FuturesCom Bi-Weekly Investment Outlook # 444 March 23 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
Saturday March 22, 2014 4:00 AM, South Florida Beach Time.
In today’s newsletter analysis for gold will roll to the June contract and we will provide trades and ideas for contracts beyond the front month for many markets. An economic calendar is attached to today’s letter. Traders should stay nimble and tune in for BW flashes, updates and day trades for all markets. Major US stock averages remain mixed on the year. The long term technicals remain bullish and the yearly analysis is just turning bullish. Last weeks Fed announcement was no surprise. If the yearly equity charts are turning bullish we would expect interest rates to move somewhat higher, along with higher stock prices. Early estimates for employment numbers that are due out in early April should be the near the 225k to 275k region. Buying the June SP500 in late March during bull periods typically shows profits into early April and perhaps Easter Holiday. Traders should continue to look to buy dips and maintain long positions.
I remember the last time the stock market broke out of a long broad sideways pattern similar to the last 15 or 16 years, a lot of guys on the CME floor thought stock market in S&P 500 terms was going to stop and top in the mid 140’s, on percentage basis it went substantially higher for quite some time.. Geopolitical issues will likely continue to make headlines. The Ukrainian situation isn’t going away anytime soon. Furthermore Russia is considering expanding naval bases in Venezuela and Cuba as well as Nicaragua. Traders should take particular note of the situation in Venezuela which is deteriorating at a rapid pace. Venezuela is a large producer of crude oil, any disruptions in that country would be friendly to the price of Crude Oil. The situation in Syria as well as the surprising decision by the Turkish Prime Minister to block some Internet access to Twitter and YouTube during the election cycle just tells us that the Mideast continues to be a hotbed of uncertainty. Crude oil is entering the best 5 to 6 month period of the year where crude oil prices tend to firm up into August and beyond. Traders should be looking to get long and hold throughout this time frame. WTI Crude is lower on the month and nearly unchanged to a tad higher on the year on the front end. Brent Crude is lower on the year and month but is resting on support and a test of 10960 to 11010 is likely if it maintains a level near or over 10680 to 10580.
On Friday in response to “Vlad the terrible” annexing the Crimea region of the Ukraine the European Union is now contemplating alternative sources of energy. The U.S. has plenty of natural gas and should move facilitate the export of Natural Gas, logistically it will not happen for a while but over the next few years. Maybe sooner. Traders should consider buying July Nat Gas on a dip into the 4315 4304 and lower and holding for the pull into the summer.
Looking at the other side of the world, China remains a concern for the global economy. However the Chinese continue to buy a lot of some food-based commodities that are grown and traders should take note of that, not all commodities but some.
In the Forex market last week the dollar rose a bit after the Fed announcement. We used the strength to exit some long dollar-yen positions to reduce the exposure because the dollar-yen is stuck in a sideways pattern, we are long-term bullish and have been since early 2012 well before the crowd. However the Japanese don’t seem to be in a hurry to continue the process to create a dynamic Japan once again before time runs out and believe me time is running out demographically. Long term the dollar-yen is bullish and should be considered a trading affair.
The dollar index is friendly on a sustained close over 8045. The Dollar index is essentially unchanged on the year and a bit higher on the month and if the wind blows the other way it will be unchanged to lower. The euro was sold off after the Fed meeting then bounced back a bit on Friday. A sustained decline under 13770 in the euro is negative for a test of 13460 to 13340. Maintaining a posture over 13830 indicates an eventual test of 14150 which should prompt the ‘powers that be’ in the Eurozone to worry about deflationary effects from the higher euro. Some ECB members began making noise as the euro approached 140 over last two weeks. Stay tuned for Forex and Short Term Flashes for Euro and Swiss trades. Cable is range bound and remains in a tight range. The British pound is marginally lower on the year and remains long term friendly. Buying cable at the end of March and exiting at the end of April typically produces profits. We will see if the cable holds, traders should continue to use the current stop on the current cable position for now. Stay tuned for flashes and updates, generally speaking the Forex markets are maintaining tight ranges in a broader sense and should be considered trading affairs.
Long term, the geopolitical situation in Europe should be considered bearish to the euro and generally to the economies of Europe however we prefer France over Germany as far as equities go.
Simply put France has an army Germany doesn’t and if things get tremendously worse in Europe having an army is better than not. Investors should have no money in Russia and not consider investing in Russia. The risk is that you will not be able get the money back out of Russia or your business will be taken over and nationalized down the road.
