What’s Up, What’s Down: Higher for the Dollar Index, Lower Closes for Crude and Heating Oil
Comments for Thursday, July 24
Looking Ahead to Today By Reflecting back at Wednesday’s price action
MEATS:
Lower for live and feeder cattle along with pork bellies while lower for lean hogs. Cattle made new recent lows before closing higher which is reversal type action. We could have a 2-3 cent rally from today’s action but still bearish overall. Cattle need to hold 10750 basis the December contract. Feeders just aren’t as strong as they should be dropping back to a support area in the August contract and at the low end of its support basis the December contract.
Technically, this market is still okay, but I don’t trust it because there haven’t been strong enough rallies off the falling corn prices. Hogs closed lower but continued looking higher especially in the August contract but really are nowhere in the October and December ones. However, the August contract is breaking out to the upside while the latter two are in heavy resistance areas with gaps below for all three months.
Bellies closed up the 300 point daily limit and are close to a buy signal, while the February contract is a completely different market still looking very weak. Don’t forget because of volume around 100 contracts a day bellies are really not a viable market to trade.
GRAINS
Lower settlements for Kansas City, Chicago and Minneapolis wheat along with rough rice, corn, soybeans, soymeal and bean oil. All of wheat continues to look lower still holding their respective support areas, although at the lower end of the range in critical areas.
Corn settled lower for the 5th consecutive day making new recent lows and closes seemingly heading towards the 550 area basis the December contract. Oats settled lower also breaking the 400 area basis the December contract but closing over 400. Oats need to hold the 400 area. Rough rice closed down the daily 50 cent looking very weak overall with its lowest low and close since March. Beans, meal and oil closed lower once again looking to continue its downward slide at this time.
ENERGIES
Sharply lower closes for crude and heating oil along with the rbob and natural gas again. New recent lows and closes for all of the energies which look like they’ve topped out. From market experience coming from over 35 years in futures, I expect the energies to soon have at least one sharp rally knocking out a high percentage of shorts (top pickers) before resuming lower in what looks like the end of the energies meteoric rise for a while. If this market doesn’t have a decent rebound then only do options if you must take a position.
SOFTS
LUMBER: Lumber closed higher ruining a bear pennant and now should retrace further to the upside but is still very bearish long term.
ORANGE JUICE: Orange juice closed lower again in a very critical area to hold if it’s going to work higher. OJ has been losing steam since it peaked on July 7th.
COCOA: Cocoa settled lower making a new recent low and close with my next objective being in the 2600 area.
COTTON: Cotton had its lowest close since last December breaking out of a bear triangle to the downside. Cotton continues to look lower overall since the first week in March.
COFFEE: Coffee closed slightly higher holding a very good support area so far. There is good support from 14000 down to 13500 basis the September contract. Really no position should be taken either way at this time.
SUGAR: Sugar closed lower again acting very weak and should be sold on rallies.
CURRENCIES
Higher for the British Pound and dollar index while lower for the Euro Fx, Swiss Franc, Canadian Dollar, Aussie Dollar and Japanese Yen.
The euros and francs after today’s action both gave me sell signals. While the yen is in a critical area to hold after settling lower again. The Canadian Dollar continues to look higher overall with good support right underneath even after closing lower again. The pound also still looks strong overall closing higher while the Aussie Dollar broke out of a bull triangle to the downside, meaning this market could now drop down to the 9400 after this formation failed.
The dollar had a strong close again and now is forming a possible bottom but bearish long term. However, over the last week it seems to be holding well and starting to get some momentum to the upside.
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 or call toll-free (888) 281-4158.