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Providio’s Daily Futures Market Commentary For May 17, 2012

Johnny Evans | Friday 18 May 2012 ( 0 Comment)
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Currencies: ­­­­  17May See the Yen for analysis on today’s spike to the upside.
That said, we still maintain that Greece’s ongoing political turmoil has many commentators we’re hearing expecting Greece to leave the Euro. This uncertainty continues to drive capital into an extremely Overbought US Dollar. The “risk off” pressure to most of the major currencies is becoming a chronic dynamic of new lows and extreme Oversold conditions.
Watch for an announcement or “event” that reverses this dynamic (if only for a while) into a profit-taking US Dollar decline.
A worrisome observation we’re seeing again is one where the risks are seen as “well contained”, a constant comment for the last several years. As risks bubbles up, it is commented on as “manageable” or “nothing to worry about”, and then at some later point, it is seen as out of control in some way.
 
Aussie: 17MayWe maintain the validity of the comment we made recently about a bearish flag follow through: With indications of slowing economic activity in Asia, the Aussie is likely to remain under some pressure.
Longer term, it appears the Aussie may be looking at another material move lower. There is the break below the bear-flag in chart action and the 200-day moving average has rolled negative.
If the break below off the bear-flag plays out, classic analysis calls for a move of approximately .0600 points lower from near the break out point of 1.0240-1.0250. This would target somewhere in the area of 0.9650. This is very near the lows from 11/22/2012.
Volatility remains in the low average range and falling.
Lower lows point to a continuing bearish trend. Today’s high in the June contract is one tick below yesterday’s… a lower high by a hair.
Our technicals are very bearish across the board and the currency is in extreme Oversold territory (13). We continue to note that the action is still hugging the -2 STD (0.9829) below the 21-day moving average (1.0157).
Support is still seen at .9875, where is held in overnight trading before breaking down. Below that is the .9850 round number psychological level and then yesterday’s lows at .9838.
The latest negative pattern is showing accelerated falling action in comparison to the action from March through mid-April. This speaks to how rapidly events seem to be unraveling.
Resistance is seen at 0.9935, a double top from the last two sessions.
Seasonal Snapshot (cash):  The 5-year pattern has a negative bias until 26May.
The 15&30yr patterns chop higher until 10May, then both fall out of bed throughout the rest of the month.
 
British: 17May Words of warning from U.K. Prime Minister about European debt contagion and his intentions to stick with austerity plans is keeping the Sterling on its heels:
http://www.bloomberg.com/news/2012-05-16/cameron-to-say-h......
The currency has retaken the now falling 200-day moving average (1.5820) after a probe below earlier this morning.
Since the Pound peaked on 4/30, it has been under relentless pressure, recently breaking out below the declining channel. The lower bound of that channel, near 1.6000, should be seen as a resistance level. Below that, 1.5950 is another resistance. The market tested near there in overnight action and once it fell to the lows, failed there this morning.
More weakness targets the 12Mar low (1.5601), but it may take a period of consolidation before it is reached… look for a bear flag or pennant formation with declining Volume.
Our technicals remain quite negatively biased, but be on guard against our Oversold and falling indicator (13). Volatility is Low but rising
Seasonal Snapshot (cash):  All three patterns have a quite negative bias until the end of May.
 
Canadian 17May Much like the Aussie$, its “commodity currency” counterpart, the Loonie is in an extreme Oversold (14) race to the downside.
The falling 200-day moving average (99.40) and falling trend line old support going all the way back to January should offer new resistance.
On more weakness, watch the series of previous lows: 9711 on 13Jan; 9675 on 9Jan; 9582 on 19Dec; 9497 on 25 Nov and finally, 9367 on 04Oct.
April Canadian CPI is on deck tomorrow morning.
This market is also now pressuring the –3 STD below the 21-day moving average as our Bollinger Bands expand in wild fashion.
Seasonal Snapshot (cash):  All three patterns have a choppy, negative bias until 26May. The 30yr’s is more protracted than its shorter-term counterparts.
 
