Energies Reacting to the Dubai news on Friday Crude oil traded intra-day to its lowest level in 7 weeks, just below $72 in the January contract. We could see that level revisited in the coming weeks, only time can tell. The dilemma we are facing is will this be a one-time off event or a precursor of more to come. We suggest using $75.50 followed by $74.00 for support. We have yet to commit any capital but like the idea of purchasing January or February heating oil against RBOB expecting heating oil to gain on RBOB. We got our wish with the come of cold weather in the forecast and natural gas responded. In the last 6 days from the recent lows January natural gas has appreciated by 65 cents or 14%.  We would suggest trailing stops on mini-futures and will be looking for new entries in February call spreads for clients. On a set back closer to $5 in February, we advise long exposure expecting a test of $5.70 plus.

Livestock Live cattle have been range bound for the last 2 weeks, encouraged they’ve been able to hold their ground we’re still waiting for a trade above the 20 day moving average to confirm a leg higher. At the moment we have clients positioned long futures and February calls in addition to a spread long December and short April. Though we rarely trade feeder cattle for clients a trade above the 20 day moving average would also signify higher action. As for lean hogs the uptrend remains intact with prices trading to 5 month highs last week. In December lean hog prices tend to flat line or consolidate as producers work off inventories. Past performance is not indicative of future results. If this year holds true we would expect a pullback and try to get clients long near the turn off the year. A 38.2% Fibonacci retracement would carry February back closer to 61.50 cents.  

Financials
Stocks: Additional surprises form Dubai or abroad coupled with investors booking profits on the year is in my opinion going to hinder higher trade in equities. That being said, we continue to advise clients to sell rallies thinking the 1110 level in the S&P and 10500 level in the Dow should serve as solid resistance. As a longer term speculation, client’s still hold their January ES puts to take advantage of further selling. The true test will come as the equities open this week and traders return from vacation and more details trickle in from the Middle East. A small downward revision in Q3 GDP was not much of a market mover but the jobs # this week could be, a loss of 120,000 jobs is expected with unemployment unchanged at 10.2%. The rising tide that has lifted all boats could cause a nasty sell off in most asset classes so be quick to go to the sidelines on further signs of trouble. 

Bonds:  Rates have been lower and prices have been higher, that has been the trade now for the last 3 weeks but will it continue? Prices on 10-yr notes and 30-yr bonds have traded to over bought levels and we feel the easy money on longs has been made. The only exposure we have in the debt complex is playing the short end of the yield curve for clients scaling into short futures and purchasing long dated puts in the Euro-dollar. It may sound like a broken record but we want to be early to this party and though we are the minority, we’re in the camp that a rate increase could happen in the first 2 quarters of 2010.

Currencies We advised last week to pay close attention to the yen which broke to the upside last week trading to a 14 year high. What this signifies is an unwinding of the carry trade and that investors are very comfortable taking additional risk. As long as the trend continues up look for that to be the case. If we were to see a dramatic reversal in the yen look for most asset classes to suffer. The dollar printed a new low but to me it appears it is being supported and do not see a sharp break in the immediate future. As for Central bank action, this week expect the RBA to raise rates 0.255 to 3.75%. The ECB should stand put at 1.0% though expect some talk on their exit policy which could lead to volatile movement. We will continue to look for selling opportunities on rallies in the Pound and Euro-currency for clients. On a further liquidation in commodities look for the commodity currencies to get hit the hardest; Aussie, Kiwi and the Loonie.

Grains We will continue to be a buyer of March and May corn for clients on setbacks, but at the moment have advised them to step to the sidelines until the dust settles. We took a small profit last Friday on the options and futures purchased on Tuesday. We view 20-30 cent moves lower as buying opportunities and we expect shortly after harvest for prices to make their way towards $4.50/4.70 in the March contract. Soybeans of late have been sideways and we’d prefer to see prices 50 cents lower before establishing longs. We’ve also priced out plays for clients in soybean meal and soybean oil but have yet to commit capital. With year end around the corner we expect sideways consolidation in soybeans and corn as farmers tend to defer sales until the New Year. Last week we took a small loss ($300/per) on clients December KCBOT/CBOT wheat spreads and moved a majority of clients into the same positions in March where we expect to make up that small loss and more.

Softs It’s too early to celebrate, but sugar could have made a key reversal Friday closing almost 1.5 cents off the intra-day lows. We’ve advised long calls for the month of March and may start to explore futures if this turns out to be a turning point. We’ve been expecting a trade back to 25/26 cents and this could be the beginning of that leg. March cotton reached a fresh high for 09’ last week but at the moment prices look as if they could come off. The trend line dating back 4 months and a 38.2% Fibonacci retracement could carry prices back to 69/69.50 which could prove to be a good long entry. OJ has started to move higher on prospects of cooler weather in Florida, where I reside, but 50 degrees is far from a freeze so we would expect prices to back off as this was a false alarm. We may not see enough to turn a profit on January puts but a trade lower should get clients more premium back. Coffee remains on our radar but we see no viable pattern or trade at this time. We still want to see a deeper correction in lumber to get clients positioned long. 

Metals Gold and Silver trends are up and will continue up most likely for several quarters, but it’s not as easy as buy and fall asleep at the wheel as seen on Friday when gold and silver both experienced over $6000 trading ranges per futures contracts. We caution clients about owning too much of either metal at these levels and have tried to avoid heavy exposure to both metals simultaneously. That being said we took most clients out of their gold at a profit last week and used the $1 setback in silver as a buying opportunity getting long $3 call spreads in May. If and when we get a 7.5-12% correction in these metals we suggest using that as a buying opportunity or a time to increase your metals exposure.

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

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Energies Oil is trading $5 off its highs reached a month ago but is $12 above the lows just two months ago so where from here? We maintain that prices should come down before establishing longs for clients; we’re expecting $76 and the $74 on the January contract. We have no exposure in the distillates but find it strange that heating oil and RBOB are trading at almost the exact same price, we’d expect heating oil to be at a higher premium and may explore that relationship in coming sessions. Natural gas prices seem to be stabilizing again but we could sure use a cold front to get this market moving north for our clients. We are still suggesting long mini-futures in the January contract and 50 & 75 cent call spreads. Those already in this trade are most likely carrying as loss but we suggest staying with the trade for now. Assuming last Thursday low serves as an interim low a 38.2% Fibonacci retracement carries prices back to $5.20.

Livestock There were no surprises last Friday in the COF report or cold storage report. The COF report came out with cattle on feed at 101, placements at 101 and marketings at 97. Prices in live cattle seem to be stabilizing. Notice the coiling pattern on the daily chart in recent sessions, the longer this pattern exists the larger the breakout. We favor a move to the upside and have been positioning clients in February calls and futures. On consecutive closes above the 20 day moving average we would suggest adding to your position Feeder cattle may be done moving lower as well as prices gained nearly 1% to end last week. The daily chart is showing oversold levels with the stochastic coming in at 10. We would like to see a trade back above the 20 day moving average; at 93.75 in January to confirm a bottom. Lean hogs continue their march higher but we’re on the sidelines with clients. The 20 day moving average seems to be support and if February can get through resistance at 65.20 we should see prices carry higher.

Financials
Stocks: The freight train in equities may be losing steam but the sentiment has yet to shift. It may be premature but we’ve opted to take a small short position in the mini S&P for clients. We would expect 1100/1115 to act as resistance and on a further sell off we feel prices could slide to 1060 in the coming weeks. We paid just under $600 for January 1000 puts that should be worth north or $1000 on that type of move. If we are correct with our assumption the Dow should find its way back to 9900. An indication to us that we could come off is volume has been weak on up days and waning all together. Additionally after last year’s brutal year we expect managers and investors alike to start locking in profits and moving to the sidelines. In a shortened holiday week it may not take much to bully this market.

Bonds:  How low can yields go? It amazes me that smart money would rather have their money tied up in debt collecting minuscule returns than have exposure in other asset classes. This makes me consider that bonds investors see more trouble ahead. As for trading Treasuries we have no interest at this point as we feel prices could go either way. The trend is up in both 30-yr bonds and 10-yr notes but the recent appreciation has taken prices to overbought levels. As for the Euro-dollar September 10 is trading at 99.20 and as we see it there is a max of 80 ticks of risk which equates to $2,000 per futures so we still suggest scaling into shorts. Additionally you can buy at the money puts for $700 which we also suggest doing.

Currencies The ECB is expected to hold rates steady at 1.0%. As for the markets again all eyes will be on the dollar. I recognize this is a broken record but the dollar controls all for now. Though recent spikes higher in the dollar have yet to hold on we suspect that we are near a turn and do expect a trade higher. This would be key because all currencies with perhaps the exception of the yen would suffer. We advised clients to book profits on their December short Pounds and will be looking to sell March on rallies this week. Clients remain short March Euro puts expecting a trade down to 1.45 in coming weeks. The Loonie will look for guidance from energies and metals which remain a mixed bag. If in fact the dollar was to get some legs expect the Kiwi and Aussie to get hit the hardest as they’ve benefitted the most to dollar weakness and commodity strength.

Grains Soybeans have gained 10% in the last 2weeks carrying prices back to their highest level since mid-August. We are bumping up against previous resistance and would not rule out a temporary set back. We will be looking to establish bullish plays in both soybeans and soybean meal on that setback…stay tuned. As for wheat and corn they’ve started to come down but not enough for clients to re-establish longs. March corn is a buy closer to $3.75 and March wheat closer to $5.50. We’ve yet to roll clients out of their December KCBOT/CBOT wheat spread but we will be looking to do that as first notice is fast approaching.

Softs We’ve come to terms with the fact the only good thing about chocolate of late is the candy we buy at the store as we’ve not been able to predict the movement in cocoa with any accuracy. When that exists we chose not to trade this commodity and opt to go else where. For what it’s worth the charts say up but we do not trust it. Sugar is hanging onto the 100 day moving average but on a breach of that level which comes in at 22.35 on the March contract longs may be in trouble. We currently have clients positioned long via calls. Clients remain short January OJ and are still looking for more downside before getting long lumber again. As for coffee we have no interest and cotton this one got away from us. Prices have been sideways for the most part in the last month but since mid August price have risen by 24% and we’ve not done any trading in cotton. Here lies the problem I ignored the fundamentals and they suggest more upside. That being said on a setback we may get clients long. Here’s what we missed: cotton will have the smallest global acreage since 86’ and the smallest US acreage since 83’=bullish.

