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Crude oil and its products came under some selling pressure over the past week as the dollar continued to gain strength

 

Weekly Futures Report

12.21.09 (one day earlier than usual)

Filed Tuesday 3:10 pm

ALL CHARTS THIS WEEK ARE Daily Bars

Last Last Week (12.16)

Feb Crude 74.31 74.33

Feb Heat 196.84 198.76

Feb XRB (Blended Gas) 191.07 190.30

Crude oil and its products came under some selling pressure over the

past week as the dollar continued to gain strength and pressured other

visible commodity markets such as gold. Support for crude came from

the idea that the economy was again incrementally gaining some

strength. On Tuesday there were conflicting signals however. The Gross

Domestic Product estimate came in at 2.2% against an expectation of

2.8%. Statistically this was a considerable miss and suggested that the

economy wasn't quite as strong as first projected. However, some of this

impression was countered when housing starts came in better than

expected. The Organization of Petroleum Exporting Countries meeting

in Angola left production rates unchanged. This move was expected.

OPEC produces 40% of the world's oil needs. There was some

expiration pressure yesterday as January futures came off the board.

The price of oil has gained 66% this year. Recent tensions in the Middle

East have appeared to be confused and not had a direct effect on the

price of oil. The main negative has been the fact that the dollar traded

to its highest levels in three months against the euro currency. The trade

believes that distillates stocks will have dropped 2 million barrels for the

latest reporting week while crude oil inventories are expected to have

declined 1.73 million barrels while gasoline is expected to show an

increase of 1 million barrels. Money flow in crude oil and natural gas

remains positive.

Support Resistance

Feb Crude 72.00 76.00

Feb Heat 192.00 202.50

Feb Gas 184.50 196.50

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

METALS

Last Last Week 12.16

Feb Gold 1085.40 1135.20

Mar Silver 16.99 17.685

April Platinum 1404.40 1460.00

Gold fell to a six-week low as the dollar continued to gain strength

against major foreign currencies, notably the EC and the British Pound.

The estimate for GDP at 2.2% in the third quarter, even though this

was below the expectation of a reading of 2.8%, is still the fastest pace in

two years. Gold is down over 7% this month as signs of economic

strength pushed the dollar 4% higher. The dollar is set for its first

monthly gain since June. Gold is up approximately 24% for the year yet

10% lower than its highs of over $1200 an ounce. Another feature to

gold trading as the year winds down is book squaring while a negative

feature for the metal has been the backup in short-term interest rates.

One month ago, the yield on the 10 year note was at 3.2%. This has now

moved up to 3.73%. The move lower in gold started with the betterthan-

expected unemployment report at the beginning of the month. This

gave traders the idea of that the Federal Reserve would start to at least

consider raising short-term interest rates. As the market pushed interest

rates higher, gold lost some of its necessity as an investment vehicle.

Support Resistance

Feb Gold 1072.50 1132.00

Mar Silver 16.65 17.72

April Plat 1400.00 1486.00

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

SOFTS

Last Last Week 12.16

Mar Coffee 142.25 148.10

Mar Sugar 26.56 26.03

Coffee came under year end profit taking pressure and dropped sharply

from the 148 level to 141. Coffee had made a new high back on

December 16 with a close of 148.30. In the bigger time frame, the

trendline is still in effect however and the marketís structure remains

positive on a technical basis. Tightening supplies and increased demand

from speculators and roasters remain a positive for the price of coffee.

World coffee production at 125.2 million bags should be 1.7% last then

the production that was recently estimated back in June. Weather has

not been a positive for coffee production. Coffee had an overbought as

net long positions the prior week rose by 19%. In other fundamental

news, Columbia will have a harvest of 9 million bags in the coming year

down 26% from a previous estimate. The Vietnamese harvest should be

down 4.9% from a previous estimate as well. Coffee will find buyers on

breaks.

Money flow in sugar continues to be positive. The world's secondlargest

sugar trader expects prices to possibly rise as much as 20% in

the next six months because of a global deficit. Hedge fund selling may

drive the price of sugar back down towards 24.00 before an upward

trend continues.

Support Resistance

Mar Coffee 139.50 150.00

Mar Sugar 24.80 27.00

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

Last Last Week 12.16

Mar Soybeans 9.984 10.67

Mar Corn 3.986 4.102

Mar Wheat 5.23 5.372

Money flow on soybeans has turned negative, primarily due to a

stronger dollar. Prices had traded at technical support on Tuesday at

9.94 basis March futures. The fundamental news remains positive,

however. China may import 4.6 million metric tons of soybeans in the

month of December, a fundamental positive.

Money flow in corn is positive. Prices have been trading sideways since

October, however. The market is showing little in terms of directional

bias. Signs that the economy is strengthening is an economic positive

and positive for corn as well. Economic growth may boost demand for

feed stocks.

Wheat prices have returned back to mid-November levels. Fundamental

news remains somewhat negative. Rising global stockpiles and

production may erode demand for supplies of US wheat for export.

Global stockpiles may increase by 17% by the end of May. US exporters

shipped 11.8 million tons over the past six months, down 30% from a

year earlier.

Support Resistance

Mar Soybeans 9.94 10.35

Mar Corn 3.89 4.11

Mar Wheat 5.11 5.33

Chuck Kespert

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.

 

 

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