MBWealth's Commodity Blog

New Ventures 2/17/12

Matthew Bradbard — Fri, 17 Feb 2012 22:24:39 +0000

This will likely be my last post from MB Wealth as I have chose to close my brokerage. I am in the final stages of a new employment contract with a large Commodity firm in Chicago. This is goodbye temporarily but I will be back in the coming weeks. Please do not hesitate to reach out to me via email or telephone if you want to continue to have access to my comments. Crude is approaching the $104 level as forecast in recent posts. We’ve advised clients to start liquidating longs after an $8 run in the last two weeks I think all the activity in Iran has taken Crude too high too quick…just my opinion. The fact that the distillates are not trading higher alongside Crude also supports my thesis that prices may be over stretched. Natural gas has picked up steam the last two sessions poised to trade above the 40 day MA for the first time in 5 months. A trade above $2.85 in March that holds would convince me a bottom is in and longs are trade able. Until then I have no interest. Stocks are trading near four year highs but probing to pick a top was non eventful this week as a false break down was exactly that false. I am uncomfortable advising longs and will not try calling a top again. Stand clear until we see consecutive settlements below the 9 day MA. In the Dow at 12835 and in the S&P at 1348. After five positive weeks gold had closed lower the last two weeks. I remain in the camp that prices come lower…as I said yesterday a settlement over $1740 would signal higher ground and to cut losses on bearish trade. Silver has traded lower seven out of the last eight sessions even though prices are only $1/ounce off their recent highs I see more downside. Next support in March is seen at $31.50 followed by $29.75. Copper was lower everyday this week losing nearly 7% in that time frame. I’m expecting a additional 4-6% correction which would complete a 50% Fibonacci retracement on the move in the last five months…trade accordingly. Finally a positive showing in coffee after seven straight losers. DO not expect much more than a bounce before the onslaught resumes. Live cattle continues to march higher…unfortunately without my clients on board. We have been bullish for months but jumped off this train but premature. Clients wait for a pullback to get long. Lean hogs also were slight gainers running into resistance at the same level that capped further upside weeks ago. On a trade back near 88.00 cents in April we suggest probing longs. Buyers are emerging in grains but until prices correct I am a spectator with clients. The Yen should continue lower but all other crosses appear to be consolidating so I see no long or short opportunities at the moment…move to the sidelines. Looking at longer term (weekly and monthly) charts in the Yen this could just be the beginning.

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

Anticipating Market Moves 2/16/12

Matthew Bradbard — Thu, 16 Feb 2012 22:02:55 +0000

I generally report on what happens today but how money is made is anticipating what will happen tomorrow. There are no major moves that I am forecasting in the immediate future…it remains a traders market so the key is to manage all your individual positions. Monitoring risk and booking profits. Quietly Crude oil has gained ground six out of the last eight sessions. I suspect in the short run we can get a probe near $104/barrel but daily charts are starting to look overbought so unless circumstances are heightened in the Middle East I am still expecting a range bound market and oil to trade back near the mid 90′s in coming weeks. Heating oil and RBOB continue to inch towards one year highs but like Crude oil prices are approaching overbought levels. So in terms of the up cycle I think we are approaching extremes. Protect profits on longs. Natural gas traded higher by nearly 6% today as the back and forth action continues. Until prices get out of this 25 cent range look elsewhere. Stocks fought back today to retake the 9 day MA and get back previous day’s losses. An interim top is likely being made but if we make a fresh 2012 high I would cut loses on all bearish trades. Gold and silver closed near their session highs today after reversing early losses. This was a positive development as selling was rejected in both metals. As long as silver stays below $34 and gold below $1700 I remain bearish thinking more selling is due. Cocoa appreciated 2.5% today to close above the 100 day MA for the first time since late August. Expect further upside and now use the 100 day MA as support. Day seven of a coffee sell off that is showing no signs of letting up. Trail stops on bearish trades and let the markets take you out…hopefully at lower levels. Fresh contract high in live cattle today. I am willing to buy a dip…if it doesn’t happen I’ll miss the trade…cannot be in them all. Mixed bag in Agriculture today with the soybean complex lower and corn and wheat higher. I favor buying a break. The dollar index traded up to but failed to take out the 50 day MA. A level that had not been obtained in almost one month. My expectation is that on the net attempt prices will get through that level moving toward 82.00 in March.

