Providio's Daily Futures Market Commentary for 8/9/12
HEADLINE COMMENTARY:
09August Another day of modest action and light volume. Initial risk-on style trading was abandoned in late action as it became apparent that the Draghi deal is not done and the optimism surrounding it is waning. We remain skeptical as long as no credible plan for inducing the Germans to pay for this are presented.
Some notable moves largely within the Ags, both U.S. and Exotic. The one continuing theme in Ags has been water; either too much or, as is most often lamented, too little.
OVERBOUGHT/OVERSOLD MARKETS:
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U.S. Economic Data releases-All times Eastern:
FOREIGN Economic Data releases-All times Eastern:
THIS WEEK'S REPORTS: Friday, August 10:
US:
Import and Export Prices
Treasury Budget
Foreign:
Germany-CPi France-Industrial Production Italy-CPI UK-PPI Canada-Labour Force Survey NEXT WEEK'S REPORTS: Monday, August 13
US: -NO RELEASES
Foreign:
New Zealand-Retail Trade
Japan-BOJ MPB Minutes
Japan-Tertiary Index
Tuesday, August 14
US:
NFIB Small Business Optimism Index
ISCS-Goldman Store Sales
PPI
Retail Sales
Redbook
Business Inventories
Foreign:
France-CPI
France-GDP Flash
Germany-GDP Flash
Germany-ZEW Survey
Swiss-Producer and Import Price Index
UK-GDP
EU-GDP Flash
EU-Industrial Production
Wednesday, August 15
US:
MBA Mortgage Applications Index
CPI
Empire State Mfg Index
TIC
Industrial Production-Capacity Utilization
Housing Market Index
EIA Petroleum Status
Foreign:
UK-BOE MPC Minutes
UK-Labour Market Report
Thursday, August 16
US:
Housing Starts
Jobless Claims
Bloomberg Consumer Comfort Index
Philly Fed Survey
E-Commerce Rretail Sales
EIA Natural Gas Storage
Fed Balance Sheet
Money Supply
Foreign:
UK-Retail Sales
EU-HIPC
Canada-Manufacturing Sales
New Zealand-PPI
Friday, August 17
US:
Consumer Sentiment
LEI
Foreign:
Germany-PPI
EU-Merchandise Trade
Canada-CPI
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CURRENCIES:
Futures Last Trade: Sep: 17Sep
Options Last Trade: Aug: 03Aug; Sep: 07Sep
Currencies:
09August Concerns in Europe over a worsening economic outlook have the Euro and other European currencies under pressure again. Slow bubbling up in economic outlooks in the Western hemisphere and Asia has the commodity currencies maintaining their rising bias.
Going back to the Draghi plan for European sovereign debt purchases. Again, who is going to pay for the bailout? All indications are the Germans. To this point, we've seen no plan that would lead us to believe this has been hammered out.
Aussie: 09Aug
Support:1.0530: Rising trend line from 7June high.
1.0500: psychological resistance.
1.0488: 7/30 settlement
1.0437: 7/27 settlement
1.0400: psychological support
1.0390: 19July high.
1.0422: 27Apr high.
1.0325: Late April highs for September contract.
1.0358: 21-day moving average
1.0245: 200-day moving average
1.0125: 25July low.
1.0083: -2STD below 21-day moving average
0.9565: 01June low, traces back to support from last November.
Resistance:
1.0552: 8/6 high trade
1.0562: Trend Indicator
1.0564: 8/7 trade high
1.0600: psychological level
1.06326: +2STD above 21-day moving average.
1.0833: 29Feb high.
Comment: The pattern of higher highs and higher lows since 6/1/12 has been continuing. Our Trend Indicator remains as being supportive when the market has been rising and offered resistance when it's going sideways. This market is modestly Overbought, but getting more so. Secondaries ROC and RSI are rolling over indicating possible topping action. Look out below if this breaks as the recent action indicates it looks a bit overextended. A move all the way back down to the 1.0425 would not be out of the question.
Seasonal Snapshot (cash): The 15&19yr patterns fall out of bed throughout August. The 5yr weakens until 16Aug.
British:09Aug
The pound stabilized when Mervyn King downplayed the chances for another rate-cut.
Support: 1.5608: 21-day moving average & just above psychological level
1.5500: Psychological level and support level since 6/13
1.5449: -2STD below 21-day moving average
1.5267: 01June low
1.5222 09Jan low
1.5179: Oct 2011 low
Resistance: 1.5700: psychological level
1.5736: 200-day moving average.