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.
The Long term work on the Aussie and Canadian dollar remain bearish. The Australian dollar tends to have a little bounce in the next two weeks and it doesn’t and bad, on the downside the long term work is bearish. Traders should consider the Australian dollar a trading affair. A sustained close over 9060 is friendly.
Silver and gold were weaker last week. The long term charts for silver and gold remain bearish, silver seems to be rather balanced these prices and gold has some support nearby. Both Gold and Silver tend to rally between now and the second week of April on a seasonal basis. Silver is up on the year and down on the month. Gold is up on the year and marginally up on the month. Copper continues act lousy. However, last week the technical action firmed up after some key low price areas were reached. Speculators now maintain a record short position in copper and a good bounce is due. U.S 30 Year Bond Futures remain bearish traders should sell rallies. Bond futures are up on the year but lower on the month. This weekend begins the first week in the spring the U.S economy is likely to do far better than most think as the country emerges from one of the worst winters in a long time. Speaking of weather the latest projections for the El Niño patterns which has shifted from late summer into the May June time frame, this may pose a threat to some southeastern Asian vegetable oil crops. Soybean oil has dipped after a sharp rally began in January and February. Soybean oil is up on the year and slightly lower on the month. Buy a dip.
On March 31 the USDA will release its March 1 grain stocks report and the acreage and planting estimates for the coming year. Traders should expect wide trading ranges. After this report is released focus for soybeans and corn markets will turn to weather and planting. It’s likely that nearby Soybeans will gain on the new crop. Buying July soybeans and selling November soybeans tends to make money after the first week of April into the first week of May. As of Friday’s close July soybeans are $ 2.00 to $ 2.10 over November soybeans. Spreaders should look to buy July soybeans and sell November soybeans under $2.00 near $ 1.95 and risk under $1.80 basis the close.
Wheat prices again sharply ever since the Ukrainian situation has evolved overseas prices are not as high as US price wheat tends to break sharply into April and typically does not make a low until June or July. We will see if wheat dips a bit. That said are short position is underwater we do however expected to pull back so aggressive traders should consider adding. ‘When sad add, when cheerful be fearful” … After the close on Friday on Friday the USDA released the March ‘Cattle on Feed’ report. Prior to the report the average estimate for cattle placed on feed was 9% above the previous year. The report showed 15% more cattle entered feed yards and were placed on feed, far exceeding that 9 % guestimate’. The report showed cattle moving out of the feedlots or ‘marketing’s’ was 3% below one year ago as expected, the total on feed supply came in just about as expected at 1% below last year.
Supplies of cattle are still tight however technically prices broke down last week on Thursday and Friday prior to the report and some slight additional weaknesses is expected on Monday due to the report. Technical traders know the action and cattle on Thursday and Friday was a key reversal from all time contract highs and some additional weaknesses anticipated. On Friday the USDA also released its monthly cold storage report on Friday the report showed that pork stocks were 6% well above expectations as users continue to store pork for in anticipation of tighter supplies this summer due to the virus killing baby pigs.
Frozen supplies of pork bellies are double the available supply of one year ago. Most of the supplies will be used this summer; however the country is not going to run out of bacon. The USDA will release its quarterly hog inventory on Friday, March 28th Expectations are for total hog inventory to be 95% last year’s total and the number of pigs per litter to be somewhere between 91 % and 98 % of last year. The figures will be updated during the week. Looking at the soft commodity markets, coffee appears to have peaked at least for a bit right on time at the ‘Ides of March’ (as expected) and should be considered trading affair. Stay tuned for short-term trades, margins have increased dramatically over the last months. Coffee is lower on the month and up on the year. Sugar seasonally has a habit to slack off a bit now and it has, sugar often makes a low in July. Sugar now appears to be on its way to somewhat lower prices. Sugar is lower on the month and up on the year. Cocoa remains long term bullish… Traders should buy dips to re-establish longs preferably in July Cocoa. Looking at Cocoa seasonally, it typically declines into early April and traders should use the decline to buy dips. Cocoa is up on the year and virtually unchanged on the month. Cotton remains long term friendly. Cotton is higher on the month and year and is essentially unchanged year over year. Seasonally cotton tends to slip a bit as plantings progress. Traders should consider it a trading affair for now… Many traders are looking for cotton to slip a bit. If cotton does rally it may surprise many and sustain higher prices. Look to re-establish longs.
Stay tuned for BW flashes and additional analysis for all markets.
