Not a whole lot of excitement as the end of 2010 draws closer. Crude oil remains range bound trading in a $3 range for the last 10 days. Our bearish bias remains thinking we could get a trade $3-4 lower into next week. Natural gas traded nearly 5% lower today; we advised clients to cut losses on their February /April futures spreads today. If prices challenge the lows seen in October and November and hold we may opt to establish outright longs…stay tuned. The fact that indices have not been able to forge into higher territory leads me to believe the bulls are running out of gas and we may get a correction into the end of the year. Some of our more aggressive clients have put on March ES bear put spreads anticipating a 3-5% setback.
We see nothing to trade long or short in currencies and suggest the sidelines. We would like to see more downside in both live cattle and lean hogs before pricing out bullish plays; ideally closer to $102 in February live cattle and $0.73 in lean hogs. The 20 day MA held in silver but as of this post prices are 1.30% lower. We expect that level to act as a pivot point and on a breach of $28.40 in March look for $27.50.
February gold gave up 1.15% as of this post but the 50 day MA at $1369 did support. As voiced in previous posts we’re expecting lower trade into next week in both metals. Aggressive traders could try to time a bottom in 10-yr notes or 30-yr bonds with tight stops. March CBOT wheat has lost 7.5% retracing 38.2% in the last two weeks. We’ve suggested bearish exposure with clients of late and have small positions on in both futures and options with select clients with a target of $7.20/7.30 into next week.
Though we remain bullish in ’11 corn we’ve suggested to step to the sidelines and buy a set back; the trend line in March comes in about 20 cents below today’s close. Those traders that were long either sugar or cocoa based on our advice we’ve recommended to book profits on and move to the sidelines. Back on our radar is bearish plays in cotton IF we fail to make a new record high in the coming sessions…stay tuned.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.