1.5773: 20June high & just above the 7/27 high (1.5767)
1.5767: +2STD above the 21-day moving average
1.5800: Psychological level and support from late March through mid-April. This is also near the 50% retracement of the late April thorough late May sell-off.
Comment: As we have noted, the wide consolidation that has been in place since May's losses has rendered our technical indicators lacking in directional predictability.
We continue to "nibble at the edges" since the currency seems to be stuck inside of a consolidation range, generally bound by +-2StD Bollinger Bands. We're out of the market right now. Volume remains anemic so far this week.
Seasonal Snapshot (cash): All three patterns are in a downward bias until 12Aug.
Canadian: 09Aug
Another day of higher highs and higher lows leaves the bullish rally in place. Fifth straight day of gains as of this writing
Support: 1.0029: Trend indicator
1.0029: Daily high for 8/7 & just above 8/7 settlement (1.0026)
1.0016: 11May high.
1.0011: 8/3 high trade
1.0010: Upper boundary of rising channel in place since 01June.
1.0000: Psychological resistance
0.9915: 21-day moving average
0.9894: 200-day moving average.
0.9750: Lower boundary of rising channel in place since 01June
0.9752:-2STD below 21-day moving average
0.9554: 04June low
Resistance: 1.00779: +2STD above 21-day moving average.
1.0168: 27Apr high.
Comment: Since the near-term bottoming on 8/2, the Loonie has rallied relentlessly. Technicals clearly point higher. ROC and RSI both made the turn on 8/2 and are driving to m a more positive bias as well. RSI is Overbought at 79 and rising. Volume has been light, however.
The +2 STD over the 21-day moving average is acting as a brake on outsized gains.
Like the Aussie$, the Canadian has made three unsuccessful attempts to flip negative during this time period, but is further away from another turn this time around. Its upward Momentum has also been constrained by the +2 STD over the 21-day moving average.
Another day of probing to new highs as this market chugs higher.
Seasonal Snapshot (cash): All three patterns fall until 11Aug, then consolidate until the end of August.
Dollar Index: 09Aug
Support: 82.535: Trend indicator level (turning)
82.067: -2STD below the 21-day moving average
81.56: 29June low.
81.22: 18June low.
81.025: 21May low.
80.46: 200-day moving average
78.68: 30Apr low.
Resistance: 83.10: 21-day moving average
84.13: +2 STD above the 21-day moving average.
84.65: Rising trend line from the 09Jan high through 01June high.
85.30: Rising trend line from the Oct 2011 high (80.45) through the 13Jan high.
88.80: 07June 2010 high.
90.35: 38.2% retracement of the July 2001 to April 2008 decline. The market came close to this level twice: Mar 2009 (89.71) & June 2010 (88.80).
Comment: A modest rally back in risk-off reaction to poor European data.
Yesterday's action had another probe to new lows and probing to the -2STD below the 21-day moving average in midst of a consolidating day. Today we see a bounce but on Low Volume again. Momentum and Trend are pointed lower at this juncture. Secondaries show either a pause or bottoming.
There are still other open gaps to fill all the way down to 79.615 (04May).
Seasonal Snapshot: The 5yr's weakness until early Aug is much more pronounced than the 15&30yr's consolidation with a downward bias.
Euro-FX: 09Aug
An ECB survey of economists has worse forecasts than previously shown. This has the Euro under pressure again. Since peaking off the residual strength from Friday's action, it has been under pressure.
Support
1.2268: 21-day moving average
1.2050: 24July low.
1.2094: -2STD below 21-day moving average.
1.2000: Psychological level.
1.1874: June 2010 low.
1.1365: Falling trend line support back to 18Apr 2011 low.
Resistance: : 1.2300: psychological level
1.2335: 19July high and just below our Trend Indicator (1.2337)
1.2400: Psychological level
1.2417: 28June low.
1.2442: +2STD above 21-day moving average.
1.2750: 18June high.
1.2826: 21May high.
Comment: Since testing the +2 STD over the bottoming 21-day moving average starting last week, the Euro has held as resistance. This moving level has continues to act as resistance to further moves higher. The probe lower tests support at our rising Trend Indicator.
Again, keep risk controls tight. Moves have tended to lurch against the prevailing "trend".
Seasonal Snapshot: All three patterns head lower: 5yr until 18Aug; 15&30yr until 11Aug.
Yen: 09Aug
Support: 1.2700: 29June high.
1.2739: 21-day moving average.
1.2649: 200-day moving average.