Onto the nitty-gritty.
THE SENSATIONAL STOCK AND BOND MARKET
DOW JONES INDUSTRIAL AVERAGE
Support should appear near 16,150.00 to 16090.00. Below that buyers should appear near 15,760.00 to 15,690.00 and contain declines. Resistance is at 16,420.00 to 16,550.00, an extended trade over is friendly and augurs for a test of the 16,890.00 to 16,960.00 region.
JUNE E-MINI SP500
Nearby Resistance is at 1858.00 to 1865.00, a close over is friendly and augurs for a test of the 1902.00 to 1909.00 region. Beyond that a test of 1946.00 to 1953.00 is likely. Support should appear near 1840.00 and the 1822.00 to 1808.00 region. Traders should go long if a close 1865.25 occurs.
NASDAQ COMPOSITE
Resistance should appear near 4370.00 to 4381.00, beyond that a test of the 4425.00 to 4446.00 region is likely.
Support should appear near the 4249.00 to 4238.00 region. Below that buyers should appear near the 4183.00 to 4163.00 region and contain a decline.
JUNE E-MINI NASDAQ 100
Support should appear near 3623.00 to 3613.00 and the 3563.00 to 3553.00 region and should bring buyers out of the woodwork. Traders can buy at 3554.00 and hold for higher prices. Resistance is at 3663.00 to 3682.00 and the 3734.00 to 3743.00 region. Beyond that a test of 3795.00 to 3806.00 and the 3858.00 to 3867.00 is likely.
JUNE E-MINI RUSSELL 2000
Nearby Resistance should appear at 1192.00 to 1203.00. Beyond that a test of 1232.00 to 1238.00 is likely. Support should appear near 1180.50 and the 1169.00 to 1164.00 region.
JUNE 30 YR BONDS
Resistance should appear near 133-07 and 133-21. Beyond that sellers should appear near 134-07 and cap a rally. Support should appear near 131-21 and 131-07. Below that buyers should appear near 130-21 and 130-07.
JUNE 10 YR NOTE
Resistance should appear near 124-07 and 124-21. Above that resistance is at 125-07 and 125-21 where sellers should appear and cap rallies.
Support should appear near 123-07 and 122-21, below that a test of 122-07 and 121-21 is likely and should hold for now.
THE FRENZIED FOREX FRONT
JUNE DOLLAR INDEX
Resistance should appear near 8029 to 8044. A sustained trade or close over is friendly and augurs for a test of 8119 to 8134.
Support should appear near the 7954 to 7939 region, below that a test of 7864 to 7836 is likely and should bring out buyers. JUNE JAPANESE YEN Resistance should appear near 9821 to 9837 and 9921 to 9937 where sellers should appear and cap a rally. Traders can sell at 9917 and risk a close over 9942 for three days in a row. Support should appear near 9737 to 9706, a close under is negative and augurs for a test of 9641 to 9625.
JUNE EURO CURRENCY
Support should appear near 13770 and the 13460 to 13340 region. Resistance should appear near 13830 and 13990. Beyond that a test of 14150 to 14210 is likely
JUNE SWISS FRANC
Resistance should appear near 11500, beyond that a test of 11640 to 11690 is likely
Support is near 11300 and the 11010 to 10960 region. JUNE BRITISH POUND
Support should appear near the 16420 region. Below that buyers should appear near 16287 and contain a decline.
Resistance remains near 16550 then 16720 and the 16890 to 16960 region.
JUNE CANADIAN DOLLAR
Resistance should appear near 8934 to 8964 and 9040 to 9060. Support should appear near 8871 to 8856 and 8777 to 8762
JUNE AUSSIE DOLLAR
Support should appear near 8964 to 8934 and 8871 to 8856. Resistance should appear near 9044 to 9060 and 9140 to 9156. Pick Your Poison and stay tuned for Forex Flashes.
THE PRECIOUS METALS
JUNE GOLD
Resistance should appear near 1346.0. Beyond that sellers should appear near 1377.0 to 1383.0.
Support remains near 1310.0 to 1304.0, below that a test of 1289.0 is likely and buyer should appear near the 1274.0 to 1268.0 region and contain a decline.
MAY COPPER Resistance should appear near 30360 to 30450 and 30920 to 31020
Support should appear near 29370 to 29280 and the 28830 to 28740 region.
MAY SILVER
Support should appear near 1996 to 1982, below that a test of 1953 to 1946 is likely.
