| WEEKLY FUTURES REPORT | ||
| 11.09.11 | ||
| Filed 12:00 (midnight) | ||
| Last | Last Week (11.02/11) | |
| Dec Crude | 95.78 | 93.04 |
| Dec Heat | 309.74 | 301.95 |
| Dec Gas (Blended) | 264.42 | 264.02 |
Crude fell in price on Wednesday as the Euro fell the most in a year against the dollar. Dollar strength was attributed to a surge in Italian bond yields. The markets were concerned that Italy was having trouble establishing a new government after the resignation of Berlusconi that would have enough political leverage to implemental fiscal reform. There is a fear that if Italian bond yields continue to rise, a recession could be triggered and with the resulting economic contraction, demand for crude and its products would evaporate. As this is going on, efforts to cobble together a new unity government in Greece were floundering. The dollar has a tendency to strengthen during periods of financial stress such as these. A stronger is a negative for the pricing of commodities. As the dollar strengthens, it takes fewer dollars to buy the same commodity so the pace of that commodity goes down in price to reflect the offsetting dollar appreciation. The dollar has appreciated 5% over the past three months against a trade weighted basket of currencies. Oil has been highly correlated to stock market price behavior and Wednesday saw a 3.7% decline on the S+P. Earlier in the session oil rose to a 3 month high after the release of the Department of Energy figures detailing weekly supply and demand. Crude stocks fell by 1.37 million barrels to 338.1 million barrels. The trade had been looking for an increase of 500,000 barrels. Distillate fuels declined by 6 million barrels to 135.9 million barrels. Gas stocks dropped by 2.11 million barrels to 204.2 million barrels. The supply declines couldn’t hold the price however as the more turned its concern to recessionary possibilities.
Now for the charts…
Even with today’s decline, the crude market is still overbought. Stochastics turning lower.
Gas is the weakest of the three charts.
| Support | Resistance | |
| Dec Crude | 92.70 | 98.22 |
| Dec Heat | 305.00 | 317.00 |
| Dec Gas | 260.00 | 274.00 |
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| METALS | ||
| Last | Last Week | |
| Dec Gold | 1772.80 | 1740.50 |
| Dec Silver | 34.17 | 34.31 |
| Jan Platinum | 1635.00 | 1608.50 |
The market traded very technically and psychologically over the past five sessions. On Monday, the high was just shy of 1800 an ounce. On Tuesday, the market took out buy stops above the 1800 level and then on Wednesday there was a late afternoon capitalization in price with an attempt at the 1750 level. The market could have rallied as an
alternative currency and a safe haven store of value in the face of political instability and resolve in Greece and Italy. Instead, it decided to maintain its high degree of correlation with US equity markets and its reflexive nature with the dollar.
Now for the charts…
Look for a regression to the mean and a tag of the middle Bollinger band. Market is overbought with too many recent, weak hands.
Silver still exhibits weakness within the price bars.
| Support | Resistance | |
| Dec Gold | 1755 | 1809 |
| Dec Silver | 32.50 | 33.55 |
| Jan Plat | 1600.00 | 1683 |
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| SOFTS | ||
| Last | Last Week | |
| Dec Coffee | 230.20 | 224.00 |
| Mar Sugar | 25.36 | 25.42 |
Coffee hit a new monthly high before recessionary fears induced profit taking and risk avoidance. Rains over key Brazilian growing regions allayed concern over the crop. Macro sentiment remains weak until new high ground is reached and with it clarity.
A strong technical correction in sugar suggests short covering in the face of physical surplus. Macro models will be pressed to support higher prices, however.
| Support | Resistance | |
| Dec Coffee | 220.00 | 240.00 |
| Mar Sugar | 24.00 | 26.50 |
| ********************** ********************** | ||
| Last | Last Week | |
| Jan Soybeans | 11.854 | 12.026 |
| Dec Corn | 6.55 | 6.45 |
| Dec Wheat | 6.43 | 6.234 |
Corn fell from a six week high while values in soybeans and wheat continued to erode on a weaker economic outlook for Europe. Corn stockpiles ahead of next year’s harvest may be 5.4% higher than previous estimates. The Department of Agriculture went on to say that soybeans and wheat supplies were also larger than initially projected. Wheat was lower by 2.1%, almost completely taking back recent gains.
Now for the charts…
What was said last week? The selling in soybeans isn’t over yet? It still isn’t over yet.
Narrowing of Bollinger bands suggests a break.
| Support | Resistance | |
| Jan Soybeans | 10.25 | 12.14 |
| Dec Corn | 6.15 | 6.70 |
| Dec Wheat | 6.25 | 6.65 |
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.