Providio's Daily Futuresd Market Commentary

Providio's Daily Futuresd Market Commentary

HEADLINE COMMENTARY:

21August After a series of family vacations, preparing for the start of school (elementary, high school and college) and, quite honestly.. boring markets (with the exception of the Grains), we are starting to return full force and finally feel as though there are things to write about again.

On that note, it may still be very early in the game, but we may be seeing the "Volatility spring" uncoiling a bit with today's action. Volume was even a little stronger today, but it was mostly in the "risk-off" afternoon when Equity Indices sank to negative territory, selected Energy markets gave back much of their overnight gains and US Treasuries finished up on the session.
A few weeks ago, the Fed exercised what has become a very effective monetary policy tool: words. They essentially jawboned the "risk-on" trade (where Equity Indices and selected physical markets rally) in an interesting way.
While Bernanke's press conference and Fed leaders' recent statements have indicated "disappointment" with the slow pace of growth, they stand "at the ready" with more assistance, if it is needed. They have chosen not act, instead opting to "wait and see" and monitor incoming economic data closely.
Ever since, while it has been somewhat sparse, that data has mostly disappointed (Factory Orders; regional Fed surveys; Housing Starts). Payrolls and Claims have been decent, but have featured revisions for the worse to prior releases. Not to mention that earnings season has given most traders little reason to cheer... During this time, the markets have essentially taken this, and the Fed's aforementioned "at the ready" stance, as opening the door for imminent accommodation, stimulus...QE.
Well, it's about that time again...
Tomorrow afternoon's FOMC minutes should reveal more about their discussions. Then comes Thursday's Jobless Claims; New Home Sales and a barrage of manufacturing data, both domestic and foreign. Friday will feature Bernanke's speech at the Fed's annual Jackson Hole symposium where all eyes will be listening (sic) for hints about Fed stimulus. Not to be outdone, and taking the Bernank's place in the hot seat, ECB Mario Draghi will speak on Saturday.
Either way things go, whichever tack the central banks decide to take, we expect the reaction to be violent: up or down.
A look at our Overbought/Oversold inventory, we see a "slight return" of the highly correlated, "risk-on" environment. It is not yet at extreme levels, but it is there in a subtle way, nonetheless: mostly in the developing Oversold US Dollar and Treasuries and modestly so in the Overbought Equity Indices & Petroleum.
We also remind readers of our note from yesterday:

"In the current rising yield environment, we feel the action in Interest Rates coupled with the ending of Summer doldrums is likely to cause a release of the coiled spring of recent muted and falling Volatilities."

The time may be approaching to fasten seat belts again.

OVERBOUGHT/OVERSOLD MARKETS:


Overbought Direction 0-100 Mini NASDAQ Falling 85 Silver Rising 84 Soybeans Rising 79 CrudeOil Falling 78 Heat Rising 78 Gold Rising 76 Corn Rising 76 E-Mini SP Falling 75 British Rising 70 Oversold Direction 0-100 Sugar Rising 23 Two Year Rising 24 Ten Year Rising 30 Coffee Rising 30 Dollar Index Falling 32 Bonds Rising 32 Yen 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 22
US
MBA Purchase Applications
Existing Home Sales
EIA Petro Status Report
FOMC Minutes

Foreign:
Japan: Merchandise Trade
Germany: IFO Survey
Canada: Retail Sales

Thursday, August 23:
US:
Jobless Claims
PMI Mfg Index
Bloomberg Consumer Comfort
New Home Sales
FHFA House Price Index
EIA Nat Gas Report
Treasury Auction Announcements
5-Year TIPS Auction
Fed Balance Sheet
Money Supply

Foreign:
China: PMI Flash Mfg Index
Germany: GDP
Switzerland: Merchandise Trade
Germany: PMI Mfg Index
Euro: PMI Services Index
Euro: PMI Mfg Index
UK: CBI Distributive Trades

Friday, August 24:
US
Durable Goods Orders

Foreign:
New Zealand: Merchandise Trade
UK: GDP
CURRENCIES:
Futures Last Trade: Sep: 17Sep
Options Last Trade: Sep: 07Sep; Oct: 05Oct; Nov: 09Nov; Dec: 07Dec

Currencies:

21August With a material lack of decision driving economic data, it's back to risk-on across the board. Greece has reappeared on the Eurozone map as a negotiating piece and that has us worried. If little Greece is back in the line, and that issue isn't even close to being "resolved", what happens when the ECB/Eurozone has to deal with Italy, Spain and then finally, France?

Again, and still, where are the Germans on this plan? They're the ones with real money to pay for this "plan".


Sugar:

First Notice: Oct: 01Oct

Options Last Trade: Sep: 15Aug; Oct: 17Sep
21Aug Oops! We spoke to soon as more selling emerged from the Brazilian production surge.
Support: 19.75: 8/21 low trade near support level from back in June
19.20: -2 STD under 21-day moving average (21.51)
18.86: 04June low
Resistance: 19.80: Late May support, early June inflection, mid-June support levels.
20.00: Psychological level
20.20: 6/11-6/15 inflection level, 6/22-6/25 support.
20.36: 8/13 low
20.50: Old resistance & where Sugar fell to & bounced for a short time in early May
20.54 Rising trend line that extends back to the 04June low.
21.00: Psychological level and near last week's highs.
21.15: June highs support
21.51: 21-day moving average.
21.95: 50% retracement of the March to early June decline.
22.57: Support in late November and mid-December
23.00: Psychological level and resistance since 7/10
23.05: week of 7/9 highs resistance
23.20: near 7/24 & 7/25 lows
23.28: 7/9-7/11 resistance.
24.00: Psychological level
23.81: +2STD above 21-day moving average (21.51)
Comment: The previously noted Head and Shoulders is nearing the end of its projected run lower.
Volume remains on pace with action going back to 8/7; basically solid. All of our directionals are now pointed to lower action, but are slowing in their descent.
All our directional indicators are firmly negatively biased. Remains Oversold but moving less so.
Seasonal Snapshot: All three patterns are in a modest downward bias until the 8/16. 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.