1.2627: -2STD below the 21-day moving average
1.2435: 16May low
1.2415: 25June low
1.2233: 20Apr low
1.1879: 15Mar low
Resistance: 1.2788: Trend indicator level
1.2800: Achieved upside target for the ascending triangle formation. Psychological level
1.2852: +2STD above 21-day moving average.
1.2895: 01June high.
1.3145: Feb pre-intervention highs.
Comment: The 1.2800 level remains as the material overhead resistance. A modest falling pattern is in place with a series of lower highs and inconsistent lower lows. Today's action is within this overall context.
Every probe above the 1.2800 level in the past 2 weeks has been rejected as the market consolidates around and below level. Further outsized gains look to be constrained above the +2STD above the 21-day moving average.
The 21-day has crossed above the 200-day.
Currently, our trend indicator has rolled over to a clearly negative bias. Momentum has joined it, with the secondaries, ROC and RSI show acceleration possible.
Volume is still low.
Seasonal Snapshot: After a short downtick until 07Aug, all three patterns chug higher until late October.
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ENERGIES:
PETROLEUM: Volume remains depressed. CRUDE OIL:
Futures Last Trade: Sep: 21Aug; Oct: 20Sep; Nov: 22Oct; Dec: 16Nov
Options Last Trade: Sep: 16Aug; Oct: 17Sep; Nov: 17Oct; Dec: 13Nov
09Aug
Support (continuous contract): 93.00: psychological level and just above 7/19 previous move higher settlement high
92.00: Trend Indicator level
90.00: psychological level near 21-day moving average (90.02)
89.90: 38.2% retracement of the March to June decline.
89.30: Late May consolidation lows.
87.45: 38.2% retracement of the July rally.
87.03: Early June consolidation highs
85.70: 50% retracement of the July rally.
83.65: 06-11July lows.
85.71: -2STD below 21-day moving average
80.68: 21-28June consolidation highs
77.28: 28June low.
77.28: 28June low.
75.71: 09Aug 2011 low
74.95: 04Oct 2011 low
Resistance (continuous contract):93.67: 8/7 recent move settlement high
94.34: +2STD above 21-day moving average.
93.85: 50% retracement of the March to June decline.
94.42: Current rally's high trade
97.28: 200-day moving average.
Comment: All our directional indicators point higher but secondaries indicate some slowing in the move may be at hand.
Our Volatility measure has eased back to Average from Very High levels and may reopen the door for option purchase strategies. This market's upward march is being capped by the +2 STD.
Seasonal Snapshot: (Cash contract) The 5yr falls until 24Aug. The 15&30year patterns consolidate until mid Sep.
PRODUCTS: Futures Last Trade: Aug: 31July; Sep: 31Aug; Oct: 28Sep; Nov: 31Oct; Dec:30Nov
Options Last Trade: Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27 Nov
RBOB
09Aug
Modestly higher in action dominated by the above noted conflicting dynamics.
What happens to demand as the prices soar out in consumptionland? Action is largely dependent on Crude's direction, but there is vulnerability to refinery issues as the Summer driving season goes on and we approach the Autumn refinery production shift
Sep Support: 2.9650: Lower end of late April consolidation range.
2.9500: Psychological support level
2.9000: Psychological support level and dates back to early May's failure.
2.9945: +2STD above the 21-day moving average
2.8156: 21-day moving average.
2.8122: 200-day moving average.
2.6695: 38.2% retracement of the July rally.
2.6130: 50% retracement of the July rally.
2.5975: Lower end of early July consolidation range.
2.6208: -2 STD below the 21-day moving average
2.3737: 21June low.
Sep Resistance: 3.00: Psychological level
3.0105: +2 STD over the 21-day moving average
3.02: Upper end of late April consolidation range.
3.2065: 14Mar high.
Comment: Our Trend, Momentum, and RSI indicators have rebounded from earlier weakness and are all headed higher. ROC now looks to be rolling over.
Gasoline looks like it may be at the end of the second leg of a measured move higher. .If this is the case, the RBOB may be in for a short and sharp move lower.
Our Volatility measure is now in the high Average level, making them more attractive for purchase strategies.
Look for the +2 STD to act as a drag on further gains. Seasonal Snapshot: (Cash) The 5yr pattern falls modestly until 23Aug. The 15&30yr consolidate on wide fashion until mid Sep. HEATING OIL: 09Aug
Sep Support: 2.8851: 21-day moving average.
2.7895: 05July high.
2.7875: 38.2% retracement of the July rally.
2.7350: 50% retracement of the July rally.
2.7050: 06-12July lows.
