Currencies: 11Apr As we have mentioned in past comments, the “aurthorities” will make forays into the traded markets to prevent collapse. Today’s permutation on that theme is the ECB jawboning on Spanish debt. An ECB Board member intimated the ECB would be willing to buy Spanish debt to lower borrowing costs. It accomplished just that by the market interpreting this statement as a willingness to intervene. It bid up the Spanish Bonds, thereby lowering borrowing costs. This is an example o how the Central Banks are using more than actual monetary policy execution, but also the power of the press to change market conditions. With the ECB’s “safety net” now public, the Euro rallied of its negatively biased Trend.
This effect is maximized as the US Fed is now in a situation where another round of QE is being publicly debated.
This is another example of our common theme of the push-pull of the European and American debt/economic situations trading places on the front burner.
Risk-off trading will still tend to favor the USD and Japanese Yen.
 
Aussie: 11Apr Today’s action displays what we regard as largely consolidating behavior. Since the Aussie’s falling trend in March began, this is the fist time the market has exhibited a new low and reversal to end the day higher. This is also the closest our Momentum indicator has come to turning positive in that time frame. Those two issues coupled put the pieces in place for at least a correction. Of concern is that despite today’s positive action there are two distinct technical issues that remain negatively biased.
First, the market has not made a new high based on yesterday’s action.
Secondly, without the market breaking out above the recent falling trend line. Until that happens, we have to assume the falling trend is still in place.
Trend is still falling but only nominally so. Momentum is still negative but is very close to going positive. ROC is clearly shifting to a less negative profile and like Momentum, is very close to going positive ROC. RSI has been rising since 4/5 other than yesterday. These show a market clearly shifting to a much less negative bias but still subject to negative global economic news.
Initial resistances are at 1.0235 and 1.0280. Support at 1.0180 and today’s low of 1.0150.
Again, paying attention to the Aussie action on its 200-day Moving Average. If it continues to Stay attuned to directional indications for global trade, especially out of Asia, as that is what Australia’s economy depends on as a commodity exporter.
Near 1.03 stands as a major level the Aussie must get and stay above for the downtrend to abate. This level coincides with the declining trend line that traces back to the failure on 3/2. 1.0150 should be seen as nearby support.
Seasonal Snapshot:  The 5-year pattern is in a sustained rising seasonal trend until April 17th. It then trends generally higher until April 30th but with more day-to-day choppiness.  The 15-year pattern is in a rising trend until May 4th with a 2 day downtrend from April 12-14th. The 30–Year pattern is in the same sustained rising trend bias until April 12th.

British:
11Apr The Pound’s negative bias remains in place albeit with a shift to a less negative profile. Today’s rally, on the back of better than expected UK Retail Sales data, is testing the important psychological 1.59 level.
Trend remains falling, Momentum is still negative but its ROC is shifting higher. RSI has risen steadily to mid-market levels since bottoming on 4/5.
How Sterling reacts to any further material weakness in the Euro is to be watched closely.
We still maintain a meaningful move above 1.60 would likely indicate a breakout as it is showing as a significant support and resistance level going back to late February’s peak. Additionally, during craziness of late October-early November, much of the action traded around this level.
Seasonal Snapshot:  All three patterns are biased to rising action until April 30.
 
Canadian: 11Apr The Canadian$ remains under pressure despite today’s neutral action. .9935 shows as support going back to late January. Meaningful daily resistance does not appear until up near the falling 21-day Moving Average. Referencing that indicator, the Loonie is also pressuring the –2 STD.
Trend, Momentum, RCO and RSI are all clearly negative in bias. The .9935 support is important as it has held since January. If this dopes hold, look for upwardly biased trading until at least 1.0060.
Look for further support at .9920 and nearer-term resistance at just above .9980. Our Volatility measure remains within our Average (±1 STD) range.
Seasonal Snapshot:  All three patterns are in a positive bias that lasts well into May. The 15yr takes a breather 05-14Apr, then rejoins its 5&30yr patterns again.
 
