What’s Up, What’s Down: Crude Oil Up, Cattle Down, Soybeans Sharply Down
Comments for Tuesday, May 20 (reflecting back at Monday’s price action)
ENERGIES
Higher closes for crude oil and the RBOB while lower for heating oil and natural gas. The crude oil made a new contract high and close again while the heating oil is in a bull pennant. The RBOB made a new contact high before settling lower. Natural gas had its lowest low in 9 trading sessions – forming a possible top but still bullish overall along with the rest of the energies.
CURRENCIES
Higher closes for the Canadian and Aussie Dollar along with the dollar index while lower for the British Pound, Swiss Franc Japanese Yen and Euro Fx. The euro, franc and yen (bull pennant) are in bottoming formations but still in a downtrend at this time. The pound still is also bearish overall but still is in a possible bottoming formation. The Canadian Dollar continues looking bullish making a recent high and close since March 20th. The Aussie Dollar made a new contract high and close again, albeit by one tick. The dollar index closed higher but I’m still close to a sell signal.
METALS:
Copper still looks lower overall with heavy resistance right overhead. Gold also followed through higher after my buy signal on Friday. Silver is now starting to gradually turn higher, needing to settle over 1737 basis the July contract. I feel we should wait and see what it does first. Platinum had its highest high and close since the first week in March again looking strong.
INTEREST RATES
Higher closes for the bonds, notes and eurodollars. The eurodollars continue to follow through higher since I had my by signal last week while notes still look lower with lower lows and lower highs overall. The bonds are still looking lower but in a potential bottoming formation that’s looking better each day.
INDICES:
Reports today: Producer Price Index. Higher closes for the cash and Dow futures along with the S&Ps while lower for the Nikkei and Nasdaq. All of the indices continue to look higher overall however.
GRAINS
Higher closes for Minneapolis, Kansas City along with Chicago wheat along with rough rice. Sharply lower closes for soybeans, bean oil and bean meal along with lower for oats and corn. Today’s action has helped Minneapolis wheat’s rounding bottom but is still bearish overall along with Kansas City and Chicago wheat. Corn closed lower again following through from Friday’s action acting like it will test the 575 area where there’s good support.
Oats closed lower further away from its double top at 425 basis the July contract. Oats next support area is around 385. This has become a difficult market to call at this time at least it is for me. Rough rice finally closed higher but is now in a bear pennant looking to continue its slide overall. The beans, meal and oil closed sharply lower ending my potential buy signals for now. All three are now in sideways action over the last couple of months looking for direction at this time.
MEATS:
Lower closes again for live cattle, feeder cattle, lean hogs and pork bellies. Cattle gapped down closing below 9375 basis the June contract pretty much ending its bull move for now. Its next support area is around 9250 and we should be watching for topping action at this time. It’s too soon to tell at this time however. Feeder cattle also closed lower breaking down through its bull pennant now heading towards the 110 support area basis the August contract especially if it settles below 111250 first.
Hogs had its lowest close in over a week now possibly going to drop down to the 7500 area basis the June contract. This market still looks very strong overall but could get through its resistance over 7750 yet. Bellies settled sharply lower just above the daily 300 point limit. There isn’t much support down to the 7600 area basis the July contract but still should continue higher overall.
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. Email Rick at ralexander@zaner.com.