May 23, 2012 Update: Commodities, Currencies

The pressure of a disinflationary environment continues to get a tighter grip on the markets.
Even those markets that lead the way and already had major sell-offs appear to be starting new major sell-offs:  sugar, cocoa, cotton for example.

The following have been attempting to stabilize and possibly bottom:  gold, silver, crude, eurocurrency, Swiss, etc.  How successful they will be remains to be seen.

As for the Fed and further printing, that probably won't occur any time soon.  Why?  For one thing, their money printing bad habit is not too popular at this point with the public.  Also, most markets are not even near where they were in 2008 before the Fed kicked in and started manipulating.  Nor are the sell-offs as extreme.  And the stock market, a key indicator, hasn't even begun to sell off as it did in 2008.  Bottom line, it appears the Fed still has considerable breathing room.  Besides, there hasn't been any major crisis yet to really get them scrambling.  So intervention any time soon would be a surprise, unless, of course, something economically blows up.  And we all know the potential for that.
 
WHICH GRAINS ARE MOST VUNLERABLE?

The follow-through selling yesterday could be just the beginning.  Long term they all suggest more of the same.

Corn is struggling to hold 600 and looks headed for 500.  Since it is coming off of a higher high than experienced in 2008, it could even try for 400.  As for beans, if they follow through with the same degree of sell-off they experienced last year, they should reach 1125.  If they do a 2008 repeat, they could reach 1000.  It is interesting that they have backed off from the same price level that got them into trouble in 2008.

Meal is still at the same level it was in 2008 and 2009 prior to its major free fall.  It has the farthest to go and could reach 350.00 near term.  But a repeat of both prior years targets 250.

Bean oil:  It never got off the ground like beans and meal did during the entire bull move this year.  That is bearish.  It has done considerable consolidation between 50.00 and 60.00 since last year.  Assuming that's a big top formation and if there is follow through, it could easily reach 40.00.
Wheat never got near to the performance seen in 2008.  Technically that is not too encouraging for the upside.  Since it really didn't go anywhere, it doesn't have far to fall either, as the saying goes.

So how do the grains rank technically in terms of best selling potential?
1.  Meal
2.  Corn
3.  Beans
4.  Bean oil
5.  Wheat
 
TRADE ALERTS:
 
Sell July (2 mini) wheat.  Sell 678 3/4 stop.  Protective stop 702 1/2.  Potential projection 625.  (Potential risk per contract $237.50.  Potential reward $537.50).  Margin per contract:  $608.

Reasons for the Trade:
1.  On the monthly chart wheat rallied up to the 20 ma and has started to sell off.
2.  The weekly chart is forming a preliminary key reversal top.
3.  On the weekly chart wheat is back under the 100 day ma.
4.  On the daily chart the macd is turning negative.
5.  On the daily chart a sell would push wheat back under the 200 day ma.
 
CHANGE IN OPEN STOPS;
Short July corn from 644 3/4 down to 635 1/4.
Short July mini beans from 1462 down to 1423 1/2.
Short July meal from 431.00 down to 422.70.
Short June canadian from 98.72 down to 98.44.
 
GRAIN COMMENTS:  
 
JUL CORN:  I shorted it yesterday.  In my last Update I suggested that it could have the potential to rally to 650.  It reached 644 1/2 yesterday and formed a key reversal top.  If you look back over the chart, every time it creates that formation, it would have a good sell-off.  Hopefully it will give us a repeat performance this time.  It sold off to 595 and closed under 600.  That is negative.  Long term this sell-off pushed corn back under the 100 day ma on the weekly chart.    Move stops from 644 3/4 down to 635 1/4.  Closed 597, down 36.
Position:  Short 627 1/4 (5.22).
Projection:  570.
 
JUL MINI WHEAT:  On Friday it blew through the 200 day ma and closed above it both on Friday and Monday.  It was attempting to hold it yesterda but didn't.  A trade could be developing.  Closed 685 1/2, down 18 1/2.
 
