COMMENTS FOR MONDAY, APRIL 21, LOOKING BACK AT FRIDAY’S (4/18) PRICE ACTION
On Friday we saw new contract highs and closes for crude oil, the RBOB and natural gas; while a new contract high close was made for the heating oil contracts. All of the energies continue to look ‘dangerously’ higher!
Friday’s price action was higher for the British Pound, Canadian dollar and dollar index while lower for the Aussie Dollar, Euro Fx, Swiss Franc and Japanese Yen. The euros continue to look higher but the Swiss franc broke out of its bull triangle to the downside and now is in a potential topping mode while still bullish overall. A key price to watch is 98.00.
The pound had its highest close in 16 trading sessions finally starting to turn around but still bearish overall while the Aussie Dollar still looks strong, though closing lower. The Canadian Dollar settled higher and should continue up but there is strong resistance over 100. The dollar index closed higher but still appears to be in a down mode.
Friday’s Cold Storage Report bodes higher for lean hogs and pork bellies while lower for live and feeder cattle. June cattle gapped to its high since March 3rd. The next stop should be the 94.00 area. Also a new recent high (19 trading sessions) before settling lower for the feeder cattle for the May feeders; also has 2 gaps below.
Hogs settled higher but could retrace as low as 70.00 (basis the June contract) with support starting under 72.50. The chart on Hogs still has an island reversal in place looking to move higher overall but with 3 gaps below. Bellies also still have an island reversal, forming a possible larger bottom but continue to look higher with 2 gaps underneath.
Friday saw a higher close for platinum again while closing lower for copper and sharply lower for silver and gold. Copper is still bullish overall while in a consolidating mode over the last couple of weeks. The key reversal for silver is still in place, continuing to look lower overall while retracing since the beginning of April. Gold still looks like its topping overall, hurt by Friday’s action. This is a critical area to hold if its going to turn back up. New recent high and close for platinum which should resume its move higher.
LUMBER: Lumber closed higher but is in a bear flag formation in a bear market.
ORANGE JUICE: OJ closed higher again, forming a potential bottom and close to a buy signal. The charts still strike me as bearish, long term.
COCOA: Friday we saw a new recent high before breaking sharply, rallying back but wound up closing sharply lower. Chart action shows support around the 2400 area (basis the July contract) and our next objective is around 2800.
COFFEE: Closed lower, failing to generate any follow-through from Thursday’s action. The July contract needs to close over 14000 again to reverse the bear trend.
A lower closes across the board again for eurodollars, bonds and notes. The eurodollars made a new recent low once again and, along with the bonds and notes continue to look lower overall.
Sharply higher closes across the board for the major stock index futures contracts is giving hope to the stock market bulls. The ISLAND REVERSAL for the Nikkei 225 is still in place.
Long over-looked by many traders, the Rough Rice contract turned in a sharply higher close on Friday. All three wheat contracts continue to look lower overall, although Kansas City wheat has held its support so. Note that the Chicago wheat closed below its support and so is looking very weak at this time. Minneapolis wheat (basis the May contract) still has a double bottom at 11.50 and is acting like it will be tested (while making lower lows and lower highs overall).
Corn has been consolidating and should continue to work higher, testing its highs. I see support under 5.75 basis the May contract. Oats look to continue higher while in a bull triangle; but needs to close over 4.00 basis the May contract. The bean complex continues to look higher at this time with meal and oil still close to buy signals.
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. For a free booklet on Rick’s favorite chart formations, email