U Turn 4/13/11

Not a trend shift but rather just a counter trend move in a number of markets is underway…in our opinion. June Crude will finish slightly higher as the 20 day MA has held for the last two sessions. We’re looking for another $3-5 sell off in the futures but we expect it to be a bumpy ride. Aggressive traders are advised to sell rallies in Crude and the distillates. Natural gas traded above the 50 day MA but has yet to settle above that pivot point. We favor long exposure in July contracts with a $4.50 target. As of this post the indices are slightly positive which if we were to close in the green this would be the first gain in five sessions…stay tuned. We are moderately bearish and on a close below the 20 and 50 day MA which are today’s lows look for the selling to intensify. Our target in the S&P is 1275 and 11800 in the Dow…trade accordingly. The US dollar will need to hang onto the current lows, if not we would likely fall off a cliff. We have light positions short the Aussie with some clients and are currently under water…stay the course for now. On a settlement above the 20 day MA’s in live cattle and lean hogs we would be willing to re-establish bullish plays with clients…stay tuned. In the June contract those levels are 1.1680 and 1.0170 respectively. Gold and silver rallied in late dealings to end up positive in today’s session gaining 0.30% and 1.30%. We’re still anticipating a break but to date have been either way off or premature. Copper finished lower by a dime today and is off 5% in the last three days. Is this a precursor to a coming commodity sell off…we think so. Cotton appears to be rolling over again losing for the fourth consecutive session but will this just be another head fake? Continue to buy cocoa as a 5-8% appreciation should be around the bend. Our suggestion is July futures or options. We’ve had a change of heart in agriculture and expect a dip in the immediate future…step to the sidelines or get short expecting the most recent gaps in the daily charts to be filled in the coming weeks. 30-yr bonds and 10-yr notes have gained for three sessions running now and we expect this bounce to continue…trade accordingly but our stance is bullish plays as a move above the 20 day MA’s should get new buyers to emerge.

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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