Metals Gold and silver made significant headway early last week but prices were sideways after that. Putting that into context gold still finished at a record high gaining $27 on the week and silver is now approaching $19, a level not seen yet in 09’.  We’ve accepted we left gold too early but all things considered we would rather miss an additional $25-50 in the short run than jump in and ride gold $100-150 lower. We expect $1300 in the next 3-6 months and will be quick to be a buyer on a correction but just do not feel right buying heavy at these levels. Silver is a different animal. We recently lightened up for client’s long silver and moved the money from May to March. The biggest differences we feel is silver has outperformed gold ytd, the chart looks a bit friendlier and we’ve yet to get back to prices seen last year vs. gold which has never seen these prices.  Depending on if we get a correction and our view on the dollar we may issue a considerable buy recommendation buying $5 bull call spreads into late next year…stay tuned.

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

Energies Crude appears to be rolling over headed for lower territory, nevertheless we suggest looking at outside markets for guidance. If the dollar continues south and the equity market can hold its own we may not see much of a setback. We have a target of $76 and then $74 on the January contract before we will explore longs for clients. RBOB and heating oil should too find their way to lower ground. The one variable could be what type of weather we encounter in the coming weeks. We’ve been buying natural gas now for 2 weeks for clients and currently they are down on their positions. This week will tell to see if prices can hold the recent lows and start trending higher. We’ve suggested 50 & 75 cent call spreads in January and also to start scaling into mini-futures with stops below the September lows on a closing basis.

Livestock Could the cattle market be readying for a shift in direction? We think so, we’ve been accumulating longs via futures and options and we’ve also instructed clients to lift their put protection. At this moment we are accumulating February 90 cent calls in live cattle and also scaling into long futures with the expectation that prices in the coming weeks to months will find their way back to 88 cents plus. The chart in feeder cattle is ugly as prices have fallen off a cliff losing 5% last week alone. We have no suggestions at this juncture but expect a bottom soon. February lean hogs closed below the 20 day moving average for the first time since 10/5 last week. We anticipate a grind lower with support at 60.00 and then 58.40. We have no long or short exposure for clients at this time.

Financials
Stocks: Once again it looks like equities are running out of gas but this could just be a pause, who knows? We have doubted the rally for weeks now and have been amazed of the resiliency in the equity market. As we’ve hinted at in recent weeks we have a bearish bias but at the moment have no exposure with clients. I have a sneaking suspicion that if we fail to make new highs this week we could get at least a mild setback. On that we could see the Dow trade back to 9500 and the S&P to 1025 by month’s end. The sentiment remains bullish and the momentum is certainly up so that is why we have yet to commit capital.

Bonds:  Though we feel the Fed is speaking out of the side of their mouths, the recent chatter that rates will stay at these levels for quite sometime has Treasuries moving higher and yields coming off. As a trader whether I agree or not, which I DO NOT, is immaterial and I must gauge my decisions on market sentiment not my opinion. If this continues the NOB spread clients are positioned in should turn out to be a great trade; clients are positioned long 30-yr bonds and short 10-yr notes. Not to contradict the aforementioned position but we will continue to play the short end of the curve for clients buying long dated puts and short Euro-dollar futures as prices appear to be overbought. Even without a change in rates if the sentiment shifts in the coming weeks prices should crumble.

Currencies It seems every week we find ourselves defending the dollar, so here goes. A base looks to be forming and we anticipate a moderate rally, that being said we are putting some client’s money in play to capitalize. The 2 currencies that we think make sense to be short, all things considered on a dollar rally, is the Euro-currency and the British Pound. We will be taking a serious look at selling the Euro and Pound on rallies. Last week we attempted a trade in the Euro and took a slight loss. Clients are positioned short the Pound; short futures against a sale of an at the money put to smooth the ride. Events on the calendar this week that could cause volatility include CPI, PPI and the BOJ which is expected to hold rates at 0.10%. 

Grains The USDA is behind us and now the markets will focus on weather and progress or lack there of during harvest. We continue to believe the less than ideal weather; first wet and than cold will have a bigger impact than the USDA indicated last week. We’ve had some success of late picking up corn contracts for clients on setbacks and we will continue to use a buy dips mentality. For those who have yet to read our latest report on corn and soybeans we suggest taking a look:

http://commodityblog.mbwealth.com/2009/11/13/exploiting-harvest-delays/

At the moment our featured trades in Agriculture for clients are long March 10 corn and a KCBOT/CBOT wheat spread looking for KCBOT wheat to gain on CBOT wheat.

Softs Reading an article in Barron’s over the weekend there are some calling for $4,000 in cocoa early next year? Maybe I’m missing something but in my opinion as prices retreat off their recent 30 years highs we think prices could continue lower. Coffee is getting close to a level that we will explore longs though we want to see how prices respond to the 100 day moving average. Clients still hold January OJ puts at a loss but are hopeful of a further depreciation. Prices are currently about 10% above longer term moving averages which we feel is out of line. Sugar has been sideways of late but we feel those with a longer time horizon can continue to gain long exposure at these levels.

Metals I think the adage is if the local butcher or barber givers you investment advise it is probably too late as you’ve missed that opportunity. With everyone piling into gold I feel as if we are due for a major capitulation. Am I capable of calling a top… absolutely not, but we caution those getting in of late and those with too much exposure. I do think we have a great deal more on the upside and see $1300 plus in 2010 but a correction first. We recently advised a small gamble betting on a correction by buying clients December $1075 gold puts for $300. If we are wrong they will take a small loss. Most who took the trade also have bullish silver positions on so on a further appreciation they still could benefit. Silver is our favorite longer term bullish commodity play but in the immediate future I have not a clue. On a move through $18 we suggest adding to longs and for those waiting for a correction we see support in December at $16.70 followed $16 though a violent move to $15 is not unattainable.

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

To find out exactly how we are positioning our clients in commodity futures and options,

Contact us today at 1-888-920-9997.

July crude oil advanced $3.85 to trade at 6 month highs. Resistance is seen between 62.25 and 62.50 with support at 60.00 followed by 57.50. July heating oil gained 10.71 cents last week but has been unable to trade above 1.57 after multiple attempts. The last time prices were above those levels was mid-January. On a move thru 1.57 look for an additional 7-10 cents. Support is eyed between 1.50/1.51. Prices could retrace 10-15 cents with no long-term chart damage. The Memorial Day holiday marks the beginning of the summer driving season. July RBOB gained 13.27 cents last week to trade to its highest level in 09’. Resistance is at 1.8150/1.8300, support is seen at 1.75 followed by 1.70. On setbacks we’ll be entertaining 20 cent call spreads in August. OPEC will meet on May 28th and so far, the consensus seems to be that they will not change production levels.
July natural gas fell 58 cents last week, down 14%. In the first 2 weeks of May prices advanced over $1 and now in the last 2 weeks prices have reversed and we are back to where prices were 4 weeks ago. Support is seen at the contract low at 3.40. Once a low is determined, start scaling into mini futures but until then we have an option play. Sell the $3 or $3.25 August puts while simultaneously buying the September $8 calls. As of Friday’s close, for virtually no debit one could sell 1 August $3.25 put and purchase 8 September $8 calls.

The USDA said there were 10.822 million head of cattle on feed as of May 1st, down 2.8% from a year ago. Placements in April were up 4% from a year ago while marketings were down 7%. The USDA also said that poor economic conditions worldwide and a strong dollar are hurting beef demand, but that the likelihood of fewer cows in 10’ suggests potentially fewer calves and tighter feed cattle supplies in 10’-11’. August live cattle were higher by 65 ticks last week but the choppy trade continues. A trade above 84.50 or below 82.00 is needed to determine the next direction. August feeder cattle were higher by 23 ticks but we feel a setback is forthcoming. Resistance is seen at 102.50 with support at 100.50. Our short term target is 99.00 in coming weeks.

The USDA said there were 614.7 million pounds of frozen pork in storage on April 30th, down 7% from a year ago. Frozen bellies in storage totaled 79.3 million pounds, down 21% from a year ago. July lean hogs closed lower 73 ticks last week. Support comes in at 66.40 with resistance at 68.60. The USDA said that lean hog prices are expected to recover as consumer confidence rebounds from the H1N1 outbreak. Once prices bottom we’ll be advising longs in July futures. For now we own June 72 calls for clients and are losing money, on a swift rally to 69 cents we should get a slight profit.

Stocks: Last week the Dow, S&P and NASDAQ all registered slight gains but we have not changed our view that a 10-15% correction is in the very near future. This week being a shortened trading week and light on volume may be an opportune time for the shorts to begin the move lower. The recent dollar drop signals that investors are willing to put risk back in their portfolio and being that prices have advanced 35% more or less, the Johnny came late investor, may have entered at an interim top. On a setback in the Dow we are looking for a move to 7750 then 7250 and for the S&P 830 then 765. A move above 8500 and 915 respectively would most likely mean that traders have bought themselves more time before we get the unavoidable correction.

Bonds:  S&P lowered its outlook for the UK economy, saying that government debt may increase to 100% of GDP in the next few years and lose its AAA credit rating. US Treasury Secretary Geithner tried to ease investors’ concerns, saying that he is committed to bringing down the budget deficit over time so that the US’s high credit rating is preserved but based on market movement, not everyone is a believer. The trend remains down in treasuries as June 30-yr bonds were lower by 3’16.5 points to trade at their lowest level in 09’. Support is seen at 118’10 followed by 117’20, mild resistance comes in at 120’16 followed by more significant at 122’00. June 10-yr notes were lower by 2’08.5 points, also to new 09’ lows. Resistance is seen at 120’10 while support comes in at 118’00. After 12 consecutive positive days March 10’ Euro-dollars finally ran out of gas. Resistance is seen at the contract high at 99.095 while support is seen at the 20 day moving average at 98.81. We suggest your current short position to be 25-40% of the ultimate position you want to own. For every $10k you should be short 3 to 4 contracts; $750K-$1M in leverage.

 
According to the minutes from the RBA they expect Australia’s economy to outperform most others in 09’ and 10’ which may have contributed to the 325 tick advance last week in their currency. It appears prices may be overextended but much of that will depend on the dollar.  Resistance is seen between .7875 and .7900 with support at .7700.

The Euro was higher by just over 5 cents last week trading to its highest level in 09’. Last week’s high at 1.4048 should serve as resistance with support at 1.39 followed by 1.3725. I guess I will follow one of our CTA’s next Euro trade as he has caught most of this move higher; contact us for their track record.

The June Swissie gained just over 3 cents last week gaining ground all 5 sessions. Resistance is between .9275 and .9300 with support at .9125. We could see a trade down to .9000 and could hold the shorter-term trend line.

The Loonie virtually gained 4 cents last week being one of the best performers. Resistance is seen at .9000 followed by .9150 with support back at .8700. We would advise traders to exit their long options and to tighten up stops on futures. We will hold the July 83 cent puts that we originally put on as a hedge expecting a setback in coming weeks.