2.6495: 02July low.
2.7429: -2STD below the 21-day moving average.
2.5155: 25June low
Sep Resistance: 2.9505: 19July high.
3.0272: +2 STD above the 21-day moving average.
2.9784: 200-day moving average.
Comment:
Like our other tracked Petro markets, all our directional indicators have gone positive in bias. The Heat's, however are more consistently positive.
Also, Volatility has dropped from very high levels.
The Sep contract has been supported above the rising 21-day moving average and remains above the flat lining 200-day moving average. Our Trend indicator, currently at 2.9785, has acted as support as well.
Seasonal Snapshot: (Cash) The 15&30year patterns strengthen until 04Aug, then fall along with the 5yr until mid Aug.
NATURAL GAS: Futures Last Trade: Sep: 29Aug; Oct: 26Sep; Nov: 29Oct; Dec: 28Nov
Options last Trade: Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27Nov
09Aug
A lighter than expected injection caused a bid to emerge. A material move higher ensued.
Pay attention to forecasts as the shoulder season approaches. With economic activity seen as "picking up", NatGas is a beneficiary with its large role as an industrial feedstock.
Sep Support: 3.0001: 21-day moving average.
2.994: 200-day moving average
2.98: 27July low.
2.91: 5/18 peak high
2.89: 38.2% retracement of the June/July rally.
2.75: Psychological level.
2.72: 29June; 11; 12 & 17July lows.
2.745: -2STD below 21-day moving average.
2.53: 06June high. Old resistance/new support for the 15June low.
2.259: 12June low
2.222: 20Apr low
Sep Resistance: 3.257: +2STD above 21-day moving average
3.315: 38.2% retracement of the June 2011 to April 2012 decline.
4.10: Falling trend line back to Jan 2010 highs.
Comment: The negative bias, which looked pronounced as late as yesterday, looks to be easing.
ROC and RSI seem to indicate the shift is continuing. Our Trend Indicator seems to be bottoming. Volatility is falling, and is now only High.
Seasonal Snapshot: All three patterns turn higher until another leg down starts at the beginning of Aug.
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EQUITY INDICES:
Futures Last Trade: SP & NASDAQ: Sep: 20Sep; Dow: Sep: 21Sep
Options Last Trade: SP & NASDAQ: Aug: 17Aug; Sep: 20Sep; Dow: Aug: 17Aug; Sep: 21Sep
09Aug Equities show the same directionless dynamic with Eurozone risks running counter to the better U.S. releases.
Seasonal doldrums seem to be dominating the market's action.
SP (Continuous)
Support: 1366.25: 21-day moving average.
1323.10: -2 STD below the 21-day moving average
1322.60: 200-day moving average
1321.25: 25July low.
1319.75: 12July low.
1302-1304: Double bottom 25June; 26June
1297: 12June low
1262: 04June low
Resistance: 1409.35: +2 STD over the 21-day moving average
1407: Rising trend line from 22May high.
1405: 01May high.
Dow (Continuous)
Support: 13075: 7/30 & 8/3 resistance
13000: Psychological level
12935: 19July high.
12917: 05July high.
12855: 21-day moving average
12572: Rising 200-day moving average.
12472: -2 STD below 21-day.
12425: 12July low.
12360-80: Quadruple bottom 13June; 25June; 26June; 28June
12288: 12June low
11985: 04June low
Resistance: 13239: +2STD above 21-day
13285: Rising trend line from the 22May high and 01May high
NASDAQ (Continuous)
Support: 2621: 21-day moving average
2514: -2 STD below 21-day
2516.50: 12July low.
2523.75: 200-day moving average
2505: 12June low
2503.50: 28June low
2433.75: 04June low
Resistance: 2648: Upper end of the brief consolidation period after the early May peak.
2621.35 +2 STD above 21-day moving average
2732: Rising trend line from 22May high.
2753: 01May high.
Comment: Directional bias is positive. Secondaries ROC and RSI are showing a mixed bag depending on the market.
Look for a failure and move lower to higher lows in the next several days; this has been the pattern since the Doji bottom on 6/4.
We still see rallies as having been capped by their +2StD above the 21-day moving average.
At the risk of getting too "mumbo jumbo" and making little, if any sense, we note one interesting dynamic on the down moves. The rally off the 04June bottoming action has seen a pattern of higher highs and higher lows. Each decline off the higher high has found support in the neighborhood of the 50% retracement from the 04June low. This has forged those "higher lows" we have noticed. This tells us there may be a possibility for more declines (overnight?) to where those levels currently lie. This should be watched briefly, but closely:
SP: 1325
Dow: 12535
NASDAQ: 2546.50
easonal Snapshot: (Cash Indices) The 5&15yr patterns decline until mid August. The 30yr consolidates before turning very slightly higher on 09Aug.
