Commodity Wrap: Markets Poised for a Big Move?

Non event in the markets yesterday,  but it does feel like markets are taking a breath for a big move…I am just torn on what direction. As trades develop I will try to keep you informed. Crude closed above $97 on the March contract yesterday which puts the bulls back in control. Support is seen between $97-98 and aggressive traders can reverse their bearish trades and start scaling into long trades.

RBOB is approaching $3, a level not seen since last April so expect momentum traders to lift this distillate further if we see a trade above that critical level. Heating oil was higher for the fifth straight session but failed to make a higher high. I am the minority, but I’m thinking we need the distillates to come off 15-20 cents/gallon before any substantial upside. I have advised clients that trade here to hold off on purchases waiting for a break in prices. No interest in natural gas...the moves are too sporadic.

It sounds like a broken record and by no means fall asleep at the wheel but I remain friendly to stocks until the 9 day MA is penetrated. How high do prices go? I have no idea as they have already exceeded my expectations.

June gold continues to run into resistance between $1760-1765. I think there is a risk of a $50-75 correction though I’ve been voicing that for a week to non-believers. Silver also looks ripe for a correction but I reserve the right to change my mind on consecutive  settlements above $34/ounce in March which has yet to happen.

OJ has closed lower 10 out of the last 12 sessions after reaching record highs nearly 3 weeks ago.The near 15% depreciation in my opinion is just the beginning of a deeper fall that could drag prices in March closer to $1.70.

The 20 day MAs are the pivot point in Treasuries so with 10-yr notes and 30-yr bonds closing back below that level I shift slightly bearish. My clients have no exposure, as we view better opportunities elsewhere.

Ag was flat yesterday anticipating today’s USDA report. I would open the opportunity to buy a break in this  complex but clients have been advised to go into the report flat. Any longs should have tight stops and do not rule out a limit up/limit down open. The report comes out at 8:30 AM eastern and the market is closed until 10;30 AM so the position you are in as of 7:30 AM is the position you hold into the report.

Live cattle were slightly higher while lean hogs were slightly lower. As for trade I would suggest buying a break in pigs and cows.

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