Today in Commodities: A New Month

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Includes: AGF, BALB, CAFE, CORN, GAZ, GLD, MOO, NIB, OIL, SGG, SLV, SOYB, UDN, UUP
by: Matthew Bradbard

All the traders that sold in May…are they back already as buyers? Crude oil fell back today but did manage to remain above the 9 day MA; in July at $100.35. We remain mildly bullish but we are smack dab in the middle of the recent trading range so trading either direction is not risk-less at these levels. We would prefer buying a dip or adding to longs on a trade above $102 which would likely confirm more upside. Natural gas surged nearly 4% higher today on the AGA report lifting prices to five month highs. We’ve advised clients to fade this rally. Those in August bear put spreads could start buying their bottom legs back which we started to do today for some clients.

The 100 day MA held in the indices in early March, last week and again in the last two sessions. It will all be on the NFP number tomorrow to see if we can continue to hold this line. An ugly number should already be factored in so unless there is a number less than 50,000 or a large jump in unemployment we do not expect much more additional selling at this time. The 100 day MA comes in at 1312 in the S&P and 12170 in the Dow. The dollar continued to slide today closing down now six out of the last eight sessions. We continue to like buying dips in the European crosses; Euro, Swissie and Pound. We advised clients to gain bullish exposure in the Loonie today. We expect today’s lows to hold as this level has supported recent tests. Our favored play is getting long futures and selling out of the money calls 1:1. Livestock both hogs and cattle appear to be basing out but we feel there are far better opportunities elsewhere so do not force trades until we get a confirmation of a bottom…only my suggestion. August gold traded below the 9 day MA but managed a close above that level which for now serves as the pivot point at $1528. We anticipate a gradual slide and would be willing to be a buyer from lower levels with aggressive traders. As of this post silver is down 6% in the last two days but a close above $36/ounce was a small victory for the bulls today. We will likely be gaining bullish exposure on setbacks but at this juncture a trade closer to $34/ounce cannot be ruled out. Although an extremely risky play we like selling July puts under the market on massive down days. Sugar gained nearly 5% today carrying prices to five week highs…we would start looking for an exit door on longs. Cocoa got hit 2% today so longs have taken heat in the recent session but we still prefer bullish exposure and have advised clients to stay the course for now. Grains were higher by 1-2.5% today with corn making new contract highs in new crop and soybeans likely on their way to new highs. We have advised clients to wait for a dip but with the weather being built in and tight stocks globally we may be buying at higher levels…so stay tuned. We are down on all bearish plays in the Treasury complex with clients and just when we are ready to cut losses we get a glimmer of hope today with the reversal. Stay tuned…if this is the top clients should get their money back if not we will likely be cutting losses on put options in 10-yr notes and 30-yr bonds in the coming sessions.

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