Resistance is at 2034 to 2042 and the 2080 to 2089 region.
THE EXCITING ENERGIES
MAY CRUDE OIL
Resistance should appear near 10104 to 10136, beyond that a test of the 10320 to 10360 region is likely.
Support should appear near 9937 to 9921. Below that buyers should appear near 9837 to 9821 and the 9737 to 9706 region. JUNE CRUDE OIL
Resistance should appear near 9921 to 9937, a close over is friendly and augurs for a test of the 10021 to 10037 region.
Support should appear near 9937 to 9921. Below that buyers should appear near the 9737 to 9706 region. Traders should go long if a close over 9939 occurs
MAY BRENT CRUDE OIL Resistanceshould appear near 10820, an extended trade over is friendly and augurs for a test of 10960 to 11010. Supportshould appear near 10680 to 10580 and 10470… Below that 10360 to 10320 should hold.
MAY HEATING OIL
Support should appear near should appear near 28830 to 28740 and the 28290 to 28200 region. Resistance should appear 29280 to 29370 and the 29720 to 29900 region.
MAY UNLEADED GAS
Support should appear 28830 to 28740 and 28290 to 28200 which should contain declines.
Resistance should appear near 29280 to 29370. Beyond that a test of the 29720 to 29900 region is likely to occur.
MAY NATURAL GAS
Resistance should appear at 4303 to 3415 and the 4370 to 4381 region. Beyond that sellers should appear near 4503 to 4514.
Support should appear near 4249 to 4238 and the 4183 to 4163 region where buyers should appear and contain decline.
THE GRANDE’ GRAINS
MAY SOYBEANS
Support should appear near 1399 and the 1383 to 1377 region. Below that buyers should appear near 1361 ½ and contain declines.
Resistance should appear near 1415 to 1421, a close over is friendly and augurs for a test of 1453 to 1459
JULY SOYBEANS Support should appear near 1383 to 1377… Under that buyers should appear near 1346 to 1334 and should contain a decline.
Resistance should appear near 1415 to 1421, a close over is friendly and augurs for a test of 1484 to 1496.
NOVEMBER SOYBEANS Support should appear near 1169 to 1164 and the 1136 to 1130 region. Below that buyers should appear near 1101 to 1096 and contain declines.
Resistance should appear near 1192 to 1203, beyond that sellers should appear near 1232 to 1238 and the 1268 to 1274 region and cap a rally.
JULY SOYOIL Resistance should appear near 4110 to 4120 and the 4238 to 4249 region. Beyond that a test of
4304 to 4315 is likely Support should appear near 4056 to 4046 and the 3992 to 3982 region. Traders can buy at 4057 for a bounce and hold for higher prices, initially risk a close under 3977 for three days in a row. Below that buyers should appear near 3929 to 3909. MAY SOYMEAL
Resistance should appear near 463.9 to 465.0, a close over is friendly and augurs for a test of 484.5 to 485.6, beyond that sellers should appear near 505.6 to 506.7.
Support should appear near 444.6 to 442.5 and 438.1 to 437.0, a close under is negative and augurs for a test of 431.5 to 430.4 and the 424.9 to 423.8 region, which should hold.
JULY CORN
Support should appear near 478 ½ to 477 and the 471 ¾ to 469 ½ region. Below that buyers should appear near 451 ½ to 450 ¼ and 444 ¾ to 442 ½ which should hold. Resistance should appear near 491 ½ to 492 ¾, a close over is friendly and augurs for a test of 512 ¾ to 513 ¾. Beyond that sellers should appear near the 541 ¾ to 544 region
MAY WHEAT
Resistance should appear near 699 to 700 ¼ and the 707 to 708 ¾ region. Beyond that sellers should appear near 714 ¼ to 717 and the 724 ¼ to 725 ½ region and cap rallies.
Support should appear 683 ¾ to 680 ¾ and the 675 ½ to 674 ¾ region… A close under is negative and augurs for a test of 667 ¼ to 665 ¾ and the 635 to 633 ¾ region.
THE LIVELY LIVESTOCK
APRIL CATTLE Support remains near 14210 to 141250 and 13830 to 13770.
Resistance should appear near 14530 to 14590 and 14840 to 14960
JUNE CATTLE
Support should appear near 13460 to 13340. Below that a test of 13100 to 13040 is likely.
