Providio's Daily Futures Market Commentary for June 13, 2012
Futures Last Trade: June 18June; Sep: 17Sep
Opions Last Trade: July: 06July; Aug: 03Aug; Sep: 07Sep
13June We shorted the June British contract after strength dissipated at our noted falling trend line resistance (1.5600) that extends back to 24May high (1.5725), a brief stopping point in the decline. We are risking to last Thursday's high (1.5635).
Another relatively quiet consolidation day ahead of what we mostly see as "event risk". We seem to be back at the mercy of the headlines with events in Europe unfolding at a torrid pace and the FOMC meeting on 20June.
Our rising Rate of Change indicators have flipped many of our Momentum to a more US Dollar negative dynamic. This should be watched closely. We add another factor (or in this case, "formations") to yesterday's list of dynamics across the sector that has us tilting US Dollar bullish:
· NEW: We are starting to see some evidence of flag, pennant or triangle formations. This typically indicates a continuation of the larger move if prices can break out on stronger Volume.
· Volumes are stronger on the moves to the upside.
· The recent strength has taken most of our tracked majors off extreme Oversold conditions. The "middling" nature of our indicators may open the door for another round of selling.
· The last time our Momentum indicators turned (US Dollar negative; FX positive), it was a short-lived consolidation that gave way to a continuation of the previous trend.
See below for specific market details, although they have not changed much.
AUSSIE$: 13June A Doji Candle, consolidation of the recent gains today.
Today's high registers a triple top since 07June, or if extended back to 16May, a rising wedge in a falling market, although rising trend line support is rather steep (current level 0.9870). In any case, the par (0.1000) level looms as resistance.
This area also aligns with our noted 38.2% retracement (1.0005) of the Mar-May decline and has fallen back toward recent settlement levels around 0.9900. Old support from mid April (1.0142) should offer new resistance and also aligns with a 50% retracement.
Our Rate of Change continues to rise, turning back a very early hint that the recent positive turn in our Momentum indicator may be slowing. We remind readers that the last time we saw a positive turn in our Momentum indicator, in mid April, the currency essentially consolidated with a modest upward bias before another substantial leg to the downside. Our Rate of Change should offer initial signs when/if this may be happening again. The one difference that we will note this time around is that the "turn" has been much steeper.
In what is becoming bigger picture, the recent lows (0.9565 on 01June) lie in a zone that traces back to support from last November. If it the previous negative tone reinstates itself, look for a sustained move lower on stronger Volume to break this major support area and target the 0.9000 level.
Seasonal Snapshot (cash): The 5-year pattern's upward bias extends until the end of July.
The 15&30yr patterns chop much higher until 20June, and then both fall out of bed throughout the rest of the month.
We shorted the June contract after strength dissipated at our noted falling trend line resistance (1.5600) that extends back to 24May high (1.5725), a brief stopping point in the decline. We are risking to last Thursday's high (1.5635).
The 1.5600 level aligns with old support (now new resistance) from mid March, then again in late May and also clusters with the 38.2% retracement (1.5660) of the April to May decline.
A break below rising trend line support (1.5450) that from the recent low (1.5267 on 01June) that forms the lower end of what may be a pennant, may kick off another large move to the downside, perhaps as low as 1.4600.
The falling 21-day moving average (1.5610) crossed below the falling 200-day (1.5750) and should be a drag going forward and cap strength. A sustained rally through this area targets the series of previous highs (1.5715 on 29May and 1.5847 on 22May).
We remind readers that our Momentum indicator has flipped positive this morning after being negative since early May, the first sustained period of our previously unstable indicator since the positive turn from mid Jan to mid Feb. We are watching our Rate of Change indicator closely.
Seasonal Snapshot (cash): The 15yr pattern rallies until 20June while the 5&30yr patterns consolidate with an upward bias.
CANADIAN$: 13June Quiet consolidation of the recent gains that have probed above, but are still generally capped by the falling 21-day moving average (0.9740). The fact that this average has crossed below the now falling 200-day (0.9880) should continue to offer pressure.
