What's Up, What's Down: Higher Oil, Dollar Index, S&P 500 and Dow

Comments for Thursday, August 28
Looking Ahead to Today By Reflecting back at Wednesday's price action

CURRENCIES:

Higher for the dollar index and Canadian Dollar while lower for the Aussie Dollar, Euro Fx, Japanese Yen, British Pound and Swiss Franc. All of the currencies continue to look lower with the possible exception of the Canadian Dollar which is in a consolidation mode looking higher. The euros and francs look lower overall but are forming potential bottoms while the Aussie Dollar is in a bear pennant trending lower also. A new contract low and close for the pound for the second trading session in row. The dollar is in a bull flag and should continue higher overall.

FINANCIALS:

Higher for the eurodollars, bonds and notes but no changes technically. The eurodollars are still in a resistance area trading sideways with small daily ranges for quite a while the bonds and notes continue to look higher.

ENERGIES:

Higher closes for crude and heating oil along with the rbob and natural gas again with little changes technically. The crude, heat and rbob are still forming potential bottoms but I still feel all of their long term tops are in place. The natural gas continues to look lower overall but is now also forming a potential bottom.

GRAINS:

Higher for corn, soybeans and bean oil while lower for soymeal, rough rice, Minneapolis, Kansas City and Chicago wheat along with and oats. Minneapolis wheat along with KC and Chicago wheat are now in support areas with overall sideways action looking neutral in my opinion. I would not take any positions at this time. Corn closed higher but could retrace to the 550 area or rally up to the 650, if its potential buy signal off a possible bottoming formation happens. Like wheat no position should be taken now.

Oats made a double bottom closing lower still below a critical support area. Rough rice made a new recent high (since July 1st) before settling lower in reversal type action. Rice did however reach our 1900 objective basis the November contract and now needs to close above it to continue its upward momentum. Soybeans settled slightly higher still acting like they're heading towards a resistance area around 1400 basis the November contract. Meal is still in a resistance area at this time, closing lower off the meal/oil spreads and could be forming a bottom along with beans. Bean oil closed lower off the meal/oil spreads.

INDICIES:

Higher closes for the cash and Dow futures along with the S&P's and Nasdaq again. The overall trend for the indices is still higher but all of the indices have been losing some momentum trading in sideways patterns.

MEATS:

Lower for live and feeder cattle, lean hogs and pork bellies again. Cattle closed sharply lower making a recent low and close also giving me a sell signal, while unable to hold the 1050 area basis the October contract. Feeders also gapped and made recent lows and closes giving me a sell signal. Lean hogs joined the parade gapping sharply lower ending up down the 300 point daily limit looking very weak. Bellies closed down the 300 point daily limit again now back in the 9000-92000 support area basis the February contract.

METALS:

Lower for platinum, copper, gold and silver again with little change technically. Copper is still forming a potential bottom with resistance around the 36000 area on up to 37000 basis the December contract. Gold and silver continue to look lower but are still attempting to form bottoms. A close above 1400 or under 1300 would be significant for the December silver contract while the December gold contract is close to a buy signal. Platinum also continues to be in a downtrend overall.

SOFTS:

LUMBER: Lumber closed mixed but higher in the November contract. This, so far, is a retracement rally in a down trending market.

COCOA: Cocoa closed higher once again still forming a potential bottom but acting like it will test its highs. Also a close over 3000 basis the December contract would be good.

SUGAR: Sugar had a huge range selling off sharply from its highs to close lower still trying to break out to the upside from its present consolidation pattern.

COTTON: Cotton closed higher again, still in a resistance area looking very bearish overall but gradually turning around at this time.

COFFEE: Coffee settled slightly higher with its highest close since the end of June in the December contract again but this time well off its session's high. Now coffee could retrace back under 14500 off of today's action. Still coffee looks higher overall.

ORANGE JUICE: OJ settled lower with a very narrow trading range after a huge one on Tuesday. I'm still looking for the rally to continue up to the 12500 area basis the January contract.

Rick Alexander has been a broker and analyst in the futures business for over thirty years. He is a Vice-President for Sales and Trading at the Zaner Group (www.zaner.com) a Chicago-based futures brokerage firm. If you would like a free booklet explaining the charts mentioned above, email Rick at ralexander@zaner.com.