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Providio's Daily Futures Market Commentary for June 27, 2012

Johnny Evans | Thursday 28 June 2012 ( 0 Comment)
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CURRENCIES:
Futures Last Trade: Sep: 17Sep
Opions Last Trade: July: 06July; Aug: 03Aug; Sep: 07Sep
We remain short the British Pound from just above 1.5700. We took profits on a portion of the position on Friday ahead of the weekend. We will reshort the additional portion on a move below the 21-day moving average (1.5540). We lowered our stop for the remainder of the position to a break -even.
Recent quiet action is not unexpected ahead of the much-watched European Summit in Brusssels this Thursday/Friday.
That said, we continue to note the similar foreign exchange action as the last FOMC meeting in April when the US Dollar consolidated (with a downward bias), then rallied 500 points in the next month.
 
AUSSIE$:
27June
Support: 0.9905: Rising 21-day moving average
0.9765-0.9780: 11-12June congestion lows
0.9642: -2STD below 21-day moving average
0.9565: 01June low, traces back to support from last November.  
0.9000: Target for a bearish rising wedge pattern back to the 01June low
Resistance: 1.0142: 20June high
1.0168: +2STD above 21-day moving average
1.0195: 200-day moving average
1.0200: 50% retracement of the early March to early June decline
Comment: Volume has been declining during the recent consolidation of last week's losses since last Thursday's break below the rising channel, which was in place since 01June. Watch our bearish rising wedge formation noted above. This week's Aussie economic calendar is light, so attention should focus on Europe and global growth prospects. The RBA is scheduled to announce its decision on rates next week Monday night/Tuesday morning.
Seasonal Snapshot (cash):  The 5-year pattern's upward bias extends until the end of July.
The 15&30yr patterns fall out of bed throughout the rest of the month.

BRITISH:
27June We remain short the British Pound from just above 1.5700. We took profits on a portion of the position on Friday ahead of the weekend. We will reshort the additional portion on a move below the 21-day moving average (1.5540). We lowered our stop for the remainder of the position to a break -even.
Support: 1.5540: 21-day moving average and rising trend line support from 01June low.
1.5267: 01June low
1.5222 09Jan low
1.5179: Oct 2011 low
1.4600: Target for a pennant formation in place since 01June low.
Resistance: 1.5745: 200-day moving average
1.5800: Psychological level and support from late March through mid-April. This is also near the 50% retracement of the late April thorough late May sell-off.
Comment: Today's action put the Sterling back on its heels. Failure to make a new high in the nearby action and a material move lower. However, this is still within the confines of the recent range, albeit with negative undertones. The fall in Volume does bring the veracity of today's action into doubt.   
Watch Thursday morning's GDP to fuel the BOE debate about the need for more asset purchases.
Seasonal Snapshot (cash):  The 15yr pattern rallies until 20June while the 5&30yr patterns consolidate with an upward bias.

CANADIAN$:
27June
Support: 0.9700: Psychological level, the 21-day moving average and the late May support before the lows were put in on 6/4.
0.9663: 12June low
0.9597: -2STD below the 21-day moving average
0.9554: 04June low
0.9200: Target for a bearish rising wedge pattern since failing to reverse higher on 30May.
Resistance: 0.9813: 20June high and +2STD above 21-day moving average.
0.9853: 200-day moving average and 50% retracement of the early May to early June decline.
Comment:
Another day of quiet consolidation as the FX markets await Europe's summit. This week's action has been consolidation.
Our technical indicators are still showing some signs of rolling over, but our falling Rate of Change still has some work to do before it can pull our Momentum negative.
Attention will most likely remain on the developments in Europe and global growth prospects until Friday's GDP release.
 
Seasonal Snaphot (cash):  All three patterns consolidate wildly until the end of June.
 
DOLLAR INDEX:
27June
Support: 81.55: -2STD below the 21-day moving average
Resistance: 82.42: 21-day moving average
83.29: +2STD above the 21-day moving average
83.70: Short-term target for a break out above a bull flag from the 21May low
87.70: Longer-term target for a break out above a bull flag from the 30Apr low.
Comment: Volume was up a touch, but all we see is a day of light consolidation with a modest upward bias.
Indecisive recent action is in keeping with a market waiting for that one bit of precious news.
That said, our still rising Rate of change is several days away from pulling our Momentum indicator positive, but our Trend indicator seems to be definitely turning higher.  
We remind readers that downside risks include plenty of gaps to fill all the way down to 79.615 (04May).
Seasonal Snapshot (cash):: All three patterns exhibit a positive bias until15June.  Then the 5yr's weakness until early Aug is much more pronounced than the 15&30yr's consolidation with a downward bias.