Sunday night's rally probed above (0.9792), but leaves a triple top in place that extends back to 29May. Rising trend line support forms the lower boundary (0.9670) of an ascending triangle. A sustained break below targets the 0.9200 area. Initial stops should be around the series of previous lows: 9497 on 25 Nov and finally, 9367 on 04Oct.
Our shorter-term charts show that Volume has been stronger on the spikes down.
Seasonal Snaphot (cash): All three patterns consolidate wildly until the end of June.
DOLLAR INDEX: 13June A first glimpse shows us that the Dollar Index is the only currency product we see with stronger Volume today.
That said, the market is still in our noted bull flag formation, bound by 81.25-82.70. A break out below reveals two potential outcomes:
1. The shorter-term rally from 81.025 (21May) may continue to 83.70.
2. The longer-term rally from 78.685 (30Apr) may continue to 87.70.
Sunday night's dip found support at our noted previous peak (81.93), which also aligns with a 38.2% retracement of the Apr-May rally.
Our Rate of Change, which pulled our Momentum indicator negative last week, is still falling. If this indicator acts like it did throughout the first part of the year, it may mean instability (for the indicator) and consolidation (for the index) lie ahead.
We remind readers that downside risks include plenty of gaps to fill all the way down to 79.615 (04May).
Seasonal Snapshot (cash):: All three patterns exhibit a positive bias until15June. Then the 5yr's weakness until early Aug is much more pronounced than the 15&30yr's consolidation with a downward bias.
EURO-FX: 13June Euro Industrial Production was better, but still negative and there is no inflation. A subsequent lurch higher prolongs the recent period of wild consolidation. Volume seems to have fallen off again today.
Unfortunately, borrowing costs rose at European debt auctions. The currency has struggled with the falling 21-day moving average (currently 1.2565) and may cap more strength. Falling trend line resistance comes in at 1.2670 and the previous highs (1.2826) were made on 21May.
The 01June bullish engulfing pattern, signaling a potential reversal of the recent large losses, is still in effect. The trouble is that the prior day was a Doji Candle, which waters down the pattern. The possibility of more bailouts (is Italy next?) and more stimulus has been doing hand-to-hand combat with the recent weak data. Quite frankly, all eyes may very well be on Sunday's Greek election.
A break out below the lows (1.2288 on 01June) should target psychological support at the round pennies down to 1.2000. The June 2010 low was 1.1874 and the lower boundary of the falling channel that has been in place since May 2011 is at 1.1770.
Seasonal Snapshot (cash): The 5&15yr patterns consolidate and the 30yr pushes lower until the end of June.
YEN: 13June More quiet consolidation... perhaps in anticipation of this tonight's BOJ meeting which may yield some ideas about future asset purchases. Meanwhile, the IMF weighed in on the issue, noting that the Yen is overvalued and their economy needs more stimulus:
Support lies at the recent consolidation lows (1.2540), then near the 12465 level, which was resistance going back to late February.
Our technicals are still tilting negative, but we are on guard for the recent highly correlated environment where US Equities rise and the Yen loses... and vice versa.
Seasonal Snapshot (cash): All three patterns consolidate with an upward bias until 20uly.
13June The sector remains under pressure with the DOEs on deck. Lower Volume reveals the consolidation nature of yesterday's action.
We are still seeing a resumption of the pattern that has been in place for the last month: decline, consolidate, decline, repeat.
Please see each individual market for details.
Futures Last Trade: July: 20June; Aug: 20July; Sep: 21Aug; Oct: 20Sep; Nov: 22Oct; Dec: 16Nov
Options Last Trade: July: 15June; Aug: 17July; Sep: 16Aug; Oct: 17Sep; Nov: 17Oct; Dec: 13Nov
13June Our technicals remain negatively biased. The recent upward swing in our Rate of Change indicator seems to be running out of steam. As a result, the current attempt to turn our Momentum indicator positive seems to be having the same problems... it has been negative since the end of April, sustaining one failed attempt failed at the end of May.
Given recent action, our noted bear pennant formation is starting to look more like a descending triangle. The upper boundary of the triangle (from 31May) comes in near 86.35. Strong support is seen at a triple bottom near 81.50 (04June; 11June & 12June), basis the August contract. Further risk-off behavior, or a smaller than expected withdrawal from already bulging supplies in this morning's DOEs should see a test of support rather quickly. We remind readers that supplies are still above the upper limit of their range for this time of year:
A continuation of the pattern would target the $70 level. This may come rather quickly, as it aligns with the lower end of the falling channel that has been in place since early May. It also agrees with our view of fundamental economic weakness.
