ENERGIES:
PETROLEUM:
10July
The sector is on its heels a bit this morning after the Norwegian
government ordered arbitration to settle the oil workers' strike that
was scheduled to start at midnight last night. China, the world's
second largest consumer, also saw imports drop to the lowest levels
since December:
The
recent wide consolidation range after the 28June rally has served to
take all three of our tracked markets off historically Overbought
conditions and has us watching this week's foreign economic calendar
focusing on European and Chinese Industry and GDP. US domestic
"FedSpeak" may also give a clue about more stimulus that may be in the
work.
Volatility remains Very High across the sector and Volume has fallen off ever since the 29June rally.
Watch
all three of our Petro markets' 21-day moving averages for support.
It is interesting to note that this average offered major resistance
throughout the decline since April.
CRUDE OIL:
Futures Last Trade: Aug: 20July; Sep: 21Aug; Oct: 20Sep; Nov: 22Oct; Dec: 16Nov
Options Last Trade: Aug: 17July; Sep: 16Aug; Oct: 17Sep; Nov: 17Oct; Dec: 13Nov
10July
Support (continuous contract): 84.00: 06&09July double bottom.
83.05: 21-day moving average.
81.20: 21-28June consolidation highs
77.40: -2STD below 21-day moving average and 28June low.
75.71: 09Aug 2011 low
74.95: 04Oct 2011 low
Resistance (continuous contract): 87.00-86.60: June consolidation highs
88.70: +2STD above 21-day moving average.
89.30: late May consolidation lows.
89.90: 38.2% retracement of the March to June decline.
93.85: 50% retracement of the March to June decline.
Comment:
A weaker, but still an "inside" day, as of this writing. Watch the
double bottom formed Friday and Monday around 84.00, then the 21-day
moving average at 83.00.
French
Industrial Production was weaker than expected this morning, but
Italy and UK's were stronger. Chinese and the European region as a
whole reports on Thursday loom large ahead. Forecasts call for Chinese
numbers to improve and the EuroZone to worsen. Weak releases will
probably only serve to heighten speculation about more potential
stimulus. However, Crude has not reacted with the Equity Indices' vigor
to such news.
Our
Momentum indicator remains positive, sustaining its 14June positive
turn after briefly flirting with going negative, but our Rate of Change
indicator is in a three-day decline.
Our Volatility measure has propelled to Very High levels and should handicap any option purchase strategies.
Seasonal Snapshot: (cash contract): All three patterns consolidate with an upward bias until a culmination high on 15July.
PRODUCTS:
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:
10July
Aug Support: 2.6950-2.7000: Lower end of the recent consolidation range.
2.6420: 29June high.
2.6045: 21-day moving average
2.4090 -2 STD below the 21-day moving average
2.4408: 21June low
Aug Resistance 2.8000: +2STD above the 21-day moving average.
2.8275: 38.2% retracement of the March to June decline.
2.8350: 200-day moving average.
2.9260: 50% retracement of the March to June decline.
Comment: Today's
Doji Candle indicates indecision on this consolidation of the 29June
rally above the 21-day moving average, which offered consistent resistance all the way down since early April. The rally has been capped at our noted +2STD above the 21-day moving average, for now.
These Bollinger Bands are still expanding widely, so this consolidation may be showing signs of exhaustion for the rally.
Gasoline
supplies are below the lower limit of the average for this time of
year and may, along with the official start of the summer driving
season, be supporting prices.
Seasonal Snapshot: (cash): The 15&30yr patterns drift higher until 12July. The 5yr pattern drifts lower until the end of July.
HEATING OIL:
10July
Aug Support: 2.7030: 06&09July double bottom.
2.6488: 02July low.
2.6455: 21-day moving average.
2.5085: 25June low
2.4980: -2STD below the 21-day moving average.
Aug Resistance: 2.7930: +2 STD above the 21-day moving average.
2.7900: 05July high.
2.8170: 38.2% retracement of the March to June decline.
2.9175: 50% retracement of the March to June decline.
Comment:
Similar to RBOB, Heating Oil is in a consolidation pattern since the
29June pop above the +2STD above the 21-day moving average. It does,
however, have a slightly more negative bias inside this recent
consolidation, essentially splitting the difference between the more
Overbought RBOB and "middling" WTI Crude.
Seasonal Snapshot:(Cash) The
30yr pattern's weakness decouples from the stronger shorter-term
patterns (until mid-July) and continues lower until mid July.
