Crude oil was down on the day but well off its lows as prices bounced off a trend line that has held since the beginning of February. As we said in yesterday’s post, expect a trade to the 20 day MA and the market delivered just a day later. If that level which comes in at $83.50 in May holds tomorrow, we suggest again shopping longs. We will have some suggestions in tomorrow's post. Natural gas is back above both the 9 and 20 day MAs and what could be a key development is if the MAs cross. We are advising long futures in June and 50 cent call spreads in July.
The grind higher continues in equities with all major indices slightly bid on the day. A small put position in June Es puts is still our suggestion. Currencies were a yawn today; we are still looking to be a seller of the European currencies from higher levels.
Sugar was higher by 2.25% today but we would really like to see a settlement above the 20 day MA, which we’ve failed to do in the last 2 sessions. On that we would advise long futures in July expecting a re-visit of 19 cents. The May/October sugar spread was a small gainer; expect May to trade at a premium to October on a run higher.
Take off all cotton shorts as July closed above 80 cents today. OJ makes its way to higher ground today, lifting prices back over $1.30. Clients are positioned in July options expecting a trade back to $1.45/1.50 in the coming weeks. With the exception of oats and rice Agriculture traded higher today. Clients are long corn via July options and December futures. On a move higher in wheat and soybeans we may look to get short… stay tuned. Trail stops down on your live cattle shorts as we feel prices are moving lower but we are not willing to give back too much in profits. June lean hogs were higher by almost 2% and, depending on your stop placement, you may have been stopped at a loss today.
The correction we’re expecting in gold and silver may be under way as gold is down $10 as of this post and silver 30 cents. There is an additional $30 in gold and 75 cents in silver before we see any significant support, so be careful trying to buy this dip.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