The 21-day moving average (88.25) is now well below the 200-day (97.30) and should be a bearish dynamic going forward. Both of these averages should also cap any near-term rallies.
Our main upside risk at this time is the developing extreme Oversold condition. However, our indicator is coming off a lower high and we have seen single digits as recently as 18May (6 vs. our current 23 reading). On a sustained rally above 92.00, we see resistance at the cluster of previous lows: 94.02 on 14May; 95.60-95.80 triple bottom from 7-9May.
Seasonal Snapshot: (cash contract): All three patterns consolidate with an upward bias until a culmination high on 15July.
Futures Last Trade: July: 29June; Aug: 31July; Sep: 31Aug; Oct: 28Sep; Nov: 31Oct; Dec:30Nov
Options Last Trade: July: 26June; Aug: 17July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27 Nov
RBOB 13June.The pattern of decline, consolidate, decline remains in place. Rising trend line support for the recent consolidation (symmetrical triangle on declining Volume?) comes in at today's low (2.6369, basis the July contract as of this writing).
Much like Crude, the slow turn to higher Momentum while Trend remains firmly lower. RSI is undecided, and this may be what to watch for a clue as to directional action.
A break out below the lower end of this consolidation, on stronger Volume, would project a move below 2.4000. Our initial bear flag formation earlier this month targeted the 2.7500-2.8000 level.
Sunday night's rally probed well above an upper boundary of the symmetrical triangle. This boundary currently comes in at 2.6950
The -2 STD (2.5900) below the 21-day moving average (2.7585) again sets us up for near-term support levels. It should be noted that this lower Bollinger Band is expanding (falling) rapidly.
Seasonal Snapshot: (cash): All three patterns are biased higher until 17June, then are biased lower until June 21.
HEATING OIL: 13June Despite the recent shift to positive Momentum, our other technicals are more negatively biased. Our Trend indicator is clearly falling and RSI has yet to take a new leg higher.
Friday's break out below a very steep bear flag formation projects a 30 cent move down to 2.3500. While the break out came on somewhat stronger Volume, the July contract needs to get through the previous lows at 2.5640 first.
Old support at 2.8075 should offer new resistance.
The -2 STD (2.5390) below the 21-day moving average (2.7510) should act as a near-term stopping point. The falling 21-day moving average remains below the 200-day (2.9848), which should keep the pressure on.
Seasonal Snapshot: (cash) The 5&15yr patterns are moving higher until 18June. The 30yr pattern's weakness decouples from the shorter-term patterns and continues lower until mid July.
Futures Last Trade: July: 27June; Aug: 27July; Sep: 29Aug; Oct: 26Sep; Nov: 29Oct; Dec: 28Nov
Options last Trade: July: 26June; Aug: 26July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27Nov
13June All of our technical remain under pressure and lower prices at the front end are indeed likely. That said, our Rate of Change is creeping back and the July contract is tipping back into Oversold conditions. However, at its current 24, we have seen much lower levels, approaching single digits through out the spring.
We feel the action sets up for a test of the recent lows (2.10 basis the July contract), then a more sustained move higher. Of course, the other side of this argument is that the recent action is signs of a failed rally. Last Thursday's decline on heavier Volume keeps the pressure on. Additionally, our Rate of Change indicator continues to bump along lower levels without sustaining any kind of real move to the upside.
We feel the bullish case is more compelling.
Fundamentally, production cuts are starting to bite. Additionally, because of low NatGas prices, we have seen numerous stories lately indicating businesses are switching to NatGas and away from coal and petroleum. These structural changes will change the supply and demand relationship and we can't count on next Winter being as mild as this last one. If we see a very hot summer, it is interesting to note that the marginal supply of electricity will likely come from gas turbines. This adds to the demand issue.
We feel the current sell-off is partly technical and partly a reaction to the European debt mess.
