Providio's Daily Futures Market Commentary for April 11, 2012

[providiotrading]

Grains: 11Mar Generally, action was consolidating today. No real directional extensions or reversals. General profit taking from managed futures added a modest negative tone to the day’s action. News stories we read indicate no real surprises ion the USDA report side from yesterday’s production report. This lack of uncertainty removes one of the recent drivers of higher pricing.
Please pay attention to the comment below, which we previously published.
A piece we read this morning indicates the Corn market, despite the pop higher on the planting report last week, is still showing longer bearish tendencies. This situation may be exacerbated by the material increase in planted acreage. If this is the case, this should work to counter some of the bullish general tendencies embedded in the Soybeans complex.
To reiterate, Soybeans are in a bullish phase due to both South American drought and lower plantings in the US. The wild card on the Corn will be Petroleum’s pricing effects on Ethanol demand. The Soybeans wild card is Chinese demand.
Planting in the US Midwest seems to be proceeding ahead of schedule. At some point this will tend act as a negative factor.
The point to ponder here is what will be the overall effect on the Grains markets. Stay tuned.
We remind readers of our recent weather notes:
“As a point of weather market speculation, we wonder whether the very warm winter will lead to an equally warm, dry summer, putting pressure on the Corn crop. This may lead to a buying opportunity if a material sell-off occurs. Stay tuned for further news in this vein.”
In partial answer to this question, we read a column over the weekend referring to this issue. The Chicago Tribune’s meteorologist Tom Skilling answered a question that indicated we might be in for a very hot summer. More to follow.


Metals:[/B]
Gold: 11Apr With the positive reaction to the increasingly dire global economic news, Gold seems to have found a near-term bottom. However, before we start popping corks, there are several items that should be noted.
First, there has not been the required breakout that would indicate an actual change in Trend. If we apply our Technicals to a weekly time frame, the view is decidedly more pessimistic. The Gold market has been exhibiting a classic falling trend with lower lows and lower highs. This is true for a short-term view going back to late February and a longer view going back to September 2011’s peak.
Second, recent moves to higher Trend and Momentum figures, our primary directional indicators, have been relatively short-lived in duration. Granted, the Trend will already be in place before our indicators, which lag, will “show” as such, but that’s a reality of our indicators.
Third, the global economic situation has been remarkable in its reaction to manipulations from “authorities”. This is all geared towards keeping the “system” working. That’s generally a “solution” geared towards adding risk. That will tend to work against Gold.
For this morning, if Gold can’t break out above the 1465 resistance, look for a likely test of last week’ lows. Again, while Trend, Momentum, ROC and RSI are all headed higher, recent experience tells us it probably won’t last long.
Support below should be seen at 1647, again at 1630-1632, and then again below at the lows of 1613. The 1635 resistance also sits right at the declining 21-day Moving Average.
Today’s action, as of this writing, is setting up as a Doji with lower Volume. This speaks of consolidation. We will likely see a more concerted directional after the release of today’s Beige Book report at 2 PM EDT, if not until tomorrow’s Jobless Claims release.
Seasonal Snapshot: All three patterns consolidate with an upward bias until 23April.

Copper: 11Apr With most indicators on the global economic scene pointing to lower activity, Copper is in a serious decline of over 8% (we miscalculated and mistakenly stated over 9% yesterday) in the last 5 sessions. Today’s fall has May’s lows in the support area at about 3.6350. It again is pushing the –2 STD from the 21-day Moving Average. Below that, we see likely support at 3.5350. We see initial resistance all the way back up at 3.70-3.75
Trend, Momentum, ROC and RSI are all firmly falling. RSI is Oversold and getting more so. This, after being as high as 61 on 4/3.
Volatility is near average.
Seasonal Snapshot: A month-long rally in all three patterns gave way on 05Mar to a consolidation phase with a modest upward bias until mid April.

Softs: 11Apr Modest US Dollar weakness lent a bid under most of the sector today. Cotton was our only tracked market that did not register an “inside day”. Attention will begin to turn away from the May contracts in the next week.

