Energy: Crude looks poised to get above $105 -- a level that has not been breached in three weeks. Today prices will finish slightly lower but well off their lows and another 50 cents puts futures over the 40 day MA, which should trigger more buying. I would have stops in any remaining shorts just above that pivot point. RBOB lost 1% as $3.15 continues to act as serious resistance. I expect the sideways 10 cent range to persist until Crude gets moving. Heating oil was the lone positive gaining for the sixth consecutive session albeit marginally. I do not see any significant resistance for another 10 cents in heating oil. The 18 day MA held on all attempts the last three sessions as prices were back on the move today, gaining nearly 5% in natural gas. A trade above the 40 day MA at $2.31 in June would likely cause another leg lifting prices in futures near $2.50 into next week. A 50% Fibonacci ytd would lift futures to $2.51 while 61.8% puts prices at $2.65.
Stock Indices: Stocks are consolidating near their recent highs. It is too early to see if the markets are catching their breath before an attempt at the March highs or if we're starting to see signs of exhaustion. Time will tell. As I've said in recent posts, I'm a spectator with clients not trusting these levels. It will take a close back under 1360 in the S&P and 12900 in the Dow for me to have an interest in bearish trades; stay tuned.
Metals: As long as July copper stays above $3.80 I remain friendly -- moreso as a guide to trade other markets as I typically do not venture into these waters because of the volatility and lack of liquidity. Gold pared losses to close flat but $20/ounce off its lows. It was a mildly positive sign but until prices trade above the 100 day MA at $1677 in June, I expect muted action. Silver lost 1% today, closing just above $31/ounce in July futures. I see limited upside but remain neutral. It will take consecutive closes back under $31 for me to be back in the bear camp.
Softs: Cocoa collapsed 4% today, falling off from overbought levels. Aggressive traders can short around 2250 in July with stops just above the recent highs. This would be our second short probe attempt. A new high take you loss. On the downside if things calm down in the Pound and the dollar can stabilize we should see 2050 in the coming weeks. Cotton appears to be rolling over -- aggressive traders can gain bearish exposure with stops above 93.00 in July. Other options include a bear put spread or selling futures while simultaneously selling out of the money puts 1:1. New lows in OJ ... stopped out on any long entries. Let coffee work higher before initiating fresh bearish trade.
Treasuries: 10-yr notes and 30-yr bonds are at elevated levels but until we get a settlement below the 20 day MA, stand aside. Those levels in June contracts are 131'28 and 142'10 respectively.
Livestock: I am going to call an interim low in both live and feeder cattle. I do not claim to have a crystal ball but it looks like a good risk to reward starting to probe longs with stops below the recent lows. Start with a small position in futures or have some option protection until this thesis is proven. Lean hog prices continue to slide losing .80% today. Now that the recent support has given way we should see momentum traders drag hogs even lower. Do not attempt to pick a bottom here.
Grains: Corn advanced 1.4% today, closing above its 50 day MA for the first time in three weeks. I expect July to challenge $6.50 in the coming sessions. CBOT wheat closed higher for the third session as prices look like we could a see another 20-25 cent advance this week. May and July soybeans settled above $15/bushel while November appears it's on its way to a close above $14. Traders could be long November as long as the trend line holds. It really has been the relentless move in soybean meal that has carried beans but it does not look over posting a fresh contract high today. I do not like buying grains until we get a dip but I may leave money on the table being absent.
Currencies: A breakout higher in the Yen lifted prices to two month highs. Today's highs nearly completed a 50% Fibonacci retracement but the bulls should make an attempt at 1.2700 this week or next. The Pound closed lower for the first time in eleven sessions. I would suggest staggered stops on longs, booking a profit just under 1.6200 on a portion of positions. Give another day in the commodity currencies from the sidelines as I did not like the action in the Loonie, Aussie and Kiwi today. I had mentioned last week that I may want to be a buyer.
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.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.