D/R move Ignored 2/19/10
Crude traded above $80/barrel today and we would start to look for an exit door on longs. I suggest tightening up stops on futures and to half your long option position. There most likely is more upside but we feel all things considered a move of almost $6 this week is not justified. On a seasonal basis we do like buying dips but prefer to be a buyer closer to $75/barrel. Along the same lines we suggest booking profits on all remaining RBOB longs. As for natural gas we will be looking to be a buyer of May or June futures and options for clients mid-next week ideally under $5. Notice the high in the S&P today; as we suggested in recent blogs selling at 1111 and then 1125 if given the opportunity. Some clients picked up more June puts today; at these levels we suggest the 1000 and 1050 ES puts. Early selling was rejected in sugar and by the close prices were in the green. On a close above 26 cents expect follow through to 27 and then 28 on the May contract. The recent move in cotton we feel is unsustainable and we’ve started to price out bearish plays. One idea from a client was to sell out of the money calls and to buy puts; a fence. We may have some ideas on Monday’s commentary. On a trade to $1.40 in May coffee our clients profit objectives should be reached; they have an order in at 450 points O/B on their $135/145 call spreads. It is too early to say the trade is underway in short Euro-dollars but we do like the topping action…stay the course. The exports this week were off the charts for corn and soy meal, which says a lot in the face of a rising dollar. Our suggestion would be to get positioned long via May and July calls and December futures in corn. The cattle market will need to digest today’s COF report but initially I read it as bearish. Clients are anticipating April futures to trade back to 89.00. Gold and silver had impressive showings this week but we are far from out of the woods. Those claiming victory are premature. We do expect a trade up to $17/ounce and would lighten up on futures and take partial profits on options. As for April gold until $1130 is penetrated this move is just a nice tradable rally. The dollar long trade appears to be getting too crowded. The new high and failure overnight could signal an interim top. We still have clients long Euro and will continue to sell Swiss franc on rallies as a way to hedge. Look for more specific forex plays in our weekly commentary.
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: bradbard, COF report, commodity, corn, crude oil, futures, gold, live cattle, MB Wealth, natural gas, options, RBOB, silver, soy meal, sugar
