Today in Commodities: Rolling With the Punches

Matthew Bradbard submits: As long as indices tread water or move higher money should flow back into commodities and out of Treasuries and the US dollar. Crude followed thru today and now has the 20 day MA in its sights. As we said yesterday as long as equities move higher we think we could see Crude appreciate $3-5 relatively quickly. As of this post August is higher by $1.70.

Matthew Bradbard submits: Crude looks to close almost $4 off its intra-day high dragging prices back near $80/barrel on the December contract. Today’s low and mild support is seen at the 38.2% Fibonacci retracement level at $79.85. Next support is seen at $78.50 followed by $77.25. We’re expecting prices to trade down and have advised light short futures exposure in December and January $5 bear put spreads.

Matthew Bradbard submits: We wanted confirmation before taking a stance in crude, and with prices convincingly higher today we are thinking the recent shakeout may be all the bears get. Today’s move carried prices back above the 200-day moving average, and at the highs we traded to the 40-day moving average. As long as April can hold above $76 on a closing basis, we suggest light long exposure via futures in April or call spreads in June.

Matthew Bradbard submits: We could see investors taking some risk off in the coming sessions so don’t be afraid to move to the sidelines or have a short bias on some of your positioning. Crude will close slightly lower today but $90 remains support as August has not settled below that level the last three sessions. If RBOB and heating oil are able to trade higher the products may lift Crude off the mat. Today RBOB gained 1% and heating oil was higher by approximately 0.40%.

Matthew Bradbard submits: In case you were not aware the FOMC is meeting today and tomorrow so stay alert as even inaction can be a market mover. We’ve advised aggressive clients to scale into longs in Crude futures and to gain bullish options exposure; today some clients bought May $95/100 bull call spreads. The 100 day MA held today just above $86 and the trend line comes in just below that level.

Matthew Bradbard submits: After making a new high Crude failed and closed almost $2 off its’ intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We’re not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we’d been calling for today; at $5.865 on the August contract.

Matthew Bradbard submits: For the time being indices are in the driver’s seat and as long as stocks are moving higher RISK is on. A falling dollar should also lend support. Oil made a higher high and higher low today but as we posted in our weekly commentary we need to see a settlement above $76 in July to think higher trade is ahead. Longs already in the market should remain long as long as the 9 day MA holds; current level $73.50 in July.

Matthew Bradbard submits: Whether it is natural gas, corn or the S&P is the last few days’ activity a head fake or reversal? Crude recovered after losses early in the day to end virtually unchanged. We still would suggest a buy dips mentality though you can be patient being a penetration of $84 should lead to a trade closer to $82 in the May contract.