Previous support at 2.320 should now offer new resistance. Resistance is also seen at the recent lower high (2.48 on 06June) which aligns with 15May support. The next major level is 2.60, which was resistance on the way in early mid-May
We reiterate our previously stated reminder to our readers of significant changes in this market that have emerged:
1. The difference between current storage and historical has narrowed.
2. The announced production cuts have had a chance to gain traction.
3. News of structural changes in electricity production towards NatGas has been announced.
Seasonal Snapshot: All three patterns chop lower, then higher before starting a period of protracted weakness from 16June-22July.
Futures Last Trade: SP & NASDAQ: June 14June; Se;p: 20Sep; Dow: June: 15June; Sep: 21Sep
Options Last Trade: SP & NASDAQ: June 14June; July: 20July; Aug: 17Aug; Sep: 20Sep; Dow: June: 15June; July: 20July; Aug: 17Aug; Sep: 21Sep
13June Another rally from lower levels is on lower Volume as of this writing. It seems to have run into resistance around the highs from last Thursday, Friday and yesterday. If we remove the gap higher opening from Sunday night, resistance is also seen at Monday's highs... This repeats the pattern we have been seeing lately. Each rally has been met with a raft of selling and has failed to materially turn the market to a higher bias.
That said, our Momentum indicators remain positive and our Rate of Change is still rising. We will be paying close attention to this Rate of Change over the next few days.
All three of our tracked markets have been testing and holding their 21-day moving averages in what appears to be a consolidation of last Wednesday's gains. :
The 2 STD Bollinger Bands are contracting on this consolidation and may likely offer support and resistance levels. We list those for your use:
Sep SP 21-day MA 1304.25, +2 STD 1337.75, -2 STD 1270.70
Sep Dow 21-day MA 12355, +2 STD 12666, -2 STD 12042
Sep NASDAQ 100 21-day MA 2521.75, +2 STD 2586.85, -2 STD 2456.80
The consolidation may very well continue. Tomorrow's Claims number (forecast to be 375K) will be followed by a rather unusually busy Friday: Empire Mfg (13.8 exp), Industrial Production (unch exp) and Consumer Sentiment (77.5 exp). All may be moot, however, ahead of next Wednesday's FOMC announcement followed by Bernanke's much watched press conference.
Seasonal Snapshot: (cash):
SP & Dow: The 5yr pattern declines in choppy fashion until late June. The 15yr pattern strengthens until early June while the 30yr consolidates with an upward bias.
NASDAQ: All three patterns are weak until turning to an upward bias throughout early June.
Options Last Trade: July: 22June; Aug: 27July; Sep: 24Aug; Oct: 21Sep; Nov: 26Oct; Dec: 23Nov
13June An easing of weather stress has the new-crop Corn and Soybeans contracts under some pressure lower.
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
13June Concern over tightness of current supplies has the old-crop July rallying somewhat. Easier growing conditions with cooler and wetter weather is seen as a driver of lower prices in the new-crop December.
July rallied up to near Sunday night's overnight highs, failed as sits below the 6.00 key resistance level as of this writing. Near-term support near 5.88 is based on overnight highs and Tuesday's overnight lows. 5.75, the next level down, was the early AM low yesterday and today. This was also modest support in late May. Below that, it's all the way down to the early June lows near 5.50.
New-crop December has held above the 5.10 support hat traces back to late May's consolidation but has failed to hold above the 5.20 consolidation center. With Trend now falling, and both ROC and RSI now declining, our technicals are shifting to a decidedly less positive and likely negative bias. Look for any test of the 5.10 support to continue to test the 5.100 lows.
The lack of any negative surprises has Corn down materially this morning. Better than expected ending stocks and less than expected dryness damage has Corn looking at peaking action. The failure of July to make high AND hold highs above 6.00 should be seen as a technical negative as this is s a key support and resistance level. December has been under pressure from a declining Trend line traced back to late October. This Trend line should offer resistance near 5.45, and declines about ½ cent per day.
