Today in Commodities: Picking Your Points

by: Matthew Bradbard

Crude was lower by almost $2 today, trading to the up trend line from late September. If this level was to break we could see an additional $3-5 trade lower... but it will be without our clients. I have suggested lifting ALL shorts, and if we miss a move lower we are OK with that. Natural gas remains sideways for the last 8 days, clients are holding out for lower pricing.

Indices sliced through the 20-day moving averages; now the next hurdle is the 50-day at 1109 in the S&P, 10385 in the Dow and 1820 in the NASDAQ. We suggest selling rallies and will be looking for an entry between 1125-1135 on March ES and SP shorts. Additionally we may buy clients puts... stay tuned.

Again today we just missed a buy limit on OJ for clients, will try again tomorrow. (See yesterday's post.) Sugar is becoming increasingly more volatile, what I’ve learned here is if you have profits take them, or at least lighten up. We are anticipating higher trade but one would think we are overdue for a profit-taking-led correction. We love the action in corn and will be issuing a special trade recommendation very soon. Clients are buying May and July calls and December futures.

Tomorrow's action in gold and silver will be critical; if $1075/1080 holds this correction should be over, if not $1030 is in play. On silver $17.25 needs to hold or $16.75 is in play. We suggest using the current dip to scale into longs, but do not trade heavy as these markets can be unforgiving.

Clients were advised to liquidate their NOB spreads as 30-yr bonds hit our objective (see previous posts).The Euro-dollar is near contract highs... scale into shorts! We liquidated clients' Pound shorts today at $700 profit/per. From here we like selling Aussie dollars on rallies and buying the Yen on dips. Objectives are .8900 in the March Aussie and 1.12 in the March Yen.

Both lean hogs and live cattle were lower today; clients are short via puts looking for more.

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