What’s Up, What’s Down: Crude Oil Up While Natural Gas Down, Sugar Down

Comments for Thursday, June 5 (reflecting back at Wednesday’s price action)

ENERGIES

EIA GAS STORAGE. A higher close for natural gas while sharply lower for crude and heating oil along with the RBOB again. I now have heating oil and the RBOB joining crude oil which already had a sell signal. Natural gas made a new contract high and close again.

CURRENCIES

June/September Roll-Over is on Monday. Lower closes for the Euro Fx, Swiss Franc, Japanese Yen, British Pound and Canadian Dollar while higher for the Aussie Dollar and dollar index.

The euro, franc and yen are all in bear pennants and should work lower near term. The euro has been gradually working lower and is closer to the critical area to hold of 15400 basis the June contract. The franc, however, has been holding over the last month still working lower overall but may be basing at this time. It’s too soon to tell and better to wait for a breakout in either direction (9800-9400).

The yen also has been gradually working lower since its highs back on March 17th with support around the 9400. The Canadian Dollar keeps dropping hard and is now in a strong support area all the way to the 9700 area but bearish overall. It’s just not a good place to take a short position if you aren’t already in one.

The Aussie Dollar settled higher this time acting like it will test its contract highs. The pound settled lower again in a downward trending market but forming a possible bottom that is in a critical area to hold or else the potential bottom will fade away. The dollar is closed high enough to give me a buy signal today.

INTEREST RATES

Lower closes for the bonds, notes and eurodollars this time. The eurodollars are still in a consolidation pattern and shouldn’t be traded until we see a good breakout in either direction while the bonds and notes are still bearish still in heavy resistance.

INDICES

Reports Today: Jobless Claims: A higher close for the Nikkei while lower for the cash and Dow futures along with the S&P’s and Nasdaq. The S&P’s look heavy and along with the Nasdaq is forming a possible top but the Nikkei still acts like it will test its recent high. The Dow still looks the weakest.

GRAINS

Reports Today: Export Sales. Sharply higher closes for soybeans bean meal and bean oil, higher for corn, oats Kansas City and Chicago wheat while sharply lower for rough rice and Minneapolis wheat. Overall the wheat continues to look lower with Minneapolis wheat now in a critical area(930 basis the July contract) to hold ending its potential bottoming formation. Corn settled higher still in basically a sideways pattern since the beginning of April though overall, corn still looks like it will test its contract highs. Oats settled higher still needing to hold the critical 375(July) area while moving lower since the first week in May. Rough rice settled sharply lower breaking down out it its bear pennant looking lower while needing to hold the 180 area basis the July contract. The beans and meal settled higher while the oil closed lower. Pretty choppy action has been going on this week between the meal and oil. The beans had their best close since the 3rd week in April and are poised for a breakout from their sideways pattern. Meal had it best high and close since March giving me a buy signal joining oil complex has been moving sideways overall since the middle of April. However, the beans and meal are near critical areas to hold and the bean oil is in a good support area but consolidating at this time. Bean oil needs to hold the 6000 area

MEATS

Mixed for live cattle while lower for feeder cattle cattle, lean hogs and pork bellies. Cattle and feeders still look toppy but cattle have good support under 100 basis the August contract and 11250 for the feeders. Both are still bullish overall. June hogs settled below 7550 which is a critical area to and are still close enough. However, today’s action hurt the hogs possible large bottoming formation. Hogs have some support under 7500 but that’s about it. Bellies had a bad close below the 7500 area basis the July contract and really need to hold its last low of 7155.

METALS

A higher close for silver but lower for gold, platinum and copper. All of the metals act like they’ll continue to work lower overall with silver in a small bear triangle, gold and platinum in bear pennants while copper broke out of its bear pennant to the downside.

SOFTS 06/05

LUMBER: Lumber made a lower low for the 8th straight trading session closing down for the day. There is heavy support down to the 240 area basis the July contract. A close over 250 basis the July contract would be nice and above 260 look awfully good! Lumber has been basing since April but is now closing in on a critical area (240-July) to hold.

ORANGE JUICE: Orange juice settled slightly lower but is in a bull pennant while trying to form a bottom.

COCOA: Cocoa settled slightly lower in quiet trading at least for this market. Its in a bull pennant now and should breakout higher eventually testing its contract highs.

COTTON: Cotton closed slightly higher in narrow trading but is now in a bear pennant looking very heavy.

COFFEE: Coffee closed slightly higher still choppin around in its sideways pattern since the middle of March trading mostly between 13000 and 14000. This is not a good place for the bears to short this market but okay for the bulls to take a chance.

SUGAR: Sugar made a new recent low and close again continuing to look very weak.

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.