MBWealth's Commodity Blog » USDA

Building on Strength 2/7/11

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

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

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

Protected: The Line in the Sand February 06, 2012

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

Protected: The Line in the Sand January 30, 2012

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

Protected: The Line in the Sand January 23, 2012

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

Protected: The Line in the Sand January 16, 2012

Matthew Bradbard — Sun, 15 Jan 2012 22:13:55 +0000

Commodity Grind 1/12/11

Matthew Bradbard — Thu, 12 Jan 2012 21:05:58 +0000

There were little to no big movers just the status qou. Crude turned down today trading down over 2% as of this post. If we see a settlement below $100 I will turn bearish. Next support is seen at $98 followed by $93 on the February contract. Natural gas gave up another 2% today taking prices below $2.70. I never thought we would see this much downside but most of my clients are ready to leave the trade so my gut tells me we’re close to a turning point. The lows from 2 1/1 years ago are still 30 cents lower and at this juncture I cannot rule out a test. After testing the 9 day MA equities crept higher. Look for the grind higher to continue…1300 in the S&P and 12700 in the Dow look like likely targets. Gold hit the 40 day MA but backed off by the close. I am targeting the 50 day MA which in the February contract is $1684. Silver also hit the 40 day MA closing higher by 0.90%. On this leg I anticipate another 3-4% appreciation. The US dollar is manic erasing previous day’s gains closing back in on the 20 day MA. Use that level as your pivot point, in March at 80.80. On continued green back weakness expect the Swissie and Euro to outperform. Aggressive traders can sell cotton with stops above the 100 day AM. A level that has rejected further upside several times in recent months. In fact March has not settled above that level since mid-June of 2011. Day two of the OJ correction with prices down limit today . The bubble has burst and more downside is expected…trade accordingly. Treasuries could go either way..walk away for now. Let the Euro-dollar work higher and then establish bearish trades from higher levels in 2013 contracts. A bearish USDA report and markets reacted with the front month of corn down 6%, soybeans lose near 2% and wheat 6%. Further downside is expected in this complex and if prices approach the November/December lows and hold I will be looking for a buying opportunity…stay tuned. Lean hogs tested and held support so on further base building I may re-explore longs for clients.

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

Sleeping Giants 1/10/12

Matthew Bradbard — Tue, 10 Jan 2012 21:52:44 +0000

It will not likely make headlines because it is not energy or metal but look at the last few days in some of the soft commodities. OJ and cocoa higher by 17%. This is what commodities is all about…timing. by The 9 day MA has supported Crude the last three days but unless we make a new high this week I would expect that level to give way. I have advised the sidelines and have told clients to buy the breakout or sell a a settlement below $100 in February…trade accordingly. New contract low in natural gas…where is the bottom? I do not see much more downside but I may be talking my clients position as they are long from 25 cents above current levels. With prices nearing 27 month lows how low do we go to entice buying is the question? Five month highs in securities as we approach the Summer 2011 highs the grind higher should continue. As long as the 9 day MA acts as support expect higher ground. Gold picked up $25/ounce today making the appreciation in the last two week s over $100 with the highest closing price since mid-December. Another $35-45 I feel is in the cards. Silver gained nearly 4% today on the verge of a breakout advancing $3/ounce in the last two weeks. Further upside should be around the bend as I expect $2-3 additional upside…trade accordingly. Day two of a dollar decline but it will take a settlement back under the 20 day MA for a true correction to be underway. It could go either way but to play a correction my best idea is buying the Euro with stops below the recent lows. The best performers today were the commodity currencies so follow the action in commodities and then play the Aussie, Kiwi and Loonie accordingly. I have no currency exposure with clients that I direct. Cocoa jumped 7.5% today to trade up to the 50 day MA for the first time in two months. See previous posts for buy recommendation and target at the 50 day MA. From here we could see more in my opinion, use today’s low as stop on new entries. Back to back limit moves in OJ with prices higher by 17% in two days. This could get ugly with prices above $2 for the first time since 2007. Thank goodness for stops as I advised shorts to take losses on yesterday’s breakout…further evidence that the market is always right. Grains should meander sideways until Thursday’s USDA. I expect fireworks but will likely be on the sidelines and react as opposed to outguess the USDA. The livestock sector found support today with feeder cattle, live cattle and lean hogs all higher on today’s session. Take remaining shorts off in live cattle on a trade above 122.00 in February.

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

Trading Your Plan 1/9/12

Matthew Bradbard — Mon, 09 Jan 2012 21:57:22 +0000

Over the years I’ve learned that when markets are quiet it is easy to fall asleep at the wheel and not abide to your plan but avoid those pitfalls to increase the likelihood for success. Crude bounced off support and closed back above the 9 day MA above $101/barrel. As long as $100 holds prices should work higher. I have advised the sidelines to clients until we get a clearer picture. Natural gas remained in its 15 cent trading range as prices tread water today finishing slightly lower. A settlement above the 9 day MA is needed for any hope of a recovery. Equities finished flat as the 9 day MA continues to act as the pivot point. Being prices are oversold do not rule out a correction back to the 20 day MA…which would be roughly 30 points lower in the S&P and 240 in the Dow. February gold is having trouble getting above $1635, the same level that acted as resistance in recent weeks. I expect this to be temporary and have a target of $1660 plus in the coming weeks. Silver is likely taking a breath before its next leg higher as well failing to breach $30/ounce in recent sessions. My target in March remains $32. The dollar failed to hold onto early gains closing lower with all other crosses higher on the day. If this serves as an interim top, which is too early to say buying the Euro may be the best play…stay tuned. Commodity currencies still appear to be at lofty levels so on a commodity correction play the Loonie, Kiwi and Aussie from the short side. Cocoa picked up 7% today as a new leg higher may be under way. We like the risk to reward dynamic buying at these deflated levels especially if the greenback turns south…trade accordingly. Potential crop damage from last week’s cold temp in Florida lifts OJ limit higher today carrying prices near two month highs. Shorts should have been stopped out on the new high at a loss. Wait for a clearer sign in the Treasury market as we could go either way. New entries in bearish Euro-dollar plays can wait for a higher entry as if looks like there is a touch more upside. Continued adverse weather in South America and buyers stepping in ahead of Thursday’s USDA report contributed to the jump in grains today. Corn gained 1.3%, wheat 2.7% and soybeans just over 3%. Clients have no exposure. Live cattle have lost ground eight of the last nine sessions and still appear to have more downside…trade accordingly. My target in February is 119.00. Remain on the sidelines in lean hogs as prices may test the mid-December lows.

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

The Line in the Sand January 09, 2012

Matthew Bradbard — Sun, 08 Jan 2012 16:04:41 +0000

Please click on the spreadsheet to view, zoom to 100% if needed. The Line in the Sand format has changed, you will be receiving the chart on technical analysis Monday mornings. Please visit Matthew’s Daily Thought for your market wrap ups and predictions. In addition he will be posting a new article per week, you can find those in Published Articles. If you subscribe to our Feed, you will be notified when new posts are available. If you ever have any questions about The Line in the Sand or any other post, you may contact us for any reason.

The Line in the Sand January 02, 2012

Matthew Bradbard — Tue, 03 Jan 2012 03:03:55 +0000