EURO-FX:
27June A lot of chatter, most of it negative ahead of the European Summit in Brussels Thursday and Friday 28-29June. Thus far today, the currency seems to be taking Monday night's Moody's downgrade of 28 Spanish banks in stride.
Support: 1.2360: -2STD below the 21-day moving average has offered solid support for recent action.
1.2288: 01June low
1.2000: Psychological level
1.1874: June 2010 low
Resistance: 1.2535: 21-day moving average
1.2705: +2STD above moving average has offered solid resistance for recent action
1.2750: 18June high
Comment: Our falling Rate of change is dragging our Momentum indicator negative, eventually. Stronger Volume validated Thursday's drop to 21-day moving average support. Volume has been declining ever since, but the market remains under modest pressure. All eyes are trained on the European Summit in Brussels Thursday and Friday 28-29June. The market is telling us that expectations are low that anything material will be decided. The European economic calendar ramps up along with the Summit on Thursday and Friday. See above for details.
Seasonal Snapshot (cash):  The 5&15yr patterns consolidate and the 30yr pushes lower until the end of June.
 
YEN:
27June
Support: 1.2445: -2STD below the 21-day moving average
1.2435: 16May low
1.2415: 25June low
1.2233: 20Apr low
1.1879: 15Mar low
Resistance: 1.2625 21-day moving average
1.2750: 200-day moving average.
1.2805: +2STD above 21-day moving average
Comment: Thursday's "recoupling" with the "risk-on" US equity markets was temporary, indeed. Our technicals are all pointing negative but this market is holding above the first support level. Tonight's evening economic calendar ramps up with CPI, Household spending, Unemployment and Industrial Production on deck.
Seasonal Snapshot (cash): All three patterns consolidate with an upward bias until 20July. 

 ENERGIES:
PETROLEUM:
27June Another day, another bearish formation. This time it is a flag in WTI Crude & Heating Oil and a rising wedge in RBOB. This is within our (broken record) noted pattern of decline, consolidate, decline. The recent consolidation period has allowed all three of our tracked markets to ease off the downward Momentum, and extreme Oversold conditions. We remind readers that our bearish technical set ups (that "rhyme" with our fundamental outlook) are still in play. Crude especially, has displayed weaker tendencies than other "risk-on" markets (except its Industrial counterpart, Copper).
This morning's DOEs revealed some surprises:
Gasoline: +2.1MB vs. +1.0MB expected
Distillate: -2.3MB vs. +1.0MB expected
http://ir.eia.gov/wpsr/wpsrsummary.pdf
There are also several fundamental items to note. Rising tensions and a lack of any concrete results from Iranian nuclear negotiations. Tropical Storm "Debby" has veered east, away from Petro refining areas
 
CRUDE OIL:
Futures Last Trade: Aug: 20July; Sep: 21Aug; Oct: 20Sep; Nov: 22Oct; Dec: 16Nov
Options Last Trade: Aug: 17July; Sep: 16Aug; Oct: 17Sep; Nov: 17Oct; Dec: 13Nov
27June
Support (continuous contract): 80.00: Psychological level
78.70: Lower boundary of a bear flag formation.
78.15: -2STD below 21-day moving average
75.71: 09Aug low
74.95: 04Oct low
65.00: Target for our descending triangle formation that extends back to early May.
Resistance (continuous contract): 81.35: Upper boundary of a bear flag formation
81.05-81.20: Triple bottom (04June; 11June & 12June).
82.95: 21-day moving average
83.95: Falling trend line from the 31May high
87.75: +2STD above 21-day moving average
89.28:
Comment: Our Momentum indicator is displaying some instability, trying to go negative after a brief positive turn. We still see declining Volume, but stronger on the short-term charts spike down. Especially on the downward spike after a disappointing DOE release. The 21-day moving average is now well below the 200-day (97.10) and should be a bearish dynamic going forward. Our Volatility measure has risen to High levels and may handicap any option purchase strategies.
Seasonal Snapshot:  (cash contract):  All three patterns consolidate with an upward bias until a culmination high on 15July.

PRODUCTS: Both of our tracked markets are Oversold.
Futures Last Trade: July: 29June; Aug: 31July; Sep: 31Aug; Oct: 28Sep; Nov: 31Oct; Dec:30Nov
Options Last Trade: July: 26June; Aug: 17July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27 Nov
RBOB:
27June
Aug Support: 2.4830: Lower boundary of a bearish rising wedge in a falling market
2.4490: -2 STD below the 21-day moving average
2.4408: 21June low
2.4000 Target for the break below our symmetrical triangle in place since 04June.
Aug Resistance 2.5790: 21-day moving average, which has offered consistent resistance all the way down since early April.
2.5300: High after last Monday's bearish, outside reversal. Also the upper boundary for a bearish rising wedge in a falling market.
2.7085: +2STD above the 21-day moving average
Comment: A larger than expected build to Gasoline stocks undercut the recent rally. The July contract found resistance at the falling 21-day moving average.  The August contract has some ground to cover before threatening its 21-day (2.4980 vs. 2.5790).
RBOB has led the recent modest strength in the Products off Oversold levels. However, Volume has been lackluster and the market has not been able to retake the 18June bearish, outside reversal of the relief rally and Volume was stronger on the ensuing weakness.
Our Momentum indicator is negative.
Seasonal Snapshot: (cash):  All three patterns are biased lower until June 21.

