The age old question as a trader what is more important the entry or exit....I say exit. Today marks the fifth consecutive losing day in Crude oil with the March contract finally breaking the 50 day MA. We've advised clients to start gaining long exposure using this set back as a buying opportunity. We eye the next solid support near the 100 day MA and 61.8% Fibonacci retracement level just above $86. Notice the bearish engulfing candle today in natural gas with prices down 3.25%. We've cancelled our buy recommendation thinking we could see a trade back near $4...stay tuned. The Dow traded to fresh 2011 highs today while the S&P was unable to take out Friday's highs. The 20 day MA's need to give way before we expect to see any significant downside; those levels are 1270 and 11650 respectively. US dollar selling has not abated entirely but we feel a bounce is coming and suggest fading rallies in the Loonie and Pound as the trade. Try to be patient and wait for a lower long entry in lean hogs and live cattle. Silver got hit for almost 1.80% today...we advised clients to lighten up on their longs if they were still willing to endure some pain. We feel we're close to turning but would have liked to see a bounce after the 15% route ytd. Gold continues to trade lower as the 100 day MA now appears to act as resistance as opposed to support. Those in the silver/gold ratio trade should sell more gold and trail stops down. Based on the price action we think corn and soybeans should correct 4-6% in the next week or so...trade accordingly. Cocoa was higher by 4% today trading to its highest price in one -year...longs should be looking for an exit door after the 15% appreciation in recent weeks. Cotton posted a new record high again trading up limit. This should be one hell of a short at some juncture but from what level?
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
By: Matthew Bradbard
Head Trader, MB Wealth Corp.
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