JUL MINI BEANS:  Please note in the last Update I did not include the short position I had on from the previous Update.  It has been reinstated below.  An inside day Monday triggered another sell yesterday.  They took out the previous low made on May 14 today.  That is positive for further sell-off.  I have changed the projection to 1350.  Move stops from 1462 down to 1423 1/2.  Closed 1382 1/4, down 30 1/4.
Position:  Short 1427 1/4 (5.11).  
Projection:  1350.
 
JUL MEAL:  It triggered a sell Monday and sold off to 404.00 yesterday.  Move stops from 431.00 down to 422.70.  Closed 405.00, down 11.50.
Position:  Short 416.30 (5.21).
Projection:  375.00.
 
JUL BEAN OIL:  Stops at 51.00 were reached Monday with a profit.  It rallied to 51.28 yesterday but then failed and closed near the low of the day's trading range.  Just watching.  Closed 50.46, down .46.
Position:  Short 52.97 (5.9).  Exit 51.00 (5.21).  Profit $1127 (-comm/fees).
Projection:  50.00.
 
MEAT COMMENTS:
 
JUN HOGS:   Stops were reached Monday.  They have continued to sell off yesterday with a low at 85.42.  Watching closely to buy.  Closed 85.82, down .87.

Position:  Long 84.57 (5.8).  Exit 86.77 (5.21).  Profit $825 (-comm/fees).
Projection:  90.22 gap.

JUN CATTLE:  They triggered a sell yesterday and then did nothing.  Keep stops at 120.42.  Closed 119.35, up 55.
Position:  Short 118.40 (5.22).
Projection:  115.30.
 
SOFTS:
 
JUL COTTON:  In my last Update I pointed out that if it took out 75.80 that would not be good.  It did take it out.  That was a low in June 2010 and support.  The next potential target could be the 66.50 level.  I also said the long term charts suggested cotton had more selling off to do.  That has been the case.  Longer term it could be headed for 60.00 but there should be rebounds in the process.  On the monthly chart, it is fast approaching the 100 day ma that intersects at approximately 72.00.  The 200 day ma intersects lower at 66.25.  That corresponds with the 66.50 support mentioned above on the weekly chart from early 2010.  Yesterday's low 74.52.  Closed 74.52, down 3.00.
 
JUL ORANGE JUICE:  It has been trying to hold 100.00.  That is support going back to 1999.  No surprise it is trying to hold it!  With more consolidation, a buy could possibly be setting up.  Watching closely.  Closed 108.60, up 1.80.
 
JUL COFFEE:  I bought it again on Friday.  Stops were reached Monday.  I must be a glutton for punishment.  Irrespective, coffee still appears to be bottoming.  Just watching.  Closed 174.50, down .65.
Position:  Long 178.50 (5.18).  Exit 176.35 (5.21).  Loss $861.25 (+comm/fees).

JUL COCOA:  I tried to buy it Monday.  The price was not reached.  It sold off yesterday and broke out of the tight band it was stuck in.  Yesterday's low 21.63.  If cocoa takes out 21.46, it most likely will take out 21.00.  Long term it is back under the 100 day ma on the monthly and back under the major down trend it was trying to break out from.  In short, yesterday's action changes the situation long term and is negative.  Just watching.  Closed 21.79, down 59.
 
JUL SUGAR:  It triggered a sell Monday and is now under 20.00.  Long term that is negative. Keep stops at 20.95.  Closed 19.80, down .58.
Position:  Short 20.35 (5.21).
Projection:  16.00.
 
METALS & ENERGY COMMENTS:
 
JUL COPPER:  Last time I thought it would rally.  It did somewhat yesterday with a high at 353.80 but that seems to be fizzling out.  Today it is right back under 350.00 major support.  This consolidation of late could be for another swing down and not for a rally.  Closed 348.70, down .15.
 
JUNE MINI GOLD:  It rallied to 1600.00 resistance and stopped.  It is now selling off.  This could be a sell-off to consolidate and make another attempt at that 1600.00 resistance.  Watching closely.  Closed 1576.60, down 12.10.
 
JUL MINI SILVER:  It triggered a buy on Friday.  I moved stops up to 27.965 from 2777.50 yesterday.  The reason being is the weakness in gold.  Silver normally follows.  I was stopped out.  Closed 28.179, down 1.42.

