FuturesCom Bi-Weekly Investment Outlook # 439 January 12 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
“Courage in a Speculator is merely confidence to act on the decision of his mind”
Sunday January 12, 2014
3:00 AM, South Florida Beach Time.
Traders should stay nimble and tune in for BW flashes, Updates and Day Trades for all markets. An economic calendar is attached to today’s letter. The 2013 Bi-Weekly Performance is posted on the website. I want to personally thank all of you for your business, those that have been with us in this for the last 18 years, some a lot longer and those who are just coming on board!
U.S Stocks closed mixed on Friday. Major U.S stock averages are down on the year by a hair, however the Dow Jones Transportation Average closed at all-time highs on Friday and qualified for a weekend buy rule, the Russell 2000 closed firm on Friday and is up on the year by a fraction. The U.S. economy added 74,000 jobs in December, the fewest for any month since May 2011. The Dow Jones Industrial Average and SP500 generally tend to begin the year a bit sloppy and typically firm into March. Long term ‘yearly’ technical patterns for U.S. stock index averages remain friendly. While the stock market tends to rise from Mid-January into Mid-March and we see no reason to abandon the long side or cut and run on sharp declines, one would expect a more range bound market.
The U.S. Senate has confirmed Janet Yellen to serve as the next chair of the Federal Reserve replacing Ben Bernanke at the end of this month. She will take inherit a large dollar balance sheet and a huge number of unemployed when you include discouraged workers. She and all policy makers in Washington have to deal with constant downward pressure on the percent of the labor force who is working.
Much of this perhaps two-thirds is due to the retirement of the baby boomers an issue we discussed many times over the last decade in both this print publication and via live broadcast media. Ms. Yellen is considered a liberal in matters of Fed policy and is very concerned about the middle class and jobs. Stanley Fisher has been chosen by the president for Vice Chair at the Fed, he is extremely well regarded and most importantly for me argues that central bank policy should be looked at in the context of policy that effects hundreds of millions of individuals. Otherwise, what they do has an impact on real people, our neighbors, neighborhoods, local businesses and families.
Not just Washington, Wall Street or numbers in a set of data.
Overseas equity markets for the northern European Union are at or very near all-time highs.
Germany is at new all-time highs, appear overdone in respect to its declining population that may prove to be a headwind. The Southern part of the union (Spain, Italy, Portugal and Greece) equity market have all recovered from recent lows but are all well off of the 2007 highs; Spain -42%, Italy -58%,Portugal -53% and Greece -85%.
Britain’s FTSE is near or at the all-time high reached in 2000 and now is sitting at the same level as the highs in 2007. The Cac-40 is well below the highs of 2000 and 2007.
Japan‘s Nikkei Index peaked at 38,915 on January 1, 1990 and reached its low of 6,995 in 2009, a loss of 82%. It is still 59% below its all-time high but has risen 127% from the 2009 low and much of this gain in the last 16 months and is likely to continue. However the government faces huge headwinds, but they know that and are addressing it and investors should not discount that point. With huge demographic headwinds from a declining population and its literal survival over the coming two decades hinging on a better economy Japan policy makers hope that eventually a better economy and stock market will produce a higher birthrate and so forth. A lower yen (higher dollar yen) toward the pre-crisis levels in the western economies of near 125 is possible and a top range for Nikkei of back into 18,000 to 20,000 is also possible.
Analysis for overseas equity and foreign exchange markets in areas such as emerging economies, China, Brazil and India are all 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.
Bond Futures bounced back a bit last week after the unemployment data was released as shorts ran for cover. We said in the last Bi-Weekly, “ traders should look for Bond futures to stabilize a bit from weakness into the first week to ten days of trading of the year” Bonds are higher on the year now but are lower year over year. Look for some more firmness over the early part of the week and consider them a trading affair.