We leave a portion of a recent comments in place as their relevancy to further thoughts in the market:
Despite today's strength, we believe any new longs are likely to be jittery due to the previously noted vulnerabilities:
· A potential record crop
· Early completion of planting
· Ahead of trend Crop Progress
· Declining U.S. personal automobile fuel demand
· Deteriorating global economic conditions
Seasonal Snapshot: For July- All 3 patterns are due to be seasonal under pressure from 6/11 until delivery starts at the end of June.
For December-All 3 patterns have some near term positive seasonal bias for the next several days. By 6/19, all will be under a very negative seasonal bias until 7/3. The 5 and 15-years peak on 7/13. Both see a 2 day seasonal "rally" on 6/16 and 6/17. The 30-year has an early 6/13 peak, 2 days down, then 4 days up into the 6/19 peak.
First Notice: July: 29June; Aug: 31July; Sep: 31Aug; Nov: 31Oct; Jan: 31Dec
13June Expectations of rain next week has the Soy complex under pressure. With July running out of speculative trading time, likely funds liquidation is starting to add some downside volatility to the mix.
That said, our primary Soybean technicals remain positively biased. However, secondaries ROC and RSI are headed lower. As we stated yesterday, this may be indicating a more profound turn in the Trend and Momentum.
July resistance remains near 14.50, where it failed to go higher on 5/17 and yesterday. Support failed to hold at 14.10, and is seen at the psychological 14.00 1tracing back to support and resistance as far back as July 2010. This the second failure to head higher at 14.50, the first occurring on 5/17. Subsequent to that failure, the market sold off to below 13.25 in a fairly well defined bearish pattern. If this is a true failure, look for a test of those lows. Support will show up in stair step fashion down to below 13.25. If that fails to hold, 13.00 is major support, going back to May 2011.
November, usually our first new-crop month, under pressure as well, due to the rain forecast for next week. This is being seen as occurring early in the growth cycle so is seen as beneficial.
Support is seen near 13.20, an intermediate level going back as early as 3/12. Below that is a support zone near 13.05, where market has found support in late March, resistance in mid-May and then again on 6/6. When November failed to go higher in May, it declined below the 12.60 level. Resistance is seen at 13.40, where it failed to go higher late last week and this week.
We leave some recent comments in place for levels. Case in point, July Soybeans are now within one day's move of the 14.50 resistance we described some time ago.
We see July's support at 13.40, near Friday's low and where it has show support this week. Below that we see the -2 STD (13.23) below the 21-day moving average (13.96) and then yesterday's low of 13.17½. Resistance is at the -1 STD below the 21-day (13.58) moving average. This market has not settled above this figure since 5/17. This market remains oversold, but getting less so.
We see November somewhat differently due to its differing technicals. Support is quite clear at 12.45, basically a double bottom with yesterday's (12.44¾) and Friday's (12.45) lows. It is not oversold, having bounced off the 35 RSI and headed higher. Resistance is seen at 12.82, near the 5/16 and 5/30 lows and where is couldn't sustain its AM probe higher today.
We leave some of last Wednesday's comments in place for further levels reference.
Until this market makes highs above 14.50 in July and 13.20 in November, it must be regarded as under pressure. These are levels the markets failed at on or about 5/17.
Today's action in July may have occurred within the context of a bearish pennant pattern. If this is true, today's action may have broken out to the downside, which we feel would target near 13.00. Support would initially come in near 13.50, just below the 5/23 low. We see resistance between 13.75-13.80, where the market found support in mid-May, and resistance last week.
November's action was much less decisive, as indicated in our comment above. Since failing to reverse the early mid-May sell-off, November has failed repeatedly in attempts to get to 13.20. For the last 2 weeks, there have been a series of lower highs. Today's action was just such a day, failing to get to yesterday's high and settling nominally lower. We see 13.20 as a logical resistance, but also near 13.00, as the market showed some support there before probing much lower last week. Support is seen at 13.81 where it has both bounced and failed at in the past 2 weeks. Below that is the 5/23 low near 12.50.
Again, beneficial rains will likely cause a serious rout.
Seasonal Snapshot: For July-5-year ends its shallow rising period on June 13 then enters a shallow falling period until 6/23. 15-year is in a mixed up and down period trending moderately higher until June 20, then biased lower until June 28. The 30-year is mixed up and down until June 14, then spikes higher until June18, then essentially is in a falling mode until June 29.
