What’s Up, What’s Down: US Dollar Up, Meats Up, Interest Rates Down
Comments for Monday, May 5 (reflecting back at Friday’s price action)
ENERGIES
Sharply higher closes across the board. All of the energies look toppy but, at the same time, are showing signs of testing their highs. This means, except for the heating oil, I don’t have sell signals and the bull trends are still in place.
CURRENCIES
Higher closes for the British Pound, Aussie Dollar and U.S. Dollar index while lower for the Japanese Yen, Canadian Dollar, Euro Fx and Swiss Franc. The Euro, Franc and Yen made recent lows and closes all looking lower. The pound continues in a sideways motion as we wait to see which way it breaks out at this time. It has been trying to bottom out but this potential pattern has been slowly fading. The Aussie Dollar still acts like it will test its highs and looks the best technically.
The Canadian Dollar also has been in a sideways pattern since the middle of March as we wait a breakout in either direction at this time. It has strong resistance over 100. The U.S. Dollar index closed higher again continuing its upward bias.
MEATS
Higher closes across the board this time. June cattle has a gap above and below at this time but is still in potential large bottoming formation. Feeder cattle are also forming a potentially large bottom. Both cattle and feeders were lower overall during the week, and Thursday’s lows should hold or the beef complex should continue down. Hogs closed higher, also holding in a support area that goes down to the 70.00 area basis with the June contract. This market is also forming a possible huge bottom. Bellies closed slightly higher but still are in a down channel while trying to form a bottom overall.
METALS
Sharply higher for copper while higher for silver, gold and platinum. New recent lows for gold and platinum before settling higher. All of the metals continue to look lower overall.
SOFTS
LUMBER: Lumber settled sharply higher 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 higher with very strong support underneath and should work its way higher overall.
COCOA: Cocoa closed higher after making a recent low first. Cocoa is now looking toppy.
COTTON: Cotton settled slightly higher but is in a bear pennant and still looking lower overall
COFFEE: Coffee made its lowest low since last November again, then closing higher. However, there is nothing but resistance all the way up to 14000 for this market.
SUGAR: Sugar settled higher after making a recent low, and at first is still looking very weak.
INTEREST RATES
Lower closes across the board. All of the financials continue to look lower overall but the bonds and Eurodollars continue trying to form bottoms at this time.
INDICES
Higher closes for the Dow futures, S&P’s, Nasdaq and Nikkei while lower for the cash Dow. All of the indices continue to look higher overall again, making new recent highs and closes across the board.
GRAINS
Reports this week: Inspections, Crop Progress. Sharply higher closes for rough rice and soybeans while higher closes for Minneapolis, Kansas City and Chicago wheat along with bean meal and bean oil. Only corn settled lower. Corn still looks as if it will test its highs. All wheat still looks lower but has held its nearest support so far and could retrace higher in the short term. Oats reached my 425 objective basis with the July contract, with the 450 area my next objective. Rough finally closed higher after 4 consecutive lower closes.
The next support area is around 200 and still looks as if it has topped out. The bean complex also closed higher, but beans, meal and oil are 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.