HEATING OIL:
27June
Aug Support: 2.5135: -2STD below the 21-day moving average
2.5085: 25June low
2.3500: Target for the break below our symmetrical triangle in place since 04June.
Aug Resistance: 2.6000: Old support throughout mid June.
2.6260: 21-day moving average, has offered consistent resistance all the way down since early April
2.7390: +2STD above the 21-day moving average.
Comment: A large draw from storage, as opposed to the 1.0MB build that was expected, popped the market higher, but it has since given away all of those gains, and then some.
Consolidation of the recent losses on falling Volume keeps the pattern of decline, consolidate, decline in place. The falling 21-day moving average remains below the 200-day and should keep the pressure on.
Seasonal Snapshot:  (cash)
The 30yr pattern's weakness decouples from the shorter-term patterns and continues lower until mid July.

NATURAL GAS:
Futures Last Trade: July: 27June; Aug: 27July; Sep: 29Aug; Oct: 26Sep; Nov: 29Oct; Dec: 28Nov
Options last Trade: Aug: 26July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27Nov
27June
Notes: Fundamental crosscurrents lie in the fact that the "mini" heat wave across the middle of the country (100 degrees in Chicago tomorrow) should be supportive, but production, halted for TS "Debby", is coming back on line and may offer pressure.
Aug Support: 2.515: 21-day moving average and recent consolidation lows
2.217: 13June low
2.17: -2STD below 21-day moving average and 20Apr low
Aug Resistance: 2.86: +2STD above 21-day moving average
2.88: Mid May peak
3.17: 200-day moving average
3.315: 38.2% retracement of the June 2011 to April 2012 decline.
Comment: Our technical indicators are all pointing up. After a brief probe above, the Aug contract is back to testing the late May peak. Our Overbought indicator (80) keeps us on guard.
Fundamentally, production cuts are starting to bite. Additionally, because of low NatGas prices, we have seen numerous stories lately indicating businesses are switching to NatGas and away from coal and petroleum. These structural changes will change the supply and demand relationship and we can't count on next winter being as mild as this last one. If we see a very hot summer, it is interesting to note that the marginal supply of electricity will likely come from gas turbines. This will add to demand.
Seasonal Snapshot:  All three patterns chop lower, then higher before starting a period of protracted weakness from 16June-22July.

EQUITY INDICES:
Futures Last Trade: SP & NASDAQ: Sep: 20Sep; Dow: Sep: 21Sep
Options Last Trade: SP & NASDAQ: July: 20July; Aug: 17Aug; Sep: 20Sep; Dow: July: 20July; Aug: 17Aug; Sep: 21Sep
27June
SP Support: 1316.25: 21-day moving average
1302.75: 25June low
1297: 12June low
1294.30: 200-day moving average
1274.60: -2 STD below the 21-day
1262.00: 04June low
SP Resistance: 1357.75 +2STD above the 21-day
1368: Upper end of the brief consolidation period after the early May peak.
 
Dow support: 12469: 21-day moving average
12387: 25June low
12331: 200-day moving average
12288: 12June low
12081: -2 STD below 21-day
11985: 04June low
Dow resistance: 12858: +2STD above 21-day
12975: Upper end of the brief consolidation period after the early May peak.
 
NASDAQ support: 2541.70: 21-day moving average
2521: 25June low
2505: 12June low
2467.35: 200-day moving average
2462: -2 STD below 21-day
2433.75: 04June low
NASDAQ resistance: 2621.30: +2 STD above 21-day
2648: Upper end of the brief consolidation period after the early May peak.
 
Comment: Interesting to note that yesterday's sell off and today's action has found support just above the previous lows, noted above. Volume has stalled out after the 21June sell off that WAS on stronger Volume. If they can breach support levels on stronger Volume, it breaks the recent consolidation pattern and targets the 04June lows and support levels, noted above.
Our Rate of Change is flattening and has delayed our Momentum indicators from going negative.
We remind readers that while they may expand and there may be occasional strays outside, the +-2 Standard Deviation Bollinger Bands have offered consistent support and resistance throughout this year
Seasonal Snapshot: (Cash Indices) All three patterns for all three markets track lower until 27June, then strengthen until the end of July.

