A Market Review and Opinion Report For April 2, 2012

Energies
Despite today’s bull move, crude oil has a decidedly bearish track and the reversal pattern that occurred on the 19th and 20th of March should hold as a top. Bearish positions in crude, rbob and heat are recommended. Natural gas poses an interesting bull play as it is reaching a capitulation point and should see marked upside once a bottom is set. A volatility play with long calls is recommended out in the December contract month.

Financials
The stock market is very resilient but is clearly setting up a volatile selloff, likely holding the 1419.75 highs set last Tuesday. Friday’s holiday time employment report could create a catastrophic failure as the market will need to account for this lagging indicator’s reversal of fortune if a negative surprise occurs. The dollar is expected to rally this week and I recommend bearish positions in the euro. The yen needs to break above the recent highs to resume its bullish turnaround efforts. I continue to stand by my forecast that:

The Japanese Yen futures will hit 140 before it hits 80 or I will quit writing the Weekend Commodities Review...forever.

Grains
Despite the largest planted acreage of corn since 1944 the reaction to Fridays mega plantings report was nothing short of a bull breakout. This is a golden opportunity for bears to play on supply-side focused traders that should see significant pressure when the next economic bear wave turns traders’ focus to the demand side once again. Folks, this is not a supply-side driven market anymore, minus the infrequent South American drought or plantings report panic rally. When world economic stability and demand is no longer volatile like it is now then sure grains will focus on supply, but until then look to fade any supply-based rally with puts.

Meats
Cattle’s market failure could be just the beginning as this market is long overdue for a collapse. Look for another 20% potential downside this year, and expect some bumps in the road at this point to offer entries on bounces. Hogs are joining the freefall and remain avoidable.

Metals
Metals remain choppy as euro zone concerns wane, however a big selloff remains likely and puts are recommended in silver and gold, which short copper futures recommended only for those with a significant intestinal fortitude for risk.

Softs
Coffee is developing a wide chop near the lows and volatility remains high. The market is a short term coin flip with a long term bearish outlook. Cocoa is a sell here with straight puts recommended. Cotton is avoidable. Sugar and OJ are both shorts with defined risk options highly recommended over futures.


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