Weekly Futures Report 

01.05.11

Filed Wednesday 5:59 pm

ALL CHARTS THIS WEEK ARE Hourly Bars

Last Last Week 12.22

Feb Crude 91.00 91.00

Feb Heat 252.95 252.95

Feb Gas (Blended) 239.74 239.74

Crude oil was able to rally on Wednesday, regaining some of the losses

the oil complex suffered Tuesday. On the second trading day of the

year, the dollar spiked in strength as several institutional accounts

rebalanced their portfolios based on percentages of exposure to certain

markets. This triggered a serious selloff across the board with gold off

by as much as $44 an ounce at one point. Crude was no exception with

oil falling by as much as $2.50 a barrel. As mentioned, the tone was a bit

better on Wednesday as the ADP private employment forecast came in

far better than expected indicating that demand for oil may remain

solid. The Institute for Supply management which measures strength

and weakness in the services industry came in at 57.1, not as robust as

the ADP number (which came in 3 times stronger than forecast) but still

strong enough to support values. All in all, there are signs that the

economy is making modest improvement and this is a positive for oil

ands its products. Year on year, crude is 10% higher. There are

disparities in the market with West Texas Intermediate trading at a

discount to Brent North Sea as supplies in Oklahoma are at their

highest levels since August. Now, after end of year draw down in stocks

along the Gulf Coast of the US due to tax considerations, supplies there

should build back over the next several months. According to the

Department of Energy, crude stocks for the latest week fell by 4.16

million barrels to 335.3 million barrels while gas stocks surged by 3.29

million barrels. Distillate stocks were also higher by 19.1 million

barrels. Last week’s blizzard that hit the Northeast US curtailed

gasoline consumption. Money flow in crude and heating oil is positive

and negative for gasoline.

Support Resistance

Feb Crude 86.30 93.60

Feb Heat 243.00 261.00

Feb Gas 234.00 248.00

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METALS

Last Last Week

February Gold 1376.80 1411.90

March Silver 29.275 30.60

Apr Platinum 1730.30 1760.20

Over the last two trading sessions, gold suffered its biggest price drop in

over two months. The dollar markedly strengthened on ideas that the

US will experience better growth prospects for 2011 than the Euro Zone

and Japan. Also, there was exposure rebalancing by institutions and this

led to a sharp sell off in some of the better performing markets of 2010.

The ADP private employment report indicated better job growth and

suggested that gold as a hedge may not be as mandatory a position as it

had previously been. Risk aversion trades were being reversed with

selling in hard assets and buyers moving into equities to take advantage

of a possible January effect. The manufacturing sector continues to

show signs of expansion. Gold was up by almost 30% last year and the

market was a bit heavy on one said of the transaction. Going forward,

players will be looking to the non farm payroll number on Friday to see

if it reflects the strength seen in the ADP number. If the NFP number

comes in better that 250K for December which would be impressive

considering the weather and holiday considerations, expect more buying

of paper assets and selling of metal. Dollar trading will drive the metals.

Gold and silver will reverse intermediate trends should they close lower

on Thursday.

Support Resistance

February Gold 1347.70 1433.00

March Silver 28.34 31.46

Apr Plat 1698.00 1790.00

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SOFTS

Last Last Week

March Coffee 233.00 239.65

March Sugar 32.20 33.83

Sugar sought to make up for recent losses as traders adopt the view that

the supply/demand ratios will tilt towards demand as Brazilian sugar

output declines. In key growing areas, sugar production in Brazil is

down 30%. The floods in Australia may limit production there by as

many as two years. Australia is the third largest exporter of sugar in

the world. Fundamentals remain positive for sugar with little in the way

of hedge selling visible in the market.

Coffee fell in sympathy with most commodities on rebalancing

portfolios and a stronger dollar.

Support Resistance

March Coffee 215.00 240.00

March Sugar 31.00 34.50

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Last Last Week

March Soybeans 13.934 13.77

March Corn 6.192 6.24

March Wheat 8.082 7.992

Soybeans and corn rose as dry weather may hamper Argentinean

production levels. Rains for this key commodity producer have missed

growing areas. Previously, rains forecast for Argentina had driven the

soybeans lower by 2.4%. Soybeans were up 34% last year and are

approaching a tipping point in that the last time prices surged like this,

there was civil unrest in lesser developed nations. Corn was up 53% last

year. Gains like this are normally not sustainable but demand is fairly

inelastic. Money flow for corn, soybeans and wheat remains positive.

Support Resistance

March Soybeans 13.39 14.05

March Corn 5.914 6.32

March Wheat 7.70 8.15

Chuck Kespert from NY/NY

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT

LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO

REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS

LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN

FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN

HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS

SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS

THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF

HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE

FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN

COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL

TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO

ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING

LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT

ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS

RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF

ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY

ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL

PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT

ACTUAL TRADING RESULTS.