TRADE ALERTS:Buy May cocoa.
Buy 24.11 stop. Protective stop 23.28 stop. Potential projection 26.00.
Reasons for the Trade:
1. On the monthly chart, cocoa continues to hold above the 100 day ma on sell-offs.
2. On the weekly chart cocoa is back over the 20 day ma.
3. On the weekly chart cocoa has rallied back over the downtrend formed since the Feb. 2011 high - suggesting a trend change from down to up.
4. The macd is positive on all three charts.
5. On the daily chart, cocoa rallied back over both the 20 & 100 day ma today. That is positive.
6. On the daily chart, cocoa has been in an uptrend. It continues to appear to be in the process of a third wave up.
GRAIN COMMENTS:
MAY CORN: In my last report I pointed out that the corn had reached the 150 day ma and started to back off. When it did so in the past, it had hefty sell-offs. This time was a repeat performance. And what is further disappointing is that even though it traded above 650 for about a week, it could not hold it. It has sold off with a low today at 631 3/4. Long term corn is challenging the 20 day ma on the monthly chart. The weekly is forming a key reversal top. Just looking at the daily chart, the near term projection could be 625, if not more. Just watching. Closed 635 1/2, down 3 1/4.
MAY MINI WHEAT: It had started to form a pennant and today it closed right under the lower side of that pennant. If there is follow through, that would be negative for the market. The key right now is the 628 low. That was the low to the correction to second wave up. Going through that could jeopardize the uptrend it had established since the mid December low. Long term the sell-off hasn't been sufficient to change the positive overview. For some time now wheat has been caught between the 100 day ma on the top side and the 20 and 150 day ma (they intersect) on the downside on the weekly chart. Closed 634 3/4, down 4 1/2.
MAY MINI BEANS: They are very close to making a new high on the daily chart. They are over bought but that doesn't seem to matter. On the monthly chart, they are giving a strong indication of starting another wave up. If that be the case, they have a potential to 1680! But the one drawback is that they have considerable resistance between 1300 all the way up to 1425 but, so far, that doesn't seem to concern them. A few months ago they had failed the 20 day ma on the monthly chart but are back over it now. When the same thing occurred in mid 2010, and they got back over it, they had a 427 point rally. Closed 1338 1/2, up 11 3/4.
MAY MEAL: There is not much difference between the meal daily chart and the beans. Just a constant steady climb higher. Today's high 367.20. Closed 367.20, up 2.70.
MAY BEAN OIL: I am getting the sense that the strength in the beans is pulling the bean oil with it. Technically there should be more follow through and there is not. Move stops from 54.37 down to 53.95. Closed 53.39, up .41.
Position: Short 53.69 (3.6).
Projection: 52.00.
MEAT COMMENTS:
APR HOGS: They triggered a buy today and rallied to 88.15. Keep stops at 86.60. Closed 87.75, up .40.
Position: Long 87.60 (3.8).
Projection: 89.75.
APR CATTLE: The recent sell-off has changed things technically. The monthly is forming another key reversal top. The last one was in April 2011 and produced about a 20.00 sell-off. The key reversal top has not been confirmed yet. On the daily chart this sell-off stopped at the 125.00 support. That is also the Fibonacci .618 retracement from the contract high. During this sell-off cattle violated all three moving averages on the daily chart but with today's rally they are trying to change that. Also the uptrend formed since the mid December low has been violated on the daily chart. Just watching. Closed 126.65, up 1.07.
SOFTS:
MAY COTTON: It appears that India's announcement to halt all cotton exports does not mean much to the market long term. After that initial rally, cotton has sold off since. Bottom line, the downtrend on the daily chart since the January high remains intact. It is back under the 90.00 support. The key now is the 87.80 low made on March 2. If that is taken out, cotton should head for 85.00. Closed 89.56, down .56.
MAY ORANGE JUICE: Last time it had succeeded in getting over 190.00. Since then it has been struggling at that price level. Other than that, there has not been any change. It still appears to be trying to form another wave up but two inside days back to back doesn't say much. Closed 189.75, up 1.25.
MAY COFFEE: Since the collapse seen on Tuesday, coffee has continued to sell off. I pointed out then that the next support was around 170.00. Today's low was 185.10. The technical damage has increased. On the weekly chart it violated and is trading under the 150 day ma. This is the first time since July 2009. That is not good. It needs to rally and close over 191.00 to rectify that negative development. Just watching. Closed 189.40, up .80.
MAY COCOA: I have liked cocoa but was still surprised by its strong rally today. It came out of nowhere as cocoa was making new lows each day and gave no hint that the sell-off was over. In just one day (today) it has gotten back over the 23.00 support, the 20 and 100 day ma. Very positive. A trade could be developing. See Trade Alert for details. Closed 23.95, up 1.25.
MAY SUGAR: The daily chart continues to look very positive. The recent sell-off seems to be a test of the breakout to the upside. That is normal. Long term sugar on the weekly continues to struggle with the 20 and 100 day ma. They tend to intersect at the same level and that has put pressure on sugar. On the monthly chart, sugar needs to get over the 20 day ma. It has violated it before in the past during the bull move but this is the longest it has struggled to get back over it. That concerns me. Watching closely. Closed 23.96, up .04.