The pound gained 731 ticks last week to trade to levels not seen since November 08’. Resistance is seen at 1.61 while support is seen at 1.56. Traders were stopped out at a loss on shorts recommended from last week, approximately a $700 loss per contract.

The BOJ left rates alone at 0.10% last week. Japan reported that their GDP was down 3.5% in fiscal year 08’-09’; the worst performance since records began in 55’. The yen moved higher by 1 tick. Clients should take profits on all remaining longs and be positioned on the sidelines prepared to buy a break. Resistance is seen at 1.0650 while support is at 1.0375.

The Kiwi was higher by 337 ticks last week. Resistance is seen at .6240 with support at .6050. We would need to see a trade thru .5900 to confirm an interim top. Similar to the other commodity currency prices they may have gotten ahead of themselves.

The US dollar index gave up 278 ticks last week to trade to its lowest level in 09’. Thru May so far prices are down 6% with prices down 4 out of the last 5 sessions. The easy money has been made on shorts, but the trend remains down. We see no real support until 78.50 and see resistance at 81.50 followed by 82.00.

The USDA reported 62% of the corn was planted, down from the five-year average of 85%. July corn was higher by 17 cents though is exhibiting signs of a top as prices have consolidated for the last 2 weeks. Resistance is seen at 4.35 while support comes in between 4.17 and 4.20. We are nearing the end of the corn planting window so wet vs. dry weather will be the key. If farmers are able to get in the fields which is the scenario we believe, this should take prices below $4 where we will be advising long entries.

The USDA reported 25% of the soybean crop was planted, down from the five-year average of 44%. July soybeans were higher by 41 cents last week having traded higher now for the last 4 weeks.The June $11 calls that we sold for clients were turned into short futures positions as of Friday’s close, as opposed to taking a loss, we advised clients to keep their short July and buy November against it 1:1. This is a spread we’re already in for other clients and think we’ll be able to recoup the loss on the option in this play. Not only did prices in July start to trade down, closing over 25 cents off their highs but the spread came in 25 cents as well. Support is seen at 11.50 followed by 11.20. On a close below the 20 day moving average at 11.07 we could see a trade down to 10.60. On a move higher, resistance is at 11.90 though a potential test of $12 is not impractical.

The USDA reported 50% of the spring wheat was planted, down from the five-year average of 90%.
July wheat jumped up 40 1/2 cents, the highest close in over three months, on concerns that planting is taking too long. On July CBOT wheat resistance is seen between 6.20 and 6.25 while support comes in between 5.93 and 5.97 followed by 5.75. July KCBOT wheat gained 29 ¾ cents last week to trade to its highest level since 1/12. Resistance is seen at 6.70 with support at 6.45.

The USDA reported 42% of the cotton was planted, down from the five-year average of 53%. July cotton rose just over 1 cent last week even after China said that it would begin making government cotton reserves available by the end of this month. Resistance comes in between 57.75 and 58 cents with support seen at 55.50. Prices have moved up 50% in the last 3 months, even a 40% correction of that move takes prices back to 53 cents.

July cocoa was higher by $73 last week and while it is tough to find bullish fundamental news, when the dollar gets pummeled cocoa generally trades higher, remember the inverse relationship between the two.  Support is seen at the 20 day moving average at 2375 followed by 2300. Resistance comes in between 2475 and 2500.

July sugar gained 75 ticks last week, supported by expectations for a world production deficit in 08’-09’ and higher gasoline prices. If the preliminary ending stocks estimates are true, they will be the lowest stocks to use ratio in 16 years. Resistance is seen at 16 cents while support comes in at the 20 day moving average at 15.14. On a break to 14/14.50 in July we will look to be a buyer. This could be doable on a setback in the energy sector. We still favor the idea of buying March 10’ calls.

July oj was down 1 cent as Florida has been experiencing some much needed rain. The .9400/.9500 cent level should serve as resistance while the 20 day moving average at .8960 should support. Prices have traded below the 20 day moving average but we have yet to see a close below since 5/1. We maintain a bearish bias but have no money in play.

The ICO is keeping its estimate of 08’-09’ world production unchanged at 127 million (60 kg) bags and its estimate of world consumption in 08’ also unchanged, at 128 million bags. July coffee jumped 7.45 cents last week, the highest trade in seven months. Prices have gained 14 of the last 16 sessions which we feel is an unsustainable pace. Last week’s high at 137.40 should act as resistance with support seen between 131 and 131/50. Prices could pullback 10 cent with no chart damage.

June gold gained $26 last week and has been higher 4 out of the last 5 weeks trading to its highest level since 3/20. Resistance is seen between 965 and 970 while support comes in at the 9 day moving average at 937 followed by the 20 day moving average at 919. Much of this recent gain was aided by the crumbling US dollar so closely monitor the dollar when maneuvering in gold. Being that prices are overbought we would advise tightening up stops on longs and putting in profit limits on bullish option plays. On bull call spreads that have 3+ months of time use a sharp correction to buy back the top leg and buy out right calls.

July silver gained 75 cents last week trading to its highest level since August 08’. What was resistance between 14.55/14.60 should become support. If that level was to give way we see the next level of support at 13.90. Resistance comes in at the psychological level of $15. Much like gold, the recent advance has taken prices to overbought levels so we would suggest tightening up stops. For longer term option spreads we would advise taking only partial profits as a move thru $15 could shortly after be followed by a print at $16. The gold “silver ratio stands at 65:1.

Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions. Calculations of profit and loss have not factored in commissions and fees.

You don’t need to go to the zoo to see animals, rather look at the common investor and how they maneuver within their portfolio. I’m not talking about giraffes and elephants but rather bulls, bears, pigs and sheep. Bulls make money in a bull market, bears make money in a bear market, pigs are greedy and will lose money in the long run, while sheep are led to the slaughter as they fail to do their own research and just follow the masses. It is crucial to one’s investment success to be able to maneuver and recognize changes in trends, to be disciplined, to eliminate fear and greed and to think outside the box. The current market dynamic is challenging and will remain this way for quarters and perhaps years. We suggest investors seek the help of professionals and if they truly are animal lovers watch the discovery channel, go to the zoo or get a pet, but do not invest like an animal.

To find out exactly how we are positioning our clients in commodity futures and options,
Contact us today at 1-888-920-9997.


DOE reported crude oil supplies were down for the first time since February, but before energy bulls get excited, the rationale is less supply rather than more demand. July crude oil closed down 2.74 closing lower on the week after 3 positive weeks. We expect prices to move lower from over bought levels. Resistance is seen between $58.50 and $59 with support first at $56.30 followed by the 20 day moving average at $54.95. July heating oil lost 11.74 cents last week closing just above the 20 day moving average. Resistance comes in at 1.52 with support at 1.36, on a breach of that level prices should retrace to levels from 3 weeks ago near 1.31. July RBOB gave up 3.30 cents but did remain within a 10 cent trading range. Resistance is seen at 1.71 with support at 1.63 followed by 1.56. If crude is down $4-6 look for a trade to $1.40/1.45.

DOE reported underground supplies of natural gas were up 95 billion cubic feet last week to 2.013 trillion cubic feet. Supplies are now up 33% from a year ago. July natural gas ended down 22 cents after reaching a 6 week high. After the impressive $1.30 advance we would expect some back and fill action. We will be exploring mini futures and selling puts and buying calls for clients. Resistance is seen at $4.50 with support at $4.05 followed by $3.85. On July an ideal entry would be between 3.70 and 3.85.

The USDA estimated the week’s beef production at 516.0 million pounds, down 5.7% from a year ago. The USDA expects beef production to be down slightly in 09’ and down 2% in 10’. Their average price estimate for choice steers is 86.5 cents per pound in 09’ and 90.5 cents per pound in 10’. June live cattle were lower by .325 last week. Support at .8100 with resistance at .8400. We would be a buyer/seller on a move out of that range. August feeder cattle were up 100 last week. Resistance at 102.25, support at 100.50.

Pork production was estimated at 424.4 million pounds, up 2.5% from a year ago. The USDA estimated that pork production will be down 3% in 09’ and down 0.5% in 10’. Their average price estimate for barrows and gilts is 45.5 cents/lb. (61.5 cents lean) in 09’ and 50 cents/lb. (67.5 cents lean) in 10’. June hogs closed down 1.775 last week. Support comes in between 65.25 and 65.75 while resistance is at 68.90. We’re still looking for 71+ and own 72 calls for clients; put limits to exit at 170 points, paid 90 points.

Stocks: The Dow suffered its second loss in 10 weeks to lose just over 300 points or 3.6% to 8269. The S&P had its worst week since early March giving up nearly 50 points or 5% to 883. The NASDAQ snapped a 9 week winning streak to lose 59 points or 3.4% to 1680. The media reports “green shoots”, I report “brown sh-ts” in terms of what is to come. We have cautioned investors about becoming too enamored with the most recent 35%+ rally and feel it has now run its course with more down to come. As consumers continue to spend less, as seen with last weeks’ retail sales and credit card defaults, increased fear will return to the marketplace. When a governor throws out the idea to sell off icons too raise money, you know things are rough. 900 should serve as resistance on the S&P and 8400 in the Dow, support at the 20 day moving average at 880 and 8200 respectively. On a breach of those levels 830 and 7800 would be our objectives.

Bonds:  June 30-yr bonds traded higher by 2’15.5 points gaining for the first time in 8 weeks. Both the daily and weekly charts indicate we should get a bounce short-term. Support is seen at 122’10 followed by 121’20 with resistance at 124’14 followed by 126’00. The rally in Treasury’s may still have upside being the amplified Fed buying. June 10-yr notes were higher by 1’03 last week to close just above the 20 day moving average. Support is seen at 120’27 while resistance comes in at 122’15. March 10’ Euro-dollars have been up for the last 9 sessions making new contract highs. Yes, that is against our current holdings but sell into this strength because one day soon it will end. We would recommend light exposure; for every $10,000 allocated to this trade you should be short 2 contracts.

The Euro traded lower by 183 ticks last week after reaching a 7 week high against the dollar. After failing to get thru 1.37 which will now serve as resistance the Euro should move lower this week. Support is seen at 1.3350 followed by 1.3250. On a significant dollar rally we could see 1.30.

The Loonie was lower by 222 ticks closing lower for the first time in the last 10 weeks. We advised clients to exit their long futures and to buy July 83 cent puts against their long options exposure in September. Resistance is seen at .8625 with support at .8400 though we could see a move to .8200 if energies fall apart. The 50 day moving average is .8175 and if prices were to get close we would cover our puts and look to reverse.

The Aussie gave up 220 ticks as commodity currencies were punished. If the dollar and yen were to continue north and commodities continued south for the time being we could get back to .7000. Resistance is seen at .7625 with support at .7400 followed by .7300.

