FuturesCom Bi-Weekly Investment Outlook # 455 August 24 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 the Creator had a purpose in equipping us with a neck,he surely meant for us to stick it out.”— Arthur Koestler
Friday August 22, 2014
10:00 PM, South Florida Beach Time.
Traders should stay nimble and stay tuned for flashes. Geopolitical tensions in Eastern Europe and the Mideast remain the same perhaps a bit elevated in Asia. Stock Indices are generally up on the year. However the once leading edge of the rally, the Russell 2000 remains lower on the year by a smidgen. Interest rates remain at essentially at zero. So far no policy change has come from the U.S Federal reserve and all the talk is essentially babble. Long term support for the Dow is well below the prevailing recent trading ranges. In Forex Markets the Euro remains lower on the year. Longer term downside targets are well below the current levels. ECB president Draghi said on Friday ‘exchange rate movements should support aggregate demand and inflation’ the big word is ‘should’ and he feels the policy path of the U.S and the Euro zone are diverging enough to support current exchange rate trends.. The ECB president makes decisions on rate policy for the Euro as well as the exchange rate. The President of the U.S decides policy on the dollar not the Federal Reserve where decisions are made regarding interest rates and money supply. So far the White House has not chimed in and is not likely to comment on dollar exchange rates. Europe is on its’ own here and the ECB has the tools to do what it needs to do. So far STILL more talk than action. They should print more euros and spend a little more domestically with additional government spending, since once in a while they pay handsomely to the terrorists upon demand. Sell Rallies in Euro as it enters a more trading affair period… Cable is now unchanged on the year. Cable has support at year end levels 16550 to 16420 below that we really see no support until the 16150 to 16090 region. Perhaps if cable reaches down to 15760 to 15690 the BOE will reignite chatter about rate hikes. USD/CAD is still broadly range bound. Forex traders should look for a dip against 10680 to 10580 to buy. The near term upside target for USD/CAD at 10960 to 11010 has been met. Over the longer term target remain higher.
The Dollar-Yen remains has pushed thru to the upside and 10360 to 10320 is now a support region with an upside objective of 10580 to 10680. Traders and investors are looking for more stimulus measures from the Government of Japan to help the economy grow. The Japanese stock markets are a tad higher on the year. Rates are essentially zero in Japan, population data is broadly negative and the GDP to debt ratio is higher any nation in Europe and more than twice the OECD average. Domestic savers via pensions and corporations in Japan have financed the debt over a very long period. However, due to the population decline the domestic side at some point will not have sufficient funds from the household sector to invest in Japanese government securities… So Japan is tenuous at best long term, something to think about.. Russia does not have to worry about population and birth rates declines as much as Japan or Germany. Russia will absorb other nations over the coming years and beyond. The word ‘nations’ is plural and is not a mistype.
Over in China, growth is meek at best…historically well under the last two decades and just last week a U.S military jet was nearly sideswiped by a Chinese fighter Jet . Increased tensions in that region have risen. Apple should consider moving production out of China as soon as possible…move the 500,000 jobs to the U.S.A. On the bright side Chinese investors and economists are looking for more stimulative measures from the PBOC.
We remain slightly negative on the Aussie and Kiwi. Downside targets are lower. However this does not preclude spikes to the upside for both. Trade cautiously and stay tuned for flashes.
Analysis for a variety overseas equity and foreign exchange markets is now available upon request,
for more detailed information or additional economic analysis please call or email a request.
Precious Metals and Energy; Gold and silver remain range-bound, copper acted better this week. However copper appears to be still range bound between the mid to high 3.20’s and 3.00.
Crude is also trading affair. Supplies are ample for now….
