I went out to lunch today and was stopped on the street by a homeless individual. Why I bring this up is instead of asking me for change he asked for $5. He gets it why doesn't the US government? March Crude broke the 100 day MA today for the first time since late November. We suggest remaining in bullish plays but what we found interesting today was while the front month is down 2.13% as of this post April was lower by 1.4% and May is down just shy of 1%. Natural gas was lower by nearly 4% today having lost almost 50 cents this week...we feel there is more downside and still do not rule out a probe of $4. The indices may trade higher but we will not be long with clients as we still think prices are at elevated levels. We do not expect much more downside in the US dollar as prices have already given up 4.7% ytd. It may take a jump in volume but as we've voiced we anticipate a dead cat bounce from here. Our suggested plays are fading rallies in the Pound and Euro. Another fresh high in lean hogs but we may see prices back off from here as the gains were not sustainable with April closing 1.8% off their highs. April live cattle were sideways today, based on tomorrow's trade will dictate if we get clients long tomorrow or wait till next week. Gold and silver were unable to hold onto their early gains. The good news is gold lost more than silver did as a % basis down 1.65% while silver gave up 1%. The ratio trade actually worked today. The volatility I could live without but it is our opinion metals traders should be getting long either gold or silver at these levels. We feel it is still advisable to see a larger set back in both corn and soybeans before getting long next years crop. Aggressive traders can get short cocoa as March is encountering stiff resistance the last four sessions just under 3400. Continue to gain bearish exposure in coffee as a dramatic repricing lower is juts around the corner...only my opinion.
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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