In Forex Markets, Swiss Francs futures have a tendency to back off a bit over the next month and are slightly lower on the year and on the month. Sell a rally and try to get short. Dollar-Yen fell after the unemployment report we want to remain long and remain short postured Yen futures. Traders should look for a continued upward bias in Dollar –Yen. March Yen tends to make drift lower until the Middle of February or roughly when Valentine’s Day approaches and perhaps beyond into early March. While some profit taking is overdue the long term Dollar-Yen remains friendly. Long term Cable charts remain friendly. If the Cable exceeds 16550 and stabilizes then higher prices possible directly ahead, however we would expect some back and fill. Our long term work in Cable versus the Kiwi has shifted to long side favoring cable.
The Aussie bounced last week , the overdue bounce is here and the Aussie remains well off its highs and traders should look for a more range bound trade and consider the Aussie a trading affair. The long term work on Aussie remains bearish, ditto for Canadian Dollar which has now breached support and acted badly on negative Canadian economic data last week, which is consistent with our views set forth early last year.
Energy markets are lower on the year and a tad lower from the close of 2012 except natural gas.
Analysis has rolled March WTI Crude and Brent Crude in today’s letter. Energies recovered on Friday after a blistering decline in the first few sessions of the New Year. Lasting lows in WTI Crude usually occur after the year–end passes and after weakness post the Mid-January to February time frame occurs. February is typically the best time for a lasing good low in WTI Crude for a long-side speculative trade. Unleaded gas typically begins January weak and rallies. Heating Oil is a mess. Historic record cold weather occurred in parts of the U.S and Heating Oil sold off badly. Sometimes weather markets are meant to be sold. Stay tuned for updates and flashes.
Copper acted better Friday, copper is lower on the year after becoming range-bound after the spike in prices just after the new-year and produced a range bound trade. Copper tends to act better into spring and missed our buy price by a hair. Consider buying copper on a dip for trading. Gold and Silver remain a trading affair are up on the year, lower year over year. Silver has bounced as expected. Silver is sitting at roughly the same levels it was in 2010 and has approximately three years of price on top it, ditto for gold. Traders should look for silver to act better against gold till the end of the month.
Looking at the Agricultural markets; March corn futures ended the week at $4.3275 per bushel, up 9 cents from the week before. The USDA’s January supply and demand report (WASDE) showed a slightly smaller 2013 corn crop, which was construed as friendly. The decline of 64 million bushels to a crop of 13.925 billion was not expected by the street as the USDA increased the number of acres harvested by 0.5 million, but reduced the average yield from 160.4 bushels per acre to 158.8 bu/ac. They are still predicting a marketing year average price close to $4.40/bu. The Soybean data was considered mixed. The USDA left ending stocks unchanged, usage was revised high and so was production. Exports demand was revised a bit higher final 2013 production came in at 3.289 bushel per acre. soybean yield came in at 43.3 Bushels per acre. Up a bit from the November data.
The soybean complex news was mostly neutral, world ending stocks were higher and favorable weather could push Brazil and Argentina numbers higher in reports down the road. New Crop November beans were weaker as expectations for higher yield this summer compared to last year pressed the market lower. Typically this activity abates after January is passed. Look for a lower to choppy Soybean and Soymeal price for now. Sell a rally in May Beans. Wheat is a mess and likely headed lower. However much of the decline is likely done. Spreaders should look for a place to buying May Corn and Selling May Wheat, preferably on a rebound from current levels and it should work for a bit. Let the noise after the report settle down a bit and look for an entry. July Bean Oil tends to firm or at least stay stable from now until March and April.
Pork sometimes is referred to as refined Corn. The USDA decreased their forecast of 2014 pork production by 1.4% to 23.58 billion pounds and raised their predicted live hog price by $1 to $62/cwt. USDA is now predicting that in 2014 the U.S. will produce 1.7% more pork, 3.0% more chicken, 1.5% more turkey, but 5.4% less beef than in 2013. Total red meat and poultry production is expected to be up 0.2%. Retail meat demand was up 3.2% in November with pork demand up 5.9%, beef up 0.8%, broiler up 2.1%, and turkey up 14.2%. Export demand for pork and beef were higher in November, but export demand for broilers and turkey were lower. The Job’s number and reduced food-stamp amounts are not encouraging news for domestic meat consumption and demand. Wholesale belly prices on Friday were lower than wholesale pork loins for the first time since June 15, 2012. The average live weight of barrows and gilts in Iowa-Minnesota last week was 282.9 pounds, up 0.6 pound from a week earlier and up 6.6 pounds from a year ago.
