Tomorrow We Will Know 6/21/11

Based on what happens sin Greece overnight and tomorrows FOMC meeting we should be able to determine where to position clients moving forward. Crude held its own but do not read into the big volume jump as it is just the July/August roll over. We are cautiously optimistic thinking yesterdays lows could serve as an interim bottom. Assuming we trade higher from current levels a 38.2% Fibonacci retracement would lift prices in August to $101.30/barrel.   Some clients hold light long positions from higher levels. As we voiced yesterday we think it will take the distillates finding  a base before being convinced Crude can gather any upward momentum. We feel after yesterdays reversal in natural gas it can be bought. Our suggestion at the moment is 50 cent bull call spreads in September. We are also  pricing out various options strategies, December 2011 and December 2012 calls to buy and hold…stay tuned.  A rally ahead of the FOMC and perhaps a solution out of Greece contributed to the 1-2% advance in stocks today. Aggressive traders may have gotten long on yesterday”s post. If so 1295 should be your first target and 1310 your second in September futures in the S&P. The greenback broke its short term MA’s and should head towards 74.00 in the coming sessions…trade accordingly. Our suggested currency exposure is buying dips in the Pound or Loonie with stops below the recent lows. The September Cable should make its way to 1.6400 and the Loonie to 1.0400 on this leg. I may have advised leaving a good thing prematurely as lean hogs and live cattle continued their appreciation today; August hogs higher by 1.75% and live cattle by just over 1%. They say the trend is your friend and June has been higher trade in livestock. We will be looking to buy back in for clients on a retracement…stay tuned. Third consecutive positive trade for both gold and silver as we feel a jump could happen in the immediate future. Gold will likely see a new contract high and silver as should trade back towards $39/40 ounce if we’re right. Obviously the two biggest game changers in the next 24 hours would be news out of Greece or any surprises from the Fed. Most clients have either long exposure in October gold or September silver. Cocoa picked up nearly 2% today making its way back near the 200 day MA. Stay long and expect more as we see little resistance above 3075 in September. Clients  are taking heat in their bearish sugar plays but we will hold anticipating a trade lower in the coming sessions. The July to September roll and stops being hit triggered the 4% appreciation in OJ. We will likely be looking for selling opportunities on a further trade up…stay tuned. Yesterday we said buy Agriculture …did anyone listen? Corn a gainer of 1-3%, soybeans 1% and wheat by 1.2-2.2%. We like the corn and CBOT wheat charts the best as for the majors but also think purchasing soybean oil is worthy of a look. After a 6% correction we are ripe for a rally…in my opinion. Some clients gained long exposure via September call options today. If Treasuries can bust and close below the 20 day MA we got a shot of seeing prices roll over. That level is 125’5 in 30-yr bonds and 123’05 in 10-yr notes.

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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