Dollar Index: 11Apr Consolidating action with no material fall from recent gains. However, despite today’s modestly negative pricing, the action is actually constructive. Early action took the DX down to the 21-day Moving Average; from this level the market tested the daily lows five times. After the last test, it rallied right back up to the resistance near 80.00. Since then the low has tested 79.895 twice. We regard this as consolidation ahead of tomorrow’s Jobless Claims number.
Trend and Momentum remains positive. ROC is plateauing and RSI is falling but remains over 50. All these together speak to consolidation. Volatility is low and falling.
This may be happening as a possible developing short-term Bull pennant over the last 3-4 sessions. If this plays out, the move should rally the DX past the early March highs and may put it in position to make a run at the early Jan highs.
Numerous Federal Reserve officials speaking and various media appearances throughout the week are offsetting this week’s light data release schedule.
On a negative note, the highs set up as the right shoulder of what could be construed to be a bearish Head and Shoulders pattern.
Watch for any evidence the Dollar is not the safe haven under crisis market conditions. This would change existing assumptions dramatically.
Seasonal Snapshot: All 3 patterns exhibiting choppy conditions until about April 7th when all 3 start more sustained falling action seasonal patterns until April 30th.
 
Euro-FX:  11Apr After a precipitous 3-day sell-off last week, the Euro has been consolidating. However, inversely to the DX, the Euro’s 4-day pattern appears to be developing a possible bearish pennant or flag pattern. If this plays out, classic analysis calls for an approximately 300-point sell off from where it breaks out below. From today’s levels this would target pricing in the bottoming pattern from mid January.
Trend and Momentum remain on the defensive. ROC and RSI are pointing to higher levels, bouncing off action from several sessions ago. RSI’s bounce is from an area from which the Euro has rallied materially in the past several months but is barely out of the Oversold zone.
Europe’s debt woes, now focused on Spain, should continue to add pressure to the Euro’s pricing. 1.3050 is near-term support. Below that, support will come in at the psychological 1.30 level. Below that support should be near 12890.
Additional technical support shows up along a gently rising Trend line extending from the 2/16 intra-day low through the 3/14 intra-day low.
Volatility is falling again and is now firmly in the Low range (-1 STD or lower below the 150-day Moving Average)
The 200-day Moving Average remains well above at about 1.3571 but remains falling.
Seasonal Snapshot:  All three patterns are trending higher until the end of April.
 
Yen: 11Apr We see today’s action as constituting a consolidation day. New high but the market backed off a bit and settling down but on lower Volume.
All our directional Technicals point higher, and it’s likely there will be some sort of pause before tomorrow’s jobless Claims release.
With weakness abounding in numerous markets, flight to quality/safety is continuing in the Yen. With Europe’s woes continuing, the US apparently not as strong as thought, and China’s slowdown apparently worsening, the Yen is seen as stable and safe.
Pay attention to the Fibonacci 38.2% retracement. If this level offers significant resistance, downside action would target a move of 1200-1300 points. This would put the Yen in the 11200 area, where there is a broad area of support going back to late 2008. This is consistent with our previous commentary of a possible developing bearish flag pattern.
Seasonal Snapshot: All 3 patterns are now poised to bottom and head higher until approximately April 20th.
 
Energies:
Petroleum: 11Apr A build to stocks that was within the expected range was more than offset by large drops in Gasoline and Distillate and has added a supportive tone to the outside forces already boosting all three of our tracked markets off developing Oversold conditions. This should be watched. Additionally, we focus readers’ attention on retracements of the recent declines (Crude’s has been longer and larger):
June Crude: 105.05 (38.2%); 106.25 (50%)
May Heat 3.1660 (38.2%); 3.1945 (50%)
May RBOB: 3.3085 (38.2%); 3.3315 (50%)
An expected resumption of nuclear talks with Iran on 14Apr (adding to hopes that supply disruption tensions will continue to ease) may cap pricing in the near-term.
Our technicals for all three tracked markets. Support in Crude lies at the psychological $100 level. Our broader view shows a 38.2% retracement of the Oct-Mar rally at 97.80. The flattening 200-day moving average lies below this level at 96.90 and aligns with the previous early Feb lows.
Crude supplies are above the upper limit of its average range for this time of year, while RBOB and Heating Oil within the upper limit:
http://ir.eia.gov/wpsr/wpsrsummary.pdf
Volatility is rising off low/very-low levels. Explore option purchase strategies.
On the upside, the 200-day moving average (105.60) is a likely resistance level as WTI has traded around this level as both support and resistance for the last 6-7 weeks.
Seasonal Snapshot: After a brief pause, all three Petroleum contracts’ patterns are in an upward bias until the end of April.
 
