Bulls Stampede
Cattle futures posted their biggest rally of the current contract month as short
players got squeezed amid concern that cold and wet weather could drive cash
prices of animals higher. The
February live cattle (LCG1) contract exploded to make good on its Turtle Soup Plus One Buy
signal to close two gaps left during the past four days of descent. Cattle
also rallied out of an imperfect pullback pattern for a gain of 1.100 to 77.275.
March feeder cattle (FCH1) followed suit to log a gain of .750 to 90.325.
Stock indexes followed through on yesterday’s last-hour surge but
failed to extend early-morning gains. The indices drifted lower to end narrowly mixed. Nasdaq 100 futures
(NDH1) added just
1.00 to 2326.0 S&P futures (SPH1) closed unchanged, and
Dow futures (DJH1) fell 70.00 to 10,645.0.
There is a growing impression that the economy may not be as bad as
thought–that it will not slip into recession–and that took some of the buyers
out of the treasury interest rate futures market. Carolyn
Boroden’s Fibonacci analysis nailed within one tick the top of the bond
rally.
T-bonds (USH1) closed 10/32 lower at 105 9/32.
The less skeptical outlook on the US economy also bolstered
March dollar index futures (DXH1), which rose .66 to 109.50.
Energy futures closed
mixed as traders weighed the impact of potentially lower output from OPEC amid
growing world stockpiles of crude oil. OPEC meets on Jan. 17 to determine output
quotas. Forecasts of the amount of a possible cut has increased from 1.7 million barrels a day to
2.2 million barrels. February crude (CLG1) closed .32 higher at 27.64.
A
warmer-than-normal winter in Europe helped bring down heating oil
(HOG1) prices. Excess supply is being diverted from Europe to the major
consuming regions in the
American Northeast and that helped the Implosion-5
List contract to a new five-month low, down .0196 to .8062.
Natural gas (NGG1)
continues to lift offers due to the “electricity crisis” in California
and closed at a new contract record, up .130 at 9.819. Any new
power plants in California, the nation’s most populous state, are required by
law to use natural gas.
Soymeal (SMH1),
which traced a Turtle Soup-like pattern, exploded off the support of the
early-December lows. The contract also gave a strong sign that it could reverse
the 20-day low laid yesterday by rallying back from the low to close on the high
of the session and hinted it could make a larger-than-expected move by tallying
a
6/100 Low Volatility
reading.
Coffee (KCH1)
collapsed to a new contract and seven-year low at its holding-pattern-on-lows
formation after Colombia–one of the world’s major producers–said it would
remove price supports for its domestic coffee because lower prices have made it
too expensive to maintain the subsidy. But several fundamental factors may be
brewing to finally grind out a bottom in the commodity that is trading at one of
its lowest levels of the decade. One, an upcoming meeting (Jan. 24) of the
Association of Coffee Producing Countries could result in a retention plan that
would keep coffee off the market and dry up supply. Two, speculation is swirling
that despite favorable rains in the world’s largest producing regions in Brazil,
crop forecasts could come in below par. Third, Vietnam, a minor but not
insignificant player, is reported to have a problem of rotting berries on coffee
bushes.
