CHINA tapping the brakes 6/14/11

A healthy move by China overnight should aid in further appreciation in most commodities in the medium and long term…in my opinion. Higher low and higher high in Crude likely helped by outside markets and the move in China overnight. On a settlement over $100/ barrel look for upside momentum to build…we are cautiously bullish with a target of $103/104 in July. Natural gas is just over 40 cents  off its high last week having competed a 38.2% Fibonacci retracement. Our short term target in July remains $4.40/4.45 where we will likely start scaling  into longer dated bullish positions for clients. News from China contributed to a rally in stocks globally with all major US indices appreciating by 1-2%. View this as a tradeable bounce that could lift prices 3.5-5% higher…trade accordingly. Our long target in the S&P would be the 50 day MA at 1323. Continue to fade rallies in the Swissie and buy dips in the Loonie. The Canadian dollar should see 1.04 and the Franc should see 1.1600 in their respective legs. Live cattle closed above the 20 day MA again today…stay long using that as your pivot point. Trail stops in lean hogs being we broke above the triple top mentioned yesterday. In the last six days lean hogs have appreciated just over 9%…do not be a pig book partial profits. Inside day in gold with a close back above the 20 day MA gaining 0.70%. Clients were advised to lift their July puts off in early dealings at a very slight profit when yesterdays low held. A nice move in silver today with July futures higher by 2.4% but we will need to re-take the trend line at $36.75 to feel confident we’re moving north from here. On that in the next few sessions we will be shopping bullish exposure with aggressive clients. Copper traded higher by 3% breaking out on strong economic data and news from China. July above $4.20/ounce should signal further appreciation…trade accordingly. Cocoa has held the 20 day MA now for three straight sessions closing higher by 0.90% today. We suggest bullish exposure and have an upside target of 3100/3150 in September. Aggressive traders can get short October sugar via futures or options with a first target of 23 cents. I’ve been called crazy for getting short grains of late and yes guilty as charged. Look for more depreciation and for corn and soybeans to be bigger losers than wheat. Our current recommendations are outright shorts in corn or short corn against long CBOT wheat 1:1. Say it is not so a break Treasuries in both the long end and short end of the curve. Some clients have bearish plays in 10-yr notes, 30-yr bonds and Euro-dollars anticipating more downward pressure…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.

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