As of this post crude is just above $101/barrel and will close out the week positive after back-to-back losing weeks. We still favor scaling into bearish exposure looking for depreciation to follow. For the last two weeks natural gas has largely been contained in a 20 cent range. We view natural gas as a coiled spring and have advised clients to get positioned long anticipating an upside breakout. A 5-6% appreciation in stocks is likely over done but the concerted effort of central banks was likely the biggest contributing factor. The lack of follow through the last two sessions leads me to believe that further upside may be limited. Clients have no position currently. The 100 day MA at $1723 should support while we see resistance just under $1,790 ... I wish I could be more help.
Support is eyed in March silver just above $32 with resistance just under $34. My bias short term is neutral in both metals therefore clients have no exposure. The dollar closed higher today for the first time in six sessions finding support at the 34 day MA. All crosses closed lower today after positive action in recent sessions. We suggest moving to sidelines or lightening up if long with profits. Clients in December yen options will hold into next week looking for a further breakdown. The bad news is the time decay is really kicking in so on a new low regardless of premium we will be looking for an exit door.
Cocoa got slammed another 2.6% today, dragging prices down for the last seven days. As we approach two year lows we feel we’re buying value but don’t get too large of a position because we have yet to see signs of a bottom. Our clients will be advised to add to their position once they are showing a profit ... stay tuned. Coffee is back in sell mode as prices have traded back to support after today’s 2.6% decline. On a new low momentum traders will likely beat this position down ... add on a fresh low.
Treasuries bounced today, so continue to use the 20 day MA as your pivot point. In 30-year bonds at 142’13 and 130’15 in 10-year notes. On a higher trade we will be trying to re-establish bearish plays in 2013 euro-dollars for clients.
Mixed bag in grains with corn lower and soybeans and wheat higher. We have told clients to wait for a trade higher and then we will be issuing bearish trade ideas ... stay tuned. Live cattle ended lower the last two sessions but we’re still expecting more downside before getting long with most clients. Those already long should be willing to let go at a loss on a settlement below 122.75 in February. Lean hogs continued lower, losing 1.6%, closing below the 20 day MA for the first time in two weeks. Stay short as prices should continue south.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.