4/18/11 Tax Day

Every tax day every year I am reminded not to make investment decisions based on their tax implications…are you adhering to that adage? Crude oil lost 2% today but all things considered it could have very easily lost $5 today based on outside market influence. We would still advise fading rallies for aggressive traders with a target of $103 in the June contract. Food for thought a 50% Fiboancci retracement drags prices in June to 102.20 and 61.8% back to 99.50. Natural gas could go either way…for the time being we remain cautiously optimistic with clients in July contracts. Play the break above the 100 day MA or below the 50 day MA on a settlement basis. As of this post indices are showing a loss 1.1-1.9% in today’s session. Minor chart damage was done today as this leg lower should take us to at least a test of the 100 day MA; in the S&P at 1280 and in the Dow at 11800. The dollar appreciated by nearly 1% today as all crosses with the exception of the Yen getting hit hard today. Our favored plays in forex remain selling strength in the Aussie and Euro and buying weakness in the Yen. Remember the Euro/Yen trade mentioned last week…today a big mover! We may opt to sell the Loonie in the coming sessions for clients so stay tuned. Give lean hogs another day to see if they can overtake the 20 day MA; in June just above $102. Clients were advised to get long live cattle today, either June or December contracts expecting a 3% appreciation from current levels. The gold and silver train may stay on the tracks for an indefinite time but we just don’t like either until we get a 5-10% correction. Today gold printed trades above $1500/ounce and silver added another 2%. The 100 day MA capped rallies in cocoa again as prices may come under pressure temporarily with a dollar bounce, if in a profit take it, if not be willing to take some heat or take your loss because we expect a set back immediately. Soy meal is a buy, old crop wheat is a buy and new crop corn and soybeans are buys…in my opinion. Our favored play is bullish exposure in July soy meal with a target of $370/375. Treasuries continue to work higher but on another basis point appreciation we would likely abandon ship on longs in 30-yr bonds and 10-yr notes…stay tuned.

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

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