MBWealth's Commodity Blog » lean hogs

Protected: The Line in the Sand February 06, 2012

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

Prepare for NFP 2/2/12

Matthew Bradbard — Thu, 02 Feb 2012 21:55:59 +0000

I think the number is fabricated but nonetheless it is market mover so prepare for tomorrow’s jobs number. As of this post Crude is lower by 1% about in the middle of today’s range trading lower for the seventh consecutive day. I think we see an additional $3-4 retracement before we run into serious support. If that assumption is correct expect heating oil and RBOB to lose 10-15 cents. Hello volatility…with 7% moves on a daily basis up and down I no longer have the stomach for natural gas. Support is seen at $2.35 with resistance at $2.75 for those braver than me good luck. Equities are back above their 9 day MA’s but I would suggest the sidelines into tomorrow’s jobs number. Gold moved higher to confirm that the upward leg likely has further life in it. Next resistance is seen between $1805-1810 but I smell a correction so have advised clients to tighten stops and lighten up on longs. Silver penetrated the key$34 level today gaining 1.5%. We could see prices drift as high as $36 but I would pare position size down because we are due for a correction. Copper lead the metals higher and if you notice prices have started to roll over in recent dealings so gold and silver should follow suit very soon in my opinion. Inside day in the dollar index as prices failed to make a new low. If we hold 79.00 into the weekend aggressive traders could be buyers trying to capitalize on a dead cat bounce. Other crosses appear to be overbought and due for a correction but I would wait for signs of a top as opposed to picking a top as that has cost my followers a few dollars on recent recommendations. OJ traded below $2 but managed to push back above that level by settlement. We continue to see more downside in the weeks to come…trade accordingly. Grains are starting to show signs of exhaustion as corn and soybeans could not hold onto gains and wheat lost 1.7% today. $6.73 is the 38.2% Fibonacci retracement level and we need to get through that level in the next few sessions to see higher ground. On a correction prices would likely fall to $6.30 and on a trade higher the next resistance is at $7.00-7.05 in March. Wait for a trade closer to $1.29 in April live cattle before re-establishing longs. Lean hogs lost ground for the first time in five sessions but in my opinion we still have significantly more upside…scale into longs with a target of 95.00 in April.

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

The January Effect 1/31/12

Matthew Bradbard — Tue, 31 Jan 2012 20:46:36 +0000

With one month under our belt how is your 2012 looking? RBOB, OJ, stocks, feeder cattle and all the metals were the upside movers in the month of January while natural gas was the only negative standout. Will these moves set the tone for trading in 2012? The move lower has been minor but Crude has closed lower for the last four sessions. Today a $3 rally was rejected as prices will close just above $98 the lowest close in one week. I continue to get mixed signals and would suggest waiting for further evidence before making a move. A number of followers preach about activity in Iran and the Middle East…well guess what folks it’s called futures for a reason all of that is factored into the current price. Do not be so sure oil will appreciate in the immediate future. The distillates are holding onto slight gains as of this post and as long as prices remain above their 9 day MA’s a slight edge is given to the bulls. Those levels in the March contract are 2.8430 in RBOB and 3.0275 in heating oil. Natural gas was slaughtered today losing almost 8% closing back under the 9 day MA. Now that this level has given way do not rule out a test of the recent lows…trade accordingly. Equities are unchanged as of this post. I see the 9 day MA as resistance and the 20 day MA as support. Those pivot points are as follows: in the S&P 1295 and 1312 and in the Dow 12495 and 12630. Gold will not have its highest close but it did have its highest trade in seven weeks getting within $2.50 of our $1750 target. A positive development but do not rule out a setback. Solid support is not seen for about $45 below the current market level so risk management on longs is critical. Silver will close marginally lower for the second day in a row but still held the $33 level. As I said yesterday unless we see a settlement above $34 very soon I would expect a correction back under $31/ounce. On the most recent leg higher a 50% Fibonacci retracement would put prices back at $30/ounce. Trade below 79.00 continues to be rejected in the dollar index. Expect a give back in the Euro and commodity currencies on further dollar appreciation. The Loonie appears to be the weakest link but much of its movement will be governed by the movement in metals and energies so look for those sectors for guidance. Sugar and cotton remain sales on any advances. My targets in sugar and cotton are 5-7% lower in the next few weeks…trade accordingly. 10-yr notes continue their advance to fresh contract highs while 30-yr bonds should be making new contract highs in the next few session as bulls remain in the driver’s seat. From my perspective 2013 Euro-dollars look poised to trade above their late Summer highs so I would hold off on fresh bearish entries. Lower trade in Ag was short lived as we see all green on the screen today with corn and soybeans slightly better than 1% and wheat higher by over 3% lifting prices back near their January highs. Continue to trail stops on any remaining longs. We advised exiting longs on a breach of the 20 day MA in both lean hogs and live cattle which happened in the last few session. Now it appears we may be trading higher so on pullbacks look to re-establish longs placing stops back under the 20 day MA again. The chart looks favorable in hogs so I would allocate there if I had to chose one.

