The impressive start to the year in both stocks and commodities is coming into question as some big movers start to retrace. The message is clear: 2012, like previous years, will likely be a traders' market, NOT buy and hold.
Crude failed at its highs and by day’s end reversed to trade down nearly 2%. I’ve suggested clients take off their positions and move to the sidelines. It would take a settlement back under $100 for me to gain bearish exposure again for aggressive clients. Natural gas erased all of yesterday’s gains, taking prices back near their lows. Just when I thought longs were out of the woods ... very frustrating. On a new low expect follow through so do not get a large position on if you are willing to weather this.
Stocks found support at the 9 day MA closing near the upper end of their trading range. We are still expecting a further grind higher but tomorrow’s action should be influenced by the jobs number in my opinion.
Gold continues to climb higher as I feel we’ve seen about half of the current leg play out, February target $1680. Same comments on silver as yesterday the market appears to be taking a breath before the leg higher resumes, March target $32.
The 20 day MA supported the dollar today as price raced 1% higher lifting prices near contract highs. Though we expect a trade back to 79.00 in March on a new high we would cancel that idea thinking momentum could lift prices near 83.00. Stay alert because an upside dollar breakout would likely lead to lower trade on other crosses. We’re getting mixed signals and suggest being nimble trading both sides and implementing tight stops because there is no clear trend in forex currently with the exception of the Euro and Swiss which should continue down. In full disclosure I recently voiced a bullish trade to no avail.
Sell signals in coffee and sugar today -- aggressive traders could gain bearish exposure. Continue to use the 20 day MA in Treasuries as your pivot point. Hopefully grain traders booked profits on their longs as price action appears to be reversing. Corn lost 2.28% today with wheat down 3.2% and soybeans off 1.7%. We anticipate further downside in the immediate future; trade accordingly. Continue to fade rallies in live cattle targeting a trade under 119.00 in February. Take longs off in lean hogs -- most traders should be at break even or a slight profit depending on their entry.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results