NATURAL GAS:
Futures Last Trade: Aug: 27July; Sep: 29Aug; Oct: 26Sep; Nov: 29Oct; Dec: 28Nov
Options last Trade: Aug: 26July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27Nov
10July
Aug Support: 2.785: Rising trend line support since 14June rally.
2.70: 21-day moving average.
2.53: 06June high. Old resistance/new support for the 15June low.
2.215: 14June low
2.32: -2STD below 21-day moving average.
2.175: 20Apr low
Aug Resistance: 2.885: Mid May peak
3.07-3.08: +2STD above 21-day moving average and 200-day moving average.
3.315: 38.2% retracement of the June 2011 to April 2012 decline.
Comment:
The tug of war may be coming to a close, on a technical level.
Today's lows again tested rising trend line support that extends back
to action after the 14June pop higher. Although it has probed above
several times. the August contract is also still struggling with the
mid-late May peak around the 2.90 level. One side has "gotta give"...
Friday's
action revealed a bearish engulfing Candlestick pattern, on moderate
Volume, indicating a potential reversal of recent gains may be in
store.
This
wide consolidation has our Overbought indicator (64) now "middling"
and looking for direction. Our Rate of Change indicator is in its third
day of decline, showing signs of leveling off and dragging on our
positive Momentum.
Recent
above normal temperatures are projected to last for the foreseeable
future, serving to increase cooling demand supplied by natgas turbines.
This speaks to bulging supplies and turns attention to Thursday's
storage report, expected to show a smaller injection to storage.
Seasonal Snapshot: All three patterns chop lower, then higher before starting a period of protracted weakness from 16June-22July.
EQUITY INDICES:
Futures Last Trade: SP & NASDAQ: Sep: 20Sep; Dow: Sep: 21Sep
Options Last Trade: SP & NASDAQ: July: 20July; Aug: 17Aug; Sep: 20Sep; Dow: July: 20July; Aug: 17Aug; Sep: 21Sep
10July We are shorting the SP on a stronger Volume
move below the 21-day moving average (1338). An initial move below
the lower end of the recently rising channel (currently 1326) would
lower our stop to break-even. Next target is the -2STD Bollinger Band
below the average (1303).
SP Support: 1339: 21-day moving average
1326: Rising trend line from the 04June low.
1302.75: 25June low
1297: 12June low
1306.30.10: 200-day moving average
1303.10: -2 STD below the 21-day moving average
1262.00: 04June low
SP Resistance: 1368.50 upper end of the brief consolidation period after the early May peak.
1375: +2 STD over the 21-day moving average.
1375: 7/5 highs
1405: 01May high.
Dow support: 12665: 21-day moving average
12540: Rising trend line from the 04June low
12385: 200-day moving average
12376: 25June low
12288: 12June low
12405: -2 STD below 21-day
11985: 04June low
Dow resistance: 12917: 05July high.
12925: +2STD above 21-day
12975: Upper end of the brief consolidation period after the early May peak.
13284: 01May high
NASDAQ support: 2581.70: 21-day moving average
2532: Rising trend line from the 04June low.
2521: 25June low
2505: 12June low
2504: -2 STD below 21-day
2481.10: 200-day moving average
2433.75: 04June low
NASDAQ resistance: 2648: Upper end of the brief consolidation period after the early May peak.
2659.40: +2 STD above 21-day MA.
2655.75: 05July high.
2753: 01May high.
Comment: Our
Momentum and Trend indicators are turning negative. All three of our
tracked markets are threatening their rising 21-day moving averages,
as of this writing. This average has offered modest support for each
ever since breaking above around 06-07June.
With
the exception of Alcoa, what seems to be a poor start to Q2 earnings
season is offering pressure. There also seems to be a fair amount of
disappointment over the lack of concrete results from the European
Finance Ministers' Summit.
We
remind readers that ever since bouncing off the -2STD below the
21-day moving average on 05June, all three markets have made a series
of higher highs and lows. See above for levels.
Seasonal Snapshot: (Cash Indices) All three patterns for all three markets track strengthen until the end of July.
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GRAINS:
Options Last Trade: Aug: 27July; Sep: 24Aug; Oct: 21Sep; Nov: 26Oct; Dec: 23Nov
10July Yesterday's
Crop Progress Reports downgraded the Grains, but within the expected
range. Coupled with some risk averse position squaring before
tomorrow's monthly USDA Supply and Demand Report and mildly encouraging
weather, the Grains sold off modestly this morning.