GRAINS:
Options Last Trade: July: 22June; Aug: 27July; Sep: 24Aug; Oct: 21Sep; Nov: 26Oct; Dec: 23Nov
27June  The continuing story of persistently dry weather in the Corn/Soybean belt remains as a serious threat to the year's yield projections. Prices are still rising materially. A failure to hold highs may indicate some sort of consolidation weakness may be at hand. Look out for the effects of the CME raising margins today. This often curbs rallies.  
 
CORN:
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
27June  We're looking to the new-crop December as July is running out of time.
The continuing dry hot weather in the Corn belt has driven December up almost 30% since 6/15. Falling crop ratings speak to the larger issue of how much actual damage is being done to this year's crop. 
Support: 6.45: June 2011 highs
6.17 Oct 2011 highs
5.94: Gap left on 26June opening.
5.75: March high trades,support in early January, bullish support inflection level back to 7/1/2011 low.
5.69: Previous high and gap left on 25June opening.
5.62 +2 STD over the 21-day moving average (5.36 3/4)
5.48-5.50:Major support and resistance inflection point going back to mid-January support
5.42: current level of declining trend line drawn from 11/9 high
5.35:Intermediate support and resistance inflection point going back to late November, was major support last Autumn. Just below 50% Fibonacci retracement of recent rally
5.10: Serious traded support in late May until latest drought fears rally.
5.00: Psychological level, was strong support in early May
Resistance: 6.73: Aug 2011 highs
7.00: psychological level 
Comment: Technicals clearly are positive, but we're not seeing the same degree of sustained strength today as earlier in this rally. Trend and Momentum remains strongly positive, as is Rate of Change. However, RSI is actually showing signs of topping with today's retreat from the highs. Technically, gaps remain between 5.94and 5.96 ¼, between 5.54 and 5.70, and then well below last weeks consolidation between 5.34 and 5.36 ¼. The one to watch is the 5.54 and 5.70 gap. It's close enough and large enough to actually have an impact on the market.
We leave some recent comments and observations in place to give some context to recent action and to remind our readers of the large supply and demand dynamics at play this crop year.
We leave some recent comments and observations in place to give some context to recent action and to remind our readers of the large supply and demand dynamics at play this crop year.
Any new long positions should be sensitive to any factors that could be construed as taking the Momentum impetus away from the bullish case. Such as

    Weakening technical action
    Rain
    Continuing global economic weakness
    Weak energy prices

We leave a portion of a recent comments in place as their relevancy to further thoughts in the market:
Despite today's strength, we believe any new longs are likely to be jittery due to the previously noted vulnerabilities:

    A potential record crop
    Early completion of planting
    Ahead of trend Crop Progress
    Declining U.S. personal automobile fuel demand
    Deteriorating global economic conditions   

Seasonal Snapshot: For July- All 3 patterns are due to be seasonal under pressure from 6/11 until delivery starts at the end of June.
For December-All 3 patterns are under a very negative seasonal bias until 7/3. The 5 and 15-years peak on 7/13.

SOYBEANS:
First Notice: July: 29June; Aug: 31July; Sep: 31Aug; Nov: 31Oct; Jan: 31Dec
27June We refer to the November contract as the traditional new-crop. July is running out of time.
Soybean expected yields are suffering under the same conditions as Corn. This manifested itself in a material rally as well.
Support: 14.12: +2 STD over the 21-day moving average (13.25)
13.95-14.00:Major level as November peaked here from 8/31-9/12, then failed again from 4/2-6/21
13.90: Gap left on 25June opening
13.63-13.68: 4/16-/4/23 multiple failures to go higher, support 5/2-5/4, failure to go higher 5/10 and 5/11
13.57½: 6/19 intra-day support
13.40: 3/26 resistance, general support area 4/18-4/24, general resistance failure area 6/7-6/18.
13.00-13.10: Psychological level and support and resistance inflection point, failure to hold this area portends materially lower prices. May's failure ended with 55 cents sell-off.
12.50: Psychological level and major support and resistance inflection point. Support late September, tough resistance in late October. Was support level in May through early June weakness.   
Resistance: 14.37: 6/25 high trade also right at the +2 STD over the 21-day moving average.
14.50: Psychological level
15.00: Major psychological and round number price level, and measures to the $1.00 move higher from the previous high.
Comment: While crop conditions are seen as "stressed" and the weather is hot and dry, Soybeans are not seen to be in as much near-term danger as Corn. Technically, November has run into the first listed resistance and has failed, so far, at that level.
Right at the Overbought level in RSI, which is not nearly as much as Corn. Rate of Change's topping action is indicative of the consolidation action we've seen since yesterday.
Any news of rain in the Illinois or Iowa will likely spark another violent move lower. 
Seasonal Snapshot:  For July- 5-year is in a shallow falling period until 6/23. 15-year is biased lower until June 28. The 30-year is in a falling mode until June 29.
For November-Both 5-year and 15-year are in a negative bias: the 5-year until June 26, the 15-year until July 7. The 30-year is in a falling pattern until July 7. 