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

Stocks lower Equals 2/15/12

Matthew Bradbard — Wed, 15 Feb 2012 21:36:26 +0000

I am out on a limb saying we will finally get a correction on the stock market after the impressive bullish start we’ve experienced ytd. If stocks depreciate where will that money go? Crude is trading at a one month high trading higher by 1.3% today. Continue to trail stops as I still expect an attempt at $104 this week or next. RBOB and heating oil were higher but both failed to hold onto early gains. If prices fail to make new highs expect a correction very soon. We have advised hedgers to tighten stops or lighten up as to not give back profits on a correction. Two sided trade continues in natural gas as all yesterday’s gains were given back today. Stand clear as whippy action is likely to continue. Stocks closed lower the last two days settling below the 9 day MA today. Move to the sidelines as I am expecting a correction. Aggressive traders could get short with tight stops but this may be premature and you are attempting to pick a top which generally does not work. The only reason I voice this is the attractive risk/reward dynamic. After three losing days gold bounces back today getting back all its losses. I still favor selling strength thinking we get a trade under $1700 in the coming weeks. $33 appears to be the line in the sand in silver but when that level gives way I’m thinking a trade under $31/ounce should follow soon thereafter. In three short days cocoa has appreciated nearly 11% lifting prices to three week highs. On a trade above the 100 day MA a level that halted gains in late January expect more buying to emerge. That break out level comes in at 2410 in March. Coffee lost 1.9% today to close below the $2 level as predicted. I expect further weakness and would not rule out a further 5% depreciation. I am not a buyer of live cattle or lean hogs until we get a break in prices even though I think we see higher ground and likely new contract highs in both commodities. April live cattle an entry closer to $1.25 and in hogs closer to 85.00 cents. Corn and wheat continued to lose ground today as soybeans were higher but running on fumes. My opinion is a break lower across the Ag sector but my money would be on the sidelines looking for a long entry on that break. If the dollar continues to gain as I expect it will sell rallies in other crosses. My opinion was an interim high was obtained in all crosses last week…trade accordingly.

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

My Valentine 2/14/12

Matthew Bradbard — Tue, 14 Feb 2012 21:27:17 +0000

Making money in commodities is nice but allot sometime today to spend with loved ones! Crude’s gain today was minute but intra-day prices were at three weeks highs approaching the $102 level. Echoing yesterday’s thoughts we should inch higher near the $104 area in the coming weeks but I do not see much more than that especially in the face of a strengthening greenback. Natural gas was higher by nearly 5% but prices are still 30 cents under support and an area I would feel confident in saying we’re out of the woods. Stocks traded under the 9 day MA but will manage a push to close above that pivot point once again. I want to say we’re exhibiting signs of a top but I learned a long time ago you cannot pick tops or bottoms. As long as the 9 day MA holds on a closing basis I am friendly. Gold continues to creep lower making its way to the $1675/1690 this week if not next in my opinion. Silver has lost very little ground of late but most of my technical indicators are signaling a bigger correction and if the dollar can gain some momentum that would also support a break. I am expecting March to trade closer to $31 in the coming weeks…trade accordingly. Sugar can be sold with stops above the recent highs in my opinion. Trail stops down on bearish OJ trades. The 50 day MA is acting as mild support but on a breach expect the 100 day MA to come into play about 10 cents beneath current levels. Coffee broke down today as forecast on its way to trade under a$2 for the first time since late 2010 in my opinion. At this moment I would not rule out an additional 5-8% depreciation. The entire livestock complex was higher by 1-2% today. I currently have no client exposure and may miss this upside move if it happens from here. Grains are a buy from lower levels but until we get a break I would be on the sidelines. The dollar gained for the third consecutive session closing above the 20 day MA for the first time in three weeks. I expect further appreciation and would be a seller of all other crosses. The Yen seems to be the furthest along on its downward move but there should be more to come and the Loonie is the laggard so could be the best potential short. All other crosses could be faded on any advance in my opinion.

