Tuesday in Commodities: Turn the Heat Up

This title has two meanings; the AC is broken in my office which is brutal in Florida and the 5% swings in commodities only makes thing more interesting. Try to keep a Cool head!

Crude oil has declined $6.50 in the last four sessions as of this post cutting through the 20 day MA like a hot knife through butter. The 50 day MA in the January contract comes in at $82.40 followed by the 100 day MA at $80.65. We will be advising clients to cover all remaining shorts $1.50-$3 lower and looking to reverse getting clients long...stay tuned. Natural gas held its own today but will need to close above the down sloping trend line and 20 day MA for clients to remain friendly. The 20 day MA gave way in the indices as well but it may be too little to late for our clients ES options trades which we’ve been working out of the last few sessions. The 50 day MA in the S&P comes in at 1160 which should act as stiff support. At most we see a move to 1125 which would represent a 50% Fibonacci retracement but clients will be absent as we see better opportunities elsewhere.

We advised clients to exit their bullish plays in live cattle at a slight loss and when the 20 day MA gave way in lean hogs today it likely signals lower ground. Clients have no exposure but those that do expect further selling; dragging prices in February likely 2.5-3.5% lower. (more)