Don’t try to outsmart the market. Listen to your signals and be quick to take losses and let profits run.
April Crude challenged the 9 day MA but I’m expecting this level to act as resistance and see prices back under the 18 day MA tomorrow or into next week. Nothing has changed, $103 and $101 remain my near term targets. Crude would have likely traded lower if not for the strength in the distillates, especially heating oil which is approaching contract highs. Hedges should remain on here as I’ve advised clients to be long futures and hold onto the out of the money calls sold in previous weeks. If we do breakout we may advise adding to the hedge so stay tuned. Natural gas is at a decade low and has only been positive three times in the last three weeks and there is no sign of a bottom yet. Don’t be a hero.
Tomorrow’s NFP is rumored at 220,000 which would be a non-event. Equities have recovered from the previous sessions…the question is if this will be a test of the highs and failure, or fresh highs. It is too early to say but I would take shorts off at a small loss until we know. With a close back above the 9 and 20 day MA’s I am not bearish but rather neutral.
Gold gained 1%, closing back above the 100 day MA. If we hold above $1700 into the weekend I would take all remaining shorts off -- at a profit or loss, depending on your entry. I still have a target of $1639 in June but prices may bounce first; trade accordingly. Silver also was higher by 1% today, but as I said yesterday, resistance just above $34/ounce should contain further upside.
May cocoa advanced over 5% today to close back above the 100 day MA. If we hold that level into the weekend, aggressive traders can buy with stops just below that level, in May at 2375.Sugar prices should continue to leak lower. On a breach of the 100 day MA in May -- a support level that held last time challenged, in mid-February -- add to bearish trades. If that level holds and we start to bounce into next week, move to the sidelines. Trails stops down on coffee shorts. Trails stops on your bearish cattle trades as well; do not let this one get away from you. As long as prices stay below the 20 day MA I remain bearish but you’d be giving back some profits. The biggest loser in the Ag complex today was oats, down 3.25% . I do not bring this up because I’m trading oats but rather because oats is generally the leader in this sector and I think it is foreshadowing a move to come in corn, soybeans and wheat. I’ve been saying for the weeks expect a decline. I think tomorrow’s USDA number will aide in grain price deterioration. I’d be looking to buy after a healthy correction and advise a cash position into the report.
I may be wrong with my currency assessment as the dollar is below its 20 day MA as of this post. If the greenback breaks down, all currencies except the Yen should be bought NOT sold. If short the Loonie take a loss and if short the Aussie or Kiwi put stops just above their 20 day MA’s. In March contracts that is 1.0670 in the Aussie and .8300 in the Kiwi.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results