MBWealth's Commodity Blog » live catlle

Managing Risk 2/3/10

Matthew Bradbard — Wed, 03 Feb 2010 21:15:03 +0000

Disappointing inventory news and oil still held up well only down 25 cents on the day. Use $76 as support in the March contract; our objectives on the upside are $78.25 & then $79.60-$80. Depending on how tight your stops were on natural gas you may have been stopped at a profit; prices traded 1-2 cents lower than yesterday. We suggest on a trade above $5.75 to take remaining futures off and to exit your call spreads. We are still waiting for a trade up to 1105/1115 to be a seller in ES and SP for clients; until then no action taken. The correction in sugar we were anticipating is in play with prices breaking the 20 day moving average today. The calendar spread (short March/ long July) picked up 72 ticks today per ($806.40). We will be unwinding this spread for clients tomorrow if spread narrows just a touch more. Remember on a trade up to $1.50 in May OJ exit your back ratio spreads. Anyone who shorted lumber which we had mentioned in passing a few days ago should have been stopped out at a loss $800-1200/per depending on your placement as prices have advanced 12% in the last 4 days. We are looking for a way to get short Treasuries pricing out a variety of time frames in both futures and options…stay tuned. Continue to scale into shorts in 2011 Euro-dollars. Agriculture got hit hard today on NO real news. We were forced to hedge off some of the risk for clients long December futures; we advised buying March $3.60 puts which will give downside protection into the USDA report. On a trade below $9.14 cut losses on your May soybeans, you should have got stopped at a loss on soy meal for approx. $500/per. We suggest holding your May soy meal call options. In live cattle clients shorted April futures today against a purchase of (3) April 92 cent calls. This is a delta neutral strategy to take advantage of downside in the short run while having protection if prices move higher. In a perfect world we break lower cover futures at a profit and then see prices trade higher several weeks from now. Being we could not take out the upward trend line we advised clients to liquidate their June call spreads in gold at a slight profit today. Those who still wanted exposure we advised lightly buying April gold futures with stops between $1105/1107 gtc. We tried to scalp silver and lost 10 cents when the 100 day moving average gave way. Option traders in May stay the course; we still like buying May $2 call spreads. We took the Euro/yen spread off today for clients and will look to re-enter below.2900 on overnight or tomorrow early. Be nimble if trading forex as the ECB and BoE meet tomorrow and NFP # is out Friday.

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

Are Commodities back ? 2/2/10

Matthew Bradbard — Tue, 02 Feb 2010 20:52:53 +0000

Crude oil has advanced almost $5 off its’ lows in the last 2 sessions trading back above $77. Ideally you are already positioned to take advantage of this and further upside. In the March contract we see $80/barrel this week if not next. On that we would tighten ups stops and start looking to lighten up on your positions. Natural gas was a gainer as well but to a lesser extent only gaining marginally. Needless to say prices have made higher highs and higher lows for the last 3 sessions and we see more. We suggest trailing stops to just below today’s low. In March on a trade to $5.75 we would exit a portion of longs. Contact us for more specifics. The April call spreads should have gained, we will have exit orders to come on further upside. Indices were higher by over 1% as of this post; still we want more upside before selling on behalf of clients. See recent posts…we suggest using 1105/1115 in the ES & SP as a sell window. We advised taking profits on all cocoa shorts today; after a 9% move lower in 9 sessions we may get a bounce. Sugar was higher but the calendar spreads (long July/short March)picked up for the second day in a row. Clients have gotten back approx. $1100 per spread and will be showing a profit on another day like today. We expect there to be another 75-100 ticks in the spread ($840-1120).OJ was higher by a nickel intra-day closing 1.50 cent higher on the day. A trade above $1.50 in May should get clients their objective on their May back ratio spreads. Agriculture is a BUY; we recommend light long exposure into Monday’s USDA. Our favorite remains corn as clients own May & July calls & December futures. Clients were advised to buy May soybeans and soy meal with stops below recent lows or to buy calls. Live cattle and lean hogs were higher today but without our clients.We are looking to re-enter but have yet to figure out the best strategy…stay tuned. Silver remained above the 100 day moving average but I’m disappointed we did not see any follow through. As long as $16 holds we like being long but on a breach it could get ugly so be careful. April gold did better but until we get a close above the trend line just above today’s highs we’re not out of the woods yet. Call spreads in both metals in my opinion seem to be the most advantageous play currently. The RBA left rates at 3.75% which surprised the market and that to me is why the Aussie got hit overnight. We established a new play in FX today for clients; long the Euro/short the Yen. Our targets in the March contract are 1.4050 and 1.0925 respectively.

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

Solid start to the month 2/1/10

Matthew Bradbard — Mon, 01 Feb 2010 21:08:24 +0000

Energies caught fire today and finally started to trade the way we’ve been forecasting in recent sessions. Crude closed 2.5% higher on the day; if March can close above $75/barrel in the next few days that should confirm an interim bottom. Clients are positioned in May call spreads to take advantage. Natural gas was a gainer by 5.5%; as we published in our commentary this morning we’re suggesting light long exposure in March futures with stops below last weeks’ lows and April 75 cent call spreads. Weather permitting we could get a test of $6 next week. We would wait for more of a bounce and sell Indices; ideally the ES & SP allows a sale between 1105/1115 area in the March contract. OJ prices regained their footing today higher by 1 penny; clients remain long via May back ratio spreads. Another $50-75 lower in cocoa we suggest taking profits on shorts. If in fact sugar can correct the calendar spreads (long July/short March) should allow traders whom stuck with this trade to book a profit; the spread picked up $571.10/per today. Treasuries remain range bound; we suggest the sidelines here for now. Continue to scale into shorts in Euro-dollars in 2011 contracts. Clients continue to accumulate May and July calls in corn and December futures ahead of the upcoming USDA reports. Still looking for lower pricing in live cattle to re-establish longs for clients. Now that the 20 day moving average was busted in lean hogs we would refrain from trying to get long; next support is seen at 64.80 and then 62.60 in the April contract. The dollar could be making an interim top. A number of Central banks meet on rates this week so stay alert. At the moment we have no new suggestions but as the week progresses we will..stay tuned. Silver is back above the 100 day moving average gaining 3% on the day. We will be looking to add to clients longs on more upside. April gold is back above the 50 day moving average and similarly if the recent lows hold we would suggest adding to your longs.

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