However we do expect that to change over the next year. Geopolitical risk to supply has marginally increased and we expect risk to become far greater over the next year or two. For instance Iraq just six months ago was expected to pump 6 million barrels a day within a year or two, its output is declining to under 3 million a day now. You can shelve the ideas of increased production if a lengthy civil war sets in. Iran’s nuclear ambitions are not going to stop. Iran is not on the radar now but we expect it will be… So expect sanctions over the next year and more Iranian production declines. Libyan Oil is production is having trouble coming back online. The North Sea is like looking at a glass of water 3/4 empty. Surprise production issues may surface in Nigeria. Especially If the Ebola Virus forces cordoning off areas in that nation. The “fencing off’ of villages in Liberia is now occurring.
No one in or out. People simply left to die by the thousands. (not to mention the lower price levels of crude oil causing Nigeria issues financing the Nigerian debt.)
The World Health Organization (WHO) has stated the virus will “at some point be contained. “Meanwhile is not… and the doctors are getting sick.
On the bright side for oil production, positive growth of oil supplies has come from the U.S.
The current Oil production boom is one I spoke about many times on ‘The Bill Chippas Show’ years ago. That growth is likely in a leveling off period now after substantial growth. New offshore oil finds in the America’s offer plentiful supplies. However off shore oil production increases in Mexico and the U.S is getting expensive at current crude oil prices compared to when crude oil was ramping higher several years back. Therefore if crude oil nears cost of production (once again) at lower levels than current prevailing prices, long term traders and institutional desks should begin to prepare to buy crude for the next year or two. Buying the back end months make some sense because they are liquid and one can to avoid the dilly- dally with a roll every month considering the prospects of another super spike is real.
Use the weakness to get long for the next year or two. Short term and medium term traders should continue to consider crude oil a trading affair. To facilitate the long term prospects in Oil and other opportunities our Premier Service will begin tracking trades in a multiple markets after labor-day of 2014… All information will posted on the website and sent out shortly.
Getting back to the here and now, we still think April Cattle is basing and a grind higher into the fall and winter is a possible. The upside targets if it holds and surprises the shorts is a test of 17310 to 17380 and that’s a big if. Cold Storage supplies were a bit negative and Cattle on Feed on Friday were neutral to a tad bearish. Cash Cattle traded near 1.55 last week , cattle closed higher on Friday. February Hogs typically make lows into this time frame. Buying February Hogs and Selling October Hogs near 7.50 / 8.00 should work. CBOT wheat typically has made the low for the year by now. However Wheat supplies remain ample and Wheat sold off sharply into the close on Friday still closing higher on the day but losing most of its gains in the last few minutes. Nearby Soybean and Soymeal Spreads have blown out to the upside as the last stages of the Soybean supply shortage over the last year or two runs its course. Sell rallies in November Soybeans and get ready for a large crop. Corn supplies are ample. However while U.S corn has dropped substantially, drought problems in China has caused Chinese Corn prices to rally sharply which is the complete opposite of U.S. Corn. Both Corn and Pork prices in China have risen dramatically over the last six weeks. Nearby Coffee spreads have collapsed, which is near term negative. Longer term its can hold on a sharp break, retail prices are risen. Sugar is trying to hold its lower long term support and is slightly lower on the year and is likely a buy once again for another attempt at 19.00 to 20.00. As the ‘Drums of War’ beat slowly this is probably a good time to buy ‘Guns and Butter’ ahead of the crowd. Buy March Sugar, the peak of harvest in Brazil is now and should act better once it gets thru this period. Cotton acts better. If cotton holds up it may leave the area and trade back to higher levels for a bit. Cocoa sold off a bit and looks to be digesting its gains and acts sloppy.
Onto the nitty-gritty
THE SENSATIONAL STOCK AND BOND MARKET
DOW JONES INDUSTRIAL AVERAGE
Support should appear near 16,960.00 to 16,890.00 an extended close under is negative…
Resistance is at 17,310.00 to 17,380.00
DOW JONES TRANSPORTS
Support should appear near 8406 to 8391 and the 8314.00 to 8300 region. Below that 8044.00 to 8029.00 should hold.
Resistance is at 8484.00 to 8499.00 and the 8560.00 to 8589.00 region.
SEPTEMBER E-MINI SP500
Resistance is at 1996.00 then 2017.50 and the 2034.00 to 2042.00 region.
