Providio's Daily Futures Market Commentary for 07/10/12

[providiotrading]

HEATING OIL:

10July

Aug Support: 2.7030: 06&09July double bottom.

2.6488: 02July low.

2.6455: 21-day moving average.

2.5085: 25June low

2.4980: -2STD below the 21-day moving average.

Aug Resistance: 2.7930: +2 STD above the 21-day moving average.

2.7900: 05July high.

2.8170: 38.2% retracement of the March to June decline.

2.9175: 50% retracement of the March to June decline.

Comment: Similar to RBOB, Heating Oil is in a consolidation pattern since the 29June pop above the +2STD above the 21-day moving average. It does, however, have a slightly more negative bias inside this recent consolidation, essentially splitting the difference between the more Overbought RBOB and "middling" WTI Crude.

Seasonal SnapshotCash) The 30yr pattern's weakness decouples from the stronger shorter-term patterns (until mid-July) and continues lower until mid July.


NATURAL GAS:

Futures Last Trade: Aug: 27July; Sep: 29Aug; Oct: 26Sep; Nov: 29Oct; Dec: 28Nov

Options last Trade: Aug: 26July; Sep: 28Aug; Oct: 25Sep; Nov: 26Oct; Dec: 27Nov

10July

Aug Support: 2.785: Rising trend line support since 14June rally.

2.70: 21-day moving average.

2.53: 06June high. Old resistance/new support for the 15June low.

2.215: 14June low

2.32: -2STD below 21-day moving average.

2.175: 20Apr low

Aug Resistance: 2.885: Mid May peak

3.07-3.08: +2STD above 21-day moving average and 200-day moving average.

3.315: 38.2% retracement of the June 2011 to April 2012 decline.

Comment: The tug of war may be coming to a close, on a technical level. Today's lows again tested rising trend line support that extends back to action after the 14June pop higher. Although it has probed above several times. the August contract is also still struggling with the mid-late May peak around the 2.90 level. One side has "gotta give"...

Friday's action revealed a bearish engulfing Candlestick pattern, on moderate Volume, indicating a potential reversal of recent gains may be in store.

This wide consolidation has our Overbought indicator (64) now "middling" and looking for direction. Our Rate of Change indicator is in its third day of decline, showing signs of leveling off and dragging on our positive Momentum.

Recent above normal temperatures are projected to last for the foreseeable future, serving to increase cooling demand supplied by natgas turbines. This speaks to bulging supplies and turns attention to Thursday's storage report, expected to show a smaller injection to storage.

Seasonal Snapshot: All three patterns chop lower, then higher before starting a period of protracted weakness from 16June-22July.



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

10July We were stopped out of our Sunday night Gold short at a small loss. We will look to re-short at our noted falling trend line resistance, currently at 1617.
Support 1554.8: -2STD below the 21-day moving average.
1551: Rising trend line from the 15May low (1529)
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: 1597.8: 21-day moving average.
1600: Psychological level.
1617: Falling trend line in place since the $90 drop on 29Feb.
1641.2: +2STD above 21-day moving average
1666: 200-day moving average
Comment: Gold is modestly higher early this morning. Our Momentum indicator is still on the cusp of going negative again. Our indicator's instability of the two weeks speaks to the consolidative-type trading action. More weakness targets important support in the low to mid-1500's, particularly the lower boundary of our giant descending triangle. The formation extends back to the Sep 2011 high (1923.7). The upper boundary currently comes in around 1705. 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.

Seasonal Snapshot: All three patterns are in sync for the next month: rising until 20July, then falling until 31July.


COPPER:

First Notice: Sep: 31Aug; Dec: 30Nov

10July
Support (continuous): 3.3950: 21-day moving average
3.2585: -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)
3.2380: 04June low
3.2325: 15Dec 2011 low
3.2040: 25Nov 2011 low
3.0915: 20Oct 2011 low
2.9940: 03Oct 2011 low
Resistance (continuous): 3.4775: 18June high
3.5320: +2STD above 21-day moving average
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.
3.5720: 200-day moving average
Comment: Copper is still consolidating last Friday's large losses, but finding support at its rising 21-day moving average. The best description we can think of for our technical indicators is "unstable", underlining the wide consolidation the market has been in since May. Additionally, our RSI is "middling".
This week's US economic calendar is on the light side, but foreign releases include notable European & Chinese Industrial Production and Chinese GDP. While any market reaction to weakness SHOULD be negative, it has recently taken on the pattern of "making the case" for more intervention, goosing the market higher. The smattering of "FedSpeak" this week underlines this potential. If the market can actually probe below the 21-day moving average, watch the -2STD below, as it has served as a "brake" on weakness and aligns with the June lows.

Seasonal Snapshot: All three patterns rally until the beginning of August.

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.