What’s Up, What’s Down: US Dollar Down, Copper Up, Rice Up
Comments for Tuesday, May 6 (reflecting back at Monday’s price action)
ENERGIES
Sharply higher closes across the board again. New contract highs and closes for crude and heating oil eliminating my sell signal for the latter. All of the energies look higher and should test their highs for now.
CURRENCIES
Higher closes for the Euro Fx, British Pound, Japanese Yen, Canadian Dollar and Aussie Dollar while lower for the U.S. Dollar index and British Pound. The Euro is in a bear flag while the Franc and Yen are in bear pennants all looking lower overall.
The Pound and Canadian Dollar continue in sideways patterns as we wait to see which way they’ll break out. The Aussie Dollar continues higher, acting as if it will test its highs and looks the best technically. The U.S. Dollar index closed lower but is in a bull pennant and should continue its upward bias.
MEATS
Higher closes for hogs and pork bellies while lower for live and feeder cattle. June cattle has a gap above and below closing today, down at the beginning of a good support area. Cattle at this time is forming a potential top in the short term and a potential bottom in the long term. Feeder cattle also are forming a potential top and bottom at the same time the same as live cattle. The only difference is the feeders aren’t in a support area.
Hogs closed higher again having held its support area below 72.50 down to the 70.00 area so far. This market is also forming a possible huge bottom. Bellies closed slightly higher again, touching the down line at the top of a down channel. Bellies are also forming a potential bottom but this formation has been eroding day by day.
METALS
Sharply higher closes across the board. Copper rallied sharply 39 dollars off its lows this morning before dropping back 29 dollars and settling 1270 higher than the basis of the July contract.
This action, for whatever reason, pretty much ended my sell signal, at least for now. Still copper has quite a bit of resistance right overall, Believe it or not, gold, silver and platinum still look lower even after today’s action.
SOFTS
LUMBER: Lumber settled lower but still is holding its lows and in a possible bottoming formation. It’s too soon to tell but just to have a potential bottoming formation is encouraging for this market!
ORANGE JUICE: Orange juice closed lower but has very strong support underneath and should work its way higher overall.
COCOA: Cocoa closed slightly higher now in a bear pennant looking toppy.
COTTON: Cotton settled lower still in a bear pennant looking lower overall. I don ‘t trade the October contract. The open interest and volume is much lower than the other months because it is in between crop years. Slippage can be brutal.
COFFEE: Coffee closed higher again but has resistance all the way up to 14000.
SUGAR: Sugar settled slightly lower making a recent low. It’s also now in a bear flag, looking very weak.
INTEREST RATES
Lower closes for the Eurodollars and bonds but higher for the notes. All of the financials continue to look lower overall but the bonds and Eurodollars continue trying to form bottoms with the former at a critical area to hold.
INDICES
Lower closes across the board but no changes technically. There were new recent highs for the cash and Dow futures along with the Nikkei while the S&P’s and Nasdaq are in bull flags. All of the indices continue to look higher overall.
GRAINS
Sharply higher close for rough rice again while higher for bean oil. Sharply lower for corn and lower closes for Minneapolis, Kansas City and Chicago wheat along with bean meal and oats. All wheat continues to look lower overall but has held its nearest support areas so far and could retrace higher in the short term. Oats reached my 425 objective basis in the July contract on Friday with the 450 area my next objective.
Rough closed higher again but is in a bear pennant looking lower overall. The next support area is around 200 and still looks like it has topped out. Beans, meal and oil are all still in bear pennants and should continue lower 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.