Position:  Long 28.305 (5.18).  Exit 27.965 (5.22).  Loss $395 (+comm/fees).

Projection:  3100.

JUN MINI CRUDE OIL:  It made a new low Monday at 90.84.  It is attempting to consolidate now.  It has long term support at 90.00 but this entire sell-off on the part of crude has done technical damage long term.  Just looking at the monthly chart it looks headed lower.  It violated the 20 day ma on the monthly this month.  The last time it did this in August 2011, there was a lot more follow through than what it has done so far.  Just watching.  Closed 91.66, down .91.
 
CURRENCIES & FINANCIALS:
 
JUN MINI JAPANESE YEN:  An inside day Monday triggered a sell yesterday.  It sold off right through the 100 day ma on the daily chart but did stop at the 20 day ma.  Long term this rally could be the setup for another major wave down.  Watching closely.  Closed 124.83, down 1.21.
 
JUN SWISS FRANC:  It made a new low on Friday at 105.30.  It then formed a key reversal bottom on the daily chart.  That is positive.  It is now selling off but that could be to test that low.  If it holds, we could be looking at a bottom at this level.  The long term charts, however, are supportive of that too.  The 105.00 level is long term major support.  Watching closely.   Closed 105.93, down .57.
 
JUN DOLLAR INDEX:  It sold off to 81.000 support on the daily chart yesterday and is holding.  That is good support.  The dollar could be starting another wave up.  It is a little questionable to me because the correction from the 81.930 high wasn't much considering the previous rally.  It was only a 25% retracement.  On the monthly chart it is pushing up against the 100 day ma.  That has been a major issue for the dollar for some time.  It did get over it in June 2010 but could not hold.  A major sell-off followed.  The one difference this time is that the dollar has built a considerable base under it on the monthly chart.  That base could easily push the dollar over that resistance with follow through this time.  Closed 81.648, up .416.
 
JUN MINI EUROCURRENCY:  Stops were reached on Friday with a profit.  It rallied to 128.26 yesterday but that was about it.  It is too early to tell whether it is consolidating at this previous support level or if it is turning around to establish new lows.  The long term charts are not revealing anything yet either.  Just watching.  Closed 127.20, down .70.
Position:  Short 129.540 (5.9).  Exit 127.630 (5.18).  Profit $1138.75 (-comm/fees).
Projection:  128.000.
 
JUN CANADIAN DOLLAR:  It made a new low yesterday at 97.52.  It then rallied to close back over the 98.00 support.  Today it has resumed selling off.  It has met my projection but considering the overall weakness of the markets, I'm going to move the stop down from 98.72 to 98.44 and see what happens.  Closed 97.95, down .9.
Position:  Short 99.27 (5.15).
Projection:  98.00.
 
JUN AUSTRALIAN DOLLAR:  It has attempted to consolidate around 98.00 for three days.  It is selling off again today.  Long term, the monthly chart suggests that there is more to this sell-off.  Just watching.  Closed 98.16, down .34.
 
JUN E-MINI S&P:  A huge outside day yesterday triggered a buy today.  It rallied to 1327.00 - that is resistance.  The S&P is in a downtrend near term but it is overdue for a rally.  A possible short could be around 1350.00 - assuming it gets there.  Closed 1314.75, down 1.00.
 
JUNE BONDS:  An inside day on Friday triggered a sell on Monday.  The monthly chart shows nothing in terms of a top.  The weekly does suggest a near term one.  Today's low 146.22.  Just watching.  Closed 146.25, down 1.04.
 
Disclaimer: Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors.  You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge and financial resources.  Opinions are subject to change at any time and are not a solicitation or recommendation to buy or sell futures contracts or options on futures contracts.  The information contained in this message has been obtained from sources believed to be reliable but is not guaranteed as to its accuracy or completeness.  All known news and events have already been factored into the price of the underlying commodities discussed.
 
Past performance is not indicative of future results.  All suggested trades are based on technical signals/indicators and do not include slippage or cost.  Not all trades suggested are taken.  Results are based on what the signal indicates not necessarily an actual trade.  Actual results may vary.