 

WHEAT:
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
We leave in place our comment from 4/5 as it addresses longer-term patterns we've noticed:
27June We refer to the December contract for ease of comparison with the other Grains we cover.
Wheat is along for Corn's ride and due to its own dryness concerns on a global level. Any rain that helps Corn's crop will likely impact Wheat's prices in the same direction, lower.
Support: 7.66: 10/11 settlement, upper level of late October through early November rally
7.60: 6//25 high, near the 6/27 low
7.45: 5/21 high.
7.30: just above 5/21 settlement, general resistance area on rallies in early January and early February
7.17-7.20:Intermediate support and resistance inflection point, was support in mid-October, resistance in late December/early January, support in early February, and resistance on rallies in early and late March
7.00: Psychological level, extends on a traded level down to 6.90 and has acted as an inflection point around which lots of trading has occurred going back to December. 
6.78-6.80: Was strong support from 2-10-3/28, was resistance in June before the drought fears rally.
6.70: Has acted mainly as an intermediate support level since late November, but on numerous dates.
6.52-6.57: Was bottoming support in late November, mid-December,mid-April, and early June. Failure to hold here means a likely test of the contact lows.
Resistance: 7.80: 8/9/11 and 9/15/11 low support
8.00: psychological level and mid-Sep 2011 resistance.
Comment: Technically, this market remains positively biased with all directional indicators pointed to higher prices. Watch the Volume, though. As strong as this rally might appear, any news that pushes Corn down is likely top do the same for Wheat.
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-All 3 patterns peak on June 13 and 14, then enter a period of generally lower bias until the end of June.
For December- All 3 patterns peak near June 13, then enter a period of generally negative bias until the end of June.  
INTEREST RATES:
U.S. Treasurys' First Notice: Sep: 31Aug; Dec: 30Nov
U.S. Treasurys' Options Last Trade: July: 22June; Aug: 27July; Sep: 24Aug
n this mess. We express surprise at the surprise from officials.
27June Today's action is largely consolidative as the market digests the uncertainty around Europe's 19th financial crisis summit and tonight's spate of economic releases.     
 
To reiterate, we go back to last week's announcement of the FOMC's extension of Operation Twist out to the end of 2012 (so far) to give a good indication of how weak the "recovery" is becoming.
Despite some intermittent "supportive" economic data, some of it in the crucial housing sector, we see growth as persistently anemic, and the numbers have stalled out in indicating growth going forward.
Couple the above with other disappointing global economic developments and risk-off days tend to drive a material share of investment and trading flows into the U.S. Treasury market.
Continuing Operation Twist operations should support the long end and add some moderate pressure to the short end.
 
BONDS: Bonds are noncommittal with a Doji candlestick today and a fall in Volume.  Bonds should continue to benefit from any risk-off action AND the expected Operation Twist induced demand.   
Support: 148-16: Late May resistance,
148-07: 6/21 low, Support level from 6/13 & 6/15
147-24: 6/13, 6/20 support & 5/22, 5/25 resistance
147-00: Psychological level, 5/16 resistance, support area 5/1-5/29, 6/11.
Resistance: 149-03 support on 5/31, 6/6-6/8. 6/17, resistance 6/19 & 6/20
149-21:6/21 high, settlements on 5/30 & 6/15
150-00: Big psychological level, resistance on 5/30 and 6/13.
150-24: pattern resistance since 6/1-6/7 sell-off
Comment: Very little has changed today. Technically, Bonds remain negative but a shift is in play on the secondaries. It seems to be a shift to a more neutral stance, although, this leaves the primary directional bias as negative. Recent action has been on declining and anemic volume. This gives us pause when considering the effects of the Operation Twist news. Rate of Change does give the impression of possible bottoming action. RSI has bounced without going Oversold but seems to be heading generally sideways. Yesterday's rally did bounce off the rising trend line drawn from the 6/11 low at 146-28. Today's action is an inside day as of this writing. This indicates consolidation which would be validated by what appears to be another day of quite low Volume.
Seasonal Snapshot: (cash contract)
Bonds: The 5yr pattern declines 7/1. It then bounces higher and lower, going generally sideways until 7/23, whereupon it enters a generally negative pattern until early October.  The 15 & 30 yrs consolidate with a downward bias until August.
 
