Commodity Currents: Tug Of War Thursday.

Mar. 01, 2012 10:59 PM ET
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Contributor Since 2011

Spent my entire career on the trading floor of major futures exchange experiencing price discovery up close and quite personal and know first hand just how irrational these markets can be. Initially in futures, branched into the world of options trading learning various options strategies that can be implemented to generate profits regardless of market direction. While irrational markets can always become more irrational, they are too large to fade but their behavior can be anticipated with a certain degree of certainty so we can tailoring appropriate strategies in futures, options or combinations to specific market situations to minimize risk while increasing reward.

Although market fatigue could be setting in the indices with sellers waiting at the highs around 1375 for the S&P500 today, late day buying took it to the sellers as the indices closed on the highs just shy of another 52 week high. However what sellers have thus far been unable to do is to force a close under 1363.86 to threaten the relentless uptrend. In the Nasdaq 100, buyers were able to print the high and the trend is up for now although sellers are still trying to regain control but so far not able to do so. In Treasuries, the Ten year note yield approached 2.100 and was met by buyers supporting prices around 130-12 on the lower side of the range with the short-term direction looking lower. The long bond was more then one point lower closing under its 100day average 140-24 but off the worse levels of the day as bonds have been supported around 139-16. The Dollar index barely budged having an indecision day with no follow through buying from yesterday's key reversal, not encouraging for upside potential as the market failed at 79.017 but it didn't sell off either. The Yen tried to move higher but sellers forced the issue closing toward the low whereas the Pound pushes higher holding over its 100day average at 1.5885 keeping 1.6000 as its next target. Consolidation in the metals after their sell off with Gold largely range bound floating higher whereas Sliver performing better pushing higher by 2.52% resuming its uptrend looking for 36.000. Crude spiked higher putting in a new contract high 110.55 supported by Heating Oil and led by Gasoline also making new contract highs. Heading in the other direction was Natural gas, longs giving up after failing at 2.600 taking prices back to the lows threatening the Jan Key reversal low of 2.438. More of the same in the grains with Soybeans heading higher after buyers took control closing +0.19% but Corn (-0.61%) and Wheat (-0.60%) were lower with sellers more eager but both still over key support. Hogs sizzled as support of 88.337 held and managed to close over the 200day moving average at 90.149 after buyers forced the issue. A close over 91.000 cents could be bullish. In the softs, Cocoa held support 2,324 and reversed higher into resistance around 2,385. Orange Juice churned higher although looks like short-covering with Cotton continuing lower failing at 91.00 back to close at 90.00. A close under 89.00 could bring a retest of 88.64.

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