Resistance should appear near 13770 to 13830 and 14150 to 14210
APRIL HOGS
Support should appear near 12532 and the 12380 to 12320 region. Where buyers should appear and contain a decline. Resistance should appear near 12680 to 12740, beyond that a test of 13040 to 13100 is likely
JUNE HOGS
Support should appear near 12892 and the 12740 to 12680 region.
Resistance should appear near 13040 to 13100 and the 13340 to 13460 region.
Stay tuned for Livestock flashes.
THE SATISFYING SOFTS
MAY COFFEE
Resistance should appear near 18580 to 18650 and the 19020 to 19020 region. Beyond that sellers should appear near 19460 to 19530.
Support should appear near 16420 to 16550 and the 15760 to 15690 region. Below that buyers should appear near 15350 to 15290 and contain a decline.
MAY COCOA
Resistance should appear near 3036 to 3045, beyond that a test of 3092 to 3102 is likely.
Support should appear near 2937 to 2928 and the 2883 to 2874 region. Where buyers should appear and contain a decline. Traders can buy at 2887 for a bounce and hold for higher prices.
Additionally Traders should go long July Cocoa if a close over 2992 occurs
MAY SUGAR
Resistance is near 1689 to 1696 and the 1731 to 1738 region. Beyond that sellers should appear near the 1774 to 1780 region and cap a rally. Support should appear near 1655 to 1642, below that a test of 1615 to 1609 is likely.
MAY COTTON
Support should appear near 9156 to 9140 and the 9060 to 9044 region. Resistance is at 9347, an extended trade over is friendly and augurs for a test of 9429 to 9445 and the 9706 to 9737 region. Traders should go long if a close over 9355 occurs to re-establish the long side.
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 March 23, 2014 12:00 Noon South Florida Beach Time
THIS PUBLICATION IS SUBJECT TO REVISIONS AND CONTAINS THE VIEW AND OPINIONS OF THE AUTHOR, EXCEPT WHERE OPINIONS ARE ATTRIBUTED TO OTHER SOURCES. WRITTEN PERMISSION IS REQUIRED PRIOR TO ANY DISTRIBUTION OR REPRODUCTION. FUTURES AND FOREIGN EXCHANGE TRADING IS RISKY AND CAN CAUSE SUBSTANTIAL FINANCIAL LOSS. THE USE OF OPTIONS AND OPTION TRADING INVOLVES A HIGH DEGREE OF RISK. THE USE OF STOPS MAY NOT LIMIT LOSSES TO INTENDED AMOUNTS. SPREAD POSITIONS MAY NOT BE LESS RISKY THAN OUTRIGHT FUTURES POSITIONS, FOREIGN EXCHANGE AND OPTIONS. TRADING FUTURES AND FOREIGN EXCHANGE ON MARGIN CARRIES A HIGH LEVEL OF RISK AND MAY NOT BE SUITABLE FOR ALL INVESTORS. PLEASE TRADE WITH CAPITAL YOU CAN AFFORD TO LOSE. PAST RESULTS ARE NOT INDICATIVE OF FUTURE RESULTS. NO SOLICITATION IS MADE HERE FOR INDIVIDUALS TO BUY OR SELL FUTURES CONTRACTS, FOREIGN EXCHANGE OR OPTION MARKET. SOURCES ARE BELIEVED TO BE RELIABLE BUT NO ASSURANCE IS MADE FOR ACCURACY. READERS ARE SOLEY RESPONSIBLE FOR HOW THEY USE THE INFORMATION AND FOR THEIR RESULTS. YOU SHOULD BE AWARE OF ALL THE RISKS ASSOCIATED WITH FUTURES AND FOREIGN EXCHANGE AND SEEK ADVICE FROM AN INDEPENDENT FINANCIAL ADVISOR IF YOU HAVE ANY DOUBTS, THE HIGH DEGREE OF LEVERAGE THAT IS OFTEN OBTAINABLE IN FUTURES AND FOREIGN EXCHANGE TRADING CAN WORK AGAINST YOU AS WELL AS FOR YOU. THE USE OF LEVERAGE CAN LEAD TO LARGE LOSSES AS WELL AS GAINS. INTERNET RISKS ; THERE ARE RISKS ASSOCIATED WITH UTILIZING AN INTERNET BASED SERVICE INCLUDING BUT NOT LIMITED TO, FAILURE OF HARDWARE, SOFTWARE AND INTERNET CONNECTION, FUTURESCOM EMPLOYS BACK-UP SYSTEMS AND CONTINGENCY PLANS TO MINIMIZE THE POSSIBILITY OF SYSTEM FAILURE
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