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Crude higher on Wednesday due to the Chinese Purchasing Managers index and the employment situation

Weekly Futures Report

 

9.01.10 Filed Wednesday 8:00 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week

October Crude 73.91 72.52

October Heat 204.11 198.56

October Gas (Blended) 188.91 182.54

Crude oil traded higher on Wednesday due to several factors. Oil was

initially trading higher overnight as the Chinese Purchasing Managers

index, a reflection of economic strength or weakness, came in higher

than originally forecast. Then there was the release of the Institute for

Supply Management figures regarding the employment situation in the

United States for the modestly paid services sector. That too came in

higher than expected. As September is the worst performing month of

the year for equities, many traders had gone into the session short

various instruments across many sectors expecting to see a decline

immediately unfold on the dawning of September 1st. Consequently,

when these economic numbers came in showing strength those who are

expecting a double dip recession and lower prices for virtually

everything were forced to buy back their positions at successively higher

levels. This helped take crude oil and its products higher. Short

covering lifts all ships. Finally, at 10: 30, the Department of Energy

released its weekly report which showed an unexpected decline in

distillate fuels. Crude inventories rose 3.42 million barrels to 361 million

barrels a traders looking for increase of 1.2 million barrels. Now that

many shorts have covered, traders are now looking forward to Friday's

release of the monthly US unemployment report to gain more insight as

to the economic strength or weakness of the broad economy and how

this could affect the appetite for oil. Chart patterns suggest, at best, a

range bound affair. Also, trade is light due to the last vacation week of

the summer before school starts in the fall. Thin volume tends to

exaggerate price moves in both directions. Hurricane Earl, at least for

now, is not expected to disrupt production or supply lines for crude oil

and its products.

Support Resistance

October Crude 69.50 75.90

October Heat 1.96 2.07

October Gas 1.83 1.94

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

METALS

Last Last Week

December Gold 1248.1 1241.3

Dec Silver 19.393 19.072

Oct Platinum 1535.7 1527.4

Gold prices backed away from near record highs as the stock market

advanced by nearly 3% on Wednesday after declining nearly 5% last

month. Interest rates continue to remain near zero which is a gold

market positive. When interest baring assets refuse to bear interest then

gold becomes extremely attractive. The inert nature of gold as a noninterest-

bearing asset becomes an investment of first and last resort to

preserve wealth. As investors seemed to lack speculative fever and

imagination gold receives more sponsorship than it ordinarily would.

Money flow in gold remains positive.

Support Resistance

December Gold 1225.00 1263.50

Dec Silver 19.00 19.83

Oct Plat 1510.0 1544.00

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

SOFTS

Last Last Week

December Coffee 181.95 166.60

October Sugar 20.40 19.27

Coffee maintained higher prices as there was the belief that Columbia's

crop may be less than originally forecast due to an outbreak of fungus.

Some observers are terming this outbreak as the worst in over 25 years.

Above average rainfall has contributed to the fungus outbreak. Coffee is

up 33% for the year. Good coffee remains scarce.

Sugar prices rallied to a five-month high on concerns over the Brazilian

crop. Dry weather in key growing regions has threatened the sugar cane

harvest. Industry sources are also looking towards China to increase

their levels of imports and the standard of living there gradually

improves. Sugar is almost 60% higher from the lows made in May.

Some traders are looking for a potential thrust to 24.00.

Support Resistance

December Coffee 173.50 185.50

October Sugar 19.50 21.50

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

Last Last Week

November Soybeans 10.054 9.99

December Corn 4.466 4.20

December Wheat 7.086 6.804

Soybeans fell in price on the idea that weather models will provide

enough rain to relieve heat stress and improve yield. Prices reached

their highs on August 5th as Russia imposed a ban on exports due to the

worst drought in that country in over 50 years. Money flow in soybeans

remains negative.

At the same time, corn rallied to a 14 month high due to heat and

dryness in key growing regions in both the East and Southern Midwest.

It's believed that the weather will effectively reduce yields and increase

prices. Crop levels remains high however as production should reach

13.3 billion bushels, almost 2% higher than last year's record crop.

Money flow in corn remains positive.

Wheat enjoyed its best rally in almost 2 weeks on Wednesday as

excessive rains were thought to have damaged crops in Europe. The

potential for flooding in Western Europe was at least partially

responsible for the nearly 3% rally on the session. Some traders are

looking toward improved fundamentals being able to lift the price of

wheat towards $7.50 a bushel. Money flow in the week remains positive.

Support Resistance

Nov Soybeans 9.95 10.35

Dec Corn 4.32 4.51

Dec Wheat 6.75 7.25

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.0000

 

 

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