Energy: Mid-day reversal in crude as prices failed to hold above the 8 day MA. As of this post prices are nearly $5 off their highs. After a $6 run in futures some give back is OK but the front month needs to remain above $83 or bulls have a problem. After three positive showings RBOB will close marginally lower, the level that needs to support in this contract is $2.65. A broken record in the complex but the short term hurdle is a close above the 8 day MA on energy products. In July heating oil that resistance level is $2.6925. I'm looking for a bounce and view this pull back today as healthy. Wow quite a pullback in natural gas with July losing over 6%. I expected a bounce but instead prices appear that they may check the April lows. I am on the sidelines but that is my take here.
Stock Indices: In early dealings it appeared we would see follow through after yesterday's massive appreciation in stocks but prices barely held onto their gains. Support is seen at the 20 day MA in the Dow and S&P at 12,450 and 1,315, respectively. I see resistance at the 50 day MA at 12,775 and 1,355. I feel a bounce is still in the cards near term.
Metals: Gold lost 2.6% today with prices back under their 50 day MA closing under $1,600/ounce. I remain friendly but the reversal today which was a 50% retracement on the most recent leg has me suggesting to traders to keep their position size small. Inside day in silver giving back 3% erasing yesterday's gains. $28/ounce will need to hold or I would abandon longs. Copper failed at the 38.2% Fib level but once we experience a trade north of $3.43 next stop should be $3.54.
Softs: Prices are up in cocoa 8.5% in the last three sessions as prices have moved about 70% of my anticipated move. Buy the dips in sugar as I'm operating under the influence an interim low was made. My target remains 21 cents in July. Gap higher open and limit move in cotton. The market is delivering the bounce I forecast. Prices above 80 cents in July and I would start pricing out bearish trade strategies. A trade back near the 50 day MA in coffee and shorts would be on my radar. That level comes in approximately 20 cents from today's close. That pivot point has acted as resistance now for over 4 ½ months.
Treasuries: Treasuries treaded water though I'd like to see a settlement under the 20 day MA before adding to any bearish trades. That pivot point comes in at 147'22 in 30-year bonds and 132'30 in 10-year notes. QE3 is back on the table ... at least that was my interpretation based on Uncle Ben's comments today.
Livestock: Live cattle picked up 1.4% with prices bouncing off their short term MAs. Aggressive traders could get long with tight stops but I'd prefer to find trading opportunities in other sectors. I don't see prices over 122.25 in June contracts so I prefer a lower entry. Feeder cattle are back at their recent highs gaining 0.75% in today's sessions. We could see a grind to the mid-May highs but I'm not a fan currently. I'm feeling a correction in lean hogs but like cattle I see no reason to be in the trade ... I prefer a buy from lower levels ... stay tuned.
Grains: This complex was the diamond in the rough today as across the board ag was in the green. The biggest winner was soybeans gaining just better than 3%. It appears we trade north from here but readers know I prefer being long soybean oil as opposed to soybeans based on the current risk dynamics. At the end of the day if soybeans trade higher so should soybean oil unless prices totally fall apart in oil which I do not expect. December corn also saw a solid performance over 3% today. A settlement over $5.50 on this contract and I suggest scaling into more longs. Day two of a wheat bounce as solid support exists just above $6.10/bushel on the July contract ... longs trade accordingly. I think we could see $6.70 on this leg higher.
Currencies: The dollar traded below but settled above the 20 day MA. The 20 day MA will remain a very critical pivot point in the entire currency complex. 81.00 - 81.50 remains my near term objective in the June contract. The yen is down 2% this week and should continue its leg lower into next week in my opinion. Short positions should be targeting a trade under 1.2400. From the recent high that marks a $5,000 move per futures contract. I like buying dips in the European currencies and the commodity currencies. Use this set back to leg in ... just saying.
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.