Commodity Update‏: Crude Oil Stays Low, Silver Loses Ground

April Crude oil held the same lows that acted as support on Friday and managed to close .075% higher. Prices are just under their 8 and 18 day MAs but unless trading the $2 range, I do see a viable bullish or bearish strategy at this juncture. Stand aside until we get more direction. RBOB closed lower the last 2 sessions albeit marginally. Is there an interim top in the making? It will take a trade under the 8 day MA; in April just above $3.27. If this turns into be an interim top expect a trade back to $3.10/3.15. Heating oil has started to trade lower closing in the red 4 out of the last 6 sessions. Today was the first settlement under the 8 day MA. I anticipate a trade to $3.06/3.11 in April this week or next. Natural gas closed higher by 3.45% nearly 15 cents off its lows and above the 8 day MA. It was featured as the chart of the day, as I think bullish trades can be scaled into.

Stock Indices: The Dow only gained 0.47% but from elevated levels it lifts prices to fresh highs. The 9 day MA remains the line in the sand under the market but a close above 14000…where from here? A 500 point depreciation is around the bend in my opinion but clearly I’ve been wrong for weeks. The S&P bounced off its 9 day MA to close just off its high gaining 0.77%. A correction long overdue - what a broken record. Understand for any move to be sustainable there needs to be ebb and flow and this has been a one sided trade for weeks now…unsustainable.

Metals: Inside day in gold with April futures closing lower by 0.33% just above $1600/ounce. At least for a tradeable bounce I think traders can gain bullish exposure in gold at current levels. It will take a settlement back over $1645 to confirm this but I expect that to play out this week or next. Silver lost ground for the fourth day in a row off by 1.43% at its lowest close in 6 months. I maintain under $30 silver futures should be scaled into from the long side. Dr copper lost 2.34% today stopping at its 100 day MA which has supported for the last month. A breach of today’s lows should get futures a dime cheaper in my opinion. Aggressive traders can fade rallies in April platinum near $1725 targeting $1655.

Softs: For the last 7 days cocoa prices have traded south…losing just under 5%. This puts futures at 8 month lows. I have been catching this falling knife with small size for clients. If we do not see a turnaround very soon I will advise cutting losses. Sugar may be finding value under 18 cents with futures higher by 1.24% today. Consecutive settlements over 18 cents in May would intrigue me on bullish trades. Cotton traded to 9 month highs on bullish buying news from China. My inclination is the appreciation in futures in recent months had factored much of this in and I see limited upside from here before a correction. I have been selling into this strength for clients thinking targeting the mid 70s in the coming months. OJ has started the correction forecast in recent weeks. Prices gave up almost 4% today closing back under the 9 day MA. A 61.8% retracement puts May under $1.19. A trade above the 9 day MA was rejected as coffee closed 4 cents off its highs. Prices are extremely oversold and due for a bounce…open bullish trades with clients are underwater.

Treasuries: 30-yr bonds were unable to get above their 20 day MA the last 2 sessions, but I view that as temporary. A trade above 144’00 should lead to a grind back near 146’00 in March futures. 10-yr notes also were met with resistance at the 20 day MA and the down sloping trend line that has capped rallies for several months. A close above 131’20 in March is needed to see further buying.

Livestock: April live cattle closed lower for the first time in the last 3 days. The 9 day MA needs to be penetrated to see further upside. I’ve suggested light bullish exposure and adding once that happens. In April that pivot point is 130.30. March feeder cattle also lost momentum today but I view that as a pause before the ascent continues. I am targeting a trade near $1.47 in March futures. Lean hogs were lower by 1.42% dragging prices to 7 month lows and within 4.5% off 1 year lows. I have yet to commit funds but bullish trade is on my radar with prices this reasonably priced…stay tuned.

Grains: A base could be in the making as corn has tread water the last 4 sessions just under $7. A close above the 9 day MA; currently at $7.02 would signal an interim low. The standout in the Ag sector was soybeans today gapping higher closing up by 3% on weather from SA. Old crop gained significantly more than new crop and that should be the case moving forward. The rumor is a large trader/traders were positioned the wrong way short beans and it accentuated the move. Upside resistance is not seen for another 30 cents. Wheat like corn met resistance at its 9 day MA the last 2 days. Once that hurdle is overcome I think more buying emerges. I like scaling into bullish trade and see prices 40-60 cents higher in the coming weeks.

Currencies: The dollar has completed a 61.8% retracement and could trade south from here. A trade back to its 20 and 50 day MA is expected…a loss of approximately 0.007%. The Euro should appreciate, bouncing off the trend line that has held since November. I would be out of shorts and willing to sell once we bounce. The Yen appears to be establishing a base but until futures close above 1.0850 I have no interest. The Canadian looks like it could see more pressure though we are seeing buying interest in the Aussie and Kiwi. When all 3 commodity currencies are showing such a divergence I would back off fresh entries in either direction.

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