Traders should stay tuned for day to day Lean Hogs trades, maintain the spread and consider adding to the position. We will also be suggesting some trades for back end hogs like August and July during January while trading the February Hogs.
The USDA raised their forecast of 2014 beef production by 0.5% to 24.32 billion pounds and they raised the predicted slaughter steer price by $1 to $133.50/cwt. Last week’s cattle slaughter totaled 569,000 head, up 9.2% from last week, but down 9.1% from the corresponding week last year. The average steer dressed weight for the week ending on December 28 was 872 pounds, up 1 pound from the week before, but down 1 pound from a year earlier. Both slaughter steer prices and beef carcass cutout values set new record highs last week. The wires and national media outlets were all mentioning and predicting higher beef prices at the stores and told consumers to expect to pay higher prices.
April Cattle Futures are near a FuturesCom non-linear price region for selling at 13770 to 13830 and typically selling April Cattle early this week makes money by the last week of January and perhaps even into February..
Meanwhile Sugar tried to halt its decline and failed badly, lower prices into spring are likely and traders should sell rallies. Cocoa remains firm, however is lower on the year and month, but well above the end of 2012. Coffee appears stable and constructive, Coffee is up on the month and year and acts better than it has been and can produce a trading high in the spring. Buy Dips for a trade. Cotton appears to be trying to break out of its recent trading range is down on the month and year but above year end 2012 level, buy a dip and see if it holds.
Onto the nitty-gritty, stay tuned for flashes and analysis across all markets
THE SENSATIONAL STOCK AND BOND MARKET
DOW JONES INDUSTRIAL AVERAGE
Nearby support should appear near 16,420.00. Below that buyers should appear near 16,285.00 and the 16,150.00 to 16,090.00 region. Which should hold…
Nearby resistance is at 16,550.00. A close or extended trade over is friendly and augurs for an eventual test of the 16,890.00 to 16,960.00 region.
MARCH E-MINI SP500
Resistance should appear near the 1858.00 to 1865.00 region and should cap a rally. Beyond that a test of 1902.00 to 1909.00 is likely to occur.
Support should appear near 1831.00 and the 1822.00 to 1808.00 region.
Traders should go long if a close over 1867 occurs.
NASDAQ COMPOSITE
Resistance should appear near 4163.00 to 4183.00. Beyond that a test of 4238.00 to 4249.00 is likely to occur.
Support should appear near 4163.00 and the 4120 to 4110 region. Below that buyers should appear near the 4056.00 to 4046.00 region and contain a decline.
MARCH E-MINI NASDAQ 100
Support should appear near 3553.00 and the 3503.00 to 3493.00 region.
Resistance is at 3613.00 to 3623.00 a close over is friendly and augurs for a test of 3663.00 to 3682.00 Aggressive Traders should go long if a close over 3625.00 occurs.
MARCH E-MINI RUSSELL 2000
Resistance should appear at the 1164.00 to 1169.00 region. Beyond that a test of 1192.00 to 1203.00 is likely.
Support should appear near 1150.00 and the 1136.00 to 1130.00 region.
Stay tuned for Flashes and trade accordingly
MARCH 30 YR BOND
Resistance should appear near 131-07 and 131-21. Beyond that sellers should appear near 132-07 and 132-21 which should cap a rally. Above that resistance is near 133-07 and 133-21.
Support should appear near 129-21 and 129-07. Below that 128-21 should contain a decline.
MARCH 10 YR NOTE
Resistance should appear near 125-07. Beyond that sellers should appear near 125-21 and
126-21 should cap a rally.
Support should appear near 123-21 and 123-07, failure to hold is negative and augurs for a test of
122-21.
THE FRENZIED FOREX FRONT
MARCH DOLLAR INDEX
Resistance should appear near 8081 and the 8119 to 8134 region.
Support should appear near 8044 to 8029 then 7991 and the 7954 to 7939 region.
MARCH JAPANESE YEN
Resistance should appear near 9625 to 9641and 9706 to 9737.
