Commodity Wrap: Metals, Stocks Build on Strength

Metals, stocks and even foreign currencies continue to build on strength as 2012 has virtually been a one way trade…will this continue? Crude oil erased the previous week’s losses adding 1.9% yesterday but failed to close above $99 in March. I view that level as the pivot point so I remain bearish still. Be willing to cut loses on any shorts if prices trade through that level in the coming sessions.

Natural gas continues to bounce around and I would suggest no long or short trades until we get a clearer picture. A fresh 2012 high with equities gaining 0.50% yesterday. The 9 day MA continues to act as my pivot point and although we’re approaching overbought levels I learned a long time ago not to jump in front of a freight train.

Positive news out of Europe with progress being made caused the Euro to jump and other crosses to follow. Clearly wherever the Euro goes other currencies will follow and at the moment that looks like higher ground. It also helped that the US dollar fell to a two month low. Gold and silver reversed early in the AM to go from negative to positive with gold and silver gaining 1.4% as of this post.

Prices may try to visit the recent highs but I have not seen enough of a correction to justify further upside. I am still looking for a move under $1700/ounce in the June contract. March silver is back above $34/ounce but like gold I feel we have more of a break before any serious advance. If you notice in this complex gold, silver and copper seem to be consolidating …the debate is if the market is taking a breath for additional upside or preparing for a reversal?

OJ lost nearly 3% closing below $2 for the first time in three weeks…expect  further losses as the 50 day MA may come into play. That level is $1.83 in March.

Continue to use the 20 day MA as your pivot point in Treasuries as 10-yr notes and 30-yr bonds closed below that level yesterday. Traders can gain bearish exposure in 2013 Euro-dollars with stops above the recent highs. The suggested play would be to build a position on the way down while trailing stops.

Ag prices appear to be stalling, unable to hold onto gains across the complex. Most traders are likely waiting for Thursday’s USDA report and will make a move based on the numbers. Any longs should be trailing stops and it may be prudent to book profits and be in a cash position headed into the USDA report.

April live cattle continue to wander between $1.27 and 1.29 trading higher back up near the top of that range yesterday. I am suggesting buying a break closer to $1.25. Let lean hogs work lower as well as my target in April is a buy closer to 86 cents…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.