FuturesCom Bi-Weekly Investment Outlook # 448 May 18 2014 SP500 and Equity Indices • Bonds • Currency Trading • Forex • Precious Metals • Energy • Grains • Livestock • Coffee • Sugar • Cocoa • Cotton. Free Two Week Trial see https://futurescom.com/free-trial-2
“If everyone is thinking alike, then somebody isn’t thinking”. –George S. Patton–
Saturday May 17, 2014 8:00 PM, South Florida Beach Time.
Traders should stay nimble and stay tuned for Flashes and Updates in all Markets during the pre-holiday trading. Overall major U.S. stock averages are mixed on the year and the long term yearly technicals remain bullish. Traders should look for wide ranges and trading opportunities from both sides. Wider trading ranges is typical for this time of year along with periods of weakness in some averages. Typically the Dow gets a bit soft after the first two weeks of the month and that is directly ahead. During secular bull markets the weakness is limited and higher highs are made into the summer. During secular bear markets the weakness can be more pervasive and a summer rally can come from lower levels. Bottom line, for now stocks remain a trading affair. Meanwhile, historically the 30 Year September Bond futures tend to firm up a bit from the end of May until late June maybe mid-July, which would be the best time to look to sell 30 Year Bond futures short.
Forex markets; the Dollar tends to exhibit strength into the May / June time frame and is beginning to do that a bit, dollar rallies are tepid at best. The Euro is now under 13770 to 13830 and is trading unchanged to lower on the year. Maintaining a posture over 13830 indicates an eventual test of 14150.
The extended trading below 13770 indicates the Euro can test 13460. So far neither side has hit. Ditto for Swiss Franc futures…unchanged to a tad lower on the year and a bit lower on the month. Below the 11300 to 11360 region, the downside target is 11010 to 10960. Swiss Futures upside target remains near 11640 to 11690. The ‘Babble’ from ECB members and other central banks is relentless. The ECB has promised the markets it will push rates lower. So far they prefer to talk the euro down.
Cable is range bound and remains in a tight trading range. The British Pound is marginally higher on the year. Last week we advised readers to book profits on shorts and are flat. Look for a range bound Cable for now. USD/CAD is trading a bit under the 11010 to 10960 region and is a bit lower on the month. We are friendly USD/CAD for the near term.
The Dollar-Yen is mixed and needs to hold over 10320 to maintain an upward bias and Dollar-Yen has not done that. Meanwhile the Japanese stock markets are beginning to roll-over on the long term charts to the downside. Traders should take note of this. Stay tuned for Forex Flashes and ideas during the week.
Analysis for overseas equity and foreign exchange markets are available upon request. I will comment from time to time on those regions and markets around the globe in this publication, for more detailed information please call or email a request.
Precious Metals; Long term charts for Silver and Gold remain bearish. Platinum exceeded the April highs in May of this year which is something platinum did not do last year and is now worth watching. Russia accounts for about 11% of platinum exports and may or may not have an impact if ‘things’ get dicey and they slow their exports. Gold and silver have bounced a bit from nearby support and appear to be holding. Look for more trading ranges. Closes over 1310 should be considered friendly as buy stops appear to building above that level. Copper acts ok and moved nicely higher last week, we will see if dips and holds. Both Silver and Copper may have reached some fundamental value on recent weakness and are worth looking at on a dip for a bounce. Stay Tuned for Flashes.
Energy markets have been unable to hold any significant rallies and continue to trade in a range bound manner, including last week’s rally. That said unleaded gas normally firms in price from mid to late May through mid-to-late July and a bit beyond. Traders should be looking to buy September Unleaded Gas if able on a decline to maintain a long posture. Buy the back-end crude for speculation if it dips. On a seasonal basis buying December Crude in late May exiting in late July usually makes money. Traders should look closely if a dip occurs as Crude Oil is a trading affair. Natural Gas at the low end of the recent range looks attractive under especially 4.30. Stay tuned for energy trades and Flashes.
