Today is only the second full day of trading as markets are still trying to find direction. I maintain a weighting in commodities is necessary for all suitable investors that desire diversification…just saying. Albeit slight gains Crude made it to higher ground and appears like we will see further upside from here. My suggestion exit any remaining bearish trade. Natural gas was higher by almost 4% today lifting prices as of this post above the 9 day MA for the first time on a closing basis in five weeks. If February can muster a further advance above $3.25 this week the bottom may be in…stay tuned. Some clients maintain small bullish positions three months out and will add on further proof of a bottom. European equity markets continued higher while domestic markets failed to follow through flat in today’s session. The tone in January generally is what guides performance throughout the year so I am keen to see the coming weeks action. From where I sit I sense higher ground but clients have no exposure in the indices.
Gold gained for the third consecutive day adding nearly .80% today. We seen another $60-70/ounce before serious resistance. Silver appears to be taking a breath after the 13% surge in the previous three sessions. Once we trade above $30.25 we see $32 followed by $33…likely in the coming weeks. Head fake as the dollar index is back above the 20 day MA. The 32 day EMA supported as it has for two months. Expect a range bound market between 79.00-81.00 in March. The biggest loser today was the Swiss which cannot get out of its own way falling 1.05% today. Bearish trades should continue to work here…trade accordingly. A freeze scare in Florida; the largest OJ producer sends OJ prices to a one year high. This spike should be short lived in my opinion and aggressive traders could sell after a further ascent. 30-yr bonds are back under the 20 day MA while 10-yr notes closed at that pivot point. Forced into the market we would be selling rallies but we currently have no exposure with clients. All those that caught the recent leg higher in grains great trade but my suggestion is book profits and move to the sidelines. That goes for corn, wheat and soybeans. Live cattle appears to be finding support at the 20 day MA though I would still expect a probe lower…trade accordingly. February lean hogs must maintain 83.50 for me to remain friendly. A trade over 86.75 and I would suggest adding to the trade.
Risk disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
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