The Swissie lost 157 ticks last week, which virtually came all on Friday, down 160 ticks. Resistance comes in at .9000 with support between .8875 and .8825. If the Euro was to get hit hard the Swissie could trade to .8700.

The Pound closed only 66 ticks lower last week and may need to play catch up on the downside this week with other currencies. Resistance is seen between 1.5275 and 1.5375 with support at 1.4950. For a position trade we are advising getting short with a target of 1.46 with stops above 1.5350.

With the exception of the dollar, the yen was the only currency to gain ground last week picking up 385 ticks. Support comes in at 1.0350/1.0375 with resistance at 1.0625 followed by 1.0800. If equities continue south the Japanese yen should continue north. The BOJ is expected to do nothing on rates this week. We would advise recent long entries to put in profit orders.

The Kiwi lost 196 ticks last week. Resistance is at .6000 with support eyed at .5725. On a further commodity correction expect .5600.

The US dollar was higher by 74 ticks to put in a positive showing after 3 consecutive losing weeks. The impressive part was the dollar made a new 4 ½ month low and held it’s ground. 82.00 should continue to act as support while resistance is seen at 83.75 then 84.90. Being prices are so oversold, if we garner momentum in the next few weeks 85.50/87.00 is attainable.

As of last week the USDA said 48% of the corn was planted, down from the five-year average of 71%.The USDA estimated 09-10 US ending stocks at 1.145 billion bushels, down from 1.600 billion bushels in 08-09. July corn was down 2 3/4 cents after trading to its highest level in four months. Resistance is seen at 4.32 while we see support at 4.15 followed by 4.03. When July trades down to 3.85 we’ll be advising clients to buy December 09’.

As of last week the USDA said 14% of the soybean crop was planted, down from the five-year average of 25%. The USDA estimated 09-10 US ending stocks at 230 million bushels, up from 130 million bushels in 08-09. The USDA reduced its estimate of the 08-09 US ending stocks from 165 to 130 million bushels. That put the ending stocks to use ratio at just 4%, matching the lowest in 6 years. July soybeans ended up 25 3/4 cents reaching a 7 month high before backing off. We feel an interim top has been made and in the short-run prices will come off. Resistance is seen at 11.50 with support at 11.15 followed by 10.90. There is an outside chance we see 10.30 but much of that will depend on the weather. We expect to collect the entire premium for clients who sold the June $11 calls. Although the trade is currently against us we like the idea of selling July and buying November on a spread looking for the spread to narrow, as of Friday’s close the spread was -1.54 ¾.

As of last week the USDA said 35% of the spring wheat was planted, down from the five-year average of 78%.The USDA estimated 09-10 US ending stocks at 637 million bushels, down from 669 million bushels in 08-09. The USDA is expecting world wheat production of 657.6 million tons in 09-10’, the second most ever, helped by anticipated increases in Argentina and Australia; weather contingent. July CBOT wheat closed down 13 cents as prices were unable to take out $6. Resistance comes in at 5.85 with support at 5.65 followed by 5.40. July KCBOT lost ¾ of 1 cent failing to get thru 6.45 on the upside. Resistance comes in at 6.38 while support is seen at 6.18 then 5.95.

July coffee closed up 90 ticks, trading to the highest level in over 6 months. The recent upswing is on easing of economic worries and expectations for a smaller Brazilian harvest. Selling capped the move at 130 which should serve as resistance as coffee showed signs of exhaustion last week, support at 126 followed by 122.
The USDA kept its estimate of the Florida orange crop unchanged at 158 million boxes, but increased the projected juice yield from 1.64 to 1.65 gallons per box. Florida’s orange groves badly need rain as prices have advanced to nearly 7 month highs gaining a further 2.50 cents last week. Last week’s high should act as resistance at 95.50 with support coming in at 90.00. Stand aside but look at weather in So. Florida to determine direction.

July world sugar was down 40 ticks following oil prices lower but only after probing 16 cents and trading at levels not seen since July 06’. The recent run has been impressive and was most likely caused by a larger than expected world deficit. The USDA estimated that there will only be 289,000 tons of sugar in the US at the end of the 09-10 season. ISO reported world production of sugar will fall short of consumption in 08-09 by 7.8 million tons. For 09-10, the ISO expects a world production deficit of roughly 4.75 million tons. Resistance is seen at 15.60 while support is at 14.65; the 20 day moving average. Expect 13.50/14.10 where we would start to explore longs again.

As of last week the USDA said 32% of the cotton was planted, down from the five-year average of 39%. The USDA estimated 09-10 US ending stocks of cotton at 5.6 million bales, down from 6.8 million bales in 08-09. July cotton was lower by 3.50 cents making last week the second negative week in the last ten. It appears an interim top was made as prices should head lower. Support is at 54.00 followed by 52.25 with resistance at 59.00. We advised clients to exit their July/ December spreads unscathed.
July cocoa was lower by $161 closing lower 4 out of the 5 days last week. Support comes in between 2225 and 2275 with resistance at 2400; the 20 day moving average. If the dollar does in fact move higher look for cocoa to continue south, we will explore longs closer to 2000.

June gold gained $14.30 last week trading to its highest levels since 4/1. Resistance comes in at 955 while we see support at 915 followed by 890. Considering outside markets with the US dollar gaining, and equities and energies falling the gold market held up well. For options we still like the idea of $100/150 call spreads in October and in terms of futures we have been advising clients to scale into mini-gold contracts in June.

July silver was unchanged on the week as prices have yet to make up their mind on what the next direction will be. Do not over think this trade, the trend is up but prices are oversold, the play is to be cautiously long until the market tells you different. Tighten up stops but don’t exit because there may be more immediate upside on futures. In terms of options if you are near your objective take a profit. Closely monitor the gold: silver ratio that we mentioned last week. Resistance is seen at 14.35 followed by 14.60 while support comes in at 13.50 followed by 12.85/12.90.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.

The latest advance in stocks and commodities with the fall in treasuries and the US dollar, could in fact be a precursor of what is to come but the pace of the advances and declines is flawed. These spectacular moves in such a short time are irrational and almost always not true. Stocks are moving higher as investors believe we will start to see a recovery in coming quarters and on hope that the worst is behind us. I’m not convinced on either front just yet. Commodities are rallying for the same reasoning and the fact that inflation may be around the corner. It is undeniable that this is a valid concern but perhaps premature. The move in treasuries is justifiable and for the US government to think they can get global investors to bail them out of this mess by issuing long term obligations and paying 3% is ludicrous. The US dollar is dead and will be considerably lower years from now. Day to day the volatility is unpredictable, however even Warren Buffet recently said 5-10 years from now the US dollar could be considerably lower. Markets tend to move irrationally and to extremes when fear and greed is present and this is never been more apparent across all asset classes. The investor that diversifies their portfolio and can differentiate between perception and reality will come ahead in the long run.

To find out exactly how we are positioning our clients in commodity futures and options,
Contact us today at 1-888-920-9997.


June crude oil closed up $6.01 last week, the highest close in 4 months. What was resistance will now become support between 55.75 and 56.25 with resistance at 60.00. Oil has traded higher 11 of the last 14 days on good volume so it is safe to say this rally is real and most likely sustainable, albeit with periodic setbacks. June heating oil was higher by 14.33 cents. Resistance comes in at 1.5375, support is seen between 1.47 and 1.48. It is not unreasonable to expect a 50% retracement of the recent move taking prices to 1.3525. June RBOB blasted higher by 19.72 cents last week trading to its highest level since 11/4. Resistance comes in between 1.75 and 1.80 with support at 1.63 followed by 1.55. We have advised clients to exit their July and August 20 cent bull call spreads at a profit. We should get a setback being the last 2 weeks we saw a 25% advance.

June natural gas closed up 77 cents at its highest level in 5 weeks. Much of the move is attributed to an expected decline in US production and industrial usage coming back on line. Since bottoming on 4/30 prices have moved $1 higher or 33%. We advised clients to book partial profits on their longs and to tighten up stops. Perhaps one of my best trades ever (Sell August $3.25 puts & buy 6 September $8 calls) was bought for $150 and closed at $3,650. $3.25 should serve as the low; we see support at 3.90 with resistance at 4.50 in June.

June live cattle were higher by .85 last week. Support comes in at 82.00 while resistance comes in at 84.00 followed by 84.65. August feeder cattle gained 2.15 and like live cattle were aided by positive movement in lean hogs. Support is seen at 100.00 followed by 98.80 with resistance between 101.25 and 101.65. Both live and feeder cattle are oversold and we should see some value buyers scaling into longs as cash prices are starting to stabilize.

June hogs closed up 3.35, helped that the spread of the H1N1 virus appears to be slowing and that experts continue to confirm that eating pork is safe. The swine flu panic should be behind us and those who took advantage of the lower pricing should be rewarded. Support is seen at 67.50 with resistance at 68.90 followed by 70.35; the 20 day moving average. We’re anticipating that the gap will be filled in coming sessions and a trade above 71 is in the near future. We would look to book profits on the recently purchased 72 cent calls and be trailing stops on futures on a trade thru 70 this week.

Stocks: The US Labor Department said the unemployment rate increased from 8.5% to 8.9%, the highest since 83’. NFP showed a loss of 539,000 jobs which was better than projected but in my eyes still terrible. Stock markets are in the black for the year but as opposed to buying we would advise investors to be selling and raising cash. The Dow added 360+ points last week gaining 4.4% to 8575. The S&P leaped 50+ points virtually 6% to 929. The NASDAQ enjoyed its ninth straight positive week adding 20 points, just over 1% closing at 1739. I question the recent rally and think that in due time perhaps sooner rather than later we will experience an about face and go down almost as quickly as we went up. I hope I’m wrong but I don’t believe circumstances have improved as much as the market is reflecting. Support & resistance on the Dow and S&P are as follows; 8570 and 8230, 930 and 900. On a break lower our first objective on a swing trade would be 7750 and 830 respectively.

Bonds: June 30-yr bonds were lower by just under 2 points last week, the lowest close in 5 months with yields rising to their highest level since late November. At these levels prices are oversold and we would expect a bounce, tighten up stops on shorts or lighten up on puts. Support comes in at 119’10 with resistance at 122’00. June 10-yr notes were lower by 14 ticks last week. Support is seen between 119’10 and 119’16 with resistance between 121’00 and 121’10. March 10’ Euro-dollars printed a new high, we suggest clients sell into this strength maintaining that in the long run risk: reward this trade should be in all commodity portfolios. Lightly sell at these levels and look to parlay the position.

The RBA met and kept its interest rate unchanged at 3.0%, as expected. The Aussie gained 371 ticks last week trading to its highest close in 7 months Resistance comes in at .7750 with support at .7300. We have advised clients to be out of 75% of their longs expecting a setback and then will re-position.