NatGas: 11Apr Sub $2 NatGas in the front May contract lends more credence to our noted bearish engulfing candle in the May contract today, keeping the pressure on the market. All of our technical indicators are negative and our Oversold indicator registers 19… we have seen near single digits four times this year.
Technically, this test of late Mar lows (2.07), and the fact that all of our technicals are pointing negative, widens our charts out to identify multi year lows: Jan 2002: 1.90; Sep 2001 1.87; Feb 1999 1.62.
Look for supply issues to dominate, as demand didn’t really materialize this year with the extremely warm winter.
We offer a story indicating a price collapse might be necessary to fix this market:
http://www.futuresmag.com/2012/04/03/natural-gas-may-need......
We remind readers of our previous “shoulder season” notes:
“The dynamic for NatGas should shift to Spring shoulder behavior fairly soon. As the current storage is at record levels for this time of year, we expect to see storage rapidly fill and Summer supply levels should be comfortably high in June. As drilling starts to wane, care should be taken on any short side trades. A seriously hot Summer would materially increase demand as electricity usage would soar. This could shift this market to a bullish tone rapidly and unexpectedly. We feel position traders are best served by exploring trades that involve spreads of either futures calendar or selling premium.”
Seasonal Snapshot: Divergence between short and long-term patterns: the 5yr pattern consolidates with a negative tone until 18April, but the 15&21yr patterns have a strong upside bias until 24Apr.
 
Equities:  11Apr Today’s modest recovery off the lows has taken all three tracked markets off our recently Oversold conditions and (for the Dow & SP) flirting with a reversion back within the -2 STD of the 21-day Moving Average. That said, all three are still in “inside days”. Yesterday’s weakness came on much stronger Volume figures.
We expect the stock index futures to be especially sensitive to “headline risk” throughout this week.

    Alcoa started earnings season off on a positive note with better than expected earnings and results across operations.
    On another note, Bernanke’s speech on Friday afternoon will conclude a number of comments from Fed officials throughout the week. If the Fed is depending on the stock market to drive economic growth (a mug’s game in our opinion), they may be forced to bring out the QE Hammer of Thor once again.
    The international economic calendar ramps up again later this week. (Please refer to our highlights in the General Comment above).

This is the largest sustained move lower since late November/early December. Most of our technical indicators are pointing negative. Watch for the vulnerable Rate of Change to turn if this early “relief rally” has some legs. Additionally, the S&P and Dow’s 200-day Moving Averages are starting to turn down and the NASDAQ 100’s is about to.
On more weakness, we note that all three of our tracked markets are in a similar rhythm, but different chart levels:
S&P looks to 1340 for real support. That significant level traces back to early Feb.
Dow is the weakest and the support we see is the psychological 12500 level.
NASDAQ targets 2650 as support.
We again offer an interesting note about Volume from WSJ:
http://blogs.wsj.com/marketbeat/2012/04/02/low-trading-vo......
Seasonal Snapshot:  The 5yr patterns of all three markets is in a pronounced upward bias until early May.  The 15&30-yrs’ follow suit, but are not nearly as steep.
 
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.
 
Corn: 11Apr The recent negative tone to old crop Corn abated some today with a Doji settlement indicating consolidation. Trend has stopped falling, but isn’t moving higher, either. Momentum, while still negative is shifting less so. However, RSI is still falling materially.
Volatility remains elevated, but not meaningfully so, sitting just below the +1 STD level.
We remain skeptical of this market’s upside until 665 is penetrated and held. Also, this is where our 200-day Moving Average sits.
Traders may wish to heed our characterization of the seasonal below.
May filled the gap below the 4/2 low. This sets up the Corn, should a bottom be put in, to head higher. We remind our readers to pay attention to weather.
Seasonal Snapshot: 5-year heads modestly higher until Apr 5, then sideways until Apr 10. Both the 15 and 30-year patterns are entering into broad, modest declining periods until April 28. April 10-12 offers a brief, more negative period.
 
Soybeans: 11Apr Despite the negative settlement, the market’s action today is not clearly negative. However, all our Technicals are shifting away from the quite positive bias we’ve observed lately.
Of note, we are paying attention to the pricing in Soybeans as particularly high on a 10-year most active chart. We believe the Grains, in general, but Soybeans especially, are at risk of highly volatile moves over the Summer months. It is true this is nothing new during the growing season. However, the current environment, with enormous shifts in acreage allocation coupled with the global market uncertainties, makes us nervous.
Protect yourself!
We see May’s near-term support at about 1420. 1433 ½ and then the highs near 1450 are resistances to watch
May has 2 gaps below, first at 1419 1/2 –1420, a minor one.
The second, between 1403 and 1407 is more substantial.
Trend remains strongly rising, but has slowed somewhat. Momentum is still positive as well but its ROC is decelerating. RSI is still Overbot but has turned down.
This is a market overdue for some sort of corrective action.
We still maintain that until we see a material move higher from here, we go back to the WSJ story we highlighted from last Tuesday, 4/3:
A story we saw today on another newsletter does add a distinct note of caution to the recent action. The story noted the WSJ posted a story about the record highs in grains. It then went on to state that this type of mainstream media story typically showed up at the end of a bull rally. Additionally it stated in its opinion that the market seemed to be stretched.
Despite our worries as expressed, this market’s Technicals (as stated above) still point higher.
Volatility isn’t great for options purchases, but it isn’t very high, either.
Seasonal Snapshot:  Seasonal patterns are jerking around with a modestly negative bias until approximately 4/12. On 4/12, the 5 and 15-year patterns bottom and head higher. The 5-year rises until 4/15 and the 15-year until 4/25. The 30-year is biased gently lower until 4/16, where it then shifts to a rising trend until 4/25. Upon peaking between 4/22 and 4/25, all 3 patterns drop sharply until 4/28. We will be shifting to tracking the July contract in that time frame.
 
