Commodities: Sell Rallies At Crosses

I am out on a limb saying we will finally get a  correction on the stock market after the impressive bullish start we’ve experienced ytd. If stocks depreciate where will that money go?

Crude is trading at a one month high, trading higher by 1.3% yesterday. Continue to trail stops as I still expect an attempt at $104 this week or next. RBOB and heating oil were higher but both failed to hold on to early gains. If prices fail to make new highs expect a correction very soon. We have advised hedgers to tighten stops or lighten up as to not give back profits on a correction.

Two sided trade continues in natural gas as all Tuesday’s gains were given back yesterday. Stand clear as whippy action is likely to continue.

Stocks closed lower the last two days settling below the 9 day MA yesterday. Move to the sidelines as I am expecting a correction. Aggressive traders could get short with tight stops but this may be premature and you are attempting to pick a top which generally does not work.

The only reason I  voice this is the attractive risk/reward dynamic. After three losing days gold bounced back yesterday, getting  back all its losses. I still favor selling strength; I'm thinking we get a trade under $1700 in the coming weeks.

$33 appears to be the line in the sand in silver but when that level gives way I’m thinking a trade under $31/ounce should follow soon thereafter.

In three short days cocoa has appreciated nearly 11% lifting prices to three week highs. On a trade above the 100 day MA, a level that halted gains in late January, expect  more buying to emerge. That breakout level comes in at 2410 in March. Coffee lost 1.9% yesterday to close below the $2 level as predicted.  I expect further weakness and would not rule out a further 5% depreciation.

I am not a buyer of live cattle or lean hogs until we get a break in prices even though I think we see higher ground and likely new contract highs in both commodities. April live cattle an entry closer to $1.25 and in hogs closer to 85.00 cents. Corn and wheat continued to lose ground yesterday as soybeans were higher but running on fumes. My opinion is a break lower across  the Ag sector but my money would be on the sidelines looking for a long entry on that break.

If the dollar continues to gain as I expect it wil,l sell rallies in other crosses. My opinion was an interim high was obtained in all crosses  last week…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.