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.

Crude was down 5% today, which hurts, being we’ve let a winning trade become a loser for clients. They are out of all their futures with no damage done but still hold May $7 call spreads. Relatively speaking we are only back to levels from 4 days ago but the path we took here is why I’m concerned. On a $2 bounce in the futures they should be able to get back to cost. We advised clients to go flat on all their natural gas. We used the near 10 cent correction in RBOB today to buy; clients are long 12 cent call spreads in June. We used a day like today to buy because premiums were hit hard.

The rally we were looking to sell never materialized and with Indices making new lows into the close we may miss the trade on futures. We will have an option strategy in coming sessions but no doubt the trend is DOWN. We highly suggest lightening up on your equity exposure or implementing hedging strategies.

Disappointing inventory news - and oil still held up well, only down 25 cents on the day. Use $76 as support in the March contract; our objectives on the upside are $78.25 and then $79.60-$80. Depending on how tight your stops were on natural gas, you may have been stopped at a profit; prices traded 1-2 cents lower than yesterday. We suggest on a trade above $5.75 to take remaining futures off and to exit your call spreads.

We are still waiting for a trade up to 1105/1115 to be a seller in ES and SP for clients; until then no action taken. We are looking for a way to get short Treasuries pricing out a variety of time frames in both futures and options…stay tuned. Continue to scale into shorts in 2011 Euro-dollars.