We suggest bullish exposure as it appears most commodities are on their way back up. July Crude oil is nearly $5 off its low from yesterday and at its highs today was approaching the 18 day MA at $101.80. We think this leg could lift prices to between $103-105/barrel…trade accordingly. Hedgers were advised to apply more hedges to their fall contracts so now should have some long protection in September, October, November and December. Natural gas closed back over the 40 day MA for the first time in three weeks. We suggest long exposure but understand we have lightened up booking profits for some clients that were long from lower levels. Our target in the July contract is $4.60. The indices fought back after overnight losses and should close positive on the day. We suggest using the 100 day MA’s as support; in the Dow at 12140 and in the S&P at 1309. Forced into the market we would prefer bullish positioning but we’ve yet to commit client capital…stay tuned.
Lower high and lower low in the dollar index today as we still maintain that an interim high has been obtained. The Swissie and Pound were the standouts today and aggressive traders can scale into longs looking for further appreciation. In the Pound our target is 1.6500 and in the Swissie we are looking for 1.1600. Lean hogs were higher by 1% today but we suggest waiting for further evidence of a bottom before buying. After a near 18% slide in recent months we can be a little late as a buyer…I think. Live cattle appreciated 1.5% and after the doji star yesterday and follow through buying today we like the chart formation. Some clients were buyers today that previously did not have exposure. We suggest being bullish August and December contracts via futures and options. Gold squeaked out a positive session but I was less than impressed especially based on the outside markets…we would move to the sidelines for now or tighten up stops. Silver was more impressive gaining nearly 5% today and nearly 1% in the past two weeks. Stay long…next target the 50 day MA; in July at $39.05. Cocoa finally is getting legs advancing 2.7% today…this should just be the beginning of what we’ve been calling for…trade accordingly. Cocoa was not the only soft that appreciated as sugar was higher by 3.3%, cotton 1.4-4%, OJ 2% and coffee 1.4%. We like being long cocoa and sugar and have no current opinion on the others. Ag was higher today but as we’ve voiced we suggest waiting for a break to be a buyer from lower levels. As weather improves and farmers get in the fields we should see a break lower. The Treasury complex traded both sides of positive and negative as clients hold losing bearish positions. We will stay the course until a new high is obtained and if that happens we would likely cut losses for clients.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.