The ECB reduced its interest rate from 1.25% to 1.00%. ECB President Trichet said that they will also practice quantitative easing, buying corporate bonds, and lending banks unlimited funds for the next 12 months. On the week the Euro was higher by 343 ticks trading to its highest level since 3/25. Support is seen between 1.34 and 1.3450 with resistance at 1.3675/1.3725.

The Swissie gained 224 ticks last week aided by a 2.2% surge on Friday. Resistance comes in at .9100 with support between .8900 and .8950. Stand aside.

The Loonie picked up 259 ticks and has now gained for the last 9 consecutive weeks. .8705 is starting to look like a potential triple top dating back to November. Support is seen at .8500. As of Friday’s close the September 85/90 call spreads we had advised in recent weeks closed at $2200. Look for an exit between $2,700-3,100.

The BoE met and kept its interest rate unchanged at .50%. The June British pound gained 299 ticks to its highest level since 1/9. We’re still looking to be a seller from higher levels. Resistance is seen at 1.5325 with support at 1.5000.

The Yen picked up 92 ticks and prices should continue to pick up value unless we see a further advance in equities. Resistance comes in at the 50 day moving average at 1.0180 followed by 1.0240. Support is seen between 1.0070 and 1.0100.

The Kiwi was higher by 311 ticks trading to levels not seen since last October. We feel we are close to an interim top and would step to the sidelines here. Support at .5900 and resistance at .6100.

There was optimism being the government’s stress test was not as dreadful as feared. The June US dollar which has served as a flight to quality got walloped, down 210 ticks to its lowest close of the year. With investors willing to take more risk, capital came out of the dollar and poured into equities and commodities alike. Support is seen between 81.50 and 82.00 with resistance at 83.50.

As of last week the USDA said that 33% of the corn was planted, down from the five-year average of 50%. July corn was higher by 13 ¼ cents last week to its highest level since 1/26. Support comes in at 4.15 followed by 4.00 with resistance at 4.25 followed by 4.38. Based on the market, action traders are content being long rather than short into the USDA report as pre-report guesses have a lower ending stocks number due to strong demand and lower South American production. Longs have been in the driver seat but we expect a 30-40 cent correction starting this week and will have clients on the sidelines until this happens or we get a different read.

As of last week the USDA said that 6% of the soybean crop was planted, down from the five-year average of 11%. July soybeans were higher by 23 cents last week. Prices traded within a 40 cent range, we feel this sideways consolidation exhibited exhaustion. First support is seen at 10.90 but we anticipate a break to 10.60 and possibly 10.20. Resistance is seen at 11.20. We sold June $11 calls and have clients positioned in put spreads into the USDA report. We ought to see a correction lower being soybean acreage should come in greater than the previous report and even with a moderate drop in ending stocks the market has already priced in a significant increase in demand for US beans. On drier weather here and in South America perhaps the demand has been overestimated.

As of last week the USDA said that 23% of the spring wheat was planted, down from the five-year average of 59%. July CBOT wheat was higher by 27 cents to its highest level since 2/10. Resistance is seen at 6.05 with support at 5.84 followed by 5.65. July KCBOT wheat gained 24 cents and has traded higher 8 out of the last 9 sessions to the highest price since 1/30.We assume most of the recent upside was due to short covering, the market believes damage will surface and this has made shorts nervous. On Tuesday’s report the endings stocks numbers should see little change and have no impact on prices.

July sugar was higher by 28 ticks last week taking prices to a 10 month high. 12 of the last 14 days sugar has traded higher, although preliminary we think an interim top was formed last Thursday. Thursday’s high now becomes resistance at 15.60 with support down at 15.00. A 38.2% Fibonacci retracement takes prices back to 14.50, a 50% retracement to 14.17. We will be looking to be a buyer of March 10’ calls on a setback.

July cocoa gained $195 as the inverse relationship to the dollar was displayed. This was the first close back above the 20 day moving average in 4 weeks. Support comes in between 2425 and 2440 with resistance at 2550 followed by 2600.

July orange juice jumped up 5.85 cents with parts of Florida suffering from drought conditions. After 4 failed attempts to get thru 92 cents last week we should see prices back off. Support is seen first at 88.50 followed by 85.50. Stand aside.

July coffee jumped up 6.40 cents, the highest close in twelve weeks, on talk that world demand may be holding steady in spite of weak economic conditions. We were able to exit the July 120 calls for clients at a profit. For now we would stand aside as our short term objectives have been met. Resistance comes in between 1.2750 with support at 1.25 followed by 1.22.

July cotton was higher by 2.85 cents last week gaining for the last 8 days. Cotton has been on a tear but at this juncture we think prices have gotten ahead of themselves being they have gained 65% in just 2 months. Recently we sold July 55 calls and bought twice as many December 65 calls for clients. The trade idea was on a correction in July look to capture the premium and then hold the December calls. We are currently making money on this trade but for the wrong reasons so we will attempt to cover the position this week at a 25% profit. The lesson here is if a market is not performing how you expected it would when you put on the trade then exit.

June gold was higher all 5 sessions last week gaining $27.40. We expect higher pricing but would’ve expected more upside last week with the collapse in the dollar. That being said on a trade below the trend line at $886 we would be quick to lighten up. The ability for gold to hold its own in the face of a stock rally may be on concerns of inflation to come. For new entries we favor $100 and $150 call spreads out to October. Resistance comes in between 925 and 930 while support is seen at the 100 day moving average at 901.70.

July silver was higher by $1.45 last week and has gained the last 6 days; up $1.60 or 13%. We are expecting further upside but the recent pace is unsustainable. Now that prices are thru 13.90 the next resistance level is 14.60. Support comes in at 13.55 followed by 13.20. When we started advising long exposure in silver to our clients last October the gold to silver ratio was near 80:1 today it stands at 65:1. If gold was to make its way to $1000/ounce, which we consider a certainty and the ratio comes into 50:1 which we do think is reasonable that puts silver at $20. Fasten your seatbelts; a 50:1 ratio should happen but at what level is the dangerous part.

Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions. Calculations of profit and loss have not factored in commissions and fees.

For the last year and half we have gotten bad news about the economy and we are now starting to see more favorable news trickle in, the key is to be objective and to look at everything. It seems that all the markets are interconnected as the metals trade with the currencies, energies with equities and all agriculture seems to move together. Observe relationships and follow the flow of money. For instance, we’re not in a bull market in stocks but investors who have ignored equities because of a bad experience have missed a huge move, oil inventories are at an 18 year high but oil has moved $9 higher in the last 2 weeks. There is virtually no demand for cotton, yet prices have advanced 40% in the last month. Natural gas prices look cheap, however that was also the case 2 months ago, since then prices have dropped an additional $2. I guess what I’m getting at is don’t ignore the good or bad news and be more critical when making decisions in your portfolio.

To find out exactly how we are positioning our clients in commodity futures and options,

Contact us today at 1-888-920-9997.


The US Department of Energy said crude oil supplies were up 4.1 million barrels, supplies of gasoline were down 4.7 million barrels while heating oil supplies were up 1.5 million barrels. June crude oil closed up $1.75 to post its second positive week in a row closing over $9off the previous week’s low. Energy prices appear to be pricing in a recovery and pick up in demand for later this year, though there is no support for that conclusion. That being said, prices may have gotten ahead of themselves and a correction is probable. Support is seen between 51.50/52 with resistance at 53.50 followed by 54.50. This week’s direction may be determined more by outside influence such as NFP and the stress tests as energies seem to be taking leadership from equities. June heating oil was higher by 1.26 cents which is not too impressive all things considered. Support comes in at 1.36 and resistance between 1.40/1.42.  June RBOB was higher by 7.72 cents making its way to a 6 week high. Support is seen between 1.45/1.4650 with resistance at 1.5450. We have advised clients to put in GTC profit orders on any 20 cent July and August call spreads. We have a chance of seeing a move thru 1.57 this week which would trigger buy stops.

The US Department of Energy said underground supplies of natural gas were up 82 billion cubic feet to 1.823 trillion cubic feet. Supplies are now up 34% from a year ago and up 23% from the five-year average. June natural gas ended up 16 cents or 4.7% on the week. Signs of stabilization in the manufacturing sector may well point towards a recovery in the industrial usage that has been lacking. Resistance comes in at the 20 day moving average at $3.63 which prices have not closed above since 3/25. The fact that we printed a new contract low and prices held is a positive sign, for now support should hold at 3.35. A trade idea; we will start to explore selling August $3 puts and buying 6 September $8 calls for even money. We would expect to keep the premium on the put and on an explosive move higher over the next few months trade out of the calls which presently would be deep out of the money.

After the close Friday, the USDA estimated the week’s beef production at 516.7 million pounds, down 3.2% from a year ago. June live cattle ended 15 ticks higher, in spite of concerns that beef exports will be slower on the Swine flu concerns. Support is seen between 81.50/81.75 with resistance at the 9 day moving average at 82.10. August feeder cattle were off by 115 ticks closing at a 4 week low as it appears prices are heading lower. Resistance is seen at the 9 day moving average at 99.85 with support at 97.80 although we cannot rule out a trade below 97.00.

Pork production was estimated at 418.4 million pounds, down 2.7% from a year ago. Countries abroad announced that they will not import pork from the US due to Swine flu despite statements from world health officials that consuming pork is safe. Hogs are getting a bad wrap being there is no evidence that hog populations are suffering and outbreaks are traditionally named according to their origin. Last week the named was changed to the H1N1 virus from Swine flu but has the damage already been done? June lean hogs finished down just over 6 cents last week making new contract lows. We have advised aggressive traders to buy; buying June 72 calls for 90 points looking to exit at 200 points on a rebound. Also we have client’s long futures from 64.50/67.50 expecting the gap formed last week to be filled in coming weeks on a trade back to 71+.

Stocks: With April behind us stocks experienced their best 2 month gain since 1975. The Dow ended the week higher by 136 points or 1.7% just over 8200. The S&P 500 climbed 11 points or 1.3% to 878 with the NASDAQ putting in its eight straight weekly gain adding 25 points or 1.5% to close at 1719. Heading into May it appears the economic deterioration seems to be slowing as tax refunds and mortgage refinancing have temporarily helped consumers. We feel this will be short lived and continue to expect a correction lower after the recent 30% advance. Investor confidence, if we’re right will quickly back off as they realize this was not the start of the next bull market. With results out on the stress tests, NFP on Friday expected to show a loss of 600,000 jobs and a slightly higher unemployment number we sense a move lower is probable. With exhaustion in the market; the Dow should find its way to 7725 on a setback and the S&P to 825. A move higher cannot be ruled out, but we will not be involved with clients.

