Providio's Daily Futuresd Market Commentary

Providio's Daily Futuresd Market Commentary

HEADLINE COMMENTARY:
14August Another day of generally modest, Summer doldrums action.
Some material moves in Treasuries are exposed as extremely low Volume actions.
The very real supply & demand issues in Ags were notable. This is true for the very well known U.S. drought, but also extends to Cotton and the foreign exotics. Brazil supply issues are dominant.

OVERBOUGHT/OVERSOLD MARKETS:

OVERBOUGHT Direction 0-100 Mini NASDAQ Falling 82 Canadian Falling 78 RBOB Falling 75 E-Mini SP Falling 74 Heat Falling 71
OVERSOLD Direction 0-100 Sugar Falling 6 Coffee Falling 18 NatGas Rising 27 Wheat Falling 27 Bonds Falling 34 Two Year Rising 34
U.S. Economic Data releases-All times Eastern:
http://www.bloomberg...nomic-calendar/
FOREIGN Economic Data releases-All times Eastern:
http://online.wsj.co...icCalendar.html THIS WEEK'S REPORTS:

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

CURRENCIES:
Futures Last Trade: Sep: 17Sep
Options Last Trade: Sep: 07Sep; Oct: 05Oct; Nov: 09Nov; Dec: 07Dec
Currencies:
14August Updated Support & Resistance levels yesterday. We leave previous Comentary in place, again. That ought to tell you about the day's action.
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 and we've seen no plan that would lead us to believe this has been hammered out.

Aussie: 13Aug

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:

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:

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:

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:

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:

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.

ENERGIES:
PETROLEUM:
14Aug Watch developing Overbought conditions in all three of our tracked Petro markets as expectations for fresh central bank stimulus bump up against a slowing global economic growth picture.
One word can describe today's Volume across the sector: pathetic.

CRUDE OIL:

Comment: Crude continues to labor at the 50% retracement of the March-June decline. This market's upward march is still being capped by the +2 STD.
That said, all of our directional indicators are still pointing higher, but our falling Rate of Change is starting to pull Momentum negative. Yesterday saw somewhat stronger Volume, but on the whole it has been trending lower throughout this consolidation period.
Our Volatility measure has eased back to Average from Very High levels and may reopen the door for option purchase strategies.
Seasonal Snapshot: (Cash contract) The 5yr falls until 24Aug. The 15&30year patterns consolidate until mid Sep.

PRODUCTS:

Comment: Much like the rest of the sector, our Momentum inidicator is showing some signs of slowing with the decline in our Rate of Change.
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. The 21-day moving average has offered support to these moves lower. Our Volatility measure is now in the high Average level, making them more attractive for purchase strategies.
Seasonal Snapshot: (Cash) The 5yr pattern falls modestly until 23Aug. The 15&30yr consolidate on wide fashion until mid Sep.

HEATING OIL:

Comment: Although our Rate of Change is falling, Heating Oil's primary directional indicators are holding their positive tilt more firmly than the rest of the sector.
Also, Volatility has dropped from very high levels.
The Sep contract has been supported above the rising 21-day moving average and has kept its toehold 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:

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
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 14Aug Volume continues to lag as seasonal doldrums seem to be dominating the market's action.


SP (Continuous)

Dow (Continuous)

NASDAQ (Continuous)
.
Comment: Directional bias is positive, although our Rate of Change indicators continue to slow.
The pattern since the Doji bottom on 6/4 indicates any failure would target a higher low, in the neighborhood of the 50% retracement from the 04June low. Currently:
SP: 1335
Dow:12585
NASDAQ: 2583
We still see rallies as having been capped by their +2STD above the 21-day moving average.
Seasonal Snapshot: (Cash Indices) The 5&15yr patterns decline until mid August. The 30yr consolidates before turning very slightly higher on 09Aug.
GRAINS:
Options Last Trade: Sep: 24Aug; Oct: 21Sep; Nov: 26Oct; Dec: 23Nov
14August Generally negative action as marketplaces outside futures react to the very high prices. As they should.

Monday's Crop Progress for Grains
Corn fell 0.5
Soybeans rose 0.5
Spring Wheat fell 0.7

We reiterate last Tuesday's remarks about Corn, the fact is very little has changed and very little new is to be said. There's a very bad 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.

Stay tune for any Congressional action on the Ethanol mandate. This would tank Corn.

CORN:
First Notice: Sep: 31Aug; Dec: 30Nov
14August Reduced demand expectations are continuing to exert influence the pricing dynamic.
The Sep/Dec backwardation has dissipated and the spread has now returned to a narrow Contango.

Comment: Primary directionals continue to point toward lower action and our secondaries are in agreement. Volume was ff materially again indicating additional profit-taking and a lack of new directionally lower bets.
Watch our noted gap levels as these getting filled may give the market the structure necessary to head to new highs.
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
14August Range bound action. In a news story, we read the market may be unlikely to make further outsized moves until after the harvest really begins.