Dollar Index: 17May We still assert that the DX ascent rate is likely becoming unsustainable as the chart action looks to be going parabolic.Don’t be surprised if a near-term correction occurs. Our technicals are all pointing higher, but the Overbought level is extremely high at 97 as of this writing.
Trading is now in the area the market peaked back in mid-January. Resistance would be all the way up to 82.00, the upper bound of that same trading area.
Support below 81.00 is difficult to see with clarity, as there are so many trade gaps below the market since the latest rally began. 80.35-80.40 would be the first level we’d recommend watching. This is where the market failed to go higher in early/mid-April.
Bigger picture, we remind readers of our past comments:
“Watch for any evidence the Dollar is not the safe haven under crisis market conditions. This would change existing assumptions dramatically.”
Seasonal Snapshot: The 15&30yr patterns consolidate in choppy fashion until the end of May. The 5yr declines during this period.
 
Euro-FX:  17May More negative news, and more negative technical dynamics despite the near unchanged level as of this writing. Since failing to breach the 1.3300 resistance during the May Day holiday on 5/1, this market has been under relentless pressure.
The Euro has now fallen through all of our identified support levels. Currently, it has probed to new lows below the 1.2700 level, held and rebounded into the mid-January congestion area. The support level will again be 1.2700,and then below that to 1.2625, near the January lows. Resistance lies above near 1.2800. This is both a psychological level and an area that offered resistance back in January.
Of note, this market is extremely Oversold at 4. If some sort of “deal” is trotted out to “fix” the issues at hand, a material bounce may be in the cards.
The Greek political impasse continues to dominate the Euro’s news dynamics. As we stated last Thursday, the Euro has and probably will probably remain under pressure so long as the political crises continue to roil the Euro-zone. 
Greece is the current issue at hand, but what happens when Spain or Italy ends up in the spotlight?
Seasonal Snapshot:  The 5&15yr patterns consolidate and the 30yr pushes lower until the end of June.
 
Yen:  17May Yesterday’s Hammer Candlestick formation tested and held above support in the low 12400s. Support should be offered in this area going forward.
A better than expected GDP (+1.0% vs. +0.8% expected with a 0.2% upward revision to the previous quarter) squirted the Yen up through last week’s highs (1.2595). The high of the move so far tested rising trend line resistance (1.2640) that extends back the 01May high. Steeper rising trend line resistance back to the bottoming action seen in mid March comes in at 1.2700. We are wary of any signs of BOJ intervention on this current spike, as it wants a weaker Yen to maintain the Japanese economy’s currency competitiveness.
Seasonal Snapshot: Modest weakness in all three patterns will turn positive for a week on 1May, then consolidation into the first part of June.
 
 
Energies:
Petroleum: 17May Today’s weakness in Crude was muted compared to that of RBOB and Heating Oil, both of which probed to new lows. WTI did not. Modest support may have come from the completion of the Seaway pipeline reversing the flow of Crude from supply-glutted Cushing to the Gulf of Mexico:
http://www.businesswire.com/news/leaderpost/2012051700617......
All three of our tracked markets remain below our noted bearish pennant and flag patterns. See each individual market for details.
Volume was decent and is starting to turn toward the July contracts across the complex.
That said, continued extreme Oversold conditions have us concerned. Be on guard for a short covering rally. Protect profits if short and keep risk controls tight.
 
