Buy and hold is dead…like 2010 this year is shaping up to be a trader's market. Crude oil closed below the 100 day MA for the second day in a row in the April contract. We have been advising clients to buy on the way down but we still feel an interim bottom has yet to be set…trade accordingly. The strength in the distillates has likely helped support oil as both RBOB and heating oil are on the verge of breaking to new contract highs. Inside day in natural gas today but as long as $3.88 holds on a closing basis in the May contract we still like scaling into longs at these depreciated levels. Perhaps a broken record but indices crept to fresh highs…yadda…yadda…yadda. NO action in forex today though on a breach of the 20 day MA in the dollar we would expect the recent run to be over and a resumption of the downtrend. That level is 78.15 in the March dollar index. We’ve yet to get a correction or buying opportunity in live cattle but expect one in the coming sessions…Buy a break in April or June.
Clients were advised to go flat on their remaining gold and silver futures today as we are unclear on the next direction. Aggressive traders willing to make a directional bet took a small bearish options position in April gold looking for 2.5-3.5% depreciation in the coming week. Cotton was higher by nearly 4% today fast approaching $2/lb. When trading near .40 cents/lb. just over 9 years ago I never expected a 500% appreciation? We stubbornly have been trying to pick a top and have lost some premium but we think odds are we could get a nasty correction in the coming weeks…stay tuned. We’ve been forced to get more creative in agriculture with the recent volatility, on our radar currently are two trades: long July soybeans and short November in a spread and long December corn futures and selling out of the money calls 1:1. When 30-yr bonds failed to take out the 20 day MA today we advised clients to lift their NOB spreads at cost taking a loss of commission/fees.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results