Bonds: Last week the Federal Reserve met and kept the federal funds rate unchanged. As they see it, “the economy has continued to contract, though the pace of contraction appears to be somewhat slower.” June 30-yr bonds were lower by 2’07 points to their lowest levels since mid-November 08’. This marks the sixth uninterrupted negative week. Resistance is seen at 124’00 with support at last week’s low at 121’21. On a trade below those levels look for an attempt at 120’00. June 10-yr notes were lower by 30.5 ticks, on the weekly chart this was the first close below the 20 day moving average since the week of Halloween. Support comes in at 120’15 followed by 119’20 with resistance at 121’20. The trend remains down but the pace of selling seems to be slowing. Continue to accumulate shorts in the March 10’ Euro-dollars as prices are about 10 ticks from the contract highs. This is the type of trade that one will need to sit on their hands and wait to develop over the next few quarters.

The June Euro was higher by 25 ticks last week fighting back from losses early in the week. Support is seen at 1.32 followed by the 50 day moving average at 1.31. Resistance comes in at 1.34, on a close above that level look for an attempt at 1.37. The ECB meets on Thursday and should reduce rates from 1.25% to 1.0%.

The Aussie was higher by 90 ticks last week. Support comes in between .7175 and .7200 with resistance seen at last week’s high at .7363. On the RBA meeting this week we expect rates to stay at 3.0%. On a pullback we will be a buyer of 75/80 call spreads in September for clients below $1000, stay tuned.

The Swissie was higher by 26 ticks last week and continues to follow the lead of the Euro. Support is seen at the 50 day moving average at .8696 with resistance between .8850 and .8900. Stand aside for now.

The June Canadian dollar closed up 187 ticks, the highest close in over three months. This marks the 8th consecutive positive week. We had been calling for a trade above 84 cents for weeks now and finally the market delivered. We advised clients to take profit in June and roll their May and June contracts into September. We bought 85/90 call spreads for clients at $1500. Support is between .8330 and .8375 with resistance at .8510.

The yen gave up 260 ticks last week closing back below the 50 day moving average seemingly making its way back under par. The 50 day m.a. now becomes resistance at 1.0147 with support eyed at .9950. The risk aversion trade is back, with equities moving higher, the yen continues to move lower.

The June Cable was higher by 262 ticks last week. Support comes in between 1.4750 and 1.4800 with resistance at 1.5075. We will be looking to be a seller anticipating a trade back to 1.4300. The BoE is expected to hold rates steady at 0.50% Thursday.

The RBNZ reduced interest rate from 3.0% to a record low 2.5% and said that they expect to keep the rate low into 10’.  The Kiwi was higher by 28 ticks last week. Moving forward we expect sideways consolidation between .5600 and .5800. No trades currently.

The June dollar index was lower by 16 ticks last week, closing lower now for 2 weeks running. Support comes in first at 84.00 followed by 83.25 with resistance at 86.00. We would expect prices to continue south for the time being, the next leg being determined by the stress tests and NFP.

The USDA said that 22% of the corn was planted. July corn closed up 30 ¼ cents or 7.9% last week. This was the highest price in three weeks with ongoing concerns about slow planting progress. At the highs prices were just below significant resistance between 4.17/4.20. On a close above that level, which we feel is unlikely ahead of the 5/12 USDA report, we would quickly see the mid 4.30’s. Support is seen at the 38.2% Fibonacci retracement level at 3.92 ½. At present the market is pricing in a cut in corn ending stocks. The April demand for corn was much better than the March and with planting delays and Argentina lowering their production, the USDA will likely raise their export expectations. The market expects at least a cut of another 40 m.b. We would like to get long from lower levels and currently have no exposure with clients.

The USDA said that 3% of the soybean crop was planted. July soybeans were higher by 63 cents or 6% with their first close above the 200 day moving average since September 08’. April demand for beans was stronger than many had expected and Argentina cuts its harvest twice in April. This, coupled with planting delays, equates to the USDA possibly cutting ending stocks on beans for the fourth consecutive month. The psychology is bullish into the report but we could see setbacks on a change to drier weather or expansion of the Swine Flu threatening exports which to date has not occurred. Support is seen between 10.50/10.60 which had previously served as resistance. There appears to be no resistance until 11.50. We would stand aside on new entries but continue to hold the $10/$9 puts strategy that was outlined in recent weeks.

The USDA said that 15% of the spring wheat was planted. July CBOT was higher by 27 cents or 5% last week, the highest close in three weeks. We advised clients to book partial profits on the July $5 puts they sold the previous week; initially they collected $1050 and they bought these back for $600. We would try to repeat this trade on a setback or just be an outright buyer of futures. Support is seen between 5.40/5.49 with resistance at 5.70 followed by 5.85. KCBOT wheat gained 24 ¾ cents last week trading back to levels seen at the beginning of April. Support comes in at 5.95/5.98 with resistance at 6.25.

The USDA said that 16% of the cotton was planted. July cotton jumped 5.20 cents, the highest close in six months, aided by spillover strength in other agriculture markets and better economic news. We advised clients to sell July 55 cent calls and to buy twice as many December 65 calls. The idea is we’re expecting a setback after the recent 40% appreciation and to collect the entire premium on the July contract. This would allow clients to own calls out to December with limited exposure. We collected $1100 for the July call and spent $2900($1450*2) for the December calls for a total cost of $1800. Support is seen at 54.25 followed by 53.00 with resistance at 60.00.

India’s sugar production is running below expectations and they will likely be an importer of sugar this year. July sugar was higher by 115 ticks last week gaining 8.25% to the highest close in eight months. Resistance is seen at 15.50 with support back at 14.25/14.35. With prices looking over bought we advised clients to lighten up and book profits on their longs. On a setback, we will be buying March 10’ options and October 09’ futures.

July coffee ended the week on a strong note up 3.9%, gaining 1.90 cents on the week largely on expectations of a smaller Brazilian crop. A close over 120 would signal a breakout to the upside. We will be looking for a scenario like that to book profit on the remaining 120 July calls for clients. Support is eyed at 115.50.

July cocoa fell $107 last week, the lowest close in seven weeks. Cocoa was one of the few commodities that finished lower but with prices now oversold the easy money has been made on shorts and all our objectives have been hit. We will now be looking for long entries. Support is seen between 2280 and 2300 with resistance at 2400.
July fcoj was lower by 65 ticks last week getting closer to our objective at 79 cents. The pivot point comes in at the 20 day moving average at 84.25. Support is at 79.75/80 with resistance at 86.50. We favor getting long but from lower levels as we’ve said in past commentaries

July silver was lower by 45 cents last week trading as high as $13.25 on Monday and as low as $12.02 on Friday ending the week at $12.50. We maintain that on a close above $13 look for the trend to be higher while a close below $12 would signal lower pricing. We are advising clients to hold onto existing positions but have not advised any recent entries as prices could go either way. We sense there is a big move brewing but cannot get a good feel on what direction. What makes me a little uneasy about bullish positions is that the 200 day moving average has been above the 100 day moving average since November and at 12.48 and 12.31 respectively if the 200 day m.a. was to move below the 100 day m.a. that would signal weakness. Longer term we are extremely friendly but before taking any serious size we would suggest waiting for a signal.

June gold lost $26.80 last week closing just below the 100 day moving average. Support is seen at $880 followed by $863 with resistance at $891 followed by $915. Throughout the month of April gold traded within a $55 trading range, with a new month will a new trading range be determined? The fact that gold prices didn’t move higher on recent dollar weakness and the Swine flu we would suspect the bears are in the driver seat. On a considerable break to say $825 we would be a buyer with both hands. The only positions we feel at ease with presently is $100-150 call spreads out to August.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.

It is viewed by many that a modest increase in commodity prices is a sign that demand is coming back to the market. We need to point out demand is only one side of the equation, the other being supply. We do agree that once prices stabilize we could see further upside, as the global economy starts to digest the recent stimulus, which should lead to inflation down the road. The 2 main questions are how long and windy will that road be and how much inflation will we have? Over the years, one of the main aspects within commodities that has intrigued me is the economics, supply and demand govern the price as opposed to an executive sleeping with his assistant, a missed earnings report or a short seller with an agenda. Yes, just like any market, commodities can be manipulated but to a bigger degree these markets make sense. A hurricane, flood or drought will affect supplies and therefore price. A significant population expansion, a growing middle class with an appetite for better things; i.e. more demand should fuel a commodities bull market for years. It is our viewpoint that we are in the 4th or 5th inning and just taking a rest before the next leg up begins.

To find out exactly how we are positioning our clients in commodity futures and options,
Contact us today at 1-888-920-9997.


The US Department of Energy said crude oil supplies were up 3.9 million, supplies of gasoline were up 800,000 barrels while heating oil supplies were down 100,000 barrels. June crude oil ended down 71 cents but $4.83 off Tuesday’s lows. These lows were within pennies of the 61.8% Fibonacci retracement level so we could see a bounce from here. Support comes in at 50.25 followed by 48.50 with resistance at 53.25 followed by 54.50. A close over $56 is needed to signal a move back over $60. June heating oil was lower by 5.81 cents last week. Support is seen at 1.3150 with resistance at the 9 day moving average at 1.3915 followed by 1.45. June RBOB was lower by 4.99 cents. 1.36/1.38 should serve as support as the last 2 visits to these levels in the last 4 weeks have held. Resistance comes in between 1.47/1.49. Continue to use setbacks to purchase 20 cent July and August call spreads.

The US Department of Energy said underground supplies of natural gas were up 46 billion cubic feet last week to 1.741 trillion cubic feet. Supplies are now up 36% from a year ago and up 23% from the five-year average. June natural gas dropped 45 cents to a new contract low losing 12%, trading lower all 5 sessions. We advised clients to buy back the top legs in their June call spreads hoping to see a rally in the next 2/3 weeks. We still own a small long position June mini-futures. The pain is usually the greatest right before a market turns and we are getting close to throwing in the towel so a bottom is probably around the corner. There is absolute no support seen on the charts, as far as resistance, first at the 9 day moving average at 3.67 followed by the 3.85/4.00 level which had previous served as support.

June live cattle were lower by 1.40 closing below the 9 day moving average. Support comes in at 82.40 followed by 82.00. Resistance is seen between 83.80 and 84.00. We expect more downside and would not rule out a move to 81.25 this week. August feeder cattle were lower by 1.175, closing down after 3 positive weeks. Resistance is seen between 1.0125 and 1.0175, support at the 9 day moving average at 100.24 followed by 99.00 and then 98.25.

June lean hogs were lower by 1.55 as the pork complex much like beef prices were under pressure. On the next rally we may trade out of the remaining June calls for clients as we are seeing better opportunities in other complexes. Support is seen between 71/71.20 and resistance comes in at 72.70.

