Uncle Ben may is talking out of the side of his mouth but apparently the market liked what it heard. What is confusing to me is this is just redirect and their policy may be stimulative in the short run in the big picture the Feds current actions are problematic. An inside day in May Crude with prices finishing slightly higher but back above its 9 and 18 day MAs. We need to see prices in May back under $106.50 in the next few sessions. I’ve advised probing shorts and still feel that is the play for now. Pay close attention to RBOB and heating oil though because if we see prices break out to fresh highs I will likely suggest cutting losses in Crude. Natural gas is at contract lows and all traders should lick their wounds as they should have been stopped out today at a loss on the fresh lows. Let the market find a bottom before buying again.
Stocks are back on the move lifting prices back to their highs. I was absent from the recent appreciation with clients and will be on further upside as well. I do not trust a further appreciation. Bernanke expressed his views and talked the market up and while it is not prudent to fight the Fed it is not necessary to buy their propaganda either. In my opinion look for trading opportunities elsewhere. In three days gold is nearly $70 off its lows fast approaching the $1700 level. I would be a light seller at these levels thinking that we should not see prices remain above $1700 for an extended period. I would admit I’m wrong cutting losses on a trade above $1720 in June. Silver is back above its 100 day MA gaining 1.7% today. Momentum could lift silver approximately $1 higher but I do not see extended upside. $33.25-33.75 should be viewed as a sell window in the May contract.
Remain short sugar and be willing to add to the trade on a penetration of 24.25. See previous posts...your risk should be just above 26 cents in May with a target of 23 cents. Wait for a bounce before re-establishing shorts in coffee. Remain on the sidelines to see if 30-yr bonds and 10-yr notes approach their 20 day MAs. That would be the level I would be willing to explore bearish trades. As long as the 9 day MA caps upside in cattle keep bearish trades on. Grains closed well off their highs with corn closing negative and soybeans and wheat managing to keep their head above water. I am not comfortable buying at these levels ahead of the Planting Intentions report. Without a break a long Ag trade may not happen. As long as the dollar is on the move lower expect further appreciation in other crosses, use the 20 day MA as your pivot point on all crosses. My favored play is buying dips in the Yen as long as June holds onto the 1.2000 level.
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