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 January 30, 2012

Matthew Bradbard — Sun, 29 Jan 2012 17:30:41 +0000

Taking a Breath 1/25/12

Matthew Bradbard — Wed, 25 Jan 2012 20:46:01 +0000

I misread the recent action thinking we were approaching a turning point but now it appear the markets were just taking a breath and now the underlying moves are back on track….trade accordingly. Crude appears to be finding its footing as further sales are being rejected. With a settlement back above $100 I would become more friendly. On a close above $102 in March I then would be looking for buying opportunities thinking we get a new high…trade accordingly. I say a bottom is in on natural gas and aggressive traders can be long. On a false start I would not hold it back to the bottom but a stop just below the 9 day MA would be my suggestion. Prices have already jumped 23% off their lows. In the coming weeks I could see a further 50-75 cent appreciation. Can you say short squeeze? The 9 day MA supported a trade lower in the morning only to end at fresh highs …well as of this post. I remain impressed but I still think we see an interim high very soon so I would start trimming your positions. I am not getting bearish just advising booking profits on longs. I had expected metals to back off but clearly after today’s action the bulls remain in the driver’s seat. Gold traded above the 100 day MA for the first time in seven weeks and now has completed a 50% Fibonacci retracement. Just above $1750 in February is the 61.8% Fibonacci level. Silver is above its 100 day MA the first time since mid-September when prices collapsed from above $40/ounce. I expect prices to get back near $37 but not before a correction but at this point we may juice prices a bit higher. I am holding out for new entries for clients under $30/ounce. The dollar continues to drop losing 0.50% as of this post. With dollar weakness comes strengths in other crosses. The commodity currencies were the best performers with the Euro and Swiss slightly behind. Signals point to higher trade in crosses and lower in the dollar. I unsuccessfully recommenced picking a top in the commodity currencies and traders should have been stopped at a loss. Cocoa should continue to work higher on further dollar weakness.. 2500 in March is the 100 day MA..use that as your target when evaluating risk to reward. Cotton is sale with stops above the recent highs. If coffee breaks the recent lows expect $2.00 to be breached in March. The sentiment is bearish in Treasuries and if you notice today the 20 day MA rejected further upside…that level continues to be your pivot point; in 30-yr bonds at 143’6 and 130’24 in 10-yr notes. 2013 Euro-dollars are at fresh contract highs…let them work higher and we will be looking for bearish entries on a sign of an interim high. Corn and wheat closed back over their 20 day MA’s. Ag traders can scale into longs expecting further upside. My suggestion would be to build a long position and to stagger stops behind the market. Trail stops on longs in live cattle as a new contract high was rejected…do not rule out profit taking. Lean hogs were slight gainers…stay long and run stops just under the 20 day MA.

