As a trader I would not consider myself too superstitious. But on a day like Friday the 13th I’d rather be lucky than good. Wild trade activity in crude again today, but we still have not been able to re-take the 100 day MA; in July at $101.40. We remain mildly bullish with a short term target of $104/105 in that contract, but prices will need to trade above that pivot point early next week or we will likely move to the sidelines with clients. Aggressive traders can start working back into bullish positions in natural gas. Two trade ideas today were given buying June $4.40 call options and August 70 cent bull call spreads thinking we could see a violent 5%-8% appreciation in the next few weeks. We would not recommend a large allocation but just light exposure in case. As of this post the indices have traded below the trend line and look to settle under the 50 day MA. If this is the case we are back on the sell side next week ... stay tuned.
A bullish engulfing candle in the dollar today lifted prices to one month highs but we’re re fast approaching over bought levels. The short term trend is clearly up but as we said yesterday the easy money has been made on longs and our target from a few weeks ago at 76.00 was obtained today so do not expect much more. We are absent with clients but all crosses could be sold against the dollar with the exception of the yen with tight stops.
Next week we should find out if cattle and hogs are basing out to reverse higher or taking a breath and continuing lower. This week some clients were light buyers of August and December cattle, thinking we bounce from here ... stay tuned. Assuming we’re right, use the 20 day MA’s as your targets, in August at 114.10 and December at 121.10. Silver managed to hold onto gains today but the key will be if we settle above the 100 day MA, in July at $34.55. Aggressive clients have light bullish exposure thinking we could get a trade back near the 50 day MA in coming weeks, in July at $39.10. Gold tested the trend line and held today but we suggest the sidelines as we’re still getting mixed signals. A trade down to $1,450 that holds would be considered a long entry in our opinion. Same song and dance we’ve been voicing all week: Buy sugar and sell coffee. Corn and wheat finished down on the week while soybeans were virtually unchanged. While the USDA report was bearish we do not trust its assessment and still like buying dips in new crop corn and soybeans. The weather, flooding of the Mississippi and lack of activity in the fields should catch up to prices on the CBOT in the coming weeks. A failed new high in Treasuries could signal an interim top but of course I may be talking my position as some clients are still short 10-year notes and euro dollars losing money. Stay the course for now.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.