What’s Up, What’s Down: Higher Crude Oil and Dollar Index
Comments for Tuesday, August 5
Looking Ahead to Today By Reflecting back at Monday’s price action
CURRENCIES:
Higher closes for the Euro Fx, Swiss Franc and dollar index while lower for the Japanese Yen, Canadian Dollar, British Pound and Aussie Dollar. The euro, franc, yen and Canadian Dollar continue to look lower with the latter three in critical areas to hold. The pound has finally given me a sell signal. Uptrend is basically over, while forming a possible top at this time. The Aussie Dollar continues it ‘s slide needing to hold the 9200 area basis the September contract. The dollar index has formed a bottom and should continue higher now needing to close over 9400 but in good resistance at this time.
FINANCIALS:
Lower for the eurodollars, bonds and notes. The eurodollars are in a resistance area starting to turn higher but still pretty much in a sideways market. Bonds and notes are forming possible large bottoms and in neutral areas at this time.
ENERGIES:
Higher closes for crude, rbob and natural gas while lower for heating oil. All of the energies act like their tops are in place and should be sold on sharp rallies unless you are heavily funded or place options. However, even the options are pricey unless you go way out of the money. Then it’s imperative you wait for a good retracement to enter or your chances almost become too slim, in most cases, as proven throughout the history of trading options.
GRAINS:
Sharply lower closes for Minneapolis, Kansas City and Chicago wheat along with corn, oats, rough rice, soybeans, soymeal and bean oil. Minneapolis settled below its support while Kansas City and Chicago are barely hanging on. All of the wheat continues looking lower overall. Corn settled lower(almost down the 30 cent daily limit) going through our December contract 550 objective, “like a knife through butter!” The next stop should be the 500 area.
The same could be said for oats which had its lowest low and close since last March in the December contract. Along with the rest of the grains oats are also in a bear market trend. Rough rice joined the rest of the grains by making its lowest low and closes since February. The bean complex continued its downward slide with poor closes none of them holding critical areas.
INDICES:
Lower closes for the cash and Dow futures along with S&P’s, Nikeii and Nasdaq. All of the indices are still in downtrends with their potential bottom formations starting to fade at this time.
MEATS:
Higher for pork bellies, mixed for lean hogs while lower for live and feeder cattle. Cattle had minor reversal type action today but still should move higher overall while the feeders made a new contract high again but settled lower this time even with corn sharply lower. Hogs closed higher in the October contract but slightly lower in the December one for the second trading session in a row. The latter looks higher and the former neutral telling me this is not the best market to trade at this time and that I should stand aside for now. Bellies closed higher but at the lower end of its daily trading range. Still bellies are in a critical area to hold.
METALS:
Lower closes for copper, gold, silver and platinum again. Copper crashed through its support settling sharply lower (since February). Gold and silver also closed weak with the latter still in a support area that doesn’t look like it will hold and the former just looking lower. Platinum closed sharply lower again with no end in sight.
SOFTS:
LUMBER: This market closed mixed with the front September contract looking strong today. Lumber needs to close over 2600 basis the September contract but is showing good bottoming type action.
COCOA: Cocoa just missed taking out Friday’s high and then broke sharply to settle over 100 points lower. With this type of action, this rally could be over. The rest of this week should give up a good grip on this market.
SUGAR: Closed lower now in a difficult area to call but is acting like it’s forming a possible large bottom.
COTTON: Cotton settled sharply lower unable to close over 7500 basis the December contract which is my critical point at this time.
COFFEE: Highest high and close in 2 weeks settling over 14000 basis the September contract which I think is a good sign.
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.