For November-Both 5-year and 15-year are peaking between 6/11 and 6/13. Both shift to a negative bias: the 5-year until June 26, the 15-year until July 7. The 30-year is in a negative bias until June 15, a positive until June 18, then generally falling until July 7.
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
Despite Corn taking a material leg lower, Wheat failed to follow Corn and Soybeans lower today. However, both July and December consolidated at only modesty lower levels today, both sit just above material support levels at 6.10 and 6.55 respectively. Failure to hold at those levels should see another 15+ cents weakness to the next support levels near mid-May's lows at 5.92 and 6.30 respectively.
Resistances are seen near the recent pattern highs, near 6.40 for July and 6.80 for December.
Since peaking in mid-May, Wheat has been largely under pressure. Our technicals bear this out, turning negative and remaining so for the last 2 weeks.
We leave in place our comment from 4/5 as it addresses longer-term patterns we've noticed:
Additionally, on our Momentum measure going back to late December, each positive shift has peaked at earlier and lower. This is in a period of a modestly negative bias in what has been largely range trading.
May's Volatility has peaked just below the High range (< 1 STD).
Pay attention to the harvest in Winter Wheat as it moves ahead of schedule due to warm weather and the plants benefit from rain in both Europe and the US.
This market has been in a gently falling bearish pattern for the last 2 months since peaking on 2/1. On a longer-term view, the bearish dynamic has been in place, albeit with a sizable range, since February 2011.
Volatility is now close to High (> 1 STD higher than Average) indicating there may be opportunities to sell premium in options.
Seasonal Snapshot: For July-All 3 patterns peak on June 13 and 14, then enter a period of generally lower bias until the end of June.
For December- All 3 patterns peak near June 13, then enter a period of generally negative bias until the end of June.
U.S. Treasurys' First Notice: Sep: 31Aug; Dec: 30Nov
U.S. Treasurys' Options Last Trade: July: 22June; Aug: 27July; Sep: 24Aug
13June With King of the World Jamie Dimon testifying today, and the data flow coming in near expectations, we are observing some consolidating action this morning.
After this round of the latest Congressional "Dog and Pony" show, we'll be back to the fundamental issues that have been driving recent action.
Where we see real action, and we say it's as it should be, is in Europe's short-end.
BONDS- Consolidation action is what we're seeing this morning. Since failing to make new highs on 6/5, this market 's action has been largely failing, as it follows a falling trend line down. We this as offering resistance near 148-24 today. Support is seen just above 148-00 which is both a big round number psychological level and where the market has seen resistance in late May, and support last week.
We still feel this market is unlikely to make a material change in longer-term direction before next Wednesday's Fed meeting announcement.
The market's consolidation action sits right near the still rising 21-day moving average (148-12).
Technicals remain negative but RSI continues to exhibit indecisive action that may indicate bottoming.
Bigger picture, on any real weakness, we still see a significant support level at the peak levels from September 2011 through January 2012. Drawing a horizontal line though the 2 sets of peaks gives us support near 146-02 and 145-14. Additionally, rising trend line support (146-21) extends back to the 04Apr congestion lows. Below this level, the 38.2% retracement of the rally since March comes in at 143-19.
Seasonal Snapshot: (cash):The 5yr pattern continues its upward bias until 14June. The 15 & 30 yrs consolidate with a downward bias until August.
Tens (10-YR NOTES): Tens are exhibiting quite similar action as Bonds (or is the other way around?).
They opened near the rising 21-day moving average(133-07). It traded down to the 132-28 support and bounced back up through 133-07 level. So far, it has failed to maintain itself above the 133-16 resistance that traces back to 5/31 and 6/7.
Resistance is seen above at 134-00, where the market struggled the last 2 days, and last week.
Seasonal Snapshot: (cash): Both Bonds and Tens seem to be in a consolidation area looking for a directional impetus. The 5yr pattern decouples from the 15&30yr, heading higher until mid June. The longer-term patterns are in a modestly downward bias that accelerates toward the end of July and lasts until October.
2-YR NOTES: Twos remain under pressure. Today's action makes another new low and, while it is consolidating, this keeps the negative bias in place.
