Every investor has a different strategy, but slow and steady sometime wins the race. The idea is to be consistent and take small losses and let profits run -- easier said than done.
For three weeks now Crude has been stuck in a $5 trading range and this looks to continue. Today prices reversed mid-day to close slightly higher back above the 9 day MA above $101/ barrel in March. The sidelines is my suggestion until we get a clearer picture. A close below $98.50 or above $102.50 would likely set the tone in that direction but until then sit on your hands. We’re getting mixed signals from the distillates which is supporting sideways action in Crude with RBOB inching higher gaining over 2% today while heating oil closed lower for the fifth straight session. No new lows today but still waiting for a bottom in natural gas and believe it or not I am hearing whispers of $1.00 handle…stay tuned.
Equities bounced off the 9 day MA today and closed higher by approximately 1% depending on the exchange. YTD stocks are off to a healthy start appreciating just over 2%. Expect the grind higher to continue, using the 9 day MA as your pivot point on a closing basis. Treasuries were lower today but until we see consecutive closes under the 20 day MA in both 30-yr bonds and 10-yr notes considering it just a trading range and I have no long or short interest. Those levels are 143’22 in 30-yr bonds and 130’25 in 10-yr notes.
Gold and silver closed above their respective 40 day MAs. My next target remains the 50 day MA which in February gold comes in at $1678 and in March silver at $31.16. On the daily chart prices are overbought so if we start to turn south have an exit strategy to book profits on longs because as we all know metals can change course quickly. Copper is nearing a three month high and if prices surge above $3.80 the next stop would likely be $4/lb., a level not seen in nearly five months; stay tuned.
Day three of a dollar setback and the first settlement below the 20 day MA in two weeks. An interim top may be in so stay tuned; a close below 80.45 in March I would turn bearish. The standouts today were the European currencies; expect that to continue on further dollar weakness. The Euro, Pound and Swissie can be bought with tight stops.
Cocoa needs to re-take the 50 day MA in the next few sessions or I would take remaining longs off. That level is 2295 in the March contract. Fresh lows in corn and wheat as we may make an attempt at the December lows while soybeans were able to tread water today. On a lower trade that holds the December support I will look to be a buyer of Ag for clients; stay tuned. Not my favorite trade but if long live cattle, place a stop just below the 20 day MA and let the market guide you. Lean hogs have picked up ground the last four sessions. As I’ve voiced, I think this is the beginning of the next leg higher. Lean hogs are not making headlines but we could see a nice appreciation in the weeks to come -- this fits the bill for a good swing trade.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.