Increased conflict in the Middle East puts the bulls back in control in Crude. If the situation is resolved energies should falter but if the plot thickens expect more fear to be priced in. Expect wild swings if willing to trade in this complex. If $97 holds on a closing basis in May aggressive traders can have bullish exposure. We suggest hedgers to leg back into their RBOB and HO hedges as the distillates will likely track Crude oil higher. Aggressive traders can use the 4% set back in natural gas to be a buyer of May futures and options as our target remains $4.25. As of this post indices are lower by 1.5-2% well below the 20 day MA's. A close below those levels expect the selling to intensify...trade accordingly. 1250 in the S&P is not out of the question on this leg and we have a NFP number fast approaching which could be the nail in the coffin. The US dollar is attempting to dig in its heels...if we can muster a rally all crosses can be sold...stay tuned. Live cattle broke the 20 day MA today... if we do not recover in the coming sessions we will let longs go at a loss for clients. Gold overnight should post a new record high gaining 1.75% today. Today marks the tenth consecutive positive session. We advised clients to cover their bottom leg on their April ratio spreads today. That way if we see a trade back to the 100 day MA ($1375) clients can cover their top leg at a minimal loss. Silver has resumed its next leg higher gaining 2.6% today. We should approach $36/ounce overnight. Aggressive clients have bullish May options exposure. Cotton came off limit in late dealings...we continue to like bearish options exposure. Sugar closed lower in today's session but did pare loses. We suggest getting long after the 15-20% correction we've experienced in recent weeks. Fade rallies in coffee as well as a move back to the trend line is a depreciation of just over 10%. All bets are off in agriculture as we are unclear of the short term direction. Wait for the dust to settle or at least wait till we see the export numbers this week. We suggest buying dips...our client's only real exposure remains the soybean spread from two weeks ago long July/short November. We feel Treasuries are overextended and the fact that we did not rally today with the equity sell off strengthens our bearish sentiment. We advised clients to enter NOB spreads; short June 30-yr bonds and long June 10-yr notes.
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.
email@example.com | 888.920.9997