Technicals remains biased towards lower prices. Look for support at 110-04, which was resistance then support in late May. Resistance should sow up near 110-056, where the market found some support before the latest move lower,
Technicals have all turned lower. The 21-day moving average (110-05) is peaking. Without a material and sustained rally, this market is looking weak.
We continue to maintain that Twos being allowed to fall is counter to current stated Fed monetary and QE policy. Something's got to give. If the Fed decides to break out the QE nukes again, we should see a lurch higher.
Seasonal Snapshot: (cash): All three patterns slow modestly, but volatile negative bias until June 4th, then spike higher until 12June.
Futures Last Trade: June: 18June; July: 16July; Aug: 13Aug; Sep: 17Sep; Oct: 15Oct; Nov: 19Nov; Dec: 17Dec
Options Last Trade: June: 18June; July:13July; Aug: 10Aug; Sep: 17Sep; Oct: 12Oct; Nov: 16Nov; Dec: 17Dec
Sep12 We see support at 99.46, where it has bounced since initially rallying up through that level on 6/6. Resistance is at the highs from last week, 99.49.Technicals seem to be peaking
Futures Last Trade: Sep: 06Sep; Dec: 06Dec
Options Last Trade: July: 22June; Aug: 27July; Sep: 24Aug
BUNDS (10-yr): Bunds remain under pressure as the crisis is seen as deepening. Definite negative Trend going back 9 sessions remains in effect. Our Trend indicator continues to fall. Our other technicals remain negatively biased and today's new low is on decent Volume. Today's move remains below the 142.00 resistance level. The next level lower is 140.00. This is where the market struggled to head higher in late April. Resistance is seen above at 143.40, where it struggled to head higher in late May. Above that is 144.00, support on 5/31 and resistance Friday and yesterday.
SCHATZ (2-yr): Schatz continues to work lower as the Eurozone situation deteriorates. New lows keeps the pressure on. The market is now pressuring the -2 STD (110.095) below the 21-day moving average (110.068). This has tended to act as a "brake" on further declines in the past. Support is likely in the zone around 110.05. Modest resistance should be seen at 110-05.5.
All our technicals point to lower action and the 21-day moving average has peaked as well.
Along with the U.S. Twos, the Schatz falling will end up being counter to official policy desires so we have our doubts as to any negative bias sustainability.
Options Last Trade: July: 26June; Aug: 26July; Sep: 28Aug; Oct: 25Sep
First Notice: July:29June; Aug: 31July; Sep: 31Aug; Oct: 28Sep; Nov: 31Oct; Dec: 30Nov
13June Not really much to report here, as the market inches up toward our noted falling trend line (1635) that has been in place since the $90 drop on 29Feb. A break out above would sustain the 01June break out above our previously noted symmetrical triangle. If the pattern plays out, it would ultimately project a rally above 1700. Our short-term charts show that Volume seems to have returned on the strength... both yesterday and today.
Bigger picture, we see a giant descending triangle formation that extends back to the Sep 2011 high (1923.7). The upper boundary currently comes in around 1722. The bounce off our noted support level at the 26Dec low (1523.9) registers a triple bottom, aligning with the previous low (26Sep 1535).
Below is a slippery slope to 1500 psychological support, then a cluster of lows between 1462.5 (02May) and 1478.3 (27June). The 38.2% retracement of the Oct 2008- Sep 2011 rally comes in at 1456.8.
Seasonal Snapshot: All three patterns spike higher until 20June, when the 15 & 30 yr patterns decline precipitously until 05July. The 5yr pattern consolidates until 06July.
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
13June The recent consolidation has certainly put the brakes on the previous month of lower lows. Our Momentum indicator has flipped back to positive. We are on guard and remind readers that this indicator has been negative for most of this year. After four attempts since March, the positive turn in late April/early May did not last long and could not yield a higher high for the move. If that is the case this time around, we look to the downside for support levels.
The 2STD Bollinger Bands are contracting and the -2STD (currently 3.2540) has acted as a brake on any weakness. If it starts to expand again, the decline may target the previous series of lows:
3.2380 on 04June;
3.2325 on 15Dec 2011
3.2040 on 25Nov 2011
3.0310 on 20Oct 2011
2.9940 on 03Oct 2011
Bigger picture, a rising trend line from the June 2010 low (2.7760) comes in at 3.1750. The next from Sep 2009 low (2.6400) comes in at 2.9310.