Crude: 17May The continuous contract has recovered another overnight probe below our noted double bottom on 16&19Dec (92.50). This date coincides with the last time the continuous contract probed below the 200-day moving average. That probe was short lived (three sessions) but our Oversold measure registered 25-30. It currently sits at 6. This matches 09Aug 2011 levels. On a continuation chart, Friday’s settlement below the 200-day moving average (96.20) keeps the pressure on and should offer new resistance.
Shorter-term charts reveal stronger Volume on the downward moves.
If the market consolidates from this point forward (or can manage another push to the downside, our noted bearish pennant formation will continue to play out from the double bottom. Stronger Volume is confirming the break out, targeting levels between 85.25-88.25. Of further note, from the breakout below 103.00 to the first test of 95.25, the rally back to 07May highs was right to the 38.2% Fibonacci Retracement. This leads us to favor the lower 7.00 target if the pennant plays out.
The +-2STD Bollinger Bands are expanding in very wide fashion and, consequently, our Volatility measure is back up to average levels.
Products
RBOB 17May RBOB took the lead from Heating Oil in the race into extreme Oversold conditions today, sustaining its probe below our noted bear flag formation from last week. Volume in the July contract was solid. If it stays strong on more weakness, the market would project a move to the 2.7500-2.8000 level.
The June contract has fallen through support at the 200–day moving average (2.9165) where it bounced last Monday. The–2STD (2.8765) below the falling 21-day moving average (3.0440) continues to widen.
Resistance should be offered at the previous highs (3.0250 on 09&10May); our noted 21-day moving average and a triple top (20, 23 & 24Apr) at 3.1500.
The market is not as Oversold as its other Petro counterparts. It recently bounced off an 11 level on 07May, but is back to declining again (15) on the renewed weakness.   Nonetheless, we advise readers to be on guard for a short covering rally. Protect profits if short and keep risk controls tight.
Heat 17May What was a rising Rate of Change indicator has turned back lower as the June contract remains quite Oversold (currently 14).
If the market continues its push lower, we see support at the late Dec congestion lows (2.8300 area).
The now declining 200-day moving average (2.9985) should offer resistance to any rallies with another level up near 3.0100.
If our bearish pennant plays out and makes a material move lower, the target pricing would be to levels last seen in late 2011 (2.7775).
However, the developing extreme Oversold conditions have us concerned. Be on guard for a short covering rally. Protect profits if short and keep risk controls tight.
Seasonal Snapshot: (Cash contracts)
Crude: All three patterns consolidate with an upward bias until a culmination high on 15July.
RBOB: Choppy consolidation in all three patterns until moving lower 27May-08June.
Heating Oil: The 5&15yr patterns consolidate until 23May before moving higher until 18June. The 30yr pattern’s weakness decouples from the shorter-term patterns and continues lower until mid July.
 
NatGas: 17May The June contract is sustaining its continuation probe above what appears to be a bullish flag formation and may set the market up for another leg to the upside. A classic move would target over 3.00 (which aligns with the previous highs), but watch the +2 STD (2.68) above the rising 21-day moving average (2.312) on a continuation chart.
We show support at the early May consolidation lows (2.25).
We note that the recent highs in the June contract represents a better then 25% rally from the lows below 2.0000.
In the ensuing month-long period, several dynamics have emerged:
1.       The difference between current storage and historical has narrowed.
2.       The announced production cuts have had a chance to gain traction.
3.       News of structural changes in electricity production towards NatGas has been announced.
Look for supply issues to continue to dominate, as demand didn’t really materialize this year with the extremely warm winter. We feel position traders are best served by exploring trades that involve spreads of either futures calendar or selling premium.
Seasonal Snapshot: Both long and short-term patterns are in a falling trend until 19May.
 
