Cutting Losses 3/21/11

An often forgotten part of trading is cutting losses which my clients and I do on a regular basis. That’s right losses! With the dollar breaking to new lows and what should be help from outside markets Crude could not get out of its own way…that being said we would tighten up stops on longs or move to the sidelines on a breach of the 20 day MA; in May at $101.90.  Natural gas remains a buy on dips but we would be quick to abandon our bullishness on a trade below $4 in May. The indices traded but did not settle above the 50 day MA’s…in the Dow at 11930 and 1296 in the S&P. Those long should add to their position on settlements above those pivot points as we could see a further advance. Both aforementioned currency trades are marginally against our clients but we’re suggesting gaining bearish exposure in the Euro and Yen via options. June live cattle were higher by 1.7% today while June lean hogs gained 1.38%. We’re bullish both anticipating a trade back to their respective highs. This would represent a gain of nearly 4% in live cattle and 3% in lean hogs. Our favored play is long futures while simultaneously selling out of the money calls against the futures at a ratio of 1:1. Gold gained o.80% today while silver leaped just over 3%. Bulls are making money but we have left the trade advising clients to book profits on all remaining longs. We will look for a correction to be a buyer of both silver and gold in the coming weeks…stay tuned. OJ gave up 3.30% today trading to a four month low. Longs are on our radar though we’ve yet to commit any client capital…stay tuned.  Mixed bag in grains…our current suggestions are to buy November soybeans and December corn on set backs ahead of the coming USDA report at month end. Treasuries should continue to falter… we are bearish and have advised clients to get short 10-yr notes and Euro-dollars via futures and options. We feel June 10-yr noted could trade back near 118’20 in the coming weeks, current price 120’05…trade accordingly.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Read more at MB Wealth