Energy: For the first time in seven trading sessions Crude made a higher high and higher low as prices will close virtually unchanged today. Sales between $96-97 continue to get rejected. I would not rule out a sideways congestion and on a settlement back above $98 I would venture to say increase bullish exposure. For now I would be lightly scaling into longs as long as $96 holds on a closing basis in June. RBOB failed to remain above $3 closing slightly lower today. Next support is seen at $2.97…that level needs to hold in June.
Heating oil lost 0.80% closing in the middle of the recent range. Support in June is seen at $2.95 with resistance at $3.02. Natural gas added another 0.50% today but could be running out of gas, no pun intended, as prices have been unable to overtake $2.50. The 50% Fibonacci level has acted a resistance for the last two sessions. It could go either way from here if long tighten up stops. The next leg should be determined on a trade above $2.55 or below $2.35 in the June contract.
Stock Indices: Equity prices were able to gain marginally. I am looking for more downside but cannot rule out a probe at the 20 day MA in the coming sessions. If prices stay below that pivot point in the Dow at 12990 and in the S&P at 1375, I would stay short. On a leg lower my targets remain 12450 and 1310 respectively.
Metals: A trade back above $1600 was rejected with June gold settling $5 below that pivot point. I’m still anticipating a challenge of the late 2011 lows approximately $60 from current levels. Silver closed lower for the fourth consecutive session as the slide continued to drag prices closer to my target at $27.50 in July. Copper is finding mild support around $3.64 in July. I see a break lower but it will likely coincide with a decline in the stock market, so key off trades in the equity market. Ultimately when $3.55 gives way we should move towards $3.30, but it may take several weeks if not months in my opinion.
Softs: If July sugar holds 20 cents into the weekend I should have some bullish trade ideas next week…stay tuned. Cotton was down the daily limit today losing almost 5% to drag prices to 17 month lows. It looks like we should be under 80 cents very soon…a level not seen since 2010. Coffee gained 2% but as I’ve been consistent, it will take a trade closer to $1.90 for short plays to be back on my radar.
Treasuries: In early dealings it appeared Treasuries were rolling over but to the tick 30-yr bonds and 10-yr notes bounced off their 9 day MAs. Continue to use those levels as your pivot point; in June bonds at 143’17 and in notes at 132’17. Long dated Euro-dollars closed below the 20 day MA as traders could continue to wade into these contracts willing to trail their stop down on a further depreciation.
Livestock: Live cattle gave back some recent gains today but as long as prices remain above their 20 day MA, in June at 114.75 I think we have more upside. My initial target per previous posts is the 38.2% Fibonacci level at 118.15. Feeder cattle lost for the third straight session as prices in May are approaching 150.00. We are trending towards support at 149.60 but that level should hold. For some reason if it breaks, expect a test of 147.00…trade accordingly. Lean hogs appear to be forming a solid base as we saw prices trade above the 9 day MA the last two sessions. All it takes is a bearish article in the WSJ today and we should see prices jump in the coming weeks. My target is a trade back over 89.00 in June in the coming weeks.
Grains: Corn has lost nearly 6% in the last two days trading below all support level that held in 2011-2012. With the USDA reporting a larger crop and more ending stocks, I see further downside. Hold off gaining bullish exposure as we will likely get a much better long entry. CBOT wheat barely held on to the $6/bushel level, but if we find support here I will have buy recommendations in the days to follow in CBOT and potentially KCBOT wheat…stay tuned. Expect wheat to react more so to the corn and bean market as circumstances for wheat on its own remain neutral. Soybeans were the big winner today gaining 1.7-2% lifting July back to its 20 day MA. This was largely a reaction to a bullish outlook for new crop.
Currencies: Tighten up stops on any remaining short plays in the Loonie and Aussie. The Cable is having trouble breaking the 20 day MA; in June at 1.6115 but I expect this to be temporary as my target is 1.6000 followed by 1.5850 in the coming weeks.
Risk Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor’s needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.