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

Turning Point 1/24/12

Matthew Bradbard — Tue, 24 Jan 2012 22:08:15 +0000

Turing point…not today and probably not tomorrow but I would expect the equity market to give back its recent gains in the very near future. What that likely means is money out of stocks and into Treasuries and commodities…just an opinion. Crude remains in no man’s land as prices could go either way in my opinion. My bias is leaning to the bullish side but I would prefer to be buyer on breaks. For instance I see solid support in March just under $94/barrel so long entries closer to that level sound extremely appealing. In two sessions natural gas has leapt 15% with a close back above the 9 day MA today for the first time since early December. It is too early to call a bottom but a spike in volume and the capitulation we got are precursors for a bottom being established…stay tuned. Another gain today in equities but the pace is waning with prices higher by 0.25% on average. I know it is a broken record but expect higher ground as long as the 9 day MA holds. FOMC decision tomorrow could derail the ascent so stay alert. Gold closed back under the 50 day MA giving up 0.75% today. Weekly charts still look supportive but the daily screams overbought. $1650 in February will need to hold or I would move to the sidelines. For the first time in five sessions silver failed to make a new high on an inside day today. Like gold the weekly chart still appears like we have more upside but prices have started to roll over on the daily chart. I say lighten up or tighten stops as we may be close to an interim top. The dollar index failed to make a new low but as long as prices remain below the 50 day MA I remain bearish; that level is 80.10 in March. The Euro and Pound remain buys while the commodity currencies appear like we could see a retracement…trade accordingly. The Yen broke down today breaking all short term MA’s. I am expecting a move back under 1.2600 on this leg. Cocoa bounced off the 50 day MA surging almost 7% today lifting prices to two month highs. Try timing a long entry again buying a dip placing stops just under the 50 day MA. Corn was higher by 1.7% today while wheat added 2.2%. I’m comfortable buying dips in either Ag product placing stops under the recent lows. I think in the coming months we could see March corn above $7/bushel and wheat closer to $7.50/bushel. April live cattle is on the verge of making new contract highs having appreciated 4% in the last two weeks. It has been a nice run for bulls but there is no reason to believe prices should not see higher ground. April lean hogs are running into trouble at the same resistance level that capped upward momentum in late December. That being said as long as the 20 day MA holds at 87.30 I remain friendly.

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

Looking Ahead 1/23/12

Matthew Bradbard — Mon, 23 Jan 2012 21:06:24 +0000

Fed meeting this week as well as any new developments out of Europe. My suggestion is to always look one-two weeks in advance for upcoming economic events when initiating trades. Just when it appears Crude was destined to move lower prices reversed finishing 1.65% higher today. $1oo appears to be a magnet for pricing and until we get $3-4 north or south of that level expect sideways action to continue. I do not feel comfortable trading either side currently. A 9% appreciation in natural gas after posting a new low could be the capitulation low. Stay tuned but if prices can overtake $2.75 this week and hold onto gains we may have a low. As I hinted at last week prices generally make tops and bottoms at extreme sentiment levels and everyone has been bearish natural gas of late. Equities crept higher today as the appreciation ytd is now over 3%. As long as the 9 day MA holds I remain friendly. Gold traded above the 50 day MA for the first time since mid-December when prices were above $1700/ounce. As long as $1650 supports we should see further upside. The 100 day MA at $1700 should be obtained in this leg in my opinion. Silver picked up 2% lifting prices to six week highs as prices are approaching the 100 day MA. Bulls remain in the driver’s seat and I cannot rule out a further $2 appreciation in the weeks to come. Continue to trail stops though as prices are nearly 25% off levels seen just three weeks ago. The dollar has lost ground five out of the last six days closing below 80.00 for only the second time in 2012. I see further downside to come. All crosses with the exception of the Yen can be bought on dips. The Euro and Swissie will likely provide the best opportunities as they got hit the hardest in recent weeks and months. OJ continues its climb to fresh record highs putting on almost 4.5% today. I do not see upside resistance being we’re in uncharted waters. If coffee breaks the lows that held the last two months expect a test of $2/lb…trade accordingly. The momentum is shifting to the bears in Treasuries as 10-yr notes and 30-yr bond have lost ground the last four sessions. Weighing the risk soybeans have advanced too far but aggressive Ag traders could lightly step into corn and wheat with stops below the recent lows. I would be building a position assuming the market proves you right. Remain in your lean hogs and live cattle longs with stops just below the 20 day MA’s. Forced to pick one livestock trade I prefer bullish exposure in April lean hogs.

