Bernanke Speaks…will you Listen 4/26/11

Not only is tomorrow a Fed decision day on rates Bernanke will be interviewed so expect fireworks. Inside day in Crude oil as we failed to make a new low with prices closing only marginally lower. Our bearish bias exists but we would like to see confirmation. On a break lower we think we could see a quick test of the 20 day MA at $109.30 in the June contract. We’ve yet to deploy any client capital but on our radar are shorts in RBOB or potential spread trades short RBOB/long heating oil…stay tuned. Aggressive traders can get short natural gas as we feel an interim high is in place and expect a trade back near $4.20 in June. A break out in the indices should lift prices higher…though our clients will be absent as we do not trust this move. Is the dollar basing out or pausing before the next leg lower…that is the question and we should get the answer tomorrow. Every short we’ve attempted in other crosses has been a loser so you may want to look for opportunities elsewhere. A 1.4% drop in lean hogs today and near 5% drop in the last four sessions has longs back on our radar and clients will move back long when we see some type of consolidation. Live cattle have retraced 50% in recent weeks so we’ve advised clients to start scaling back into longs. In the coming weeks we anticipate a trade back over the 20 day MA’s. In June at 117.20 and in December at 123.70. Silver loss nearly 5% today and is almost $5 off its intra-day highs from yesterday. We lifted the bearish ratio trades for clients from yesterday at a 40% profit. From here we would fade rallies as a trade to $40/41 could be in the cards. The gold chart is fairly ugly as well, but it would take a trade below the 9 day MA for selling to accelerate. That level is $1490 in the June contract. On that we would likely see a swift move to $1450…trade accordingly. Sugar did finish lower in today’s session but prices still remain above the 200 day MA. We have clients long via July options that are currently carrying a small loss. We are positioned trying to capitalize on a bounce to 25/cents in the coming weeks. Aggressive traders can add to their shorts in cotton and continue to fight coffee by selling although it may be painful for a short period. Over the next several months we’re looking for much lower cotton and coffee pricing…trade accordingly. As for agriculture our favored plays are currently bearish positioning in soybean oil and corn. We suggest trading July soybean oil and either July or December corn. Treasuries moved higher and though we should be cutting losses on shorts being most of our clients positions are options we opted to hold bearish plays in 10-yr notes into tomorrow’s FOMC decision…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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