Support should appear near 1982.00, a close under is negative and augurs for a test of 1967.50 and the 1953.00 to 1945.00 region.
NASDAQ COMPOSITE
Resistance should appear at 4571.00 to 4582.00 and 4639.00 to 4650.00
Support should appear near 4514.00 to 4503.00 and the 4446.00 to 4425.00 region. Below that buyers should appear near the 4381.00 to 4370.00 region.
SEPTEMBER E-MINI NASDAQ 100
Support should appear near 3992.00 to 3982.00 and 3929.00 to 3909.00.
Resistance is at 4110.00 to 4120.00 and 4163.00 to 4183.00
SEPTEMBER E-MINI RUSSELL 2000
Resistance should appear at near 1164.00 to 1169.00 and 1192.00 to 1203.00.
Support should appear near 1136.00 to 1130.00.
DECEMBER 30 YR BONDS
Resistance should appear near 139-21 and 140-21. Beyond that sellers should appear near 142-22 and 143-16.
Support should appear near 138-21 and 138-07 and 137-21
DECEMBER 10 YR NOTE
Resistance should appear near 126-17 and 127-07
Support should appear near 124-17 and 123-07.
THE FRENZIED FOREX FRONT
SEPTEMBER DOLLAR INDEX
Resistance should appear near 8300 to 8314.00
Nearby support remains at 8194.00 and 8134 to 8119.
SEPTEMBER JAPANESE YEN
Resistance should appear near 9706 to 9737
Support remains near 9542 to 9526 and 9445 to 9429
SEPTEMBER EURO CURRENCY
Support should appear near 13100 to 13040.
Resistance is at 13340 to 13460. Traders can sell at 13392 and risk a close over 13460 for three days in a row.
SEPTEMBER SWISS FRANC
Resistance should appear near 10960 to 11010 and 11155.
Support should appear near 10820, below that a test of 10680 to 10580 is likely.
Trade accordingly
SEPTEMBER BRITISH POUND
Support should appear near 16550 to 16420 and 16150 to 16090.
Resistance should appear near 16890 to 16960 and the 17310 to 17380 region.
SEPTEMBER CANADIAN DOLLAR
Resistance should appear near 9140 to 9156 and 9237.
Support should appear near 9060 to 9044, a close under is negative and augurs for a test of
8964 to 8934.
SEPTEMBER AUSSIE DOLLAR
Support should appear near the 9156 to 9140, a close under is negative and augurs for a test of 9060 to 9044.
Resistance should appear near 9316 to 9347.
THE PRECIOUS METALS
DECEMBER GOLD
Resistance should appear near 1304.0 to 1310.0
Support should appear near 1274.0 to 1268.0 and the 1238.0 to 1232.0 region.
DECEMBER COPPER
Resistance should appear near 32610 to 32700 and 33190 to 33280 region.
Support should appear near 31570 to 31480 and 31020 to 30920 is likely.
DECEMBER SILVER
Support should appear near 1909.0 to 1902.0 and the 1808.0 to 1822.0 region
Resistance is at the 1982.00 to 1996.00 region.
THE EXCITING ENERGIES
DECEMBER CRUDE OIL
Support should appear near 9156 to 9140 below that a test of 9060 to 9044 is likely.
Under that buyers should appear near 8777 to 8762…
Resistance should appear near 9526 to 9542 and 9625 to 9641
NOVEMBER BRENT CRUDE OIL
Resistanceshould appear near 10320 to 10360 and 10580 to 10680
Supportshould appear near 10136 to 10104 and the 9737 to 9706 region.
OCTOBER HEATING OIL
Support should appear near should appear near 27750 to 27580 and the 27240 to 27160 region.
Resistance should appear 28740 to 28830 and 29280 to 29370
OCTOBER UNLEADED GAS
Support should appear 25190 to 25110 and the 24690 to 24610 region.
Traders can buy at 24710 and risk a close under 24590.
Resistance should appear near 26120 to 26200 and 26630 to 26720. Beyond that sellers should appear near 27580 to 27750.