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GRAINS:
Options Last Trade: Sep: 24Aug; Oct: 21Sep; Nov: 26Oct; Dec: 23Nov
09Aug Pre-USDA Report positioning had the recent shorts puking positions, and an attendant material rally. Especially the Soybeans. Few new positions as Volumes dropped.
As we said Tuesday, the fact is very little has changed and very little new is to be said. There's a drought , the crops have been materially damaged, high prices are killing some of the demand, and we're waiting to find out how bad the crops really are.
CORN:
First Notice: Sep: 31Aug; Dec: 30Nov
09August
Recent shorts were the likely source of today's material rally making new highs. A major directional move wasn't seen as likely before tomorrow's USDA Supply and Demand Report.
Field survey data will start impacting the supply side states.
The Sep/Dec backwardation has dissipated and the spread has now returned to a narrow Contango.
December
Support: 817¾: 7/30 high trade & just above the 8/8 high trade
8.00: Psychological resistance level and now support
7.90: Just above the 7/17 high
7.89: 21-day moving average
7.78: 7/16 high trade
7.60: Projected measured move. 6/15 to 6/27-6/29 pause, then 1.27 move from 6/29.
7.45-7.50: Psychological level
7.44: -2 STD under the 21-day moving average
7:08:7/5 settlement, 7/9 opening
7.00: psychological level
6.85-6.90: support above gap since 7/5 gap open.
6.73: Aug 2011 highs
6.56 ¾: 6/26 high trade
Resistance: 8.30: round number just above 8/9 high trade (8.29¾)
8.33½: +2 STD over the 21-day moving average
Comment: Directionals point to lower action, but most of our perceived action is consolidating as the market positions itself for this week's noted USDA report. The rally today takes some of the potential fuel out of any move higher if the USDA Report calls for it.
Watch our noted gap levels as these getting filled may give the market the structure necessary to head to new highs. Today's action took out a ½ cent gap between 7.49 and 7.49½.
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.
Seasonal Snapshot: For December-All 3 patterns have a modest positive bias until 8/2. All 3 tend to general sideways action with various shorter-term biases, until 9/27. Then all 3 move sharply lower to bottom on 10/2, whereupon a generally positive bias will prevail until 10/14.
SOYBEANS
First Notice: Aug: 31July; Sep: 31Aug; Nov: 31Oct; Jan: 31Dec
09August
The likely recent large short positions seemed to have headed for the exits before tomorrow morning's highly anticipated USDA report. Soybeans had the largest move off their highs with the hoped for rain. Positioning ahead of the report had the 'Beans up 50 cents at what point.
We maintain that U.S. Soybeans are going to find plenty of competition from Brazil at $15-$20.
Support: 16.16¼: 7/23 limit down and low trade
16.07: 7/17 high
1605½: 21-day moving average
16.00: psychological level and just below the 21-day moving average (16.00½)
15.98½: 7/16 high trade
15.90½: New settlement high on 7/16
15.75: 7/11 high trade
15.71¼: 7/9 high trade
15.70: support and resistance inflection point going back to 7/9
15.57: 7/9 early session resistance & support area going back to the 7/24 dump
15.50: psychological support, inflection point dating back to 7/9
15.25: 7/5 & 7/26 resistance and overnight support test on 7/9.
15.32: -2 STD under the 21-day moving average (16.05½)
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
Resistance: 16.34¾: 7/23 overnight support and near the declining Trend line drawn from the 7/23 high trade and reversal
16.51½: 7/23 overnight support and morning resistance level
16.79: +2 STD over the 21-day moving average (16.05½)
16.91: high trade from 7/20, just below the 7/23 overnight high
Comment: Our Primary directional technicals remain negative. The secondaries, though, made material moves higher as short covering dominated ahead of the Report.
As we noted yesterday, the bounce of the 1550s is off an area that sets up as a support and resistance inflection level. This is a good set up for a base to move higher with a descending wedge, which is a bullish formation as continuation after the moves we've seen. If this does play out, 'Beans may be setting up for another material move to new highs.
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. However, that's an awful long way to fall.
Seasonal Snapshot: For November-All 3 patterns are in a modest but sharp positive mode until 8/2. They then enter a negative mode until bottoming action is complete on 8/10.
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