Grains; Traders should look for more trading ranges in soybeans and a place to buy August and July soymeal. Nothing has changed. Backing and filling is now occurring. Seasonally Buying Sept Corn tends to make money by mid-June. We are long Dec and will add to the longs with flashes. You can’t kill the crop till it is planted and it’s pretty much planted. Wheat is seasonally weak, aggressive traders should consider buying this weakness to add to the back end for a rally into late autumn. Stay tuned for flashes in the front end for trading from both sides. Livestock; The pork industry remains concerned that the impact of the PED on herd size going forward once summer passes. The front end has become weak while the back end has firmed as expected. Hog slaughter this week totaled 1.999 million head, down 0.8% from the week before and down 1.9% compared to last year. Iowa-Minnesota slaughter weights were down for the second week in a row. The average live slaughter weight of barrows and gilts in Iowa-Minnesota last week was 286.6 pounds, down 0.4 pounds from a week earlier, but up 9.8 pounds from a year ago. Heavy pig weights are offsetting most of the decline in total pork production caused by PEDV herd reductions. Year-to-date hog slaughter is down 4.1%, but year-to-date pork production is only down 0.8%. Look to buy weakness again in October or August and continue to trade from the short side for the near term in June and likely the July contracts with increased trading sizes over the short term.
Friday’s USDA April Cattle on Feed report was released after the close. The number of cattle on feed in large feedlots at the start of the month was down 1.0% compared to last year. The 21st month in a row the on-feed number has been below the year earlier level. April placements of cattle into feedlots were down 4.9%, marketing’s were down 2.0%. The pre-report guess was for April placements to be down 3.2%, April marketing down 2.1% and the May 1 on feed number to be down 0.8%.
Due to lower placements the cattle on feed report was deemed slightly bullish. In addition demand for Live Cattle typically improves into the summer, look to some more corrective activity and add to the long August cattle and buy June as well. Seasonally, buying August cattle near Memorial Day tends to make money by the fourth of July and both June and August are a discount to cash. The Livestock markets are a day to day trading affair and traders should stay tuned for flashes.
Looking at the Softs; Cocoa remains long term bullish. Stay long the July and Buy Sept Cocoa for the ‘pull’ with intentions to have longs in place at or near month end as the cocoa market appears to now have absorbed the marginally higher crop numbers. Buying October Sugar during the middle of May prior to Memorial Day tends to make money after the Fourth of July into the Dog Days of Summer. Traders should maintain longs October sugar and buy dips, production is an uncertainty and ethanol use may increase. Stay tuned for flashes. Cotton remains long term friendly and is correcting. Look for a trading range in July Cotton. December has weather concerns keeping it in a sideways to upward pattern. Nothing has changed. Buy a dip in Dec for a trade.
Coffee can be stronger in May and June if premium builds. However, seasonally Coffee tends to peak a bit into mid to late May. Therefore traders should expect a trading affair. The bottom line is that enough damage has been done to the Brazilian coffee crop and traders should look for production decreases for next year’s crop and likely for the year after. If the expected El-Nino does come around it can have adverse impacts on Vietnam or Indonesia coffee production down the road and Coffee can again cut loose to the upside.
Onto the nitty-gritty.
THE SENSATIONAL STOCK AND BOND MARKET
DOW JONES INDUSTRIAL AVERAGE
Support should appear near 16420.00 and the 16,150.00 to 16,090.00. Below that buyers should appear near 15,760.00 to 15,690.00 and contain declines. Resistance is at 16,720.00 and the 16,890.00 to 16,960.00 region, where sellers should appear and cap a rally.
JUNE E-MINI SP500
Resistance is at the 1902.00 to 1909.00, a close over is friendly and augurs for a test of 1946.00 to 1953.00 region, where sellers should appear and cap a rally. Traders can sell at 1945.75 for a turn lower and risk a close over 1954.25 for three days in a row. Support should appear near 1865.00 to 1858.00, below that a test of 1840.00 and the 1822.00 to 1808.00 region is likely. Under that buyers should appear near the 1780.00 to 1774.00 and contain a decline. Traders can buy at September E-mini at 1781 for a bounce and hold for higher prices.
NASDAQ COMPOSITE
Resistance should now appear at 4163.00 to 4183.00. Beyond that sellers should appear near 4238.00 to 4249.00 and cap a rally for now.
Support should appear near 4056.00 to 4046.00 and the 3992.00 to 3982.00 region. Below that buyers should appear near 3929.00 to 3909.00 and contain a decline.
JUNE E-MINI NASDAQ 100
Support should appear near 3563.00 to 3553.00 and 3503.00 to 3493.00. Below that a test of the 3443.00 to 3425.00 region is likely and should hold. Resistance is at 3613.00 to 3623.00, a close over is friendly and augurs for a test of the 3663 to 3682 region. Beyond that sellers should appear near the 3734.00 to 3743.00 region cap a rally.
JUNE E-MINI RUSSELL 2000
Resistance should appear at 1130.00 to 1136.00, a close over is friendly and augurs for a test of 1164.00 to 1169.00. Beyond that a test of 1180.50 is likely and will likely bring sellers out of the woodwork.