Equities:

17MayRumors of an impending Moody’s downgrade of Spanish banks took away the overnight bid this morning.
We were stopped out of yesterday’s SP short last night at a small profit, but will look to position ourselves from the short side around the falling 21-period moving average (currently at 1331) on a 240-minute chart with a tight stop. The market has found resistance at the average since the afternoon of 11May.
This mild overnight, Asian/European weakness needs to be followed by a U.S. morning “melt up” in order to continue the pattern that has been in place for a week. A slightly higher than expected Claims number with upward revisions won’t help. Philly Fed and Leading Indicators are on deck at 10:oo EDT. There are no releases scheduled for Friday.
Our noted recent pattern has been finishing with a sell off into the US cash close. Yesterday was no exception. Volume has been increasing on the stabs to the downside on shorter-term charts.
All three of our tracked markets have fallen below the 06Mar lows (SP 1332.75; Dow 12653; NASDAQ 2569.50). Look for this old support to provide some modicum of new resistance.
We also update the 21-day moving averages and –2STD below:
SP: 1366.30 & 1316.85
Dow: 12924 & 12519
NASDAQ: 2651 & 2539
The –2STD looms large, since none of our tracked markets have been able to sustain probes above or below these Bollinger Bands for very long.
Taking a look forward, we counsel readers to keep an eye on developments in Greece. Events there, and in the EuroZone as a whole are back to VERY fluid dynamics.
We remind readers of our noted support levels at the 38.2% retracement of the Oct-Apr rallies:
SP 1285.35
Dow 12165
NASDAQ: Aug-Apr rally retracement is at 2483
All three of our tracked markets are deep into Oversold conditions (SP 14; Dow 12; NASDAQ 11). We also note that our Volatility measures are falling after drifting higher into last week, a potential sign that the recent downward Momentum is slowing. These will be upside risks going forward.
Seasonal Snapshot: (Cash Indices)
SP & Dow: The 5yr patterns decline in choppy fashion until late June. The 15yr pattern is modestly weaker until 23May while the 30yr consolidates with an upward bias.
NASDAQ: The 5yr pattern’s steep decline levels off into choppy consolidation on 24May. The 15yr’s is modestly weaker during this time period. The 30yr rises until 01June.
 
 
Grains:

17May Continuing concerns over dry weather in the US Wheat growing region is now being joined by concerns over dry conditions in the Black Sea regions and damage to crops in Russia and Europe.
We are increasingly seeing fundamental supply and demand issues imposing themselves after an extended period of financial system induced pressure.
 
Corn: 17May  Today’s action has all the hallmarks of a consolidation at a decision point/level. All our measures have shifted higher and quickly so. As stated yesterday, if this latest rally peters out it may return to a negatively biased profile quickly. Corn may be at that point as both July and Dec have rallied right up to their respective declining trend lines.   Additionally, the shifts to positive bias occurred too rapidly to be sustainable without a major shift in sentiment.
July’s trend line, drawn starting from 3/19, runs right through today’s high at 626 ½, falling a bit over a.01 per day.
December ‘s trend line, also drawn starting from 3/19, runs through 5.31, falling about .01 per day.
If those trend lines hold, the downside is likely to be new lows.
In old-crop July, price action has run up to 6.20. The low 630s is the next notable resistance area. Look for support down near 6.05.
New-crop December Corn rallied to just shy of the 5.30 resistance, which is also right about where the declining trend line passed through. First support is near 5.15, then down to the 5.00 psychological level.


Both contracts remain within declining channels that have defined several months of trading activity.
We retain some skepticism regarding this latest rally, as our comment below is still valid.
As the crop’s planting is likely to be completed soon and the crop progress itself moves along, there is a real possibility of an enormous crop. Coupled with declining fuel demand and the Corn may be setting up for a washout.
Seasonal Snapshot: For July- 5-year heads modestly lower until higher until May 15. It will be in a modest rising pattern until May 21, then head generally sideways until June 7.
The 15 and 30-years head generally sideways until, May 10, enter a quick 3 days higher than enter a period of long broad decline until early July with some interim pops higher.
For December- 5-year heads sideways until May 15, then trends higher until peaking on June 13. 15 and 30-year are in a generally negatively biased sideways period until May 29th.
 