Support should appear near 9445 to 9429, below that a test of 9347 to 9316 is likely.
Stay tuned for Flashes.
MARCH EURO CURRENCY
Support should appear near 13615 and the 13460 to 13340 region where buyers should appear and contain a decline.
Resistance should appear near the 13770 to 13830 region. Beyond that a test of 13990 is likely and should cap a rally. Traders can sell at 13767 for a trade and risk a close over 13837.
MARCH SWISS FRANC
Resistance should appear near 11155 then 11227 and the 11300 to 11360 region. Traders can sell at 11292 and hold for lower prices.
Support is near the 11010 to 10960 region, below that an eventual test of 10680 to 10580 is likely.
Traders should go short if a close under 10957 occurs.
MARCH BRITISH POUND
Support should appear near 16420 then 16357 and 16277. Traders can buy at 16292 for a bounce and risk a close under 16272 for three days in a row. Below that 16150 to 16090 should contain declines.
Resistance remains near 16550. Beyond that a test of 16720 is likely.
Stay tuned for flashes.
MARCH CANADIAN DOLLAR
Resistance should appear near 9237 and 9317 to 9347.
Support should appear near the 9156 to 9140 region, below that a test of 9060 to 9044 and the 89864 to 8934 region is likely
MARCH AUSSIE DOLLAR
Support should appear near 8777 to 8762, below that a test of the 8683 to 8668 region is likely to occur.
Resistance should appear near 9002 and the 9044 to 9060 region. Beyond that sellers should appear near 9140 to 9156.
THE PRECIOUS METALS
FEBRUARYGOLD
Resistance should appear near 1253.00, beyond that a test of 1268.0 to 1274.0 is likely and should bring out sellers and cap a rally.
Support remains near the 1203.00 to 1192.00 region, below that some buyers should appear near 1169.0 to 1164.0, failure to hold is negative and augurs for a test of 1136.0 to 1130.0.
MARCH COPPER
Resistance should appear near the 34250 to 34430 region. Beyond that a test of 34930 to 35030 is likely and should bring out sellers.
Nearby Support should appear near 33280 to 33190 and should hold. Below that the 32700 to 32610 region should contain declines. Traders can buy at 33000 for a bounce and stay tuned for a stop.
Stay tuned for flashes
MARCH SILVER
Support should appear near 1996 to 1982 and the 1953 to 1946 region. Below that buyers should appear near 1909 to 1902.
Resistance is at 2034 to 2042 and 2080 to 2089. Beyond that sellers should appear near 2126 to 2134. Pick your poison.
THE EXCITING ENERGIES
MARCH CRUDE OIL
Resistance should appear near 9316 to 9347 and the 9706 to 9737 region.
Support should appear near 9060 to 9044 and the 8964 to 8934 region
MARCH BRENT CRUDE OIL
Resistance should appear near 10820 then 10960 to 11010. Beyond that sellers should appear near the 11300 to 11360 region and should cap a rally.
Support should appear near 10580 region failure to hold is negative and augurs for a test of 10360 to 10320 and eventually the 10136 to 10104. Where buyers should appear and contain declines.
FEBRUARY HEATING OIL
Support should appear near should appear near 29370 to 29280 and the 28830 to 28740 region.
Below that buyers should appear near 28290 to 28200.
Resistance should appear 29720 to 29900 and the 30360 to 30450 region. Beyond that sellers should appear near 30920 to 31020 and cap any rally.
FEBRUARY UNLEADED GAS
Nearby Support should appear 26730 to 26630 and should hold. Below that buyers should appear near 26200 to 26120. Under that a test of the 25680 to 25520 region is likely.
Resistance should appear near 271260 to 27240 and 27580 to 27750 and should cap a rally.
FEBRUARY NATURAL GAS
Resistance should appear at 4163 to 4183 and 4238 to 4249 and should cap a rally.
Support should appear near 4056 to 4046 and the 3992 to 3982 region. Below that buyers should appear near 3929 to 3909 and contain a decline.
THE GRANDE’ GRAINS
MARCH SOYBEANS
Support should appear near 1274 to 1268, below that a test of 1253 and the 1236 to 1232 region is likely.
