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Many commodity markets down

Crude oil fell on Wednesday after the Department of Energy reported that crude stocks fell by 6.7 million barrels while gasoline inventories increased by 1.94 million barrels. The trade had been looking for a fall of 500,000 barrels in gasoline stocks. The trade had also been looking for a decline of 3 million barrels in crude oil. Another negative for the complex was a decline in US retail sales. Retail sales are often viewed as a barometer of relative economic strength or weakness of the US economy. Only 9% of US citizens recently polled remain confident that the US will not dip back into recession. Traders continue to look at the Euro zone debt crisis and continue to access its ability to tip the world back into a recession. BNP Paribas lowered its Brent estimate from $124 to $114. On Wednesday, even as equities staged an impressive rally, crude (often a proxy for the stock market) could not follow and remained lower on the session. On Tuesday evening, the American Petroleum Institute stated that crude stocks had fallen sharply in the previous reporting week. Recent dollar strength has been a negative for crude oil. The possibility for a Greek debt default is a negative for crude. Money flow in crude remains positive. Money flow in both November Heating Oil and Gasoline remains negative, however.

And as for the charts…

  

The spread between Brent and West Texas Intermediate has narrowed reducing profit margins for refiners.

Crude was slightly lifted by the move higher in equities. Bollinger bands remain flat so look for range trading.

 

 

 

 

 

 

 

 

 

 

 

 

Heating oil looks much weaker as a chart but the price rejection on Wednesday coupled with stochastics looking ready to turn higher suggests stability moving forward.


 

 

 

 

 

 

 

 

 

 

 

Gasoline most closely tracks Brent oil.

 

 

 

 

 

 

 

 

 

 

 

 

 

Support                                    Resistance

Nov Crude                                                  86.94                                        92.20


 

Nov Heat

290.00

299.00

Nov Gas

265.00

 

275.00

 

 

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METALS

 

 

 

Last

Last

Week

 

 

Dec Gold

 

 

1824.80

1817.60

 

Dec Silver

40.825

41.63

Oct Platinum

1815.10

1828.70

 

Gold traded defensively on Wednesday as stocks rose. As French President Sarkozy and German Chancellor Merkel stated that they were convinced that Greece would remain within the European Union, some players pared down long gold positions. Stocks have rallied nearly 3% over the last three sessions, making a long hedge position in gold less attractive to hold. Belief that the world was slipping back into a recession sparked by the structural weaknesses in the Euro has been a rationale for buying gold. Concern about Euro zone stability has turned to an almost quantifiable fear. Action only seems to come about when there’s a crisis. At the same time, the level of pessimism regarding the US equity market among the newsletter writers is at its highest level since March of 2009. Short interest is very high, only providing a pool of highly motivated buyers somewhere down the line. Hedge funds are reportedly running large short positions. Money flow in gold remains positive. Money flow in silver remains negative. Money flow in platinum remains positive.

As for the charts…

 

It looks as though the gold market is waiting for some clarity to come out of the euro zone. Either prices are consolidating or the chart is building a complex top. As stochastic have deteriorated prices are meandering sideways which is a bullish setup.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The platinum chart is not bullish.  Lower highs with a flat bottom.


 

 

 

 

 

 

 

 

 

 

 

 

Support

Resista

nce

 

 

Dec Gold

1777.00

 

1876.00

 

 

Dec Silver

40.00

43.00

Oct Plat

1800.00

 

1883.00

 

 

 

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

 

SOFTS

 

 

 

Last

Last

Week

 

 

Dec Coffee

265.70

288.95

Oct Sugar

29.70

28.41

 

Coffee was stabilizing after last week sharp selloff. Sentiment is negative. The International Coffee Organization suggests that this year’s Colombian crop will be 13% larger than last year’s production. The exact size of next year’s Brazilian crop remains unclear however.

As for the charts…

A sharp selloff followed by two dojis and another selloff is not a positive sign.

 

 

 

 

 

 

 

 

 

 

 

 

 

The chart looks really positive with a saucer bottom. Speculative interest remains high however. Fundamentally the market still faces a surplus of 3 to 6,000,000 tons. For the cash market to absorb the supply prices might have to move lower. Until that’s expressed in the chart however being short this market is ill-advised.


 

 

 

 

 

 

 

 

 

 

 

 

Support

Resistance

Dec Coffee

260.00

285.00

Oct Sugar

27.50

29.50

 

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

 

 

Last

Last Week

Nov Soybeans

13.826

14.206

Dec Corn

7.242

7.48

Dec Wheat

7.044

7.512

 

Corn was lower on Wednesday and is the US crop continues to improve and while soybean inventories continue to rise. World soybean inventories are expected to reach 62.5 million metric tons against 60.9 5 million metric tons that were estimated in August. Macro uncertainty is a price negative for the grain complex. European sovereign debt worries continue to throw into question the strength of demand. Corn is expected to not be impacted by early frost damage in the Midwest. Soybeans have been under strong selling pressure over the past several sessions, down $.87 from the highs seen at the end of August. The harvest is still two weeks away and export news is sluggish. Commodity funds have been liquidating long positions. Even threats of a Frost have not encouraged buying. Corn has seen heavy speculative long liquidation. Prices for corn in China however are very strong. If China expanded pork production it certainly would put more pressure on price and encourage imports. Wheat is also been under selling pressure. Prices move to their lowest level since August 9. Funds again were on the sell side. The belief that US wheat will have a hard time competing with Russian and Ukrainian wheat has pressured prices.

 

As for the charts…

 

Soybeans show no sign of bottoming.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pay attention to a possible double bottom in wheat.

 


 

 

 

 

 

 

 

 

 

 

Support

Resistance

Nov Soybeans

13.70

14.11

Dec Corn

6.97

 

7.62

 

 

Dec Wheat

6.74

7.46

 

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

 

 

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.