Soybeans: 17May Soybeans remain less materially impacted by the substantive Wheat rally. Already high prices and a more negative technical profile of late offset some of the powerful upward forces. Additionally, despite the likely Chinese demand, South American supply acts as a counterweight to American pricing power.
Negative primary directional technicals remain in place but the secondaries show a shift is ongoing.
Another day of different action in old and new crop markets. Old-crop July retained more of its day’s rally than November’s end of session consolidation.
Old-crop July broke out of its possible developing bearish flag and ended up materially, approaching its 21-day moving average before settling in he middle of the day’s range, in the range we identified yesterday. Volume declined materially in both contracts, speaking to the consolidation of a market looking for real direction.
Seasonal Snapshot:  For July- 5-year enters a shallow rising period until June 13. 15 and 30-year both are in peaking action until May 10-13, whereupon they both exhibit falling tendencies until May 29th.
For November-5-year is in a rallying bias until June 12th. 15-year is generally sideways until May 18th. 30-year is bumping higher until May 10th,, where it plays peaking action until May 19th.
 
Wheat:  17May It seems as if the Wheat “problems” have come out of the woodwork. A week ago, this market looked like it was heading below 5.00. No more and more current issues are popping up as dynamics.   This latest run and decoupling from U.S. Dollar action has us wondering if this is some sort of ruse.
After days and weeks of financial markets led selling, today’s action was the first in quite some time to actually acknowledge weather’s effects.
Today’s July rally was up to just shy of the psychological resistance at 6.60. This level acted as an infection point around which July traded above and below going back to late December. This will certainly act as resistance with support at about 6.40, the previous resistance.
December’s action is quite similar with different levels, generally add 25-30 cents to the July price levels.
We leave in place our comment from 4/5 as it addresses longer-term patterns we’re noticing:
Additionally, on our Momentum measure going back to late December, each positive shift has peaked at earlier and lower. This is in a period of a modestly negative bias in what has been largely range trading.
May’s Volatility has peaked just below the High range (< 1 STD).
Pay attention to the harvest in Winter Wheat as it moves ahead of schedule due to warm weather and the plants benefit from rain in both Europe and the US.
This market has been in a gently falling bearish pattern for the last 2 months since peaking on 2/1. On a longer-term view, the bearish dynamic has been in place, albeit with a sizable range, since February 2011.
Volatility is now close to High (> 1 STD higher than Average) indicating there may be opportunities to sell premium in options.
Seasonal Snapshot: For July-, 5-year peaks on May 8th then enters selling period until May 16th.
15 and 30-years both are in a modestly rising period until May 10th. 15-year then falls gently until June 1st. 30-year is more profoundly negative until May 30th.
For December- 5-year peaks May 8th, sells of and bottoms May 16th, then rallies and peaks again on May 28th. 15 and 30-year both peak near May 10th then fall off modestly until May 29th.
 
Interest Rates: 