Comment: Our primary directional technicals remain negative. The secondaries are joining them again in pressing some negative bias. Preliminary Volume indications, though, are again low. Again, this does not validate the recent negative action. We feel the action is likely further profit-taking. 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 choppy area until bottoming is complete on 8/19. All three will then be in a general rising bias until 8/29.


WHEAT:
First Notice: Sep: 31Aug; Dec: 30Nov
14August Wheat is now under more pressure as the international trade looks to other sources than the expensive U.S. Egypt bought from Russia and the Ukraine rather than the U.S.

Comment: Wheat has now broken below the 9.00 level. It is now testing a level going back to the 7/13 resistance break out to the highs. Negative dynamics in both the technicals and incoming demand point to likely further lower action. A hold at these levels, however and any meaningful VOLUME supported action higher would point to a resumption of positive action .
Today's Volume, again, while off from Friday's Report driven trading, is still within the levels we've recently seen. The moves are valid but may be stretching to levels that demand a reversion to mean. However, it may still be developing a triangle continuation, which would portend another material move higher. Negative directional biases remain in place. This market entered Oversold territory today.

Seasonal Snapshot: For December-All three patterns move higher until peaking on the 8/2. The 5-year drops for 1 day, then peaks on 8/5. It then drops hard until 8/8, then enters a volatile period of negative and positive biases until the end of August/beginning of September. It then enters into a generally negative bias until 10/7. The 15-year moves generally sideways until 9/10, where it enters a negative bias until 9/19. The 30-year moves sideways, with day-to-day volatility, until 9/12. It then falls sharply until bottoming on 9/19.

INTEREST RATES:
U.S. Treasurys' First Notice: Sep: 31Aug; Dec: 30Nov
U.S. Treasurys' Options Last Trade: Sep: 24Aug
14August With the better than expected Retail Sales, the Treasury Yield Curve gave up the ghost and sold off materially, especially at the long end.
Still, we ask, what evidence do we have that the German's are seeing a plan that they will feel comfortable funding? We're waiting!

Bonds-With the Retail Sales number and the sell-off, the Bonds are now under pressure again.

Comment: The sell-off is down to test the 8/9 lows, and has bounced at the 147-10 level for several hours. This level runs right through the support levels from as far back as late May. This level, just above the 147-00 psychological support is threatened by the fact that our entire set of directionals indicates a shift to much more negative bias. This was validated recently by the Volume, which has tended to swell dramatically as sell-offs have occurred.
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.
Comment: Like the Bonds, Tens negative bias remains and the secondaries are adding additional negative shift and momentum.

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.

Comment: It remains to be seen as to how much pressure the Fed will allow the Two's to take. Dallas Fed's Richard Fisher took a bat to the U.S. Treasury Yield Curve when he said there is enough financial stimulus in the system. Violating the low surge from last week would be a big deal, and the negative momentum resumed its shifting on this market. This may be the beginnings of a more substantive move lower.Seasonal Snapshot: (cash contract)All three patterns move generally sideways until 7/29, when they all enter a longer term falling pattern until mid-September and early October.

Comment: Recent action has taken this market's directionals to a negative bias. Not an awful lot of real directional action is likely, though with the Central Banks not making many real moves at this point. This market, like the Twos, is set up for another material move lower.

Comment: Technically, Bunds negative bias continues to assert itself. Like the U.S. longer end Treasuries, it's looking like it is calling the government's bluff. Volume is supportive of negative action.

Comment: The Schatz has resumed its shift to a more negative bias and is threatening recent support levels.
METALS:

Comment: The initial negative reaction to better than expected US Retail sales has receded and Gold is hugging the 21-day moving average, as of this writing. Our recently falling Rate of Change has our Momentum indicator on the cusp of going negative. The recent lower high keeps the market inside of its three month consolidation range. The case could be made that the upper end of the consolidation range in place since June forms a horizontal trend line. The corresponding series of higher lows could form the lower boundary of an ascending triangle. A break out above would target 1725 area.
We remind readers of the giant descending triangle which extends back to the Sep 2011 high (1923.7). The upper boundary currently comes in at 1666. The bounce off our noted support level at the 26Dec low (1523.9) forms our horizontal trend line noted above and the lower boundary of the triangle. A sustained move below this larger descending triangle targets large losses to 1125.
Seasonal Snapshot: Wide consolidation with a very modest upward bias in all three patterns until September.

COPPER:
First Notice: Sep: 31Aug; Dec: 30Nov
14Aug The fact is, since falling to current levels in late-May, the market has gone largely sideways, trading around the 21-day moving average to various degrees. Comment: The modestly weaker tone continues after failing to forge a higher high last week. This targets the lower boundary of the consolidation range the market has been in since early June. A break below rising trend line support on stronger Volume would target the 02Aug low.

Seasonal Snapshot: All three patterns are in a weak period until mid August..
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.