Stocks: Stocks ended the week much better than they stated, clawing back to end modestly lower. The Dow finished the week 55 points or less than 1% lower at 8076 for its first loss in 7 weeks. The S&P traded on both sides of positive and negative but finished the week 3 points lower at 866. For the month of April the S&P is up nearly 9% and on track for its best 2 month run since 75’. The NASDAQ was able to keep its streak alive, ending higher for the seventh consecutive week adding 21 points to 1694. Earnings were largely ignored as were the stress tests, as the market disregarded these tests feeling the gov’t is once again letting banks off the hook. With the results still 1 week away don’t hold your breath for any earth shattering results. The dilemma is that the recent rally was led by financials and with banks on the guillotine we feel it’s unlikely the financials will remain the leaders. We remain cautiously optimistic but if forced to pick a direction we would say down. That is not to say an attempt at 900+ on the S&P is unlikely, we will just be spectators not speculators. Remember the adage “Sell in May and go away.”

Bonds: June 30-yr bonds were lower by just over 1 basis point with the lowest trade since 3/18. Support is seen at 123’00 with resistance at 126’00. The trend remains down but we could see a bounce being prices have come off 7 basis points just in the last 3 ½ weeks. June 10-yr notes were lower by 21.5 ticks last week, like bonds was the lowest price since 3/18. Support comes in between 120’16-120’23 with resistance between 122’05-122’16. The trend remains down but the pace of selling may slow now with the rate back above 3.0%. We are advising clients to continue accumulating shorts in March 10’ Euro-dollar positions. We are approximately in the middle of the trading range we have been in for the last 3 months. The Fed meets this week and we expect no change in policy, at most some jawboning on how to keep longer term rates low.

The June Euro was higher by 2 cents last week bouncing early in the week from oversold levels. Support comes in at 1.3125 with resistance at 1.3350 followed by 1.3475. We have advised clients to cover all shorts but to stand aside on new entries.

The Aussie was lower by 6 ticks last week getting back between Tuesday and Friday, virtually the entire 3.6% decline from Mondays trading. Support comes in between .6950 and .7000 with resistance at .7275. We are working bids for clients between $850/900 for September 75/80 call spreads.

The Swissie was higher by 203 points , on a close above .8800 you would see more upside. Support comes in at the 50 day moving average at .8675 with resistance at .8850 followed by .8925.

Last week the BOC reduced its interest rate from .50% to .25%. Furthermore, they said they would maintain their benchmark overnight-lending rate for 14 months. The Loonie picked up 43 ticks last week closing 322 ticks off the weekly lows. It was a classic case of sell the rumor and buy the fact as prices rallied just after the rate reduction. On a further advance we will be looking to roll our client’s May positions out to September and look for an exit on the June positions on a trade above 84 cents. As of Monday morning the September 85 calls were bid at $1800.

The June yen was higher by 225 ticks and since prices bottomed on 4/6, prices have traded higher 10 out of 13 days. Prices closed over the 50 day moving average for the first time since 2/12. Support is seen between 1.0050/1.01 and resistance is seen between 1.04/1.0450. On a trade above 1.04 we would advise taking partial profits on recent longs. The BOJ is expected to leave rates alone at 0.10%.

The Pound gave up 113 ticks to trade lower 2 out of the last 3 weeks. Support is seen at the 50 day moving average at 1.44 with resistance at 1.48. There seems to be indecision as prices could go either way from here. We have a slightly bullish bias but only from outside market influence as there is very little to be bullish about with the Pound alone.

The Kiwi was higher by 25 ticks after starting the week lower, prices fought back to end in positive territory closing 229 ticks off the lows. Support comes in at .5500; the 38.2% Fibonacci retracement level with resistance at .5775 followed by .5850. The RBNZ is expected to reduce rates 50 basis points from 3.0% to 2.50%.

The US dollar was lower by 144 ticks last week as things fell apart, selling intensified with more concerns of quantitative easing. Resistance comes in at the 50 day moving average at 86.80 with support just below last week’s low 84.60 followed by 84.00. On a close below 83.60 look out below. The FOMC meeting this week may have an impact but most likely the down move we saw last week was the market pricing this in. Rates remain at 0.25%.

July corn was higher by 2 ½ cents last week with the pivot point being the 50 day moving average at 3.89 ½. Support is seen at 3.77 followed by 3.70 with resistance between 3.95/4.00. Buyers have come in because weather reports are turning wet the next 7-10 days potentially slowing planting progress already behind schedule. Some forecasts see May looking as wet as March 08’ when flooding occurred. We are advising clients to be buyers near 3.65.

July soybeans were lower by 3 ¾ cents last week as prices are exhibiting signs of an interim top. The 10.50/10.60 area that served as resistance back in January looks to act as resistance once again. A 50% Fibonacci retracement would take prices back to 9.32, the 50 day moving average stands at 9.39. First support is seen between 10.07 and 10.10. We like the idea of put spreads in July, we recommended clients to sell $10 puts and buy 3 times as many $9 puts for 2-3 cents last week. On top of that for a futures play if prices do break as we anticipate play short July (old crop) against a long November (new crop). Get in the spread over -1.00 risking 15-20 cents looking for the spread to come in 25-40 cents. If soybeans don’t drop in the next 2 weeks we may opt to lighten up, not wanting to remain short into the next USDA crop report with traders looking for another drop in ending stocks.

July CBOT wheat was higher by 9 ¼ cents last week bucking the trend from corn and beans. Support is seen at 5.25 followed by 5.15 with resistance at 5.50 followed by 5.60. We are advising clients to sell July $5 puts for 20 cents O/B. July KCBOT gained 16 ¼ cents last week. We see support at the 50 day moving average at 5.82 ¾ with resistance at 6.00 followed by 6.10.

July cocoa picked up $58 last week recovering from the previous 2 week’s losses of $383. Support is seen at 2400 with resistance at 2500 followed by 2532, the 20 day moving average. On further weakness in the dollar we may see a short covering bounce being prices are oversold.

July sugar closed up 54 ticks, the highest close in 7 months, helped by higher gasoline prices and what appears to be fund buying. Support comes in between 13.70 and 13.80 with resistance at 14.25 followed by 14.60. We have advised clients to lighten up on longs or at a minimum tighten up stops. Additionally, our clients sold July calls against some of our October call positions.
The US Census Bureau said that cotton mill use increased from an annual rate of 3.09 to 3.14 million bales in March. July cotton closed up 2.10 cents at its highest level since late January. Resistance comes in between 53.50/54 with first support at 51.00 followed by 50.00. We would be a cautious buyer on breaks. We have considered selling July calls against a purchase of October calls; contact us for pricing.

July coffee prices reversed course mid-week with news that truck drivers in Colombia went on strike for lower fuel prices. July coffee ended the week higher by 5.90 cents. When prices failed to break support at 112.75 early last week we chose to cover the 140 calls for our clients by buying this leg back for a profit of $770 per position. We will now look to trade out of their 120 calls this week at 700 points O/B. Support comes in at 116.25 with resistance at 119.75 followed by 122.25. The lesson here is as the market is always evolving you sometimes need to adapt your trading strategy.

The USDA’s Florida weather crop report said that due to the dry conditions, trees ranged from poor in groves with less maintenance and little irrigation to good in well-cared for groves. The report also said that drought intensity has reached severe to extreme in some areas. July orange juice ended down 3.50 cents, moving lower as we had forecast last week. Support is seen at the 20 day moving average at 82.90 with resistance at 86.90 followed by 88.25. We expect a move down to 77/79 where we may opt to get long.

June gold was higher by $43.90 or 5% on the week, after 4 losing weeks the market reversed direction and took off. The triple bottom at $865 that we spoke about last week served as solid support and as long as prices stay above those levels we’ll remain long with clients. We were expecting an opportunity to get long from lower levels but that did not work out with a decisive move back above $900 on big volume. The market was likely influenced by comments out of China that their reserves of gold were reported to be much larger than previous estimates. Immediate support comes in at the psychological level at 900 followed by the 100 day moving average at 890.20. Resistance is seen at 919 followed by 937. Those not comfortable scaling into long futures we suggest purchasing $100 and $150 call spreads in August.

July silver was higher by $1.17 or 10% once again approaching the $13 level. Prices closed almost $2.20 off the weekly lows as a violent reversal took place. Support is seen between 12.50 and 12.60 with first resistance at 13.25 followed by 13.70. Prices managed to close back above the 200 day moving average for the first time since 3/27 which should indicate higher ground. We have been fairly consistent for the last few months and in terms of risk to reward silver remains our number 1 bullish recommendation. In the coming weeks 14.50 is achievable and on further dollar weakness and on another leg down in stocks we could see even higher pricing. We have numerous medium-term and longer-term bullish strategies, contact us for pricing.

The International Copper Study Group said they expect a world production surplus for copper of 345,000 tons in 09’ and 400,000 tons in 10’. They acknowledged that the world’s economic crisis makes it harder to predict, but they expect world refined usage to be down at least 4% in 09’ and mine production to be up 4%. July copper finished down 16.7 cents, a further 15-25 cents is necessary to the downside before we will look to go long.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions.

According to several news sources the US government will issue a report on April 24th that explains its stress test on 19 of the largest financial firms and then release the actual results of those tests on May 4th. What these tests should confirm is that we have issues in our banks and in order to get our economy back on track these banks will need to be recapitalized, start lending and some may need to fail. In order for conditions to get back to a state were we can see growth, those are the first things that need to be done. We cannot proceed forward with a broken system as the financial institutions are the lifeblood of the economy. Not only would this increase the health of the economy but it too would instill the much needed confidence and perhaps the risk appetite of the investor may well return.

To find out exactly how we are positioning our clients in commodity futures and options, Contact us today at 1-888-920-9997.

The US Department of Energy said crude oil supplies were up 5.6 million barrels last week, supplies of unleaded gasoline were down 900,000 barrels while heating oil supplies were down 700,000 barrels. June crude oil closed down $1.98 unable to stay above the 20 day moving average at $53.20. Resistance comes in between 53.30 and 54.00 with support first at 51.50 followed by 50.00. If prices are unable to take out 54 early in the week we expect a trade down to 48.50. June heating oil was lower by 6 ticks closing at the 20 day moving average. 1.47/1.48 should serve as resistance with support coming in at 1.4225 followed by 1.40. On a move lower in Crude expect the low 130’s. June RBOB was higher by 88 ticks last week. Support comes in at the 50 day moving average at 1.3870 with resistance at the high from 3/26 at 1.5626. On a trade above those levels look for buy stops to be triggered. We advised clients to buy July 1.54/1.74 calls spreads last week; paying just over 650 points with a target of 950/1000 points.

