Today’s pause in selling is just that - a pause - as we expect more downside to come in both stocks and commodities. Continue to sell rallies in Crude as the 40 day MA should cap any spikes higher. WTI Crude is nearly $10 off its highs just in the last three days as we should make our way under $90 next week…trade accordingly. The selling has yet to abate but at least the pace of decline is slowing as natural gas was only moderately lower today. We’re still waiting for signs of a bottom. As we’ve said being cheap or oversold is not enough reason to buy. Clients that have light long exposure in March contracts are suggested to hold on for now. The S&P appears to close slightly higher but below its 50 day MA. The Dow seems to be supported by its 50 day MA which is a few ticks from today’s low. We think there is more risk to the downside and as long as the 9 day MA caps any upside remain in bearish trades if already involved.
Gold does not appear to be down losing traction as prices lost another 1.2% today. On a trade below $1540 we think $1500 would come into play. Silver found interested buyers just above $28/ounce but we view this to be temporary anticipating lower trade. The pressure remains on copper as well as $3 should come into play in the coming weeks. Today’s decline in the dollar should be viewed as a pause and momentum should still lift the greenback higher. I feel after a bounce in crosses we will see the downside extended with the commodity currencies having the most potential to falter…in my opinion. Cocoa may retrace after the 15% acceleration so use mild setbacks to be a buyer of March or May futures. If we make a new low be willing to take a loss. We are anticipating 10-yr notes and 30-yr bonds to see new contract highs…trade accordingly. Corn and wheat extended losses with some mild chart damage as we will likely see lower ground. Soybeans held on picking up 1% today. We echo yesterday’s comments and would stand aside in Ag for now. If live cattle manage a close over the 9 day MA, a feat unattainable for the last two weeks, buys would be back on our radar. Aggressive traders can scale into longs in lean hogs and start building a position. As long as February remains above 83.00 cents we would stay bullish on the pigs.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.