Resistance should appear near 1289 and the 1304 to 1310 region.
Trade Accordingly…
MARCH SOYOIL
Resistance should appear near 3858 to 3867 and 3909 to 3929. Beyond that sellers should appear near 3982 to 3992.
Support should appear near the 3806 to 3795, below that buyers should appear near 3743 to 3734 and the 3682 to 3663 region which should contain a decline.
MARCH SOYMEAL
Resistance should appear near 423.8 to 424.9 then 430.4 to 431.5 and the 437.0 to 438.1region.
Support should appear near 412.0 to 411.0 and the 405.6 to 404.6 region. Below that 399.2 to 398.2 should hold.
MARCH CORN
Support should appear near and 430 ½ and the 424 ¾ to 423 ¾ region. Below that buyers should appear near 418 ¼ to 416 ¼.
Resistance should appear near 437 to 438 ¼ and the 442 ½ to 444 ¾ region. Beyond that sellers should appear near 450 ¼ to 451 ½
MARCH WHEAT
Resistance should appear near 585 ½ to 588 and 602 ¼ to 603 ½. Traders can sell at 602 ¼ and risk a close over 611 ¾ for three days in a row.
Support should appear 557 ¾ to 555 ¼ and the 550 ¼ to 549 ¼ region. Below that a test of 535 ¾ to 534 ½ region is likely. Stay tuned for Grain Flashes.
THE LIVELY LIVESTOCK
FEB CATTLE
Support should appear near 13617 and the 13460 to 13340 region which should bring out buyers.
Resistance should appear near the 13770 to 13830 and 13987 and should cap a rally.
APRIL CATTLE
Support should appear near 13617 and the 13460 to 13340 region.
Resistance should appear near the 13770 to 13830 region. Traders can sell at 13762 and hold for lower prices.
FEB HOGS
Support should appear near 8502 to 8482 and the 8407 to 8392 region. Below that a test of 8317 to 8300 is likely.
Resistance should appear near 8662 to 8682. Beyond that sellers should appear near 8762 to 8777 and the 8852 to 8872 region.
APRIL HOGS
Support should appear near the 9062 to 9042 region. Below that buyers should appear near
8967 to 8932, Failure there augurs for a test of 8857 to 8862.
Resistance should appear near 9137 to 9157. Traders can sell at 9137 and hold for lower prices.
Beyond that sellers should appear near 9237 and the 9317 to 9347 region.
JUNE HOGS
Support should appear near 10037 to 10022 and the 9937 to 9922 region.
Resistance should appear near 10102 to 10137 and the 10317 to 10357 region.
Stay tuned for Livestock flashes.
THE SATISFYING SOFTS
MARCH COFFEE
Support should appear near 12030 to 11920 and the 11690 to 11640 region.
Traders can buy at 11835 and hold for higher prices.
Resistance should appear 12320 to 12380 beyond that a test of 12680 to 12740 is likely.
Stay tuned for Flashes.
MARCH COCOA
Resistance should appear near 2775 then 2797 and the 2820 to 2829 region. A close over is friendly and augurs for a test of 2874 to 2883 and eventually the 2928 to 2937 and 2972 to 2990 region.
Support should appear near the 2672 to 2663 region, below that buyers should appear near 2620 to 2612. Stay tuned for Flashes
MARCH SUGAR
Resistance is near 1569 to 1576 and 1592. Traders can sell at 1587 and hold for lower prices. Beyond that sellers should appear near 1609 to 1615.
Support should appear near 1525 to 1529 and the 1496 to 1453 region.
MARCH COTTON
Support should appear near the 8223 to 8194 region. Traders can buy at 8225 for a bounce and hold for higher prices. Below that buyers should appear near 8134 to 8119 and the 8044 to 8029 region.
Resistance is at 8300 to 8314, a close over is friendly and augurs for a test of 8391 to 8406 and the 8484 to 8499 region. Beyond that a test of 8560 to 8589 and the 8668 to 8683 region is likely.
Traders should go long if a close over 8317 occurs.
Stay tuned for flashes.
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 January 12, 2014 12:00 PM South Florida Beach Time
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