NOVEMBER NATURAL GAS
Resistance should appear 4.046 to 4.056 and 4.304 to 4.315
Support should appear near 3.867 to 3.858 and 3.553 to 3.563 where buyers should appear and contain declines.
THE GRANDE’ GRAINS
NOVEMBER SOYBEANS
Support should appear near 1036 to 1032 is likely. A close under is negative and augurs for a test of
1013 ¾ to 1010 ½ and the 1003 ¾ to 1002 ¼ region.
Resistance should appear near 1047 and the 1058 to 1068 region. Traders can sell at 1057 ¾ and hold for lower prices.
Aggressive Traders should go Short if a close under 1031 occurs
DECEMBER SOYOIL
Support should appear near 3157 to 3148 and the 3045 to 3036 region.
Resistance should appear near 3319 to 3328 and 3377 to 3386
DECEMBER SOYMEAL
Resistance should appear near 368.3 to 369.2 and 385.8 to 386.7
Traders can sell at 367.2 and risk a close over 374.6 for three days in a row.
Support should appear near 338.6 to 337.7 and 327.0 to 326.1
DECEMBER CORN
Support should appear near the 344 ½ to 342 ¾. Below that a test of 327 to 326 ¼ is likely
Resistance should appear near 373 ½ to 373 ¾ and 398 ½ to 399 ½. Traders can sell at 397 ¾ and hold for lower prices.
DECEMBER WHEAT
Support should appear near 543 to 541 ¾ and 535 ¾ to 534 ½.
Traders can buy at 536 for a bounce and hold for higher prices.
Resistance should appear near 571 ¾ to 572 ¾.and 585 ½ to 588
THE LIVELY LIVESTOCK
OCTOBER CATTLE
Support should appear near 14590 to 14530 and the 14210 to 14150 region.
Resistance should appear near 148409 to 14960 and 15290 to 15350.
DECEMBER CATTLE
Support should appear near 14960 to 14840 and 14590 to 14530
Resistance should appear near 15290 to 15350 and 16090 to 16150
OCTOBER HOGS
Support should appear near 9157 to 9137 and 9062 to 9042. Below that 8967 to 8937 should hold.
Resistance should appear near 9707 to 9737, a close over is friendly and augurs for a test of
10022 to 10037.
DECEMBER HOGS
Support should appear near 8682 to 8667 and 8317 to 8302
Resistance should appear near 8857 to 8872, a close over is friendly and augurs for a test of 9042 to 9062.
FEBRUARY HOGS
Support should appear near 8592 to 8560 and the 8502 to 8482 region.
Resistance should appear near 8682 and the 8762 to 8777, a close over is friendly and augurs for a test of 9042 to 9062.
Trade Accordingly and stay tuned for Flashes
THE SATISFYING SOFTS
DECEMBER COFFEE
Resistance should appear near 19020 to 19090 and 20340 to 20420.
Support should appear near 17800 to 17740 and 17380 to 17310 below that buyers should appear near 16960 to 16890 and the 16150 to 16090 region. Traders can buy at 16170 for a bounce and hold for higher prices.
Aggressive Traders should consider going short if a close under 18570 occurs
DECEMBER COCOA
Resistance should appear near 3261 to 3270 and the 3319 to 3328 region.
Support should appear near 3157 to 3148 and 3102 to 3092 region.
OCTOBER SUGAR
Resistance is near the 1569 to 1576 and 1609 to 1615 region. Beyond that resistance is at 1642 to 1655. A close over is friendly and augurs for a test of 1731 to 1738
Support should appear near 1535 to 1529 and 1496 to 1484.
DECEMBER COTTON
Support should appear near 6350 to 6337 and 5880 to 5855.
Resistance is at 6743 to 6755 and 6809 to 6836. Beyond that a test of 7074 to 7088 is likely.
Aggressive traders should go long if a close over 6675 occurs.
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
Saturday August 23, 2014 2:00 PM South Florida Beach Time
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