As stocks go so does the market. I expect the decline in equities to lead to further depreciation elsewhere…consider yourself warned. Crude makes a lower low today and I expect prices to be under $100 for the first time since early February very soon. My target remains $97.50 in May Crude. RBOB and heating oil also appear to be headed lower as another 15 cents south should be the mark if Crude hits my target…trade accordingly. Expect natural gas to be below $2 this week. I had a few clients call today looking to be a buyer…I say hold off until there is a catalyst to justify a bottom. Where do prices bottom $1.80…1.60…1.40 who knows?
The Dow and S&P have broken the 50 day MA trading at one month lows and there is more to come in my opinion. We could see a further 3% depreciation before we see any serious buying. Gold futures gained 1% today but as long as the 100 day MA caps any further upside I am still looking for a leg lower thinking $1550 is still in the cards. The 100 day MA should act as a ceiling in silver as well in May at $32.20. I am bearish until that level is penetrated on a closing basis. Copper is below its 100 day MA for the first time since the first of the year having dropped over 20 cents in the last four sessions. Do not rule out a challenge of $3.50 in the May contract.
Aggressive traders can be back probing shorts in sugar with stops just above the recent highs. 10-yr notes and 30-yr bonds are in bull mode and may get back to levels seen early 2012 especially if equities continue to drop. At this stage remain on the sidelines and look to be a seller as we approach previous contract highs. Live cattle and feeder cattle resumed their trade lower as forecast. As June live cattle approaches one year lows we may start probing longs but not yet. Ags have likely put in an interim top, if long exit and aggressive traders can reverse with stops above their recent highs.
Another trading approach as opposed to stops would be to get short futures and sell out for the money puts 1:1. I like this strategy in soybeans and corn…contact me for specifics. The big mover today in FX was the Yen hitting my target of 1.2400…see previous posts. This was the 50 day MA and also the 38.2% Fibonacci levels so like clockwork. 1.2560 is possible in June but tighten stops as this has been a great ride for longs.
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.
Disclosure: No positions at time of writing.