17May We remain skeptical of any bearish tendencies with the uneven data and negative bias of late. The recent action showing rapid recovery from sell–offs and subsequent positive biases speaks to a market still spooked by recent US data and weekly doses of debt crisis news from Europe.
It is interesting to note that all Interest markets’ price structure has trended positive, well into Overbought territory against a similar backdrop in our tracked Equities.
Bonds- June Bonds are getting more Overbought as the rally continues. It remains the highest Overbought level of our tracked interest rate contracts.
Volume has been strong during the rise in prices.
The Momentum and Trend have turned much higher, to the point we are concerned this market is heading too high too fast. However, it does continue to track the +2 STD over the rising 21-day moving average.
At this point, the resistance levels are likely to occur at psychological round number levels as the market is at all-time highs. Support is seen near today’s low of 146-12, psychological 146-00, and then 145-06 near Friday’s high and Monday’s low.
Pay attention to levels below these as a sudden shift lower could occur simply off of correction action.
Volatility remains Very Low, but is now rising.
Tens (10-Yr Notes)- Much like theBonds, Tens broke out above a recent rising channel. Unlike the Bonds, Tens haven’t turned to a more rapid rally mode. Tens simply repriced higher, and since doing so, have essentially risen at the same rate. They are using the upper bound of the same channel as their support.
Today’s action made new highs above the recent 133-16 resistance. Look to this level for new support. We would see 134-00 as the next major resistance.
Volatility conditions are similar to Bonds, very low and seen as more conducive to option buying strategies.
Twos (2-Yr Notes)- The recent negative action continues this morning as the U.S. Fed is apparently exchanging shorter-term Notes for longer-term Notes. This is as a result of Operation Twist.
Despite the economic environment being quite supportive of the Treasuries in general, the last 2 week’s action has shown a slow but distinct shift in the Twos bias towards a much less positive bias. Our primary directional indicators, Trend and Momentum, are both pointed towards lower action. Actual action now shows a distinct rounded top quality to the chart, a bearish pattern.
Twos being allowed to fall, though, is counter to current stated Fed monetary and QE policy. Something’s got to give. If the Fed decides to break out the QE nukes again, we should see a lurch higher.
Bunds (10-yr) Technicals remain in the positive, but Overbought (85). Resistance remains at the +2 STD (143.86) over the 21-day moving average (141.65).
Schatz (2-yr) Today’s Schatz action is positive as the rally takes the market to the upper bound of the rising channel.
Our noted broad shift to less positive technical profile continues, however. If the rally in place today continues, though, we see this shift waning and a resumption of positive technicals.
Sept12 Eurodollar With the Fed’s continuing Twist Operations, and the well-documented Greek risks, we see some consolidation of the recent negative action. This consolidation is validated by the material fall in Volume.
It remains below the 200-day moving average but is now back to pressuring ONLY the –2 STD below the 21-day moving average.
The directional technicals remain negatively biased, but our RSI indicator, while still Oversold, is at least rising today.
This latest weakness may be a snapshot of the difficulties the Fed is feeling in managing the extremely low rate levels. The 99.43 is our stated resistance, 99.375 is our support. That traces back to early December highs.
For context into our thinking regarding the debt markets, we invite you to read one our recent comment, as it includes several days’ postings.
http://techtalk.providiotrading.com/newsletter/?req=viewd......
Seasonal Snapshot:
June Bonds: All 3 patterns consolidate before the 5yr pattern decouples, heading lower around 21May. The 15&30yr have a modest upward bias until expiration.
Tens: The 5yr pattern decouples from the 15&30yr, heading lower until mid June. The longer-term patterns rise until expiration.
Twos: 5-year shows modestly, but volatile negative bias until June 4th. The 15 and 30-years move generally higher until June 2nd .
 
Metals:

17May The Euro’s modest deceleration has metals staging their own rebound.
 
Gold: 17May Gold stopped falling and has seemingly bounced off our noted support level at the 26Dec low (1523.9). This general area may serve as a double bottom (maybe a triple bottom?), as well, aligning with the previous low (26Sep 1535). The current extreme Oversold conditions has us looking for real support or consolidation around this level. June seems to have found support at the –2 STD below the 21-day moving average.
Below is a slippery slope to 1500 psychological support, then a cluster of lows between 1462.5 (02May) and 1478.3 (27June). The 38.2% retracement of the Oct 2008- Sep 2011 rally comes in at 1456.8.
Volume looks robust, which would add validity to the negative action. This latest plunge lower is the largest extension below the 200-day moving average since the financial crisis in October 2008.
Seasonal Snapshot:  All three patterns see modest strength into the last half of May.
 