CORN:
First Notice: Sep: 31Aug; Dec: 30Nov
10July Corn
is under moderate selling pressure as traders take profits and square
positions ahead of tomorrow's monthly Supply and Demand report. A
modest improvement in the weather forecast adds a bit of negative
dynamic. December
Support: 7:08:7/5 settlement, 7/9 opening
7.00: psychological level
6.73: Aug 2011 highs
6.56 ¾: 6/26 high trade
6.45: June 2011 highs
6.39 +2 STD over the 21-day moving average (5.53)
6.17 Oct 2011 highs
5.94: Gap left on 26June opening.
5.75: March high trades,support in early January, bullish support inflection level back to 7/1/2011 low.
5.69: Previous high and gap left on 25June opening.
Resistance: 7.31: +2 STD over the 21-day moving average (5.94)
7.50: Psychological level
7.60: Projected measured move. 6/15 to 6/27-6/29 pause, then 1.27 move from 6/29.
Comment: Technicals
remain clearly positive and should remain so until a meaningful
correction occurs. While the drought continues and additional damage to
the current crop is implied, this remains an unlikely event.
RSI
now looks to be declining which indicates some slowing in positive
Momentum. ROC is now headed sideways. New gaps remain in place between
6.74½ and 6.85½. Additional technical gaps remain between 5.94 and
5.96¼, between 5.54 and 5.70, and then well below the consolidation
between 5.34 and 5.36 ¼.
We
leave some recent comments and observations in place to give some
context to recent action and to remind our readers of the large supply
and demand dynamics at play this crop year.
Any
new long positions should be sensitive to any factors that could be
construed as taking the Momentum impetus away from the bullish case.
Such as
- Weakening technical action
- Rain
- Continuing global economic weakness
- Weak energy prices
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 December-All
3 patterns have a modest positive bias until 7/14, when all 3 peak
and head lower until starting bottoming action on 7/22. The 5 and
15-year patterns bottom on 7/25, the 30-year on 7/30. At their bottoms,
all 3 will project modestly higher biases until 8/2.
SOYBEANS:
First Notice: Aug: 31July; Sep: 31Aug; Nov: 31Oct; Jan: 31Dec
10July Another
expected drop in crop conditions, but within the expected range of
decline, is working in conjunction with pre Supply/Demand Report
position squaring. The result is some mild selling pressure this
morning.
Support: 15.25: 7/5 & 7/26 resistance and overnight support test on 7/9.
15.00: Major psychological and round number price level, and measures to the $1.00 move higher from the previous high
14.50: Psychological level
14.47: +2 STD over the 21-day moving average (13.48)
14.37: 6/25 high trade also right at the +2 STD over the 21-day moving average.
13.95-14.00: Major level as November peaked here from 8/31-9/12, then failed again from 4/2-6/21
13.90: Gap left on 25June opening
13.63-13.68: 4/16-/4/23 multiple failures to go higher, support 5/2-5/4, failure to go higher 5/10 and 5/11
Resistance: 15.57: 7/9 early session resistance.
15.71¼: 7/9 high trade
Comment:
Technicals remain positive, but the ROC and RSI have declined some.
The +2 STD (15.55) over the 21-day moving average (11.09) is acting as a
drag on upward momentum. Some serious gaps remain below, most notably
14.74¾ to 14.93. If this gets filled and the drought action remains,
this may set up the Soybeans for a move to materially higher record
highs.
Any news of significant rain, especially in Illinois or Iowa, will likely spark another violent move lower. Maybe this is the gap filler?
Seasonal Snapshot: For November-All
3 patterns are in a modest positive mode until 7/14. All then enter a
negative mode until bottoming action is complete on 7/29.
WHEAT:
First Notice: Sep: 31Aug; Dec: 30Nov
10July Wheat continues to move in sympathy with Corn. Today's action however, appears somewhat consolidative amid likely pre-report profit taking.
Support: 8.41½: Resistance in late July and support in early September 2011.
8.15: mid-level support area from mid-July and mid-August 2011
8.00: psychological level and mid-Sep 2011 resistance.
7.80: 8/9/11 and 9/15/11 low support
7.66: 10/11 settlement, upper level of late October through early November rally
7.60: 6//25 high, near the 6/27 low
7.45: 5/21 high.
