Crude failed to close positive but was able to post a new high. Momentum has started to shift bullish again and on a close above the 18 day MA at $101 look for more buying to appear. A bearish AGA report contributed to natural gas being down on the day but losses were pared with a close nearly 15 cents off the intra-day low. The 100 day MA supported the indices again today and as we hinted yesterday forced into the market we would rather be long than short. A close above the 50 day MA which should happen today gets bulls back in the driver’s seat.
The dollar was lower for the third consecutive session and as we predicted should be making its way back near 74.00 in the June contract. Our favored play is longs in the Swissie and Pound. Inside day in live cattle…accumulate longs looking for first the gap from last week to be filled and then an eventual test of the 20 day MA. Silver closed down 1% after trading within 25 cents of the 50 day MA overnight. On a breach of that level expect a further appreciation of $2-3 ounce…we should know in the next few sessions. We advised clients with multiple positions to lighten up on longs. Traders searching for metals exposure outside of silver could lightly buy gold…today some clients bought October bull call spreads. Cocoa was higher by 1.6% today as prices have started to move…our target is September is a minimum of 3200. October sugar is back over the 200 day MA…we suggest buying dips as our target remains 25 cents/lb. Grains closed positive today but were unable to hold onto much of their gains. Aggressive traders can gain bearish exposure and grains bulls should wait for a dip to buy new crop contracts. We expect new contract highs but not before we get a break in corn and soybeans…again my opinion. Futures traders in the debt complex should cut losses on today’s new high. Option traders should wait for a set back to cut losses in 30-yr bonds and 10-yr notes.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.