sessions. Prices are oversold, but a bottom is yet to be determined. Stiff support is not for another dime. The general rule is for every $1 advance/decline in Crude RBOB and heating oil move 3-4 cents… trade accordingly. A bearish engulfing candle puts natural gas today lower by 2.56% as of this post. Assuming an interim top, a 38.2% retracement puts June at $3.90. The first task for the bears is to bust the 8 day MA, currently at $4.14.
Stock Indices: A weak number out of China, sell-off in outside markets, margin calls, a bombing in Boston… pick your catalyst, but a sell-off in stocks is underway. S&P is lower by 2.5%.. 16 points below the 9 day MA. A 38.2% retracement puts June futures under 1500, and would amount to a correction of 6.5%. The Dow is approaching a 300 point loss and, as of this post, is just below its 9 day MA, in June futures at 14540. Key levels to observe are the 50 day MA at 14215, and a 38.2% retracement puts this contract back at 13850. Book profits… lighten up, for crying out loud.
Metals: Before taking any action, please read my chart of the day from today spelling out my feeling on both gold and silver. Gold is lower by $140 as of this post, experiencing more selling in a two-day period than I have seen in any two-day period in my career. There will come a time to buy again, but I'm not convinced it has arrived. Under $1350 in June, the next significant support is $1250. Silver is lower by 11% and at its lows, was down by nearly 15%. Under $22/ounce, the next stiff support is $18… a level that has not been seen since August 2010.
Softs: Inside day in cocoa… tighten up stops as to not give back too much on bullish trade. As long as May is above 2200, I am friendly. Sugar gave up 1.3%, but the 9 day MA did hold. A penetration of that level would likely lead to a test of the lows 1.7% from today's close. The 9 day MA is acting as resistance in cotton with today's loss of 1.46%. Bearish trade is the play as 82, and possibly 80 cents, may come into play in the coming weeks, in my opinion. Coffee has resumed a move lower, giving up 0.60%, but the real story was a fresh low trade under $1.32… stand aside and look for long entries once we find a bottom.
Treasuries: Safe haven play should lift Treasuries higher. As money leaves commodities and equities, I would expect flows to find a home in this complex. 30-year bonds should track up to levels seen last November. 10-year notes ended well off their highs, but expect a fresh 2013 to follow. Bullish trade is expected as long as prices are above their 9 day MAs. In 30-year bonds at 146'27, and 132'25 in 10-year notes. Work into long dated bearish trade in Eurodollars as we are approaching contract highs. Those probing this level could institute tight stops as it may take a few attempts to find a top.
Livestock: A fresh 2013 low was rejected in live cattle on the 0.77% loss today… lower trade is still in our future. Stand aside until buying returns. Feeder cattle is challenging lows from last month, trading in the red 9 out of the last 10 sessions. I anticipate lower trade and have yet to commit capital with clients. Lean hogs were also hit today, giving up 1.45% to close at 3 week lows. A 1.7% additional loss puts prices back at the March lows and then I will re-evaluate.
Grains: Do not rule out lower trade and not because there are any fresh developments, but rather margin related selling in the Ag sector. Corn gave up 1.78%, but is still above the 9 day MA. In my opinion, new crop corn can be bought as long as prices remain above $5/bushel. Current price of December 13' is $5.32. Soybeans reversed lower just under the 50 day MA and formed a bearish engulfing candle on the daily chart. Expect a retracement back near the recent lows. July soybean meal is my favored pick anything soybean, but the recent support needs to hold… just under today's settlement. Wheat failed at the 50 day MA and did not penetrate the down sloping trend line. Exit and move to the sidelines and look to buy again at lower levels.
Currencies: The U.S. dollar is above the 50 day MA. A slight gainer today, but I would have expected more upside with the sell-off in almost all other markets. I am bearish as long as prices are under their 20 day MA… in June futures at 82.85. The euro, pound and swiss can be sold with tight stops. I'd be willing to add on a trade under the 34 day EMA. The commodity currencies were hit the hardest, which makes sense based on the movement in metals and energies. Look for more selling to follow. The yen has likely put in an interim bottom and as risk is unwound, expect the buying to intensify. The play is long call options, as June could see $1.0650/1.0800, in my opinion.
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.