Commodity Update: Crude Close To Tradable Bottom

closed lower for the third session in a row yesterday, trading under $90/barrel for the first time in 2013. I feel prices are very close to finding at least a tradable bottom. If futures do not make new lows in the next 2 sessions I would be willing to wade back into longs…stay tuned. RBOB gave back nearly 1% but did hold its 50 day MA, in April at $3.0750. For now that appears to be the line in the sand. After a 25 cent correction we may have found some value. Stay tuned. Heating oil is lower by 30 cents in the last 3 weeks giving back 3 months of gains. If yesterday was not an interim low I think we are very close. It will take a settlement back over $3 to confirm a low. Natural gas gained better than 2% to have its highest close in 6 weeks. Prices have been under the 100 day MA since mid-January but trade 5 cents higher would penetrate that level and likely lead to a trade near $3.70 in April.

Stock Indices: The 9 day MA supported the S&P as futures closed back near their highs appreciating 0.61% yesterday. Previous highs should act as resistance, but with all this talk of a triple top looking at a historic chart is there any additional 4-6% appreciation to come? I have some clients in bearish trade and we certainly hope not. I have to remind myself that usually when you reach your pain threshold the market generally turns in your favor. We are there now. The Dow put on just better than 40 points to close at fresh contract highs. Looking at the futures chart prices are currently less than 1% from 2007 highs. I do not see these prices as sustainable…

Metals: Gold traded up $50/ounce only to come right back down in the preceding sessions. Yesterday, prices settled just above $1570 in April. My interpretation is we are putting in the 2013 low very close to current levels. I have advised clients to scale into bullish trade in recent dealings. All trade under $28.40/ounce has been rejected in May silver and with prices 20 cents above that level as of this post I like scaling into bullish trade.

Softs: Cocoa is at 8 month lows with May futures fast approaching 2000, a level which has not been penetrated in 13 months. Bullish trade has taken on considerable water but with the dollar showing signs of a potential trade lower, hold on for now. Sugar appreciated by nearly 1% to close at its 9 day MA. I would like to see a trade over the down sloping trend line to get confirmation of an interim low: Tthat level is 18.20 in May. Cotton closed above 86 cents for the first time in 9 months. Prices appear overextended but I may be forced to cut the size on my client bearish position if we do not see the buying slow. OJ closed higher by 2.48% likely on worries of a freeze in Florida. Yes it was cold yesterday, and I can attest living in Miami, but not cold enough for crop damage. I expect lower trade to resume when a crop assessment shows no damage. Coffee jumped 2.3% closing above the 20 day MA for the first time in 6 weeks. We should see a trade towards $1.50 in May futures.

Treasuries: June 30-yr bonds continue to run into resistance just below 145’00. Prices could go either way in my opinion. It will take a settlement under 143’16 for me to think a bearish trade is worthy. June 10-yr notes are meeting resistance just under 132’00. A close under 131’10 would signal an interim high here. Long dated Euro-dollars have retraced 61.8% as traders can fade the most recent ascent. I like bearish trade and would cut losses on a fresh high.

Livestock: Live cattle closed over the 20 day MA yesterday. Traders can wade into bullish trade with stops around $1.29 in April with an upside objective of $1.3250. Feeder cattle ended in the green closing at its 20 day MA. Traders could be in long trade with stops under $1.2450, in my opinion, targeting $1.28. Lean hogs broke down yesterday closing at 10 month lows. I do not see prices getting under last summer’s lows which are 1% from current prices before we see some sort of bounce. I still feel April can trade north 83 cents in the coming weeks.

Grains: Corn held its 9 day MA which was hit on its lows and closed just above its 20 day MA lower by 0.74%. May futures had a 15 cent trading range. $7 will need to hold on that contract for a trade higher to continue. Soybean futures gained 1.28% for a 1 week high close. Support is seen about 20 cents under current trade and if bulls remain in the driver’s seat this leg could challenge the elusive $15 level. I have no exposure except for clients who put themselves in the trade. Higher trade was rejected in wheat with a loss of 2.50% dragging prices back to their lows. I have bullish exposure with clients and am taking heat. A close above the 9 day MA needs to play out to see higher trade. That level is $7.13 in May.

Currencies: There are several Central Bank meetings this week so check out the docket and trade accordingly. The dollar was in the red yesterday but this has not been a regular occurrence. It's only the second negative close in the last 9 sessions. A 38.2% Fibonacci retracement puts the March contract at 81.10, so trade accordingly. The euro, Swiss and pound are all showing preliminary signs of a bottom. Aggressive traders can scale into bullish trade with stops under the recent lows in my opinion. The yen will need to retake the 20 day MA just above the current level for my bullish sentiment to return. As long as the lows hold, I think we can at least see a tradable bounce. In recent dealings, lower trade was rejected in the Aussie and loonie. Could that be signaling a change in trend? I think the loonie is a buy; my suggestions are bullish entries in June futures or back ratio spreads with an objective of .9900-.9950 in the coming weeks.

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