Old support on two moves to 3.3800 still seems to be offering new resistance. This is also in the neighborhood of falling trend line resistance that has been in place since the lower high on 01May.
An additional negative dynamic is the falling 21-day moving average (3.4480) is accelerating below the 200-day (3.6420), but may be relegated to the background if central banks start acting.
Seasonal Snapshot: All three patterns rally until the July contract's expiration.
11June We see a variety of dynamics impacting the Softs. See the individual contracts.
First Notice: July: 18June; Sep: 20Aug; Dec:
Options Last Trade: Aug: 06July; Sep: 03Aug; Oct: 07Sep
13June Our technicals remain positively biased, but is starting to tip into Overbought territory. The +2STD (2323) is contracting and comes in right above our noted longer-term trend line (2315). This should offer some significant resistance. There has been a fair amount of correlation to the British Pound, where a significant amount of Cocoa is traded.
Bigger picture, we remind readers that this market has been in a declining longer-term dynamic since late January. Until it breaks above the declining trend line (2315) that extends back to the 27Jan high (2519), this market is still in a bearish pattern. Seasonal Snapshot: All three patterns are rising until early July.
First Notice: July: 25June; Sep: 23Aug; Dec: 21Nov
Options Last Trade: Aug: 13July; Sep: 10Aug; Oct: 14Sep
13June The market sagged to new lows. Good weather seems to be cooperating with the start of the Brazilian harvest. The next level to the downside is the June 2010 low at 147.20.
Our Rate of Change indicator is still rising, but we remind readers that any positive turns in our Momentum indicator have been both short-lived and have only resulted in a consolidation period before a continuation of the overall downtrend that has been in place for over a year.
The market is still quite Oversold (14), so consolidation may be in order. Watch the falling 21-day moving average (currently 165.95) to cap any rallies. Resistance should also be seen at the upper end of the recent consolidation range, near 159.00. Seasonal Snapshot: The 5yr pattern rises until the beginning of July. The 15&30yr patterns are both quite negative until 25June.
First Notice: July: 25June; Oct: 24Sep; Dec: 26Nov
Options Last Trade: Sep: 17Aug; Oct: 14Sep; Nov: 19Oct; Dec: 09Nov
13June Our Volatility measures for both July and Oct remains at Very-High levels.
The July contract is still flirting with the 29May high (75.33). The previous series of highs should offer (brief?) stopping points on the road higher: 79.05 on 21May; 80.65 on 15May, then 81.80 where this phase of the lower action started.
Support should continue to be offered at old July-Sep 2009 resistance (65.00).
Attention will shift from good planting progress to crop ratings going forward.
Seasonal Snapshot: The 30yr pattern consolidates throughout June, but the 5&15yr move the entire month.
First Notice: July: 02July; Oct: 01Oct
Options Last Trade: July: 15June; Aug: 16July; Sep: 15Aug; Oct: 17Sep
13June The July contract has thus far respected our noted resistance is seen at yesterday's high of 20.50. This is also where the market fell to and bounced for a short time in early May. A.break below the previous lows at 19.00 on stronger Volume would put our previous target of 17.00 back into focus. This dates back to the break below a large descending triangle and horizontal trend line (21.00) that dates back to January.
Continuing concerns over tight supplies is an upside risk. Precipitation is also the issue, as heavy rains slow harvesting activities in Brazil and threaten to do so in India. Seasonal Snapshot: The 5yr pattern is in a pronounced upward bias until expiration. The 15&30yrs consolidate until heading higher on 16June.
Disclaimer: The information presented in this report is taken from sources we believe to be reliable and accurate. This information is not guaranteed as to accuracy or completeness. The opinions expressed are based on our best judgment at the time of writing and are subject to change without notice. These opinions should not be construed as an inducement or advice to enter into any Futures or Options on Futures transaction except where explicitly stated. There is risk of substantial loss in trading futures and options. One's financial suitability should be considered carefully before placing any trades. Past performance is not indicative of future results.