Commodity Wrap: Plenty of Reasons to Be Bulllish, But Bearish Gold

It is said the S&P 500 is a good  barometer of the overall economy. The question is can prices overcome the 1350 level?  A number of times in the last 10-15 years this level has been reached but only once have prices managed to keep trading higher. Probability-wise, prices are likely due for a correction.

A level that has been hit is in Crude oil which went higher by almost 2%, closing back above the $100 level. From here it appears we may see a trade back to $104 in the next few sessions. My bias has shifted back to be being bullish as long as $98 holds in March. I think it may be difficult to see much more upside especially if heating oil and  RBOB trade sideways to down.

Sideways action continues in natural gas, so look elsewhere.

In early dealings stocks traded to their 2012 highs backing off slightly for a close approximately 0.50% higher.

Gold has closed lower 5 out of the last 7 sessions as prices have started to peel off. My inclination is to stay in bearish trades until prices reach at least my first objective…$1690. For almost 3 weeks silver has tread water wandering around the $34 level. I continue to think a break is coming and wait for confirmation. Confirmation that I’m correct or that I’m wrong, which would happen on a settlement above 34.50 or below $33.

OJ looks set to break the 50 day MA for the first time in 2012. Expect further weakness to come. Coffee lost ground for the last 4 days and momentum traders should accentuate a further move dragging coffee closer to $2. The 20 day MA continues to act as the line in the sand as Treasuries have flirted with that pivot point now for weeks. You know the story above that line bullish and below that line the sentiment is bearish…trade accordingly.

Live cattle were higher by 1% yesterday but I’m still suggesting longs wait for a lower entry. Lean hogs closed under the 20 day MA as patient traders should get a long entry in April closer to 85.00 in the coming weeks. Wheat and corn dug in their heels to gain slightly yesterday but soybeans may be back on the move registering the largest gain in the complex picking up nearly 2%. More impressive was the chart with prices breaking out to fresh 4 month highs. If this is not a false breakout expect $13 to be challenged in the near future.

Although all the crosses were higher yesterday and the dollar was lower I expect a  reversal in that action soon. That means a bounce in the dollar and for international currencies to back off. I am still waiting for confirmation but we will likely get it this week.

Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.