Copper: 17May Copper’s fall has decelerated after Monday’s plunge. It’s still falling, just a more sustainable pace now. Unless the U.S. Dollar stops rising, it’s not likely to stop falling entirely.
Technicals remain negatively predisposed. Despite its deceleration of recent falling action, the negative bias is still profound. With most global economic news coming in as disappointing, Copper is likely to remain under pressure.
The July contract continues to ride the important –2 STD (3.4625) below the 21-day moving average (3.6880). Additionally, it is below the 3.5775 level established during mid-April’s move below the 200-day moving average (currently 3.6930), as well as rising trend line support that extends back to the 03Oct low (2.9940). On more weakness, watch the double bottom from 05&09Jan around 3.3800, then the series of previous lows back to last Nov (3.3250; 3.2325; and 3.2040).
Resistance is seen at 3.6250, where a candlestick chart showed bottoming action in mid-April.
Seasonal Snapshot:  All three patterns have a mild upward bias until turning decidedly weaker around 27May.
 
Softs:

17May We see some initial signs of the sector reverting back to their internal dynamics for direction.
 
Cocoa:  17May  An “inside day” as of this writing found resistance at what seems to be a topping 21-day moving average (2287). This market has been in declining longer-term dynamic since late January. Until it breaks above the declining trend line (2345) drawn from 1/27 through May’s highs, this market is still in a bearish pattern.
Support from our perspective is seen near 2200, where it held for the most part, since mid-April.
Seasonal Snapshot:  The 15&30yr pattern consolidates before falling on 22May. The 5yr pattern is rising until the July contract’s expiration.
             
Coffee: 17May Continued consolidation with a positive bias clustered around the 21-day moving average (177.95).
Going back to late April, this market has repeatedly failed to head higher at a series of lower highs. That declining trend line runs through approximately 182.75 as of this writing. Support seems to be coming in at just below 174.00. The market has repeatedly bounced off trading down to that level going back to 4/16. A short term Momentum indicator of approximately 4 hours appears to be shifting to a negative bias. This would argue for July to again test the 174.00 support. Below that lies a series of minor support level down to 160.
We see resistance above at 181.60, today’s high and then the 182.50 level, which is where the declining trend line passes through today.
Seasonal Snapshot: The 5yr pattern has a choppy, upward bias until 01June. The 15&30yr patterns head higher before topping out at the end of the month.
 
Cotton: 17May  Expected burgeoning supplies globally have the Cotton market attempting to complete a short term bearish repricing.
If our noted mini-bear flag continues to play out, look for 9.00 point move to the downside. This would target the 70.00 level. Any move into the low 70s should probably suffice, though.
We see resistance at 81.80, where the second day’s lower action started.
The July contract continues to hug the –2STD (76.20) below the falling 21-day moving average (86.57).
Bulging carryover stocks, increasing global production and an early start to planting are all acting as downside risks.
Seasonal Snapshot:  The July contract is in wide, choppy consolidation throughout May.
 
Sugar:  17May Despite the quite negative tone to outside markets, our technicals for July Sugar continue to point higher. Our RSI measure now “middling” at 54, so there seems to be room to the upside. The market has so far respected our noted resistance between 2100 and 2110, where the market tried without success to go higher in early May. This was after it held there on the way down in late April. More upside targets the 23.6% retracement (21.68) of the Feb-May decline.
That said, we have held the belief that the short side is where the Sugar’s greatest profits would lie. Until we see a material breakout higher, we remain skeptical of the current rally and leave the bearish sentiment comments in place:
On that note, we remind readers that the market broke below the lower boundary (21.95) of a large descending triangle on 19Apr. The ultimate projection would be to the 17.00 level. A large spec long open interest and ample supplies keeps the market vulnerable to more weakness. A backdrop of rising supplies and bumper crops is another downside risk.
A sustained move below the previous 14May low (20.07) targets falling trend line support at 19.70 that extends back to the 21Feb lows.
Seasonal Snapshot:  All three patterns consolidate until the beginning of June. The longer-term 15&30yr patterns have a choppy, but modestly upward, bias.

Disclaimer: A commodity and currency report brought to you by Providio Trading Consultants, Inc. There is risk in trading futures and options. One's financial suitability should be considered carefully before placing any trades. Past performance is not indicative of future results.  
 

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