Tens (10-YR NOTES):
Tens remain exhibiting similar action as Bonds (or is the other way around?).
While Operation Twist news automatically adds a bid to the Tens, the action has failed to break out above the recent range trading zone. Until that happens, this market is going to appear to be under moderate pressure on technicals.
Support: 133-08 supported on 6/14, 6/17
132-28: near 6/13 & 6/20 lows, resistance in late May
132-16: 5/15 resistance, 5/2/ support, near midpoint to 5/17-5/25 consolidation action
Resistance: 133-17 intra-day chart high trades 6/11, 6/13, 6/17, 6/19, 6/20, 6/21, just above 21-day moving average (133-16), near mid-point of 3 week consolidation range.
134-00: Psychological level. Support from 5/31-6/4, just above highs on 6/11, 6/15-6/19
134-16: near +2 STD over the 21-day moving average
135-00: Psychological level, just above 6/1 & 6/2 highs
Comment: While our Technicals point to a generally negative bias, there is some evidence of bottoming in the Rate of Change, which may show a slowing in negative Momentum. Chart action has been largely consolidating between 133-00 and 134-00 since 6/6. RSI did bounce higher after failing to go Oversold but is now heading sideways. Volume's material decline indicates consolidation.
Seasonal Snapshot: (cash contract)
Tens: The 5yr pattern is in a modest bounce and fall off sideways pattern until 7/23, whereupon it enters a more profound falling pattern until early September.  The longer-term patterns are in a modestly downward bias that accelerates toward the end of July and lasts until October 
 
2-YR NOTES:  Two's have essentially gone sideways with a 110-03.0 support low for the past week. The action seems to be consolidating the lower levels after the 6/20 sell-off. Is this the pause before another move?
While we continue to maintain that Twos being allowed to fall is counter to current stated Fed monetary and QE policy, with the 6/20 news regarding the continuation of Operation Twist, some modest pressure on the short end is to be expected as the Fed reconfigures its balance sheet.  If the Fed decides it needs to break out the QE nukes again, we should see a lurch higher.
Support:110-03.5: resistance after 6/20 FOMC sell-off, support after 6/21 overnight rally
110-03: Support on 5/25, 6/20, & 6/21. 
110-02: 6/20 low post-FOMC sell-off.
Resistance: 110-04: support from 5/29-6/19
110-04.75: Declining trend line fro 6/4 peak, resistance from 5/25-5/30
110-5.25: 21-day moving average
110-06.25: resistance on 5/30, support from 6/6-6/8
Comment: Twos remain negatively biased with most of our directional indicators pointing down.
Technicals remain focused lower. The 21-day moving average (near 110-05.25) should act as a resistance level. The Oversold condition has been a portent of rallies since March. It's been prudent to wait for our RSI to turn, which we saw in Monday's action. The last turn from these levels ended up targeting the highs above 110-08.   
 Seasonal Snapshot: (cash contract) All three patterns bounce higher from 6/25 until 6/28, and then resume a generally negative bias until 7/10. The longer term Trend is negative until it seems to bottom in early October.
 
SEP 13 EURODOLLARS:
Support: 99.555: high trade on 6/20
99.535: high on 6/18 & 6/19, settlement on 6/20
99.515: 4/3 & 5/2 highs, settlement on 6/15, support on 6/18, low on 6/21
99.500: high trade from 4/12-4/19 & 4/26-4/27, low from 5/1-5/4, settle on 5/7
99.490: high trades on 6/7 & 6/11
Resistance: 99.560: 2/3 and 3/2 highs and mid-August support.
99.570: 9/21/11 & 3/2 high trade.
Comment: This week's action looks to be consolidating in the mid 99.50s. The last 2 days have been on light and declining action indicating the market may be setting up for another surge higher. This may continue as this week's auctions evolve and the Europeans start their financial summit.
We see recent action as having some importance. The rally above 99.50 is seen as penetrating resistance and that should act as support now. Look for resistance at 99.56 as the highs in February and March and support last August.
Technicals point to higher levels but with some deceleration. The general trend is higher.


BUNDS (German 10-yr): Bunds seem to be in consolidation mode with the beginning of the financial summit close by
Support: 141.50: general support and resistance inflection area since 6/13 lows.
140.00: resistance in late April and early May
Resistance: 142.45: 5/14 & 5/16 highs, support & resistance inflection 5/17-5/23
Comment: Technically, Bunds are quite negative with Trend and Momentum falling quite steeply. Rate of Change is rising. With the RSI bouncing out of the Oversold conditions from last week, some moderating of the recent negative bias is in place. However, as we noted above, the declining Volume brings this "rally's" sustainability into doubt. Look for failure at technically significant levels.
 
