Providio’s Daily Futures Market Comment for 01/10/12 (Part 1)
10Jan The possibility of Chinese intervening to spur economic growth and Fitch’s less negative outlook on Europe underpinned yesterday’s rally in most of the physical markets we track. However, they are lagging our Overbot Equity sector while the EuroFX is looking lonely, extending its stay on our Oversold list.
This week’s light US economic calendar turns attention to GOP primaries and any news coming out of Europe.
10Jan What started out as a stronger day across most of the majors faded as the session wore on. The “Commodity Currencies” benefiting most from speculation that Chinese intervention may help spur demand. Volumes are inching their way back to pre-holiday levels.
With the exception of the weaker tone in the Euro, we note the wide consolidation ranges that have been in place since the summer, but these patterns are running out of time. If there is a resolution that emerges on higher Volume, in keeping with traditional technical analysis, the moves could be enormous. Below average Volatility may be telling us that an “uncoiling spring” may be in the offing…
Aussie: 10Jan Testing the pivot/fulcrum nature of the March 200-day Moving Average at 103.55, but still in a wide, symmetrical triangle consolidation pattern in place since August that is bound by 9900-10420. All of our technicals are pointing higher and the market is not yet Overbot. This currency, along with the Canadian, has been highly correlated to the physical commodities’ action.
Seasonal Snapshot: Divergence between all three patterns until mid January: 30yr down, 15 yr up and the 5yr consolidates. After rallying until 22Jan, the 30yr then joins the 5&15 yr in a move down until the end of the month.
British: 10Jan Respecting rising trend line support that forms the lower end of our symmetrical triangle that has been in place since August.
With most tracked US denominated FX contracts lower on the day after the US Jobless number, it seems increasing likely that the Sterling is destined to test support in the 1.5350 area. Most of our signals indicate a broadening weakness with some residual strength stemming from safe-haven to the Euro’s issues.
Additionally, the 200-day Moving Average is falling and the market is still well below that level.
Seasonal Snapshot: The 15&30yr move down until 10Jan followed by choppy consolidation in all three patterns until Feb.
Canadian 10Jan Today’s rally tests the upper end (98.50) of the symmetrical triangle formation that has been in place since August. There has been high correlation to the Aussie$ and physical markets. The 200-day moving average lies well above at 100.55
Seasonal Snapshot: The 5yr pattern declines precipitously from 08-22Jan. The 5&15yr patterns arrive late to the party (14Jan), but stay longer (28Jan).
Dollar Index 10Jan Watch the EuroFX, as it seems to be trumping the other major currencies in underpinning the Dollar Index since November. The resulting rising channel is bound by 80.30-83.00. The market is leaning Overbot, but a test of the upper boundary of the channel may be in the offing. 80.00 will continue as strong support, with a new, higher support levels at the obvious 81.00 and also at about 81.30.
Seasonal Snapshot All three patterns rise until 20Jan. On 24Jan, the 15yr breaks away from the ensuing consolidation and rallies again until the end of the month.
Euro-FX 10Jan Watch the round pennies on either side of the market for support and resistance. The falling channel in place since late October that is bound by 125.70-130.25. The lower end coincides with the August 2010 low. Oversold somewhat, but not showing signs of turning.
Seasonal Snapshot A decidedly weak tone until the end of Feb.
Yen 10Jan The Yen is struggling with the mid November highs. Near-term Momentum seems to have eased off since peaking on Wednesday. Look for a near term test of the 129 support area.
Be careful if the Yen rallies, as intervention has loomed large around the 130.00 level.
12810 shows as strong support.
Seasonal Snapshot Mild weakness in all three patterns ends 07Jan and strengthens until 23Jan.
10Jan Initial support from the possibility of Chinese intervention on weak data wore a bit thin throughout the session. That said, all three Petro markets we track have positively tilting technicals. But the very high correlation to “outside forces” has us concerned. Crude is lagging the Overbot conditions that is presenting the rest of the Petros.
Seasonal Snapshot All three tracked Petro markets’ are exhibiting a mixed to negative bias until about Jan 10th
Crude: 10Jan Major resistance is still offered at 104.00. Old resistance at 101.75 is offering new support for the time being. Watch the Euro and the Equities for a resumption of highly correlated action.
NatGas: 10Jan Spring-like weather in the upper Midwest keeps the pressure on the market. Watch both Momentum and RSI as these 2 indicators have not been able to seriously shift to a higher dynamic for some time. If they do, it has a good chance of staging a possible reversal rally. A move back to near 3.50 would be necessary to make that a reality.
Of utmost importance, though, is the storage market has not had a sizable draw yet and we’re already into January. If this persists, look for continuing weakness.
Seasonal Snapshot A mixed historical picture for the next week, but generally negative action until month end.
10Jan Light, declining Volume lends some suspicion to today’s rally. Our noted gaps below last week’s lows in S&P and Dow have been filled, but Mar NASDAQ still has a gap open down to 2284 that was left open after the New Year’s Day holiday.
Mar Dow has violated its late Oct highs (12230), whereas the S&P is still capped there (1290) and NASDAQ has some catching up to do (2408). Indicators might point higher, but all three markets we track are historically Overbot... the most since last July. Keep track of the Volatility, which has been Low.
Seasonal Snapshot S&P is a mixed bag until mid-Jan where a weeklong material downdraft is in place. From that point on, look for a general Trend to higher prices until Feb 1.
The Dow has some modest pressure higher for the next 2-3 days, then enters a negatively biased period until Jan 22.
The NDX Trends modestly higher until Jan 14. At that point all indicators head lower for a week.
10Jan South American Weather concerns still weigh on pricing but today’s action was a reversions from yesterday’s rallies. Markets are unlikely to see material new directional bias as Thursday’s USDA report looms. Post-Christmas gaps still exist below the current market prices and should provide a drag on any rising momentum until filled.
Corn: 10Jan Current months were basically unchanged as the market readies itself for Thursday’s USDA report. Today’s action was consolidative with reasonable but lower volume. The Doji day speaks to the day’s directionless action. Positive Momentum continues to wane, but today’s action in RSI reverts back to positive so the reading is mixed. RSI is coming off recent peaks near 87. Volatility is low and falling.
Seasonal Snapshot The 5yr pattern leads the choppy 15&30yr patterns gently higher until the end of February.
Soybeans: 10Jan Doji day speaks to directionless close. Not an inside day like Corn, but no new highs. Momentum and RSI at cross-purposes. Volatility in Soybeans is near the 1st Standard Deviation higher which is our measure of High. However, it is going sideways at this point. The 200-day Moving average is still falling.
Seasonal Snapshot All three patterns display a choppy downward bias. The 5yr ends 29Jan; 15yr 01Feb; 30yr 07Feb.
Wheat 10Jan Like Corn and Soybeans, Wheat’s Momentum and RSI are moving in opposite directions which is again showing mixed signals.
Unlike Soybeans, its Volatility so on the Low side of Average and falling. Its 200-day Moving Average is also falling though.
Seasonal Snapshot The 5yr pattern displays pronounced weakness until 16Jan, whereas the 15&30 yr patterns’ weakness are less pronounced, but last until the end of Jan.