Support should appear near 1096.00. Failure there is negative and indicates a test of 1082.00 and has so far held. Below that buyers should appear near 1068.00 to 1058.00 and contain declines.
JUNE 30 YR BONDS
Resistance should appear near 137-24 and 138-07. An extended trade over is friendly and augurs for a test of 139-21. Support should appear near 136-21 and 136-07, below that 135-21 should hold…
JUNE 10 YR NOTE
Resistance should appear near 126-07. Above that a test of 126-21 and 127-07 is likely and where sellers should appear and cap rallies.
Support should appear near 125-07 and 124-21. Below that buyers should appear at 124-07 and contain a decline.
THE FRENZIED FOREX FRONT
JUNE DOLLAR INDEX
Resistance should appear near 8029 to 8044 and 8119 to 8134.
Support should appear near 7864 to 7836 and the 7777 to 7763 region.
JUNE JAPANESE YEN
Resistance should appear near 9921 to 9937, beyond that a test of 10021 to 10037 is likely. Support should appear near 9837 to 9821 and 9737 to 9706.
JUNE EURO CURRENCY
Support should appear near 13615 and the 13460 to 13340 region. Resistance remains near 13770 to 13830. Beyond that a test of 14150 to 14210 is likely.
JUNE SWISS FRANC
Resistance should appear near 11300 to 11360 and 11500. Beyond that a test of the 11640 to 11690 region is likely.
Support is near 11155 and the 11010 to 10960 region.
JUNE BRITISH POUND
Support should appear near 16720 and the 16550 to 16420 region. Traders can buy at 16557 for a bounce and hold for higher prices. Resistance remains near the 16890 to 16960 region and should cap rallies. Beyond that a test of 17310 to 17380 is possible.
JUNE CANADIAN DOLLAR
Resistance should appear near 9237 and the 9316 to 9347 region. Support should appear near 9060 to 9044 and 8964 to 8934
JUNE AUSSIE DOLLAR
Support should appear near 9156 to 9140 and 9060 to 9044. Resistance should appear near 9347. Beyond that a test of 9429 to 9445 is likely. Stay tuned for Forex Flashes.
THE PRECIOUS METALS
JUNE GOLD
Resistance should appear near the 1304 to 1310 an extended close over augurs for a test of the 1334.0 to 1346.0 region.
Support should appear near 1289.00 and the 1274.0 to 1268.0 region. Below that buyers should appear near 1253.0 and contain a decline.
JULY COPPER Resistance should appear near 31940 to 32130, a close over is friendly and augurs fort a test of 32610 to 32700.
Support should appear near 31020 to 30920 and 30450 to 30360 and should hold.
JULY SILVER
Support should appear near 1909.0 to 1902.0 below that buyers should appear near 1865.0 to 1858.0 and the 1822.0 to 1808.0 region, which is likely to contain a decline.
Resistance is at 1946.0 to 1953.0 and the 1982.0 to 1996.0 region. Beyond that sellers should appear near the 2034 to 2042 region.
THE EXCITING ENERGIES
JULY CRUDE OIL
Resistance should appear near 10320 to 10360, beyond that a test of 10470 is likely.
Support should appear near 10136 to 10104 and the 10037 to 10021 region.
JULY BRENT CRUDE OIL Resistanceshould appear near 11300 to 11360 and should cap a rally. Supportshould appear near 10960 and 10815, below that buyers should appear near the 10680 to 10580 region and should hold.
JULY HEATING OIL
Support should appear near should appear near 29370 to 29280 and 28830 to 28740. Resistance should appear 29720 to 29900. Beyond that a test of 30360 to 30450 is likely.
JULY UNLEADED GAS
Support should appear 29370 to 29280 and the 28830 to 28740 region, where buyers should appear and contain a decline.
Resistance should appear near 29720 to 29900, beyond that a test of 30360 to 30450 is likely.
JULY NATURAL GAS
Resistance should appear 450.3 to 451.4 and 463.9 to 465.0
Support should appear near 431.5 to 430.4 and the 418.3 to 416.3 region.
THE GRANDE’ GRAINS
JULY SOYBEANS Support remains near the 1459 to 1453 region, below that buyers should appear near 1421 to 1415 and contain a decline. Traders can buy at 1423 for a bounce and hold for higher prices.
Resistance should appear near 1484 to 1496, an extended close over is friendly and augurs for a test of 1529 to 1535, beyond that a test of 1569 to 1576 is likely.