The US Department of Energy said underground supplies of natural gas were up 21 billion cubic feet last week to 1.695 trillion cubic feet. Supplies are now up 35% from a year ago and up 22.5% from the five-year average. June natural gas closed up 15 cents as the lows have held for the last 2 weeks. Since the first of the year prices have fallen by 37% so we feel a bounce is overdue. The stochastic on the daily chart has started to trend higher on an increase in volume which should lead a trade over $4.50 in coming sessions. We maintain positions for clients in June futures and options. 3.65/3.70 on June is our buy zone as we expect the low from 4/13 at 3.64 to hold. Resistance is seen at 4.20; the 50 day moving average which prices have not been above since mid-July. Look at the weekly charts before ruling out a buy at these levels.

After the close Friday, the USDA said that there were 11.152 million head of cattle on feed as of April 1st, down 4.6% from a year ago. March placements were up 3.8% and marketings were down .8%. The USDA estimated the week’s beef production at 476.6 million pounds, down 7.5% from a year ago. The USDA’s Livestock Outlook said that beef exports are expected to be down 4% in 09’. After everything was said and done live cattle in June were higher by 10 ticks on the week. Last week’s high at 85.675 should serve as resistance, support comes in between 83.75 and 84.00 followed by the 50% Fibonacci retracement level at 82.75. August feeder cattle have been positive 5 of the last 6 weeks, gaining 1.10 last week. Coincidence or not this is the same level that prices fell from in late October early November. Within a month prices had lost 10%, will we get the same results again? Resistance comes in between 102.50/102.75 with support at 100.25.

Pork production was estimated at 433.3 million pounds, down 7.6% from a year ago. The USDA expects pork exports to be down 13% in 09’ which they say is still “strong relative to export history.” June lean hogs ended the week .675 lower. Support comes in at the 9 day moving average at 73.15 with resistance between 74.15 and 74.25. We expect prices to break out of the ascending triangle this week, but we are not sure in what direction. On a breakout to the upside look for 75 shortly thereafter, on a breakout to the downside look for 71.50 shortly thereafter. We advised clients to lighten up on longs in the futures market and continue to hold bullish option strategies.

Stocks: The S&P 500 was higher by 18 points last week trading at a 9 week high gaining now for 6 weeks in a row. Resistance comes in between 875 and 885, support is seen between 845 and 850. On a close above 875 we would most likely see an attempt at 900. The S&P has not traded above 900 since 1/8 and this would be a major psychological hurdle. The Dow was higher by 92 points, much like the S&P making it 6 positive weeks in a row. The last time we witnessed this type of advance was in April/May of 07’. Resistance comes in between 8225 and 8275 while support is first seen at 8000 followed by 7800. The NASDAQ advanced 20 points last week trading to its highest level since 11/5. From 11/5 to 11/20 prices lost 24% to trade down to the same levels that the most recent rally started from just 6 weeks ago. Resistance comes in between 1380 and 1390 with support between 1315 and 1325. We would continue to play the momentum on the rally but would caution investors, as we feel earnings can continue to trickle in another leg down, maybe in the immediate future.

Bonds: June 30-yr bonds were lower by 1’15.5 points last week. Resistance comes in at the 40 day moving average at 127’00. Support is seen between 123’16 and 124’00. On a trade below those levels look for an attempt at 120’00. June 10-yr notes were higher by 3 ticks. A NOB spread; short 30-yr and long 10-yr may be an appropriate strategy as it has been working since January. On a break of the 40 day moving average of 121’23, look for a trade down to between 120’16/120’24. Resistance comes in at 122’20 followed by 123’00. March 10’ Euro-dollars were lower by 7.5 ticks last week, much of that coming Thursday and Friday after a mid-week reversal. Between 98.60 and 98.70 we would be comfortable selling more positions. For now 98.45 is support but a trade below look for the next stop to be 98.35. We would continue to accumulate shorts and sit on your hands as we expect this trade to develop over the coming months.

The Euro started last week strong, but on light volume as Europe was closed only to give back those gains ending the week 163 ticks lower. Our target at the 50 day moving average was reached and as we suggested last week, look to book profits from recent short positions. The trend will remain down but the easy money on shorts has been made. Support is seen at 1.2975 followed by 1.2840 with resistance at 1.3125 followed by 1.3260.

The Aussie was lower by 19 ticks last week and although longer term we are extremely friendly to this currency, in the immediate future we expect a retracement. This should set up an excellent long entry for a position trade. Our buy zone is .6650/.6750 for our clients. The 50 day moving average comes in at .6700. First support comes in between .7050 and .7100 with resistance at .7275. One of clients has suggested 5 cent call spreads in September which is our on our radar.

As predicted the Swissie came under pressure last week giving up 79 ticks. Much like the Euro, the Swissie started the week strong only to fall back the next four sessions down 2 ½ cents in that time frame. Now that the .8600 level has been penetrated we should see .8525. On a trade back over .8600 look for resistance at .8675 followed by .8750.

The Loonie was higher by 71 ticks but is starting to exhibit signs of an interim top closing over 1 cent off its weekly high. Our target has and remains 84 cents, but was the trade up to .8368 close enough to reach our objective? Support comes in at .8100 followed by .8025 with resistance at .8370 followed by .8450. For futures traders you should be trailing stops on longs as to not give back too much. For our clients still holding May and June call options we are still looking for a challenge of 84 cents. The BOC will meet this week and is expected to keep rates at 0.50%.

The yen did as we anticipated, traded back over par last week gaining 122 ticks on the week. .9850/.9950 remains our buy zone but as we alluded to last week we prefer options to futures at this juncture. Resistance comes in between 1.0150 and 1.0250.

The Pound was higher by 154 ticks last week, which in our opinion set up a good short entry. It appears at this point prices have started to roll over and as long as resistance contains prices, we would continue to sell rallies. Resistance is seen between 1.4950 and 1.50 with support at 1.4550. If we do see increased selling, the 50 day moving average at 1.444 would be where we would look to book partial profits.

The Kiwi lost 198 ticks or 3.4% last week closing lower 4 out of 5 sessions. Resistance is seen at .5750 with support at .5525. The trend is certainly down as our target is .5400.

The US dollar was higher by 56 ticks last week and has now gained for 2 consecutive weeks. A move above the 86.00 resistance level should mean a trade to 86.65 the 50 day moving average or perhaps 87.50 the 61.8% Fibonacci level is in our future. On a reversal lower a close below 84.90 should mean 84.00. To take a stance we expect a trade up to 87.00 this week.

July corn fell 14 ¼ cents to the lowest close in four weeks with the planting weather in the Midwest looking good for at least the next few weeks. We expect a trade down to 3.70/3.75 this week. On a breach of that level 3.55/3.60 is obtainable where we may look to get clients long. Much of this will depend on outside markets and what type of progress farmers make in the field. Resistance comes in between 3.95 and 4.00.

July soybeans closed up 41 ¼ cents helped by weather problems in Argentina and strong recent demand from China. We started getting clients short Thursday and Friday expecting a $1 break over the next 1-3 weeks. We sold the $10 put against a purchase of 3 $9 puts in July. For a futures play we advised clients to get short July (old crop) and buy November (new crop). The trade is against us approximately 5 cents at -$1.05, we are looking for the spread to narrow and come in 25-35 cents. Resistance is seen at Thursday’s high of 10.50 ½ with support at 10.15 followed by 9.62; the 31.8% Fibonacci retracement level. The 50 day moving average comes in at 9.36 and on a total meltdown this level may come into play.

July CBOT wheat was lower by 2 cents as prices have been back and forth in recent weeks. We would buy a break of 5.46 and sell a break of 5.24. Much of the movement will be contingent on weather and crop ratings. Wheat continues to be a follower of corn and beans. July KCBOT was lower by 1 ¼ cents last week. Resistance comes in at the 50 day moving average at 5.85 ½ with support at 5.70 followed by 5.60.

July cocoa finished down $155 losing $336 or 13% in the last 2 weeks. Resistance is seen at 2450 with support at 2350 followed by 2280. We would be a buyer between 2225 and 2250.

July coffee closed down 6.90 cents, the lowest close in four weeks, with ongoing concerns about world demand and a stronger US dollar. We traded within ticks of taking a profit on our July 120/140 call spreads before we saw prices move 9 cents lower to take our positions back to cost. The 20 day moving average at 1.18 should serve as resistance with support at 1.1275 followed by 1.1100.
India ended its 60% import duty on sugar in an effort to relieve their shortage.

July sugar closed up 26 ticks as support at 13.24; the 61.8% Fibonacci level held. We would advise being a buyer between 13.25 and 13.40 on futures in July but as far as options we like the 15 and 17 cent October calls. 14/14.10 should serve as resistance on the upside.

Last week the USDA’s Florida weather crop report said that “the drought intensity was between moderate to severe everywhere.” July fcoj was higher by 2.70 cents closing higher 6 out of the last 8 weeks. Resistance comes in at 90 cents with support at 85.00 followed by 82.50. With prices overbought we would look for a setback to between 77/79 cents to be a buyer again.

July cotton was higher virtually 2 cents last week quietly moving 9 cents or 21% in the last month. We have seen prices move higher 5 out of the last 6 weeks. At this point we would be a buyer on setbacks to 46/47 cents. The demand for cotton is still weak and although supplies are tight we still would need a catalyst to see much higher pricing. However with prices now above 50 cents we may see an attempt at 52 cents.

May silver lost 58 cents last week and is lower by $1 over the last 2 weeks. The 200 day moving average has served as tough resistance as prices failed to get over that level after 4 attempts. Prices ended the week below the 100 day moving average with a close below that level for the first time since 1/15. The 11.25/11.50 level needs to hold, if not we will see a trade below $11. We are currently on the defensive and lightening up on longs and advising clients to sell call options against their long futures. Resistance comes in at $12 followed by 12.50. We maintain our long-term bullishness on silver but for the short-term prices could go either way.

June gold was lower by $15 as prices failed to get above $900, closing the week above the support level of $863 but just below the 100 day moving average. We are advising clients to treat the area between 825 and 850 as the buy zone. Being the trend is down, more conservative traders can wait for a more definitive bottom. Resistance comes in at the 200 day moving average at 886 followed by 900. Generally speaking, April is a weak month for gold and this year has been no different. April is a weak month from a demand perspective and it seems investors sell gold in order to raise money for taxes as well. Throw into the mix this year the unpredictability in the equity market and it is a recipe for volatility.

Disclosure: The risk of loss in trading commodity futures and options can be substantial. Before trading MB Wealth recommends that you should carefully consider your financial position to determine if commodity trading is appropriate for you. All funds committed should be purely risk capital. Past performance is no guarantee of future trading results. There are no guarantees of market outcome stated, everything stated above are our opinions. Calculations of profit and loss have not factored in commissions and fees.