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Commodities: Daily Futures Commentary

|Includes: SPDR Gold Trust ETF (GLD), SCO
- Technical Insight -
March 18, 2009 (FinancialWire) (Investrend Information Syndicate) -- As of 12:00 noon today the SPDR Gold Shares ETF (NYSE: GLD) was up 0.56% on volume of 7,153,707 shares, and the ProShares UltraShort DJ-AIG Crude Oil ETF (NYSE: SCO) was up 1.45% on volume of 673,145 shares. FinancialWire(tm) contributor, Brewer Investment Group, issued some pre-,market commentary going into the day regarding the commodities markets, providing an insightful preview:
U.S. stock indices are trading flat overnight. Traders have largely ignored the weakness in the Euro over Greece concerns. This may mean that today’s menu of U.S. economic reports will have a bigger influence on stock prices.
The first report is Weekly Initial Claims. Traders will want to see improvements in the U.S. job situation in order to get a gauge of the developing U.S. recovery. The Consumer Price Index, due out at 7:30 am CT, will give traders a clue about U.S. inflation. Leading Indicators and Philadelphia Fed will give traders information about the robustness of the recovery.
With cheap money expected to be around for an extended period of time, continue to look for the stock market to rise. A strong rally in the Dollar however, is likely to put pressure on equity prices due to profit-taking.
June Treasury Bonds have finally broken out above the recent double-tops at 118’02. The charts indicate the next upside target is 118’17. Traders are reacting to the recent FOMC policy statement and to the possibility of weaker stock markets.
April Gold is trading higher despite the stronger Dollar. This could be trader reaction to a possible flare-up of financial problems in Greece. At this time the charts indicate this market is caught in a short-term range between $1145.80 and $1097.30. A trade through $1097.30 will turn the main trend to down. A rally through $1145.80 is likely to trigger an acceleration to the upside.
June Crude Oil is trading lower but still within striking distance of the recent main top at 83.80. A breakout above this level sets up a possibility of a test of the high for the year at 85.95. Fundamentally, OPEC left production unchanged and inventories were up. Both events had virtually no effect on crude oil. This indicates that risk sentiment and the desire for higher risk assets are having a bigger influence on crude oil.
The U.S. Dollar is trading better against most major currencies with the exception of the Japanese Yen as investors removed risk from the equation overnight. The Dollar was under pressure on Wednesday as traders reacted to the previous day’s FOMC statement. In its statement the Fed said that interest rates would remain low for a prolonged period. This gave traders the green light to buy higher risk assets while selling the Dollar.
Late Wednesday news came out that the political party representing German Chancellor Merkel said that a bailout was unlikely and that Greece may have to seek aid from the International Monetary Fund. This weakened the Euro, forcing a lower close. This news has spilled over into the markets overnight and is putting pressure on higher yielding assets while helping to drive traders into the Dollar for safety.
The March Euro is trading lower, but remains in an uptrend. The key to sustaining the developing rally will be this market’s ability to attract buyers in the retracement zone at 1.3628 to 1.3584.
The March British Pound is under pressure overnight after a strong rally on Wednesday. Yesterday’s rally was triggered by better than expected U.K. Initial Claims and news that the Bank of England Monetary Policy Committee had voted unanimously at its last meeting to leave its quantitative easing program unchanged. The Pound rallied into a retracement zone at 1.5297 to 1.5419. With the main trend down, this market is finding resistance inside this zone. This could set up a break back to 1.5080 to 1.5010.
Trader demand for lower risk assets is helping to support the March Japanese Yen. A new swing top has been formed at 91.08. The new main range is 88.14 to 91.08 which means this market may correct back to 89.61 to 89.26. Additional support comes in at an uptrending Gann angle at 89.52.
Despite the stronger demand for lower yielding assets, the March Canadian Dollar remains strong. Traders believe the Bank of Canada is likely to raise interest rates before the Fed, underpinning the Canadian Dollar. In addition, stronger gold and especially crude oil has been helping to support the Loonie. Although conditions may be overbought, upside momentum continues to indicate that this market could test the July 15, 2008 top at 1.0019 before finding resistance.
The March Swiss Franc is trading lower because of the weaker Euro. Another collapse in the Euro increases the likelihood of an intervention by the Swiss National Bank. On Wednesday, this market found resistance after completing a 50% retracement of the .9884 to .9185 range. This price level was .9526. The market stopped at .9525. Although a closing price reversal top was not formed on Wednesday, the chart pattern is still suggesting a possible short-covering rally back to .9355 to .9315.
Source: Courtesy of Brewer Futures Group
For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Communications via with “Brewer” in the subject line.
Brewer Futures Group advises that futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance.
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