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Gold fell below its 200 day moving average for the first time since January
WEEKLY FUTURES REPORT

Filed at 8:13 am Thursday

3.07.12

 
Last
Last Week (02.22.12)
Apr Crude
106.19
105.96
Apr Heat
322.36
321.30
Apr Gas (Blended)
328.92
326.41

Oil traded to better levels on Wednesday as more investors took the position that the Greek bond swap would the place with majority participation, reducing anxiety over an immanent default by that country. Old bond holders would exchange paper for new paper and take a 75% loss on their initial position. It had been thought that hedge funds that had come into this market lately with a view to buy deeply discounted paper and flip it for a profit would not go along with the current terms and throw Greece into technical default. Now these fears seem to have been reduced and this is an oil market positive. A Greek default would immediately reduce oil demand on the idea of a European economic contraction. At last estimate, 58% of the bond holders were set to participate with the bond swap.

As the supply and demand considerations, crude stocks were higher while heating oil and distillates fell. The price of crude is up 7.4% for the year largely on two factors, the fear that Iran will do something to disrupt supply and as a proxy for equity prices which enjoyed tremendous performance over the first two trading months of the year. Another positive was the positive response to the ADP private jobs forecast which said that the US had added 216,000 new jobs last month. US consumer confidence is at its best level in a year.

Crude stocks rose by 832,000 barrels to 345.7 million barrels. This was the highest level since last September. Supplies at Cushing, Oklahoma, the terminus for West Texas Intermediate oil were at their highest levels since 2009. Gas stocks fell by 396,000 barrels. Distillate stocks fell by 1.94 million barrels. Consumption was lower by 7.6% compared to last year at this time. Oil prices may get a boost into the unemployment report on Friday which is rumored to surprise on the high side but will fall immediately afterword on ideas of economic softness. Money flow for crude and its products is negative across the board.

As for the charts, prices finally broke in the wake of the fed Chairman’s testimony last week when he backed away from mentioning the need for another round of quantitative easing. Prices remain defensive as long as tensions in the Middle East fail to escalate.

 
Support
Resistance
Apr Crude
102.70
108.50
Apr Heat
314.50
325.00
Apr Gas
319.00
335.00

**********************************************************

METALS
   
 
Last
Last Week
Apr Gold
1685.20
1698.70
May Silver
33.46
34.065
April Platinum
1632.10
1600.00

Gold modestly rebounded on Wednesday but was still trading at levels below those seen last week at this time. The market was stil in the process of recuperating after a severe sell off on the last trading day of the month in February when price made a new monthly high, a new monthly low and an outside day lower close. The decline was blamed on the possibility that the Fed would no longer be as accommodative and that interest rates might normalize and drift higher as the economy improves, Gold fell below its 200 day moving average for the first time since January. The technical action that took place last month makes it difficult to ignore and prepaid the market for the test of its 200 day moving average. Damage was done and suggests that the downside is not yet resolved. Maybe there will be a test of the middle Bollinger band before attempting hammer out a bottom.

 
Support Resistance
Apr Gold 1636 1730
May Silver 31.45 35.00
April Plat 1565 1695

******************************************

SOFTS
   
 
Last
Last Week
May Coffee
188.40
203.15
May Sugar
23.92
25.01

Coffee fell to a 16 month low as Brazilian producers stepped up sales to lock in price. Ideas of a European economic contraction were also negative. A basketful of commodity prices fell to its lowest level in 11 weeks on signs that China was slowing and further quantitative easing by the Federal Reserve was unlikely. The dollar strengthening against the Brazilian real was also a negative. Coffee inventories are higher by 24% since October. Brazilian output is expected at 53.9 million bags, 2.6% higher than previously estimated in November. Shipments from Vietnam jumped 25% in February from year ago level.

Chart is oversold but has yet to put in bottoming action.

The idea that India, Thailand and Brazil will all be active exporter’s pressured prices. Prices traded to their lowest levels since mid-February. Macro considerations have pressured values.

   
Support
Resistance
May Coffee
180.00
220.00
May Sugar
23.50
25.00
********************** **********************
   
Last
Last Week
May Soybeans
13.266
13.20
May
Corn
6.386
6.58
May
Wheat
6.392
6.68

Soybeans held their own compared to week ago levels while corn and wheat traded lower. Farmers aggressively sold to take advantage of last month’s higher prices. Soybeans had been 15% higher since mid-January. Corn had been higher by 9.1%. Weather models are calling rain in key growing areas in eastern Brazil and Argentina next week and this is a price negative. Money flow for soybeans is positive while flow for wheat is negative.

 
 
Support
Resistance
May Beans
13.07
13.49
May Corn
6.25
6.64
May Wheat
6.25
6.67

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 SUBEQUENTLY 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.