Today in Commodities: Fed on the Hot Seat

The actions of the Federal Reserve are coming into question, justifiably so. Inflation/deflation at this point it is semantics…the bottom line is that commodities should be in your portfolio.

A correction in crude oil comes into question as today it bid higher for the third day running; use $67 as support $72 as resistance in August. Get long natural gas, buy the October $5/6 call spread. Risk the premium, which is approximately $2,300, and your max profit is $7,700 ($10,000-premium paid if held til’ expiration which is 9/29 if the futures price is above $6.) Great risk/reward dynamic.

Treasuries were bid higher today on comments from “Uncle Ben.” This could last a few days but we suggest being spectators at this juncture. Euro-dollars are higher in the futures against our customers, we will be in this trade for the next few years with clients so 1 day will not discourage us. Lightly sell into this rally, March 10′ contract high is 99.095 today’s price 98.90. Read our report on our website from February 12th to get a further explanation. Put in limit at 60 points for the 93.00 Swiss franc call bought yesterday for 28 points. We suggest getting out before the weekend because of the time decay.

We expect a sizable move in corn very soon, we have a bullish bias. Get long December futures with stops below 397′0.

Gold and silver were well bid today. Buy the October $100 call spreads; 50 day and 100 day moving average at $930 should hold up. July silver looks like a Picasso, it appears the market is taking a breath before a surge higher as long as recent lows hold; 100 day moving average at $13.58 in July.

We lightened up for clients yesterday in sugar - I wish we doubled down instead…oh well. Prices have broken out to the upside advancing 13% in the last week. Prices are currently 75% off their all time highs…find another commodity that meets those specs!

Comments

[MarkitWacha:]

sugar has correllated increasingly with oil due to its energy density, and usefulness as an input in the production of ethanol.

Jun 27 11:47 AM