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 January 23, 2012

Matthew Bradbard — Sun, 22 Jan 2012 17:38:46 +0000

A Straight Line… 1/19/12

Matthew Bradbard — Thu, 19 Jan 2012 22:15:28 +0000

Nothing included markets move in a straight line…stocks will not move higher in a straight line nor will natural gas move lower…all things must come to an end. I am still in a holding pattern waiting for direction in Crude oil. We’re still experiencing a tug of war in the distillates as RBOB was lower today and heating oil was higher…the reverse of previous sessions. Natural gas was lower by 7% today making it 21% already in 2012..a rocky start! The reality is I still do not see signs of a bottom. Equities continued their climb with the S&P exceeding our target of 1300 and the Dow within 100 points of our target…see previous posts. The 9 day MA should continue to support and as long as prices hold above that level I remain friendly. Gold is having trouble getting above the 38.2% Fibonacci retracement level at $1663 in February. I still see $1676; the 50 day MA but much more than that is not likely in my opinion on this leg…trade accordingly. Silver bulls are running on fumes as well…I am not advocating a bearish trade yet but start looking for an exit door on longs. The dollar index broke the 31 day EMA, a level that has supported since mid-November…could the tides be shifting? The Euro and Swiss franc are above the 20 day MA and the Pound is on the verge of penetrating that level…all starting to look more friendly. From where I stand the commodity currencies look the weakest along with the Yen and the European currencies appear to be a buy. Trade small because the forex market has been manic of late. Cocoa is back above the 50 day MA…aggressive traders can work back into longs with stops below the recent lows. Sugar #11 could be bought with stops below the 50 day MA as well. Treasuries appear to be rolling over but my clients have been fooled too many times so we will remain on the sidelines…forced into the market I would be a seller. Grains were higher by 1-2.25% today though I remain on the sidelines still to see if we get a test of the December lows. Next week if we have not I may be a buyer of wheat and or corn for clients…stay tuned. Live cattle and lean hogs remain a long proposition until prices breach the 20 day MA on the downside.

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

Tortoise or Hare 1/18/12

Matthew Bradbard — Wed, 18 Jan 2012 21:51:06 +0000

Every investor has a different strategy but slow and steady sometime wins the race. The idea is to be consistent and take small losses and let profits run…easier said than done. For three weeks now Crude has been stuck in a $5 trading range and this looks to continue. Today prices reversed mid-day to close slightly higher back above the 9 day MA above $101/ barrel in March. The sidelines is my suggestion until we get a clearer picture. A close below $98.50 or above $102.50 would likely set the tone in that direction but until then sit on your hands. We’re getting mixed signals from the distillates which is supporting sideways action in Crude with RBOB inching higher gaining over 2% today while heating oil closed lower for the fifth straight session. No new lows today but still waiting for a bottom in natural gas and believe it or not I am hearing whispers of $1.00 handle…stay tuned. Equities bounced off the 9 day MA today and closed higher by approximately 1% depending on the exchange. Ytd stocks are off to a healthy start appreciating just over 2%. Expect the grind higher to continue, using the 9 day MA as your pivot point on a closing basis. Gold and silver closed above their respective 40 day MA’s. My next target remains the 50 day MA which in February gold comes in at $1678 and in March silver at $31.16. On the daily chart prices are overbought so if we start to turn south have an exit strategy to book profits on longs because as we all know metals can change course quickly. Copper is nearing a three month high and if prices surge above $3.80 the next stop would likely be $4/lb., a level not seen in nearly five months…stay tuned. Day three of a dollar setback and the first settlement below the 20 day MA in two weeks. An interim top may be in so stay tuned … a close below 80.45 in March I would turn bearish. The standouts today were the European currencies…expect that to continue on further dollar weakness. The Euro, Pound and Swissie can be bought with tight stops. Cocoa needs to re-take the 50 day MA in the next few sessions or I would take remaining longs off. That level is 2295 in the March contract. Treasuries were lower today but until we see consecutive closes under the 20 day MA in both 30-yr bonds and 10-yr notes considering it just a trading range and I have no long or short interest. Those levels are 143’22 in 30-yr bonds and 130’25 in 10-yr notes. Fresh lows in corn and wheat as we may make an attempt at the December lows while soybeans were able to tread water today. On a lower trade that holds the December support I will look to be a buyer of Ag for clients…stay tuned. Not my favorite trade but if long live cattle place stop just below the 20 day MA and let the market guide you. Lena hogs have picked up ground the last four sessions. As I’ve voiced I think this is the beginning of the next leg higher. Lean hogs are not making headlines but we could see a nice appreciation in the weeks to come…this fits the bill for a good swing trade.

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