7.30: just above 5/21 settlement, general resistance area on rallies in early January and early February
7.17-7.20:Intermediate
support and resistance inflection point, was support in mid-October,
resistance in late December/early January, support in early February,
and resistance on rallies in early and late March
7.00:
Psychological level, extends on a traded level down to 6.90 and has
acted as an inflection point around which lots of trading has occurred
going back to December.
6.78-6.80: Was strong support from 2-10-3/28, was resistance in June before the drought fears rally.
6.70: Has acted mainly as an intermediate support level since late November, but on numerous dates.
6.52-6.57:
Was bottoming support in late November, mid-December,mid-April, and
early June. Failure to hold here means a likely test of the contact
lows.
Resistance: 8.50: Psychological resistance
8.58¾: 7/9 high trade
Comment: Technically,
this market has maintained its quite positive bias along with Corn
during the drought induced rally. Look for it to continue in this vein
while the drought continues. When the results of the drought are more
evident and some sort of final yield is forecast, we should see some
sort of consolidation.
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 December- All
3 patterns enter a more positive biased mode on 7/10. 5 year will be
in a very positive mode until peaking on 8/5. 15 and 30 years are in a
generally positive trending direction until early September, with the
30 year swinging back and forth from positive to negative in that
time period.
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U.S. Treasurys' First Notice: Sep: 31Aug; Dec: 30Nov
U.S. Treasurys' Options Last Trade: Aug: 27July; Sep: 24Aug
10July Consolidating
action is putting potential Hanging Man formations in place in the
longer end contracts. Short end contracts are under mild, but
meaningful pressure.
We see today's action reiterating our theme below:
Despite
some intermittent "supportive" economic data, some of it in the
crucial housing sector, we see growth as persistently anemic, and the
numbers have stalled out in indicating growth going forward.
Couple
the above with other disappointing global economic developments and
risk-off days tend to drive a material share of investment and trading
flows into the U.S. Treasury market.
Continuing Operation Twist operations should support the long end and add some moderate pressure to the short end.
BONDS: The
safety trade continues to drive capital into the U.S. longer end,
albeit, only lightly so in today's action. Bonds should continue to
benefit from any risk-off action AND the expected Operation Twist
induced demand.
Support: 150-24: pattern resistance since 6/1-6/7 sell-off
150-09: 6/5 support, 6/8 resistance, 6/18, 6/19 high trades
150-00: Big psychological level, resistance on 5/30 and 6/13.
149-21:6/21 high, settlements on 5/30 & 6/15
149-03 support on 5/31, 6/6-6/8. 6/17, resistance 6/19 & 6/20
148-16: Late May resistance
148-07: 6/21 low, Support level from 6/13 & 6/15
148:00: psychological support level, was resistance from 5/17-5/24, and has been support since 6/7
147-24: 6/13, 6/20 support & 5/22, 5/25 resistance
147-00: Psychological level, 5/16 resistance, support area 5/1-5/29, 6/11.
Resistance: 151-00: psychological resistance
151-24: 6/4 intra-day support, 6/5 intra-day resistance
152-00: psychological resistance
Comment: Bonds have now gone positive in Momentum; Trend already had shifted to rising.
With
the lack of releases today, we see anemic Volume. Despite this
observation, the Pricing is breaking out, making highs above the last
month's range highs.
Seasonal Snapshot: (cash contract)
Bonds: The
5yr pattern declines 7/1. It then bounces higher and lower, going
generally sideways until 7/23, whereupon it enters a generally negative
pattern until early October. The 15 & 30 yrs consolidate with a downward bias until August.
Tens (10-YR NOTES):Tens
remain exhibiting similar action as Bonds (or is the other way
around?). Friday's action coupled with today's move has the Tens
breakout out of the last month's range highs.
Support: 134-16: near +2 STD over the 21-day moving average 134-00: Psychological level. Support from 5/31-6/4, just above highs on 6/11, 6/15-6/19
133-17
intra-day chart high trades 6/11, 6/13, 6/17, 6/19, 6/20, 6/21, just
above 21-day moving average (133-16), near mid-point of 3 week
consolidation range.