METALS & ENERGY COMMENTS:
MAY COPPER: Last time I said failing 370.25 should confirm a potential sell-off to 375.00. That obviously doesn't make sense! It is a typo and should have read 365.00. Since the last report copper has continued to sell off. Yesterday's low was 371.40 and it has now started to rally. It is obvious it is trying to hold that 370.25 low. But it has a lot of resistance above it now. Long term the monthly chart is not encouraging. This is the third month copper has attempted to get back over the 20 day ma without success - at least so far. And the weekly chart is teetering on the 100 day ma. Fundamentally, China, just announced in their annual economic conference recently that they expect their GNP to slow to a rate of 7.5% for the coming year. I would assume this would put further pressure on copper. Closed 379.15, up 2.45.
APRIL MINI GOLD: The low sited on Tuesday has held and it is attempting to rally. This is what is concerning because in closer observation I noticed the following: In November gold initially had an aggressive sell-off similar to what we have seen recently. Ironically where it initially stopped in November (1675.00) is pretty close to where it stopped this time (1663.40). That range is in a previous support area. In November that sell-off equaled 133.00. This time 129.00. Gold is now trying to rally. It did the same thing in November and succeeded in getting over 1750.00. And that is where the problem lies. The rally stopped and gold started the real sell-off that not only took out the 1675.00 low but sold off a total of 243.00 before it bottomed. In other words, that rally was merely a setup for the continuation and completion of the total sell-off. It is important to watch how gold reacts this time and if it sets up a similar situation. Watching closely. Closed 1698.70, up 14.80.
MAY MINI SILVER: Its uptrend from the late December low was violated during this recent sell-off. The sell-off equaled a Fibonacci 0.480 retracement. An inside day yesterday triggered a buy today. It has a lot of resistance to go through to reach 35.000. At this point it needs to clear 35.000 and hold. Just watching. Closed 33.831, up .246.
APRIL MINI CRUDE OIL: It sold off to the 20 day ma yesterday on the daily chart and held. It formed a key reversal bottom in the process. Considering the extensive consolidation under the market from mid November to mid February, technically there should be more to this rally. The long term charts still suggest 120.00. Closed 106.58, up .42.
CURRENCIES & FINANCIALS:
MAR MINI JAPANESE YEN: It triggered a buy on Tuesday from Monday's inside bar day. So far it looks as though that buy may be negated. Either that or it is testing the low and will hold. If so, it should then have a good rally. As mentioned last time, the monthly chart is not encouraging at all and suggests a near term target of 120.00 at least. On the weekly chart it is "teetering" on the 100 day ma. That is the first time the market has even touched that average since the move started in 2007. Not a good sign. So long term the yen could be in trouble still but near term it sure is oversold. Just watching. Closed 122.52, down .62.
MAR SWISS FRANC: The recent sell-off could be over with. It has maintained its uptrend status and closing over 110.00 would be further confirmation. That it did today. If this potential rally follows through, the swiss could take out 112.00. Watching closely to buy. Closed 110.11, up 1.01.
MAR DOLLAR INDEX: For a second time the dollar backed off from 80.000 yesterday. If this sell-off can follow through, it has a potential to 78.000. Long term this market is still very positive. Just watching. Closed 79.179, down .584.
MAR MINI EUROCURRENCY: It is attempting to get back over the 20 day ma and succeeded today. It is back over 132.00 support too. If it can hold that level, this current minor uptrend that started in mid January could have more to it. If it fails to hold the 20 day ma, we may have seen the rally and the eurofx could be setting up for another major sell-off. It is too early to tell. Closed 132.73, up 1.24.
MAR CANADIAN DOLLAR: As pointed out before the recent sell-off worked deep into the consolidation that the cd had formed. On Tuesday the sell-off had reached the low end of that consolidation. This was after breaking out to the upside earlier. It is normal to test a breakout but normally they don't go that deep back into the consolidation. It was beginning to look as though that upside breakout was a false one. Yesterday it started to rally and today it broke out again to the upside! It will be interesting to see if there is follow through and if the cd can take out the recent high up at 101.57. Closed 101.02, up .93.
MAR AUSTRALIAN DOLLAR: The aussie broke out of its consolidation to the downside on Tuesday. It is already rallying and pushing into that consolidation. The sell-off stopped at the uptrend line formed since the late November low. Technically the aussie is still in an uptrend. Just watching. Closed 106.46, up .86.
JUN E-MINI S&P: Switching to June. As I have pointed out earlier, the S&P has technically done some damage lately on the daily chart. But as of today it is trying to change that. It is back over the 20 day ma and seems headed for the contract high (1371.25). This recent sell-off is the steepest since this latest big move started in December. But considering the strength of this rally, I would not get in front of it. The key is the high and whether it can take it out or not. Closed 1360.50, up 13.50.
JUNE 10 YR. NOTES: An inside day yesterday triggered a sell today. It is now in the middle of its huge range once again. Nothing new here. Closed 130.290, down 100.