What’s Up, What’s Down: US Dollar Up, Cattle Prices Up, Precious Metals Down
Comments for Thursday, May 29 (reflecting back at Wednesday’s  price action)
ENERGIES
API/EIA energy stocks, gas storage. Higher closes for crude and heating oil along with the RBOB and natural gas. The RBOB made a new contract high and close but all of the energies continue to look higher overall in spite of some sharp corrections that we recently have had. Of course dollar wise these corrections are high but percentage-wise minuscule.
CURRENCIES
Higher closes for British Pound, Aussie Dollar, Canadian Dollar and dollar index while lower for the Swiss Franc Japanese Yen, and Euro Fx. The euros have been losing some steam in its bull market while the franc has been working lower over the last 2 month. The yen also continues to work lower overall with support around the 9400 area basis the June contract. The Canadian Dollar seems to be in a large bull flag and the pound is forming a large potential bottoming formation. The Aussie Dollar made a new contract high close looking very bullish while the dollar index has been consolidating for the last 3 months as it tries to form a bottom. There is good resistance over 7300 basis the June contract.
MEATS
Higher closes for live and feeder cattle, mixed for lean hogs and lower for pork bellies. Cattle and feeders are in bull pennants in a very bullish markets at this time with the former making a new recent high close since last September and the latter making a new contract high close. Hogs closed weak mixed but but are still in a bull triangle and should work higher overall. There is, however, good resistance over 7750 basis the June contract. Also hogs are in an extremely large potential bottoming formation. Bellies gapped lower but did close near their session’s highs although still lower on the day and their weakest close since April 11th.
METALS
Lower closes silver, gold, platinum and copper with pretty wide swings in gold and silver. All of the metals now act like they’ll continue to work lower overall. Copper continues to look lower at this time with heavy resistance right overhead and needing to hold the 36500 area basis the July contract. Gold and silver’s recent move higher should be over unable so far to penetrate good resistance areas. Silver does have good support at the 1700 area basis the July contract and gold under 880 basis the June contract. Platinum hurt today basically ending my buy signal. Obviously keep an eye on crude oil prices while trading the metals but stick to the charts when making decisions.
SOFTS
LUMBER: Lumber closed lower but still in a bull flag only a larger one. Lumber acts like its basing and should work higher in spite of continually bad news coming out. However, by absorbing so much bad news and holding, tells me this market is bottoming overall. A close over 260 basis the July contract would look awfully good!
ORANGE JUICE: Orange juice closed lower in a bear triangle continuing to look lower overall.
COCOA: Cocoa settled higher again in a bear triangle but not a good place to add to your short position(s).
COTTON: Cotton had its lowest low since the end of last August before settling higher. Could this be reversal type actions? We’ll have to wait and see. Meanwhile cotton looks very weak overall.
COFFEE: Coffee closed higher this time chopping around in its sideways pattern since the middle of March trading mostly between 13000 and 14000.
SUGAR: Sugar closed slightly higher but near its session’s lows looking very weak overall.
INTEREST RATES
Lower closes for the bonds, notes and eurodollars again but still no changes technically. The eurodollars have flattened out and shouldn’t be traded until we see a good direction either way. The bonds and notes made new recent lows and closes since last February.
INDICES
Reports Today: Jobless Claims, GDP (Q1 ’08). Higher closes for the cash and Dow along with the S&P’s and Nasdaq while lower for the Nikkei. The S&P’s along with the Nasdaq and Nikkei are starting to turn back higher at this time losing their potential topping formations.
GRAINS
Higher closes for Minneapolis wheat, soybeans, meal and bean oil, unchanged for Chicago wheat while sharply lower again for rough rice and lower for Kansas City wheat, corn and oats. Minneapolis wheat still is in a bull triangle but Kansas City and Chicago wheat are in bear pennants. Overall the wheat continues to look lower with only Minneapolis showing some signs of possible bottoming action. Corn settled lower again gradually working lower over last month. However, corn still is long term bullish but has for now lost the pattern it had in April before it rallied. Oats settled lower but near the session’s highs still in a good support area but acting like it will test the 375 area basis the July contract. Rough rice gapped lower closing over one dollar down in the ever expanding daily limit. Now rice is another support area but needs close above 180 basis the July contract. The beans and meal settled higher with the former forming a possible bottom and the latter still looking lower overall. Bean oil also closed sharply and is in a bull pennant.
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.