What's Up, What's Down: Lower Closes for Crude and Heating Oil, RBOB and Natural Gas

Comments for Monday, July 28
Looking Ahead to Today By Reflecting back at Friday’s price action

ENERGIES

Lower closes for crude and heating oil along with the rbob and natural gas. New recent lows and closes for all of the energies again which look like they've topped out. From market experience coming from over 35 years in futures but not written in stone, I expect the energies to have at least one sharp rally knocking out a high percentage of shorts(top pickers) before resuming lower in what looks like the end of the energies meteoric rise for a while.

If this market doesn't have a decent rebound, then only do options if you must take a position. Natural gas is just plain bearish with little support down to the 8500 area basis the September contract.

CURRENCIES

Higher for the Swiss Franc and British Pound while lower for the Japanese Yen, Canadian Dollar, Aussie Dollar and dollar index. The euros and francs have been basically trading sideways since the beginning of May but trying to form topping formations. The francs are still in a heavy support area and the euros just above one.

The yen continues to hold at the lower end of its sideways trading range since early June while in a bear market overall. The Canadian Dollar after another lower close(4th in a row) is now at the bottom end of a good support area. It’s in a critical area to hold at this time. The pound continues to look strong overall but is in a bear pennant, but closing lower needing to hold Thursday's low. The Aussie Dollar also settled lower again still in a support area and, while still in an uptrend overall, is forming a possible top. Lower for the dollar index forming a possible bottom, but still bearish long term.

MEATS

Lower for live cattle and feeder cattle along with lean hogs while mixed for pork bellies. Cattle still is in a downtrend but have been doing some consolidation, especially in the August contract. However, this market is still bearish overall. The December contract needs to hold the 1075 area which it's having trouble doing after today's action. Feeders just aren't as strong as they should be, making a new recent low in the October contract, while the August looks totally different holding in a trading range since the middle of June.

Hogs closed lower, making a double top in the August contract, while the October contract is in a strong resistance area and the December contract has been consolidating telling me not to take a position in either direction at this time. Bellies closed up the 300 point daily limit for the third trading session in a row in the August contract, while the February contract closed lower, still close to a buy signal but in a completely different market with its own chart pattern. Think of old crop versus new crop.

Don't forget because of volume around 100-200 contracts a day bellies are really not a viable market to trade at this time or maybe ever as the hedgers have basically left.

GRAINS

Higher settlements for Kansas City, Chicago and Minneapolis wheat along with corn, soybeans, and bean oil, while lower for the lonely oats. All of wheat continues to look lower still, holding their respective support areas although at the lower end of the range in critical areas. Minneapolis wheat continues to have narrow trading ranges in light volume. Although working lower, it’s been so gradual that it has been able to hold its support area.

Corn closed higher again, but has good resistance right overhead and may be in a bear pennant. It looks like corn had topped out overall but overdue for a retracement rally. Still my next objective is the 550 area basis the December contract. Oats, on the other hand, is the only grain to settle lower today, needing to hold the 400 area basis the December contract. Rough rice settled slightly higher looking very weak overall. Beans, meal and oil closed but continue to look lower overall.

METALS

Higher for copper, gold, silver and platinum. Copper has given me a sell signal after today's poor close which was the lowest since the middle of June. Gold is in the mist of forming a possible top while silver is in a strong support area making it difficult to take a position that you can feel comfortable with. Platinum continues its sharp slide with no discernible support below.

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 (zaner.com) a Chicago-based futures brokerage firm. Email Rick at ralexander@zaner.com or call toll-free (888) 281-4158.