Today In Commodities: Getting My Bearings

by: Matthew Bradbard

After a few week hiatus I am starting to get my feel back as readers can see on trade recs. Those looking to get more precise advice contact me at my new firm. I believe we can compete on execution, rates, platforms, research, etc. Crude was lower by 1% today trading down to support that has held for the last few weeks. My expectation is for that level to give way in the coming sessions and to see a trade 4-6% lower. The 50% Fib line in April is just above $103 and a 61.8% retracement puts Crude near $101.50. Much of that could be determined on if RBOB and heating oil continue to trade higher or we see prices roll over…stay tuned. Even if not trading the distillates I think they are a key to the equation when trading oil. First we need to see a settlement above the 9 day MA in natural gas which has capped the last two days upside. It is too early to call a bottom in my opinion.

Very little follow through in stocks after yesterdays surge higher. Do I feel there is a top? I am incapable at picking tops or for that matter bottoms. But I will tell you this I advised some family members to go to cash...lightening up on their stock market exposure. Gold was lower by 3% hitting my $1639 target. That level did hold on a closing basis in June but let’s see what the next few days bring. A breach of today’s lows could lead to more weak longs running for the hills and a trade back near levels last seen in 2011 about $100 below current levels. If so I would advise buying with both hands on a position trade. Silver gave up 4% trading to 2 1/2 month lows closing below the 100 day MA for the first time in over 2 months. I’m still looking for a move below $31/ounce and on a total meltdown do not rule out $28 in May. Much of that should be known in the next few sessions…stay tuned.

Keep stops in on coffee shorts and if the market gives you more downside before a bounce take what you can get. Sugar appears poised for a 3-5% appreciation so hold off and if given the opportunity a sale closer to 26 cents in May looks like a trade to me. In three short days Treasuries have given back four months of upside. Expect further downside. Traders with some patience can be positioned in bearish plays in 2013 Eurodollars. I’d like to see cattle trade higher before re-establishing shorts. Stay on the sidelines awaiting further appreciation. Until we get a break in grain prices (wheat, corn and soybeans) I have no interest. The dollar continues to be bid higher and I see no stiff resistance for another 1.75-2%. Bearish plays in the Aussie and Kiwi should still be on if you are trailing stops above the 20 day MA. Both were big losers today as was the Yen. Echoing recent comments though wait for a rally in the Yen. All crosses appear to be headed for lower ground in the immediate future in my opinion.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results