For the last three sessions Crude oil has drifted in a $2 trading range between $81-83. As long as this week’s lows hold, we’re friendly and have advised aggressive traders to gain long exposure in January and February contracts. I cannot remember the last week natural gas has gained four out of five sessions. On the week, January futures advanced just over 9%. With trade over the 50 day MA again, we suggest adding to longs. On a settlement above $4.40 we expect a trade near $5.
As for the indices, play the breakout above the 20 day MA or below the 50 day MA. I have no bias and recommend the sidelines. The US dollar should move lower from here; our favored play would be long Euro’s with an upside target of 1.4000.
Higher trade in both live cattle and lean hogs today. We’re suggesting bullish plays in ’11 contracts, expecting a record high in live cattle and 2.5-3.0% appreciation in hogs.
It was not a bad week for metal traders who heeded our advice long (3) silver against (2) shorts in gold; as silver was higher by 5.2% and gold lower by 1.3%.
Agriculture traded lower in today’s session with corn down 3.9%, soybeans 3.25% and wheat just marginally lower. Most of our clients have been using setbacks to gain bullish exposure in ’11 corn. Depending on their fills, some are up while others are down on their positions. We will remain long for the coming weeks with clients feeling a trade back to the highs will occur ... trade accordingly. Cotton traded down limit again today, clients have no exposure. We did use the 7% setback in sugar today to establish bullish option plays in March ’11 sugar for some of more aggressive clients. We opted to sell (1) 30 cent call and buy (3) 35 cent calls thinking we could see a trade back over 30 cents in the coming weeks.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.