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

Significant Resistance 2/13/12

Matthew Bradbard — Mon, 13 Feb 2012 21:15:20 +0000

It is said the S&P 500 is a good barometer of the overall economy. The question is can prices overcome the 1350 level? A number of times in the last 10-15 years this level has been reached but only once prices managed to keep trading higher. Probability wise prices are likely due for a correction. A level that has been hit Crude oil is higher by almost 2% closing back above the $100 level. From here it appears we see a trade back to $104 in the next few sessions. My bias has shifted back to be being bullish as long as $98 holds in March. I think it may be difficult to see much more upside especially if heating oil and RBOB trade sideways to down. Sideways action continues in natural gas…look elsewhere. In early dealings stocks traded to their 2012 highs backing off slightly as it appears we will get a close approximately 0.50% higher. Gold has closed lower 5 out of the last 7 sessions as prices have started to peel off. My inclination is to stay in bearish trades until prices reach at least my first objective…$1690. For almost 3 weeks silver has tread water wandering around the $34 level. I continue to think a break is coming and wait for confirmation. Confirmation that I’m correct or that I’m wrong, which would happen on a settlement above 34.50 or below $33. OJ looks set to break the 50 day MA for the first time in 2012. Expect further weakness to come. Coffee lost ground for the last 4 days and momentum traders should accentuate a further move dragging coffee closer to $2. The 20 day MA continues to act as the line in the sand as Treasuries have flirted with that pivot point now for weeks. You know the story above that line bullish and below that line the sentiment is bearish…trade accordingly. Live cattle were higher by 1% today but I’m still suggesting longs wait for a lower entry. Lean hogs closed under the 20 day MA as patient traders should get a long entry in April closer to 85.00 in the coming weeks. Wheat and corn dug in its heels to gain slightly today but soybeans may be back on the move registering the largest gain in the complex picking up nearly 2%. More impressive was the chart with prices breaking out to fresh 4 month highs. If this is not a false breakout expect $13 to be challenged in the near future. Although all the crosses were higher today and the dollar was lower I expect a reversal in that action soon. That means a bounce in the dollar and for international currencies to back off. I am still waiting for confirmation but we will likely get it this week.

