Crude oil was higher for the first time in 4 sessions but we only gained 70 cents after the $7 rout; that is not much. It appears that buyers are emerging but we would suggest waiting for the inventory number this week before establishing fresh positions. For now, $70 should support and $73 should act as resistance in the March contract. Natural gas reversed to close down almost 2% on the day. Clients are flat; though we think lower pricing is likely, we wish to have no exposure. Clients are starting to buy June RBOB call spreads anticipating prices to get back above $2.20 in the coming months; we like this trade and clients currently own $2.16/2.28 spreads.

We will be looking to sell rallies in the ES and SP for clients; we see resistance at 1069, 1084, 1100. Continue to scale into short exposure in the Euro-dollar! Clients were advised to go long the Aussie today via June 90 cent calls; today at just under $1400/per. Additionally currency traders are still long the Euro and short the Yen. This trade got a little better today but clients are still under water.

A nervous market nevertheless finished nearly flat with the S&P 500 (SPY) lower for a fourth consecutive week by just -0.7% and the NASDAQ 100 (QQQQ) higher by +0.4%. However, at one point before Friday's last hour rebound, the VIX had run up +30% from earlier in the week and the S&P 500 had tagged its 200-day exponential moving average for a near "official" correction of -9.2% off its January highs. This action had the Market Rewind ETF rotation models seeking safety for the first time since the 2009 March lows.

(Click Image to Enlarge/ ETF Rewind Glossary)

Crude will close down about $1.50 on the day and about $6 off its highs intra week highs. The fact that prices did not break down and heavy buying came in below $70/barrel this correction may be close to over. Clients are still holding their May call spreads and are under water but we expect this trade to be profitable. We have NO opinion here until the dust settles. We have no long or short exposure in natural gas with clients. We started to buy June RBOB call spreads this week and will most likely be adding to this position in the coming weeks.

We expect to see a rally in Indices to start next week. That being said, we’re not saying to get long, but rather to use this rally to exit positions or to sell; ideally we get a window of 1105/1115 in the ES and SP to sell.