SCHATZ (2-yr):  We now see a fall in Volume on the negative action from the recent rally, too. Look to announcements from the European financial summit to drive pricing.
Along with the U.S. Twos, the Schatz falling will end up being counter to official policy desires so we have our doubts as to any negative bias sustainability.
Support: 110-59: resistance zone in early April, support and resistance inflection in late April/early May, support on 6/6, resistance on 6/14 & 6/15
110.445: support in early April.
110.355: resistance in late March/early April, at various times support or resistance going back to late December.
Resistance: 110.625: 6/25 high and 6/11 low
110.675: 6/8 settlement and level of declining trend line drawn from 6/6 high.
Comment: Schatz is still under primary technical pressure, with Rate of Change and RSI, our secondaries, rising. Yesterday's material rally was on another drop in Volume, indicating weakness underlying the rally. We await further political wrangling in Europe with the soon to open summit.


METALS:
Options Last Trade:Aug: 26July; Sep: 28Aug; Oct: 25Sep
 
GOLD:
First Notice: July: 29June; Aug: 31July; Sep: 31Aug; Oct: 28Sep; Nov: 31Oct; Dec: 30Nov
27June Today's violent, whippy day tells us to stay away for the time being.
Support 1558.6: 22June low
1553: -2STD below the 21-day moving average
1525-1530: Horizontal trend line that extends back to the previous low (26Sep 1532.7).
1500: Psychological support
1478.3 to 1462.5: Cluster of lows between 02May & 27June.
1456.8: 38.2% retracement of the Oct 2008- Sep 2011 rally
Resistance: 1589: Recent double top (25&25June)
1600: Psychological level and 21-day moving average (1600.2)
1627: Falling trend line in place since the $90 drop on 29Feb.
1647.9: +2STD above 21-day moving average
1674.5: 200-day moving average
Comment: Today's lower high and lower low relative to yesterday's action keeps the market inside the recent consolidation range. Our Trend and Momentum indicators remain negative after the recent failed attempt to make a higher recent high (1642.4 on 06June).
A break out above our noted falling trend line would ultimately project a rally above 1700.
Bigger picture, we see a giant descending triangle formation that extends back to the Sep 2011 high (1923.7). The upper boundary currently comes in around 1715. The bounce off our noted support level at the 26Dec low (1523.9) forms our horizontal trend line noted above and the lower boundary of the triangle. A break below brings our above noted support levels into play.
Seasonal Snapshot:  All three patterns spike higher until 20June, when the 15 & 30 yr patterns decline precipitously until 05July.  The 5yr pattern consolidates until 06July.

COPPER:
First Notice: July: 29June; Sep: 31Aug; Dec: 30Nov
27June
Support (continuous): 3.2965: Lower boundary of a bear flag.
3.2660: -2STD below the 21-day moving average has acted as a brake. Also rising trend line from the June 2010 low (2.7200) through the Oct 2011 lows (299.40)
on any weakness.
3.2380: 04June low - Futures Broker

3.2325: 15Dec 2011 low
3.2040: 25Nov 2011 low
3.0915: 20Oct 2011 low
2.9940: 03Oct 2011 low
Resistance (continuous): 3.3460: 21-day moving average
3.3550: Upper boundary of a bear flag.
3.4245: +2STD above 21-day moving average
3.4775: 18June high
3.5280: The 38.2% retracement of the April to May decline and also clusters around the upper end of a brief consolidation range in late May.
3.5825: 200-day moving average
Comment: Crosscurrents inside of the recent consolidation range... Similar to its Industrial counterpart, Crude Oil, Copper continues to form a bear flag. That said, Friday's Hammer candlestick formation and a test of the low indicates a potential reversal of the recent declines may be coming.
An attempt by our Momentum indicator to turn negative has been turned back for the time being. A negative turn would be similar to the action after the positive turn in late April/early May, which did not last long and could not yield a higher high for the move.
Like its Industrial counterpart, Crude, Copper remains in a falling channel pattern of lower highs and lows. An additional negative dynamic is the falling 21-day moving average is continuing its move below the 200-day.
Seasonal Snapshot:  All three patterns rally until the beginning of August.
 
SOFTS:

We have shifted to September contracts for Cocoa and Coffee, December for Cotton, and October for Sugar due to delivery in the July contracts. 
 
COCOA:
First Notice:Sep: 20Aug; Dec:
Options Last Trade: Aug: 06July; Sep: 03Aug; Oct: 07Sep
27June  Concerns are now mounting that West African supplies are tightening.  Support: 2080: early April support.
2031: 04June low and horizontal trend line support extending back to Dec 2011.
Resistance: 2165: 21-day moving average and support going back to 08June.
2271: 15June high
2315: Declining trend line that extends back to the 27Jan high (2519).
2372: 07May high
Comment: Our primary directional indicators, Trend and Momentum have now turned positive. Volume has expanded indicating a building rally. The market has decisively bounced off of Oversold. In reference to our below big picture comments, refer to the first resistance level.
Bigger picture, we remind readers that this market has been in a declining longer-term dynamic since late January. Until it breaks above the (2519), this market is still in a bearish pattern.
The case could be made for a large, descending triangle formation that is bound to the downside by horizontal trend line that extends back to Dec 2011. If drawn from the Sep 2011 high (2950), a break below 2030 on stronger Volume could target a move to 1200.
Seasonal Snapshot:   All three patterns are rising until early July.
 