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

Protected: The Line in the Sand February 13, 2012

Matthew Bradbard — Sun, 12 Feb 2012 18:19:07 +0000

Complacency 2/9/12

Matthew Bradbard — Thu, 09 Feb 2012 21:27:35 +0000

Do not get complacent because the market is quiet. Inaction can sometimes cause more damage than action. Do not forget to manage your trades. Crude oil is flirting with the $100/barrel level once again. I am mildly bullish but trade small as a trade back under $97.50-98 could mean lower ground. It is not the strength in Crude that I am impressed with but rather the relentlessness in the distillates that continue to push higher. Heating oil and RBOB are approaching the highest level they have seen in almost one year. I’ve advised hedgers top keep their hedges on to protect from further upside but be cognizant that we could have a violent reversal so look for any signs of a reversal. Natural gas is showing signs of life but still is having trouble retaking its 9 and 20 day MA’s…a sure sign that there could be weakness soon. Big surprise stocks inch out another positive trade. Continue to use the 9 day MA as your pivot point and major support. Gold and silver continue to exhibit signs of an interim top. I still think a correction is likely in the immediate future. I will not change my mind unless gold trades over $1770 and silver over $35. Cotton has lost ground the last four sessions and with prices back under the 50 day MA for the first time in 2012 fade rallies as I expect a challenge of the December lows 6-7% lower from current levels. OJ and coffee which I drank both this AM should continue lower as well…do not rule out coffee joining OJ under the $2 mark. Treasuries continue their slide…bearish trades should trail stops and continue to use the 20 day MA in 10-yr notes and 30-yr bonds as their pivot point. Mixed bag in meats with cattle slightly lower and hogs a small gainer. I am advising buying dips in both. This trade may take a few weeks to set up so be patient. No surprises from the USDA and based on the reaction we will likely get a break in grains allowing a long entry from lower levels. Wheat today was the main loser shedding over 2% while corn and soybeans were marginally lower. The closer prices get to the level we saw in the beginning of the year the larger interest I have in advising bullish trade to clients. With Central banks keeping rates as is there has not been fireworks in FX with the exception of the Yen. The Yen is down for the last five days losing 2.25%. This could be the beginning of larger leg that could drag prices back to levels seen in late October…in my opinion.

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

Quiet Trade 2/8/12

Matthew Bradbard — Wed, 08 Feb 2012 21:46:16 +0000

Non event in the markets today 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 will close above $97 on the March contract today 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 MA’s 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 we as we view better opportunities elsewhere. Ag was flat today anticipating tomorrow’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 830 AM and the market is closed until 1030 AM so the position you are in at as of 730AM 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.

Building on Strength 2/7/11

Matthew Bradbard — Tue, 07 Feb 2012 20:55:37 +0000

Metals, stocks and even foreign currencies continue to build on strength as 2012 has virtually been a one way trade…will this continue? Crude oil erased the previous week’s losses adding 1.9% today but failed to close above $99 in March. I view that level as the pivot point so I remain bearish still. Be willing to cut loses on any shorts if prices trade through that level in the coming sessions. Natural gas continues to bounce around and I would suggest no long or short trades until we get a clearer picture. A fresh 2012 high with equities gaining 0.50% today. The 9 day MA continues to act as my pivot point and although we’re approaching overbought levels I learned a long time ago not to jump in front of a freight train. Positive news out of Europe with progress being made caused the Euro to jump and other crosses to follow. Clearly wherever the Euro goes other currencies will follow and at the moment that looks like higher ground. It also helped that the US dollar fell to a two month low. Gold and silver reversed early in the AM to go from negative to positive with gold and silver gaining 1.4% as of this post. Prices may try to visit the recent highs but I have not seen enough of a correction to justify further upside. I am still looking for a move under $1700/ounce in the June contract. March silver is back above $34/ounce but like gold I feel we have more of a break before any serious advance. If you notice in this complex gold, silver and copper seem to be consolidating …the debate is if the market is taking a breath for additional upside or preparing for a reversal? OJ lost nearly 3% closing below $2 for the first time in three weeks…expect further losses as the 50 day MA may come into play. That level is $1.83 in March. Continue to use the 20 day MA as your pivot point in Treasuries as 10-yr notes and 30-yr bonds closed below that level today. Traders can gain bearish exposure in 2013 Euro-dollars with stops above the recent highs. The suggested play would be to build a position on the way down while trailing stops. Ag prices appear to be stalling unable to hold onto gains across the complex. Most traders are likely waiting for Thursday’s USDA report and will make a move based on the numbers. Any longs should be trailing stops and it may be prudent to book profits and be in a cash position headed into the USDA report. April live cattle continue to wander between $1.27 and 1.29 trading higher back up near the top of that range today. I am suggesting buying a break closer to $1.25. Let lean hogs work lower as well as my target in April is a buy closer to 86 cents…trade accordingly.

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

Protected: The Line in the Sand February 06, 2012

Matthew Bradbard — Mon, 06 Feb 2012 22:08:39 +0000