133-08 supported on 6/14, 6/17
132-28: near 6/13 & 6/20 lows, resistance in late May
132-16: 5/15 resistance, 5/2/ support, near midpoint to 5/17-5/25 consolidation action
Resistance:134-20: high trades on 7/9 and 7/10, also traces back to intra-day support on 6/4.
135-00: Psychological level, just above 6/1 & 6/2 highs
Comment: The Tenstechnicals
have now shifted to a distinctly positive bias. Pricing remains near
the +2 STD (134-17) over the 21-day moving average (133-22.5). Look to
this level to act as a drag on further gains.
Seasonal Snapshot: (cash contract)
Tens:
The 5yr pattern is in a modest bounce and fall off sideways pattern
until 7/23, whereupon it enters a more profound falling pattern until
early September. The longer-term patterns are in a modestly downward
bias that accelerates toward the end of July and lasts until October
2-YR NOTES: Despite today's modest fall in prices, we see thecontinuing
Euro-mess driving a risk-off bias in financials, Twos have shifted
more distinctly to a positive bias. Recent global Central banks' moves
reinforce our view below.
While
we continue to maintain that Twos being allowed to fall is counter to
current stated Fed monetary and QE policy, with the 6/20 news
regarding the continuation of Operation Twist, some modest pressure on
the short end is to be expected as the Fed reconfigures its balance
sheet.
If the Fed decides it needs to break out the QE nukes again, we should see a lurch higher.
Support: 110-06.25: resistance on 5/30, support from 6/6-6/8
110-5.25: 21-day moving average
110-04.75: Declining trend line from 6/4 peak, resistance from 5/25-5/30
110-04: support from 5/29-6/19
110-03.5: resistance after 6/20 FOMC sell-off, support after 6/21 overnight rally
110-03: Support on 5/25, 6/20, & 6/21.
110-02: 6/20 low post-FOMC sell-off.
Resistance: 110-08: High settlement on 6/5
110-08.25: High Trade on 6/4
110-09.25: spike high trade on 4/24
Comment: TheTwos'
are now shifted to a positive bias and look to be poised to make new
highs. The market, however, has traded up to the +2 STD (110-05) over
the 21-day moving average (110.04.5). This level has tended to act as a
drag on further moves.
Seasonal Snapshot: (cash contract)
All three patterns bounce higher from 6/25 until 6/28, and then
resume a generally negative bias until 7/10. The longer term Trend is
negative until it seems to bottom in early October.
SEP 13 EURODOLLARS:
Support: 99.555: high trade on 6/20
99.535: high on 6/18 & 6/19, settlement on 6/20
99.525: Support level back to 6/20
99.510:
major support and resistance level going back to 2/29 settlement.
Major support low since 6/21. 99.500: high trade from 4/12-4/19 &
4/26-4/27, low from 5/1-5/4, settle on 5/7
99.490: high trades on 6/7 & 6/11
Resistance: 99.560: 2/3 and 3/2 highs and mid-August support.
99.570: 9/21/11 & 3/2 high trade.
Comment: With
the short end benefiting from the risk-off financial issues, this
market's technicals are shifting to a higher focus. Some retrenchment
with today's consolidation.
BUNDS (German 10-yr): Bunds have completed the shift to a positive bias after last week's Eurozone "rescue" deal.
Support: 144:00: psychological level and early June resistance
143.45: late May resistance
142.45: 5/14 & 5/16 highs, support & resistance inflection 5/17-5/23
141.50: general support and resistance inflection area since 6/13 lows.
140.00: resistance in late April and early May
Resistance: 144.31: 7/9 high and 5/30 settlement
Comment: Technically,
Bunds shifted to a positive bias. All our directional indicators are
now pointing to higher levels. Doji pattern today, but with a higher
settlement and higher Volume.
SCHATZ (2-yr):
ECB rate cut provides a reason to buy the Schatz. Period.
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.
Support: 110.755: Late May/Early June chart pattern support from pattern lows
110.6756/8 settlement and level of declining trend line drawn from 6/6 high.
110.625: 6/25 high and 6/11 low
110-59:
resistance zone in early April, support and resistance inflection in
late April/early May, support on 6/6, resistance on 6/14 & 6/15
110.50: psychological level
110.445: support in early April.
110.355: resistance in late March/early April, at various times support or resistance going back to late December.
Resistance: 110.800: Late May/Early June resistance
Comment: Schatz's
technical pressure is now shifted with Trend and Momentum having
already turned positive. This is in keeping with Central bank policy.