Futures Market Recap: Gold Prices Stop Falling, While Gas Prices Start Falling (A Little)
Interest Rates
The Bond markets traded slightly higher today, as traders are now giving a closer thought to Wednesday’s FOMC meeting. After trading lower nearly every day for the past two weeks, the markets seemed to have paused a bit.
Traders who have been short are warily exiting positions before the Fed announcement and cautious bulls are lightly establishing new long positions. Barring any fundamental surprise over the next day and a half, the markets will likely continue to be flat to mildly higher until Wednesday afternoon.
Currencies
The Currency futures were relatively quiet today. The exceptions appear to be the BP and AD, which have both gained on the day. These markets also have the FOMC on their minds, which should keep things relatively quiet for the next day or so. I have a feeling that the Fed’s actions will have a visible impact on the charts.
The indicators that I watch indicate that further strength in DX and more weakness in the EC, JY and SF is on the horizon if some longer term support and resistance levels can be breached.
The DX is hovering right below it’s 50 day moving average, which could be a pivotal mark. If the DX can rally and close above that level for a day or two, that could be a strong signal that a bullish recovery is in place. However, if it fails, I think it will fail dramatically. Both the SF and JY have closed below their respective 50 days averages, indicating a potential bearish shift in trend momentum. The AD and EC still have a bit lower to go before those key support levels are tested. Trade activity in the DX will also have far reaching implications in many commodity markets, as the recent downtrend contributed to the price increases in nearly all markets.
Softs
Sugar led the momentum on the bearish side today, dropping to test the 12.00 level, while Coffee was the leader on the bullish side by gaining slightly over 2% o the day. Cotton was slightly higher traders look forward to Monday afternoon’s Crop Progress report. Cocoa continued it’s slow march and OJ was down slightly after testing resistance at the 50 day moving average of closes today. While it can be, and usually is, the most volatile of the group, Coffee also looks the most interesting right now.
If that market can close above 136.65 in the next day or two, that should signal a bullish reversal and could lead to a 10.00 jump in prices. This market has been very choppy for the past month, so caution is advised should you choose to trade a directional position in the futures.
Metals
I think that Friday’s activity seemed to find a short term point of price equilibrium in the Metal markets. Both the Gold and Silver markets have halted their weeklong decline, as traders in those markets are also looking to the Fed meeting for a new impetus. While they both traded higher on Monday, neither one showed any real conviction on the part of the bulls out there. If the July Silver closes above 17.35 and June Gold closes above 910.00 I would expect a very rapid rally back to the market highs for the month of April. However, if Friday’s lows are taken out in either market, this writer would expect a much deeper selloff. Copper has been stuck in a violent and choppy range for the past three weeks and is not offering any directional clues just yet.
Energies
Natural Gas led this complex higher today, as prices for the June contract surged nearly 2% in value. Demand remains strong for this market and prices show no sign of slowing right now. Crude Oil is trading .30 higher at the moment, which is a bit surprising given some of the current events (strike in UK, strike and pipeline issues in Nigeria) and the amount of press Oil prices get these days. I would have thought that the market would be higher than it is. Unleaded Gas was down today, as US refineries appear to be keeping up with demand.
Stock Index Futures
The Stock markets also have their eye on the Fed, but the futures are up marginally, as of this writing. I get the feeling that both Main Street and Wall Street really, really want a good reason to start buying stocks again. And when that reason comes, I think the markets will rally quite nicely. But we’ll have to wait until Wednesday afternoon to see if that reason comes from the FOMC or not. Short to medium term trends are up across the board, but it’s been a relatively quiet rally from the lows of mid-March.
Livestock
Prices were mixed today as Feeder Cattle and Lean Hogs were lower, but Live Cattle manage to post higher highs and higher lows on the chart today. Live Cattle appears to have some decent technical strength behind it, along with good demand and has been the least choppy of these three lately. Higher feed costs have contributed mightily to the woes of Livestock ranchers for quite some time. It appears as if the markets might finally be starting to reflect that, in the form of higher prices.
Grains
The Soy complex was sharply lower today, but Wheat, Oats and Corn were all higher on Monday. Expected delays in crop planting in the US have traders plugging in higher prices for Corn due to loss of acreage or yield and weaker prices in Soybeans due to a weather induced shift in acreage from Corn to Beans. But it’s still early, as far as that all goes. Farmers can easily plant Corn within the next 2-3 weeks and still have time for optimum yields. If it gets to be much later than that, the yes, there may be valid concerns. But until then, it’s all just speculation and talk. Planting Progress reports, issued every Monday afternoon, do not show “normal” progress yet, but the farmers will get the crop planted. They always do.
Jeff Fosse is a Market Analyst with Striker Securities, Inc. based in Chicago www.striker.com . To contact Jeff directly with any questions you may have, you can email him at jeff@striker.com.