Today in Commodities: Risk Trade Back

 |  Includes: DBA, GAZ, GBB, GLD, GRU, JO, SGG, SLV, SPY, TLO, USL
by: Matthew Bradbard

I’m not sure I agree, but needless to say oil traded higher by 3% today. We are on the sidelines; on a close back above the 20 day moving average we may need to get clients long again. We were hoping for an entry at lower levels but with the dollar lower and equities higher that may not happen. Natural gas may have turned the corner, gaining 5% today. We’ve suggested long mini-futures with stops below the recent lows on a closing basis and January 50 and 75 cent calls spreads.

Sugar was higher by 2.25% today. We suggest long exposure via calls and futures in March contracts looking for a re-rest of 25/26 cents. Let’s wait till tomorrow on the coffee, a gainer of 4% today. The 50 day moving average held late last week and with today's move, prices regained the 100 day moving average on the March contract. OJ was one of the few commodities that faltered today; clients remain short via January puts.

The 1100 level was taken out in the S&P today and the momentum should lift equities up, though we will not be involved with clients.

The correction in gold we were anticipating does not look likely as prices were convincingly higher today, gaining almost 2% to a new record high. The good news is clients only paid $300 per and a total loss would be significantly less than what they make on the silver longs, which picked up almost $1000 per today. This was aided with a new 09′ high in silver gaining $1.00 or 5.5%.

We advise long exposure in corn, wheat and soybeans. The pick of the litter to us would be March or May corn as December closed above $4 today. Cattle were quiet; we suggest gaining long exposure in February live cattle expecting the recent lows to act as support.

The NOB spread was a gainer today with 30-yr bonds gaining on 10-yr notes. As we said last week, as long as Treasuries move higher this trade should work.

The dollar is a dog trading to a new 15 month low as recent comments from Geithner and Bernanke are being ignored. The problem now is the lack of credibility on a strong dollar policy. Clients remain short the Pound in a loser and if things do not turn in the coming sessions we will advise them to cut losses.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.