Oil Reverses, Silver Hits 6 Week High

With a Fed meeting this week as well as any new developments out of Europe, my suggestion is to always look one-two weeks in advance for upcoming economic events when initiating trades.

Just when it appears Crude was destined to move lower, prices reversed finishing 1.65% higher yesterday. $100 appears to be a magnet for pricing and until we get $3-4 north or south of that level expect sideways action to continue. I do not feel comfortable trading either side currently.

A 9% appreciation in natural gas after posting a new low could be the capitulation low. Stay tuned, but if prices can overtake $2.75 this week and hold onto gains we may have a low. As I hinted at last week, prices generally make tops and bottoms at extreme sentiment levels and everyone has been bearish natural gas of late.

Equities crept higher yesterday as the appreciation YTD is now over 3%. As long as the 9 day MA holds I remain friendly. Gold traded above the 50 day MA for the first time since mid-December when prices were above $1700/ounce. As long as $1650 supports we should see further upside. The 100 day MA at $1700 should be obtained in this leg in my opinion.

Silver picked up 2% lifting prices to six week highs as prices are approaching the 100 day MA. Bulls remain in the driver’s seat and I cannot rule out a further $2 appreciation in the weeks to come. Continue to trail stops though as prices are nearly 25% off levels seen just three weeks ago.

The dollar has lost ground five out of the last six days, closing below 80.00 for only the second time in 2012. I see further downside to come. All crosses with the exception of the yen can be bought on dips. The euro and Swissie will likely provide the best opportunities as they got hit the hardest in recent weeks and months.

OJ continues its climb to fresh record highs putting on almost 4.5% yesterday. I do not see upside resistance being we’re in uncharted waters. If coffee breaks the lows that held the last two months, expect a test of $2/lb. Trade accordingly.

The momentum is shifting to the bears in Treasuries as 10-yr notes and 30-yr bonds have lost ground the last four sessions.

Soybeans have advanced too far, but aggressive Ag traders could lightly step into corn and wheat with stops below the recent lows. I would be building a position assuming the market proves you right. Remain in your lean hogs and live cattle longs with stops just below the 20 day MAs. Forced to pick one livestock trade, I prefer bullish exposure in April lean hogs.

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