Using MA’s to trade 4/19/11

Regular readers understand how much I utilize and how valuable moving averages (MA) are when trading commodities. A lower low and lower high in Crude shifts the momentum lower but we still would like to see a settlement below the 20 day MA to confirm a price decline. That level is $108 in the June WTI contract. Natural gas closed 3% higher at a two week high. A break out above the 100 day MA this week should lead to a further 3-4% appreciation…trade accordingly. Inside day in the indices as stocks settle in after yesterday’s swoon. Our negative bias exists as we would use the 50 day MA as a pivot point to help in determining the direction of the immediate leg; in the Dow at 12115 and 1310 in the S&P. Inside day in the dollar as well with prices again failing to close above the 20 day MA. Bulls still have a chance but we will need to see June settle over 75.75 in the next few sessions. Aggressive forex traders can sell rallies in the Euro and Aussie and buy dips in the Yen. Live cattle and lean hogs gained roughly 1% today in the June contract. Our advice is to scale into longs as we should see prices make their way to their recent highs. Gold traded above $1500/ounce today but the real mover was silver once again gaining nearly 3% settling above $44/ounce. In the month of April silver futures have gained 17%…can you say parabolic? As long as cocoa holds the 200 day MA we like being long for clients. July futures should in the coming weeks make their way to 3300…trade accordingly. Aggressive clients started gaining long exposure in July sugar today via call options. Our target is 25/cents lb. in the coming weeks. Wheat has advanced 7-9% in the last three sessions and this could just be the beginning…buy dips in CBOT or KCBOT. Outside of that our most recent trade rec. in agriculture was buying July soybean meal which we still like. Treasuries have gained six out of the last seven sessions, lighten up on longs or trail stops as we feel the easy money has been made in longs.

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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