AUGUST SOYBEANS
Support should appear near the 1383 to 1377 region. Below that buyers should appear near 1346 to 1334 and contain a decline. Traders can buy at 1347 for a bounce and hold for higher prices.
Resistance should appear near 1415 to 1421 beyond that a test of 1453 to 1459 is likely.
Trade Accordingly
NOVEMBER SOYBEANS Support should appear near 1217 1/2 and the 1203 to 1192 region, where buyers should appear and contain a decline.
Resistance should appear near 1232 to 1238, a close over is friendly and augurs for a test of 1253.
JULY SOYOIL Resistance should appear near 4110 to 4120 and the 4238 to 4249 region. Support should appear near 4056 to 4046 and the 3992 to 3982 region.
JULY SOYMEAL
Resistance should appear near 484.5 to 485.6 and 491.5 to 492.6. Beyond that a test of 497.3 to 499.5 and the 505.6 to 506.7 region is likely.
Support should appear near 478.5 to 477.5 and 471.7 to 469.5. Below that buyers should appear near 465.0 to 463.9 and the 458.2 to 457.1 region. Traders can buy at 465.3 for a bounce and hold for higher prices. Trade Accordingly
AUGUST SOYMEAL
Resistance should appear near 457.1 to 458.2 and the 463.9 to 465.0 region. Beyond that a test of
469.5 to 471.6 is likely to occur.
Support should appear near 451.4 to 450.3 and the 438.1 to 437.0 region. Below that buyers should appear near 431.5 to 430.4. Traders can buy at 437.5 for a bounce and hold for higher prices. Trade Accordingly
JULY CORN
Support should appear near 478 ½ to 477 ½ and 465 to 463 ¾ Resistance should appear near 491 ½ to 492 ¾ and the 505 ¾ to 506 ¾ region.
JULY WHEAT
Support should appear near 667 3/4 to 665 3/4 and 659 ¼ to 657 ¼ Resistance should appear near 690 ¾ to 691 ¾ and 707 ½ to 708 3/4
Stay tuned for Grain Flashes
THE LIVELY LIVESTOCK
JUNE CATTLE
Support should appear near 13770 and 13692… Below that buyers should appear near 13617 and contain a decline.
Resistance should appear near 13830, a close over is friendly and augurs for a test of 13990 and the 14150 to 14210 region.
Traders should go long if a close over 13837 occurs.
AUGUST CATTLE Support should appear near 13830 to 13770 and the 13460 to 13340 region and should contain a decline.
Resistance should appear near 13990, beyond that a test of 14150 to 14210 is likely.
JUNE HOGS
Support should appear near 11817 and the 11690 to 11640 region. Below that buyers should appear near 11512 and contain a decline.
Resistance should appear near 11920 to 12030 and 12177. Beyond that sellers should appear near 12257 and 12320 to 12380.
JULY HOGS
Support should appear near 12380 to 12320 and 12030 to 11960 which is likely to contain a decline. Resistance should appear near 12680 to 12740 and 12887.
AUGUST HOGS
Support should appear near 12380 to 12320 and 12030 to 11960. Resistance should appear near 12680 to 12740 and 13040 to 13100.
Stay tuned for Livestock flashes.
THE SATISFYING SOFTS
JULY COFFEE
Resistance should appear near 19020 to 19090 and the 20800 to 20890 region. Beyond that a test of 21260 to 21340 is likely.
Support should appear near 18220 to 18080 and the 17800 to 17740 region and should bring out buyers and contain a decline.
JULY COCOA
Resistance should appear near 2928 to 2937, a close over is friendly and augurs for a test of 2972 to 2990.
Support should appear near 2883 to 2874 and the 2829 to 2820 region.
JULY SUGAR
Resistance is near 1808 to 1822, an extended trade over is friendly and augurs for a test of 1858 to 1865 and likely the 1902 to 1909 region. Support should appear near 1780 to 1774. Below that buyers should appear near the 1738 to 1731 region.
JULY COTTON
Support should appear near 8964 to 8934 and the 8871 to 8856 region. Below that buyers should appear near 8683 to 8668. Resistance is at 9044 to 9060 and the 9140 to 9156 region. Closing over is friendly
Stay tuned for Flashes and Updates in all Markets
–A Ship in Harbor is Safe…But that is not what ships are built for –
Happy Trading!
Bill wil@futurescom.com
Sunday May 18, 2014 1:00 PM South Florida Beach Time
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