Today In Commodities: Commodity Update

by: Matthew Bradbard

A correction in metals, energies and indices to the downside appears to be underway. May Crude traded below the trend line mentioned in previous posts but at the moment losses have been pared and prices are above that level. The next few days’ action will be critical so pay close attention. A break below the trend line and 40 day MA; in May at $104.25 should lead to a trade under $100/barrel. RBOB and heating oil also have given up ground today…heat is the weakest link in the complex with prices losing just over a dime this week. Similarly to Crude a trade below the 40 day MA should lead to increased selling pressure. In the May contract I see support at $3.10 followed by 3.04. Natural gas lost almost 4% today as traders first stops should have been triggered at a loss. You should have trimmed your size and have the remaining stops under the contract lows. This market is not only a dog but a dog with fleas.

Stocks appear to be headed lower at least in the short run. I think you could see an additional 2-3% drop in the indices into next week. At its lows, gold was down almost $25/ounce but as of this post prices are only off $7. I remain bearish expecting lower ground but be prepared for a bumpy ride. Silver closed down just better than 2% fast approaching my $31 target. As I voiced yesterday, as long as the 100 day MA caps upside remain in bearish trades. That level is $32.40 in May.

Sugar picked up 2% today. Use this acceleration to layer in bearish trades. As long as we do not see a close above 26 cents in May into the weekend I like being short. So much for the bounce in coffee as prices gave up over 4% today to trade to their lowest level in over one year. I will be looking to sell rallies. Ideally you listened and exited your bearish trades in Treasuries as it appears we get a bounce from here. I expect to be a seller from higher levels in the coming weeks. Remain short both feeder and live cattle with stops just above the 9 day MA. Mixed bag in agriculture today. On a lower trade across the board in wheat, corn and soybeans I will be looking at buy points for clients. Expect some trade recs next week. The big mover today was the Yen gaining 1.13% to gain two days in a row. An interim bottom should be in as we get a bounce moving forward. My target at the 20 day MA is within reach and the 31 day at 1.2370 should play out next week…trade accordingly.

Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor’s needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.