COFFEE: 
First Notice: July: 25June; Sep: 23Aug; Dec: 21Nov
Options Last Trade: Aug: 13July; Sep: 10Aug; Oct: 14Sep
27June Modest profit taking in a consolidation day.Some light profit taking too the market off its highs.
Support: 161.50: Major failure level with high trades and much lower settles on 6/5 & 6/20.
158.20: 21-day moving average(158.40) but more importantly, 6/19 & 6/21settlemnts. Also, early June support before the move to the lows.
150.00: Psychological level and just below 18June low.
148.80 -2STD below 21-day moving average
Resistance:
166.85: +2STD above 21-day moving average (158.05)
171.75: Consolidation highs after 7-cent loss on 23May.
Comment: A material drop in Volume indicates a consolidation day. Market forges to new highs but late action on trader profit-taking took it down nominally. The market failed to stay above the +2 STD (166.85) above the 21-day moving average (158.05).
Hedging for delivery is likely to be a cash intensive business unless some sort of long option strategy is implemented. Call or email us for information on how to implement.
Seasonal Snapshot: The 5yr pattern rises until the beginning of July.  The 15&30yr patterns are both quite negative until 25June.

COTTON:
First Notice: July: 25June; Oct: 24Sep; Dec: 26Nov
Options Last Trade: Sep: 17Aug; Oct: 14Sep; Nov: 19Oct; Dec: 09Nov
27June Modest, lightly traded consolidation day.
Dec Support: 67.75-67.95 Shoulder for an inverse Head & Shoulders
64.60: 04June low -

Dec Resistance: 69.85: 21-day moving average
73.95: +2STD above 21-day moving average
74.80: 19&20June double top and old support in early May
Comment: December's rise has been capped by the 21-day moving average.
Unhedged crops are seen as a material barrier to further rallies. After staging an impressive rally since bottoming on 6/4 through 6/6 on the Chinese export sales news, recent action has disappointed.
The 6/21 large sell-off was accompanied by a material rise in Volume, which keeps our longer-term bearish sentiment intact. Our Momentum indicator is on its way to going negative after the rally failed to make a higher high.
Seasonal Snapshot:  The 30yr pattern consolidates throughout June, but the 5&15yr move the entire month.

SUGAR:
First Notice: July: 02July; Oct: 01Oct
Options Last Trade: Aug: 16July; Sep: 15Aug; Oct: 17SepSeasonal Snapshot:  All three patterns are in a pronounced upward bias until the beginning of Aug.
27June: Notes:Continuing concern over tight supplies is an upside risk.
Precipitation is another issue, as heavy rains slow harvesting activities in Brazil and also threatens India. Potential rain damage to crops in Brazil is still being assessed but has emerged as a supportive dynamic.
With Sugar increasingly seen as an industrial resource (ethanol), it is vulnerable in the global economic landscape.
Support: 20.50: Old resistance and where the market fell to and bounced for a short time in early May.
20.15-20.20: 21-day moving average and 6/11-6/15 inflection level, 6/22-6/25 support.
19.80:Late May support, early June inflection, mid-June support levels and rising trend line that extends back to the 04June low.
18.86: 04June low
17.00: Target for the break below a large descending triangle and horizontal trend line (21.00) that dates back to January.
Resistance: 2100: psychological level and near last weeks highs.
21.95: 50% retracement of the March to early June decline.
Comment: Despite our recent pronouncements of weakening technicals, the move today was clearly positive. A material move higher coupled with a material rise in Volume. Trend and Momentum both now pointed higher. Rate of Change and RSI have both bounced.
If the Brazilian situation proves to be less damaging than accounted for in recent positive action, look for a sustained materially lower move. If the situation IS, as expected, quite damaging, look for some moves to the upside, though, capped by low 21.00 levels, at least initially.
Seasonal Snapshot:  All three patterns are in a pronounced upward bias until the beginning of Aug. 
 
Disclaimer: The information presented in this report is taken from sources we believe to be reliable and accurate. This information is not guaranteed as to accuracy or completeness.  The opinions expressed are based on our best judgment at the time of writing and are subject to change without notice. These opinions should not be construed as an inducement or advice to enter into any Futures or Options on Futures transaction except where explicitly stated.  There is risk of substantial loss 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.

Related to Providio's Daily Futures Market Commentary for June 27, 2012
 
 
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