What’s Up, What’s Down: Dollar Down, Cattle Up, Corn Up
Comments for Tuesday, May 27 (reflecting back at Friday’s price action)
ENERGIES
Prices are lower for heating oil but higher for crude oil which is in a bull pennant, higher for the RBOB also in a bull pennant and natural gas which made a new contract high and close. All of the energies continue to look higher.
CURRENCIES
Higher closes for the British Pound, Swiss Franc, Japanese Yen, and Euro Fx while lower for the Canadian Dollar and dollar index with no real changes technically. Today’s action overall continues to show the strength of the currencies against the dollar. The euro, franc, yen, pound (bull pennant) and Aussie Dollar (bull pennant) continue to look higher along with the yen which is closer to a buy signal but not quite yet. The pound also continues to look higher along with the Canadian Dollar even though the latter settled lower but is in a bull pennant. The dollar index (bear pennant) made a recent low and close again but is now in a strong support area.
INTEREST RATES
Higher closes for the bonds, notes and eurodollars but no changes technically. The eurodollars have now flattened out and shouldn’t be traded until we see a good direction either way. The bonds and notes are still forming potential bottom formations but look lower overall.
GRAINS
Reports today: Export Inspections, Crop Progress. Sharply higher for soybeans and bean oil, higher for Minneapolis and Chicago wheat along with corn and bean meal while sharply lower for rough rice and lower for Kansas City wheat and oats. Minneapolis wheat still is in a bull triangle but Kansas City and Chicago wheat made new recent lows again before settling higher this time. Overall the wheat continues to look lower with only Minneapolis showing some signs of possible bottoming action.
Corn settled higher but overall corn has been gradually working lower. However, corn still is long-term bullish. Oats settled lower after being higher for the second session in a row, they’re acting like they will test the 375 area basis the July contract. Still oats are in the same pattern as in April meaning the odds are that this market will continue higher overall. Also oats are in a strong support area at this time. Rough rice settling down the daily 50-cent limit needing to hold the 1985 area. This market has little resistance up to the 220 area but looks like it’s topped out. The beans and oil closed sharply higher while the meal was dragged along for the ride. The beans are close to a buy signal while the oil has given me one but the meal isn’t close.
MEATS
Higher closes for live cattle and feeder cattle along lean hogs and pork bellies. Cattle’s close in the June contract over 9500 is the highest settlement since the last November and a complete breakout to the upside. There is support around the 9250 area looking strong at this time but needing to close over 9500 or else profit taking could ensue. Feeder cattle made a new contract high and close again. Hogs gapped and settled higher while now in some resistance but looking higher overall. Also hogs are in an extremely large potential bottoming formations. Bellies settled higher this time and are in the lower end of a good support area but are lagging behind the rest of the meat complex. I feel it’s critical for the July contract to hold the 7500 area.
INDICES
Reports Today: Consumer Confidence, New Home Sales. Lower to sharply lower closes for the cash and Dow along with the S&P’s, Nasdaq and Nikkei while lower for the Dow futures. All of the indices are forming potential topping formations but still in uptrends 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.