Today in Commodities: Chicken or Egg?

Includes: GRU, MOO, NIB, OIL
by: Matthew Bradbard

What came first -- the recovery, or the market pricing in an eventual recovery? The recent rally in the stock market, in our opinion, is premature. We are advising clients to lighten up after the recent 50% rally and still remain short the S&P via put options, with our clients looking for a test of 960 in the September contract.

October crude was a gainer of 3% today running into resistance at the 9 day moving average. On friendly news on inventories tomorrow, expect the move to $75 to accelerate. In case of bearish news we would advise still holding your October $60 puts, see blog from yesterday. Today clients bought the November $5/6 call bull call spreads for $1800. Please follow the trade, I will advise when I cut losses or take profits.

We see no worthy trade in the currencies presently. We had expected to see some down side follow through in metals today, could the recent lows hold? We will be looking at June 10′ 98.00 and 98.25 puts in the Euro-dollar in coming sessions.

Corn was marginally higher and wheat marginally lower, nothing new to report; we are long and wrong with clients for now.

Live cattle and lean hogs showed some strength today, we maintain that a bottom is forming. We hit our target in the futures on our cocoa but the options have yet to hit our objective, we advised clients to put in a profit order on the October 2500 puts at $500 o/b. We will need to see further down side to get filled.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results.