Cocoa: 11Apr Our Trend and Momentum indicators remain negatively biased. RSI has turned from extremely low levels to near 20. Our indicator’s inability to affect a positive turn in our longer-term indicators speaks to continuing weakness due to both resuming supply and risk-off trading from the global perspective. Volatility is almost exactly Average.
If the previously identified triangle is a continuation pattern, the formation projects a move down to 1460, similar to the action after last fall’s prolonged consolidation. A test of the Dec low at 2005, and psychological support is first in line.
ICE exchange stocks at 5yr highs should keep a negative tone to the market.
Seasonal Snapshot: All three patterns’ tone have turned positive until 26Apr.

Coffee: 11Apr The market is still struggling with retaking the 21-day moving average (182.95) since breaking below in mid Jan. We still see what may be a developing symmetrical triangle, in this case, a continuation pattern (bearish). Today’s low held the downside leg (178.00). If it breaks below on stronger Volume, look for a 10-12 point move.
Trend and RSI are falling. Momentum and ROC both remain positive but shifting in a negative direction.
Our Volatility measure is rising above average. Friday’s Commitment of Traders report shows the spec shorts are holding in there, but stay nimble. This dynamic, along with roaster “bargain hunting” at lower prices, dry Brazilian weather and a supply deficit are likely supportive factors.
Roasters should investigate low (but rising) Volatility to investigate option strategies to protect upside risks. Please refer to the link on our web site for more information:

Seasonal Snapshot: All three patterns consolidate until they resume their down trend 05-16April.

Cotton: 11Apr A fourth consecutive probe up to the 21-day moving average (90.30) has failed. Shorter-term charts reveal stronger Volume on weakness and has returned in general from quite de[pressed levels.
Trend, Momentum, and ROC are all firmly negative. RSI has bounced but is still modestly Oversold at 28.
Look for support near 88.50.
Seasonal Snapshot: The July contract’s strong downward bias in all three patterns lasts well into May.

Sugar: 11Apr Quiet consolidation of yesterday’s sell off after the USDA report. All our Technicals point lower and the 21-day Moving Average is rolling over. A big surge in Volume validates the action. Look for support initially at 23.50, then stair steps down to the Dec lows in the low 22.00s.
We leave our levels in place from yesterday’s comment for reference.
A “swing” below targets rising trend line support (23.50) that goes back to mid Dec in the continuous contract. A sustained break out below targets the ascending series of lows: 23.26 (12Mar); 22.85 (01&02Feb); 22.43 (late Dec); 22.25 (15Dec). Below these levels, it’s anchors aweigh down to 20.40 (May 2011).
Our technical picture has tipped negative and is not Oversold. Additionally, a large spec long open interest and ample supplies keeps the market vulnerable to more weakness.

Seasonal Snapshot: The 5&15yr patterns negative bias lasts until mid-April. The 21yr pattern consolidates with a negative 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.

[IvonaLili]

Coffee: 11Apr The market is still struggling with retaking the 21-day moving average (182.95) since breaking below in mid Jan. We still see what may be a developing symmetrical triangle, in this case, a continuation pattern (bearish). Today’s low held the downside leg (178.00). If it breaks below on stronger Volume, look for a 10-12 point move.
Trend and RSI are falling. Momentum and ROC both remain positive but shifting in a negative direction.
Our Volatility measure is rising above average. Friday’s Commitment of Traders report shows the spec shorts are holding in there, but stay nimble. This dynamic, along with roaster “bargain hunting” at lower prices, dry Brazilian weather and a supply deficit are likely supportive factors.
Roasters should investigate low (but rising) Volatility to investigate option strategies to protect upside risks. Please refer to the link on our web site for more information:

i like this part, this will be effect
1) Employers around the world mandate a 14-hour workday in a 6 day workweek.
2) New rap-videos come out highlighting how cool it is to drink coffee.
3) We find industrial use for coffeebeans, maybe for military assault weapons.
4) The US decides to back the value of the dollar to coffeebeans.
5) Coffeebeans become precious gems on jewelry.
6) Coffeeshop waitresses are forced to serve coffee in bra-n-panty.
7) Scientists find out coffee cures cancer.
8) Same scientists discover halucinogetic properties after chemical synthesis.
9) Coffee becomes illegal and sold in the black market.