Commodity Currents: Tantalizing Tuesday.

May 29, 2012 9:29 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.

Is this the green light for equities to move higher? The S&P500 chopped higher trending up for the third day although I don't trust the move with near term resistance seen at 1341 while 1314 supports on the downside with the Nasdaq 100 advancing through chart-based resistance at 2550 with upside objective for bulls coming in under 2590 and support at 2530. 10yr Treasuries printed new highs again only for prices to pull back but still staying over 133-22 support keeping alive more upside possibilities despite the up move in stocks. The Dollar continues higher as well although its looking more fatigued at these levels crawling toward 83.00 while 81.91 is seen as near term support, for now the trend is higher. Gold fell back under 1568 making a three day low to try to move higher again with Silver falling as well as it inched closer to 28.72 resistance whereas Copper succeeded in advancing over 3.4600 but closing well off the best levels. Crude tried to advance but ran into sellers waiting at 92.00 sending prices back to the opening similar in previous sessions although buyers supported at the lows just over 90.00 keeping alive upside prospects whereas Natural gas continues to experience profit-taking falling through another support area with more selling not out of the question with a 61.8% retrenchment taking prices to 2.372 if support at 2.445 fails. Corn fell on the open to new low of the move as sellers give no respite with support seen at 550 with Wheat falling in sympathy trading through 674 to test support at 656 and Soybeans tried to advance but ran right into resistance at 1400 capping gains with Meal trying to move higher as well but stopped by 418.00. Coffee grinds lower still confined between 165.00 and 170.00 will it break up or down still remains to be seen whereas Sugar tried to advance but buyers lost interest with near-term resistance at 20.05. Cocoa tried to move higher as well but sellers waited when prices traded over 2,150 selling into the move sending prices back to the low with 2,100 still supporting but Orange Juice had no such problems building on gains after 107.70 support held closing over 110.00 after a failed test of 115.60 still looking for higher prices whereas Cotton tried to advance but was turned away from resistance at 75.06 sending prices back to the day's lows to try again.


The risk of loss trading commodity futures contracts can be substantial. You should, therefore, carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. Trading futures without protective stops or options is not recommended

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