What’s Up, What’s Down: Gas Very Sharply Up, British Pound Up, Cattle Up
Comments for Thursday, May 22 (reflecting back at Wednesday’s price action)
ENERGIES
EIA Today’s Report: Gas Storage. Sharply higher and I mean sharply higher closes across the board with crude and heating oil along with the RBOB making new contract highs and closes again while the natural gas made a new contract high close acting like it will test its highs.
CURRENCIES
Once again higher closes for the Canadian and Aussie Dollar along with the British Pound, Swiss Franc Japanese Yen and Euro Fx while lower for the dollar index. Today’s action continues to show the strength for the currencies and the weakness for the dollar. The euro and franc look bullish with resistance for the former over 15800 and the latter between 9900-1100. The yen is closer to a buy signal but not quite yet. The pound also continues to look higher while the Aussie Dollar made a new contract high and close again. The Canadian Dollar also continues looking bullish making a recent high and close once again since last March. Finally the dollar index made a recent low and close again but is now in a strong support area
INTEREST RATES
This time the bonds, notes and eurodollars settled lower. 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 still look lower overall.
INDICES
Reports Today: Jobless Claims. Again we had sharply lower closes for the cash and Dow futures along with the S&P and Nasdaq while lower for the Nikkei. This gives me a sell signal for the Dow but still keeps the buy signals for the rest of the indices.
GRAINS
Reports Today: Census Crush, Export Sales. Higher closes for rough rice, corn, oats, soybeans and sharply higher for bean oil while lower for Minneapolis, Kansas City and Chicago wheat along with soymeal. Minneapolis wheat still is in a bull triangle that’s too far towards the apex to be reliable. Overall the wheat looks lower with only Minneapolis showing some signs of possible bottoming action. Corn closed sharply and is acting heavy overall to me but is still bullish technically. There is good support at the 575 area basis the July contract and resistance up to 625. Oats closed higher and if you look at the daily July chart below you will see that the oats are in the same pattern as in April meaning the odds are this market will continue higher overall. Also there is good support down to 375.
Rough rice settled higher but still looking lower overall. However, there is little resistance up to the 220 area making it difficult to trade in its present area. The beans and oil closed higher while the meal settled lower again. The beans and meal have been basically in sideways markets over the last couple of months looking for direction at this time while the bean oil had its highest high and close since the middle of April now acting like it will resume its upwards momentum.
MEATS
Reports Today: Cold Storage. Higher closes for live cattle and feeder cattle while mixed for lean hogs and lower for pork bellies. Cattle’s close in the June contract tied its highest close since the end of February. 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 had its highest high and close since the first day it came on the board. Hogs closed mixed and is still in bear flag but still looking very strong overall unless this bear flag indicates a retracement lower. The June hogs could drop down to the 7500 area if this happens. Bellies settled lower and are now in a good support area. I feel it’s critical for the July contract to hold the 7500 area.
SOFTS 05/22
LUMBER: Lumber closed higher again with a wide trading range forming a nice looking potential bottom. This market is in a good support area.
ORANGE JUICE: Orange juice made a new contract low and close.
COCOA: Cocoa settled lower again just missing giving me a sell signal. The market is in a very critical area to hold. So far cocoa has been basically trading between 2600 and 2800 since April 11th but did drop below 2600 before rallying to close at 2586 basis the July contract.
COTTON: Cotton closed slightly higher with only 50 point trading range. This market needs to not close below 7000 basis the July contract. and then could rally to the 7500 area basis the July contract. However this market really hasn’t gone anywhere over the last 15 trading sessions.
COFFEE: Coffee had a strong close settling over 14000 basis the July contract. I now have a buy signal but first I need coffee to now take out its last high of 14285 first. A close over 14000 would be a strong breakout to the upside. Otherwise this market has basically been in sideways pattern since the middle of March trading mostly between 13000 and 14000.
SUGAR: Sugar closed lower and is now in a bear flag looking very weak with little support underneath.
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.