The Calm before the Storm 1/6/10
Crude was higher by 1.6% today carrying prices back to previous resistance just above $83/barrel. If we get through this level we are wrong and we will not get a correction as predicted. We stand our ground thinking a $3-5 sell off is just around the corner. Let’s assume today serves as the high a move back to $78.50-$77 is likely. We are on the sidelines with clients. We are too on the sidelines in natural gas expecting a sell off before we are interested in exposure again for clients. We see resistance just above $6 in February and support at $5.50. Volatility is picking up in sugar with a 1.25 cent range today and over 1.50 yesterday. We expect a trade over 30 cents/lb but first a 2- 3 cent correction, trade accordingly. OJ was up limit early in the day but reversed and closed lower; we just missed an order for clients on March puts. Limit orders are a science and this may get away from us…stay tuned. Gold is gaining momentum and as long as the NFP # does not knock this train off the track this could be the beginning of the next leg higher. February gold picked up $20 today and over $50 in the last 5 sessions. $100 & $150 call spreads should be on your radar. As for silver much like on the way down it appears to be out pacing gold on this up move gaining 2.4% today. We like scaling into futures and buying $2 & $3 call spreads out until at least May. Corn is approaching previous resistance, the next few days will be critical. To complicate matters there is an USDA report next Tuesday and we’re getting mixed reports of what to expect. We advise getting out of longs in March on a spike thru resistance. Aggressive traders were advised to buy March puts in soybeans today; we expect to see a 30-50 cent move lower immediately. Continue to fade rallies in the Euro-dollar; clients are trading September 10′ options and futures. Live cattle were marginally lower but held support. On a move higher we suggest booking a profit on longs in February and moving out until April or June.
Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.
Tags: commodity, corn, crude oil, futures, gold, live cattle, natural gas, NFP, options, soybeans, treasuries, us dollar