Wheat:  11Apr Based on recent action and absent any positive supply shock (or substantial profit taking), look for a bounce in old-crop Wheat. The range-bound action in place for the last several months is running into the supportive –2 STD band below the 21-day Moving Average. Additionally, the RSI, while not Oversold, is approaching that level and it’s been bouncing off of modest Oversold conditions.
May’s support should show up near the 620 area.
Trend, Momentum, ROC, RSI, and the 21-day Moving Average are all falling. Volatility is high and close to our Very High (+2 STD) measurement.
We leave in place our comment from last Thursday as it addresses longer-term patterns we’re noticing:
Additionally, on our Momentum measure going back to late December, each positive shift has peaked at earlier and lower. This is in a period of a modestly negative bias in what has been largely range trading.
May’s Volatility has peaked just below the High range (< 1 STD).
Pay attention to the harvest in Winter Wheat as it moves ahead of schedule due to warm weather and the plants benefit from rain in both Europe and the US.
This market has been in a gently falling bearish pattern for the last 2 months since peaking on 2/1. On a longer-term view, the bearish dynamic has been in place, albeit with a sizable range, since February 2011.
Volatility is now close to High (> 1 STD higher than Average) indicating there may be opportunities to sell premium in options.
Seasonal Snapshot: All 3 patterns enter a brief upwardly biased period until April 5th. The 5-year then continues in a pattern that ultimately peaks on April 25th. The longer 15 and 30-year patterns change direction on the 5th, entering into a very modest declining period until the same April 25th.
 
 
Interest Rates: 11Apr A somewhat weaker auction of $21B in 10Yr Notes turns attention to tomorrow’s $13B 30Yr auction. It should be noted that more dealer participation has mopped up some of the slack demand from direct and indirect bidders recently.
All of our tracked US markets’ pricing is quite positive (and today’s moves are still “inside days”) with rising Trend, positive Momentum, but have shot into historically Overbought levels. Recent Volume figures on the strength have been inconsistent. Yesterday’s strength was much higher, but the previous two sessions’ were dreadfully low.
Bonds’ recent rally from last month’s lows probed the middle of the range from the past 5 months, bumping into the psychologically and technically important 142 level. Support at 140-08
Tens have the same Technicals profile. Additionally, Tens are at a level that sets them up for a thrust higher to early Feb highs. 131 shows as nearby support.
Twos have also risen above its 200-day Moving Average. Look for resistance at 110-06.5. Support should be at about 110-03.25.
With the disappointing US Payrolls report, there has been a steady chatter of new interest in the Fed applying more QE.
Additionally, this week’s relatively light data releases and are supplemented by seemingly endless Fed Governor “jawboning” speeches throughout the week, book-ended by culminating in Chairman Bernanke Monday night and Friday afternoon.
We leave some comments in place from last week:
With the Fed seemingly allowing events to play out for now, and merely “jawboning” the markets at this point, reality starts setting in. An ugly reality of too much debt, not enough jobs, and political impasses abounding.
Given that our tracked 2yr depends on the Fed’s Overnight Rates and the Bonds are not a benchmark any longer, the Tens are really, at this point, the ultimate contract that reflects the Fed’s policy stance.
This may be an opportunity for directional positions, but keep stops tight or explore option purchase strategies, as Volatility is starting to expand (the 2yr’s is now “very hi” based upon our measurement).
Seasonal Snapshot:  All three patterns in the Bond are a consolidation phase with an upward bias that extends well into April.
The 10yr has a strong, upward bias in all three patterns until early April.
The 2yr’s 5& 21yr patterns have an upward bias until 18Apr while the 15yr pattern is in a wide consolidation phase into May.
 
Metals:

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:
http://techtalk.providiotrading.com/newsletter/?req=viewd......
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.

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