Tuesday’s Price Actions: Metals and Oil Up, USD Down
Comments for Wednesday, April 23, 2008; Looking back at Tuesday’s (4/22) price action
ENERGIES
API/EIA Gas Storage is released this morning. Yesterday we saw higher closes for crude and heating oil along with the RBOB, while lower for natural gas. New contract highs and closed for the crude, heat and the RBOB while natural gas made a new contract high before settling lower. All of the energies continue to look higher.
CURRENCIES
Higher closes for the Aussie Dollar, Euro Fx, Swiss Franc, Japanese Yen, and the British Pound while lower for the Canadian Dollar and USD index.
The euros continue to look higher making a new contract high and close while the franc continues consolidating in a bull market basically trading between 98 and 100. The yen settled higher but is still bearish and appears to be trading now in a bear pennant. The pound also settled higher and is still trying to bottom in while in a bear market. The Aussie Dollar made a new contract high and close again. The Canadian Dollar settled lower again and is really difficult to call. It should continue higher but has strong resistance over 100 and has been in a sideways market overall since the end of January. The dollar index made a new contract low and close.
MEATS
Higher closes for live cattle and lean hogs, while mixed for feeder cattle and lower for pork bellies. Cattle should continue higher at this time but does have strong resistance over 93.75. Feeders have 2 gaps below but are still in a bull pennant and continue to look higher overall. Feeders are also forming a possible bottom at this time. Hogs settled higher this time double bottoming at 72.80 (basis the June contract), filling a small part of its nearest gap. Hogs also continue to look bullish overall but could still retrace as low as 70.00 basis the June contract with support starting under 72.50. Hogs also have an island reversal in place. Bellies filled their closest gap leaving one left that’s part of an island reversal. Bellies are also forming a possible larger bottom and continuing to look higher overall.
METALS
Higher to sharply higher closes across the board. Copper is still bullish overall while in a consolidating mode over the last couple of weeks. After yesterday’s action copper looks like it will test its highs but today this scenario could change in a second! The key reversal for silver is still in place which continues to look lower overall while still in a consolidation area. Today’s action at least temporarily given the bulls hope. Gold closed higher but continues to look like it’s topping out overall. A critical area to hold basis the June contract is the $900 area. Platinum has also been consolidating and could go in either direction but feels heavy to me. Stand aside in this market for now and watch for a breakout in either direction first.
SOFTS
LUMBER: This market gapped to a new contract low and close. I don’t see an end in sight at this time.
ORANGE JUICE: Orange juice settled slightly higher and has been in a consolidation mode for a couple of months. This market is still bearish long term.
COCOA: Cocoa had its highest high and close since the middle of March. Our next objective at 2800 is now very close.
COTTON: Cotton finally settled higher and is still in a good support area that it needs to hold. Cotton is forming a possible large too and there still is an island reversal in the May contract. I don’t trade the October contract. The open interest and volume are much lower than the other months because it’s in between crop years. Slippage can be brutal!
COFFEE: Coffee closed higher in the middle of a month long consolidation area. The July contract needs to close over 14000 again and stay above 13000. There is strong support between 13500 and 14000.
SUGAR: Sugar settled higher this time and is now in the area to go long if you are bullish.
INTEREST RATES
The financials have run the total gamut. The bonds settled higher, the eurodollar’s unchanged and the notes closed lower. However there are no changes technically. All of the financials continue to look lower overall.
INDICES
Lower closes across the board this time. However, all of the indices are acting like they will resume moving higher overall. The island reversal for the Nikkei is still in place.
GRAINS
Sharply higher for soybeans, soymeal and bean oil while higher for Chicago wheat, corn, oats and rough rice. Sharply lower for Minneapolis wheat and lower for Kansas City wheat. Minneapolis wheat is approaching the double bottom that I’ve been mentioning for over a week. There is no support until the 100 area if the double bottom doesn’t hold and, don’t forget, Minneapolis wheat already had a nice rally off of it. All of the wheat continue to look lower overall although Kansas City wheat has still held its support but now is at the bottom of its support area. However, Chicago wheat basis the May contract continues to look very weak not able to hold its support. Corn closed sharply higher and has good support under 575 basis the May contract. This market does look a little toppy needing to make a new high relatively soon or could correct like it did in the middle of March. Oats settled higher but needs to close over 400 to turn this market higher. Rough also settled higher and is still in a bull pennant looking very strong overall. The beans, meal and oil are all close to buy signals after today’s action settling sharply higher!
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.