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Old 28-06-2012, 02:40 PM
providiotrading providiotrading is offline
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Providio's Daily Futures Market Commentary for June 27, 2012

SOFTS: We have shifted to September contracts for Cocoa and Coffee, December for Cotton, and October for Sugar due to delivery in the July contracts.

COCOA:
First Notice:Sep: 20Aug; Dec:
Options Last Trade: Aug: 06July; Sep: 03Aug; Oct: 07Sep
27June Concerns are now mounting that West African supplies are tightening. Support: 2080: early April support.
2031: 04June low and horizontal trend line support extending back to Dec 2011.
Resistance: 2165: 21-day moving average and support going back to 08June.
2271: 15June high
2315: Declining trend line that extends back to the 27Jan high (2519).
2372: 07May high
Comment: Our primary directional indicators, Trend and Momentum have now turned positive. Volume has expanded indicating a building rally. The market has decisively bounced off of Oversold. In reference to our below big picture comments, refer to the first resistance level.
Bigger picture, we remind readers that this market has been in a declining longer-term dynamic since late January. Until it breaks above the (2519), this market is still in a bearish pattern.
The case could be made for a large, descending triangle formation that is bound to the downside by horizontal trend line that extends back to Dec 2011. If drawn from the Sep 2011 high (2950), a break below 2030 on stronger Volume could target a move to 1200.
Seasonal Snapshot: All three patterns are rising until early July.

COFFEE:
First Notice: July: 25June; Sep: 23Aug; Dec: 21Nov
Options Last Trade: Aug: 13July; Sep: 10Aug; Oct: 14Sep
27June Modest profit taking in a consolidation day.Some light profit taking too the market off its highs.
Support: 161.50: Major failure level with high trades and much lower settles on 6/5 & 6/20.
158.20: 21-day moving average(158.40) but more importantly, 6/19 & 6/21settlemnts. Also, early June support before the move to the lows.
150.00: Psychological level and just below 18June low.
148.80 -2STD below 21-day moving average
Resistance:
166.85: +2STD above 21-day moving average (158.05)
171.75: Consolidation highs after 7-cent loss on 23May.
Comment: A material drop in Volume indicates a consolidation day. Market forges to new highs but late action on trader profit-taking took it down nominally. The market failed to stay above the +2 STD (166.85) above the 21-day moving average (158.05).
Hedging for delivery is likely to be a cash intensive business unless some sort of long option strategy is implemented. Call or email us for information on how to implement.
Seasonal Snapshot: The 5yr pattern rises until the beginning of July. The 15&30yr patterns are both quite negative until 25June.

COTTON:
First Notice: July: 25June; Oct: 24Sep; Dec: 26Nov
Options Last Trade: Sep: 17Aug; Oct: 14Sep; Nov: 19Oct; Dec: 09Nov
27June Modest, lightly traded consolidation day.
Dec Support: 67.75-67.95 Shoulder for an inverse Head & Shoulders
64.60: 04June low -
Dec Resistance: 69.85: 21-day moving average
73.95: +2STD above 21-day moving average
74.80: 19&20June double top and old support in early May
Comment: December's rise has been capped by the 21-day moving average.
Unhedged crops are seen as a material barrier to further rallies. After staging an impressive rally since bottoming on 6/4 through 6/6 on the Chinese export sales news, recent action has disappointed.
The 6/21 large sell-off was accompanied by a material rise in Volume, which keeps our longer-term bearish sentiment intact. Our Momentum indicator is on its way to going negative after the rally failed to make a higher high.
Seasonal Snapshot: The 30yr pattern consolidates throughout June, but the 5&15yr move the entire month.

SUGAR:
First Notice: July: 02July; Oct: 01Oct
Options Last Trade: Aug: 16July; Sep: 15Aug; Oct: 17SepSeasonal Snapshot: All three patterns are in a pronounced upward bias until the beginning of Aug.
27June: Notes:Continuing concern over tight supplies is an upside risk.
Precipitation is another issue, as heavy rains slow harvesting activities in Brazil and also threatens India. Potential rain damage to crops in Brazil is still being assessed but has emerged as a supportive dynamic.
With Sugar increasingly seen as an industrial resource (ethanol), it is vulnerable in the global economic landscape.
Support: 20.50: Old resistance and where the market fell to and bounced for a short time in early May.
20.15-20.20: 21-day moving average and 6/11-6/15 inflection level, 6/22-6/25 support.
19.80:Late May support, early June inflection, mid-June support levels and rising trend line that extends back to the 04June low.
18.86: 04June low
17.00: Target for the break below a large descending triangle and horizontal trend line (21.00) that dates back to January.
Resistance: 2100: psychological level and near last weeks highs.
21.95: 50% retracement of the March to early June decline.
Comment: Despite our recent pronouncements of weakening technicals, the move today was clearly positive. A material move higher coupled with a material rise in Volume. Trend and Momentum both now pointed higher. Rate of Change and RSI have both bounced.
If the Brazilian situation proves to be less damaging than accounted for in recent positive action, look for a sustained materially lower move. If the situation IS, as expected, quite damaging, look for some moves to the upside, though, capped by low 21.00 levels, at least initially.
Seasonal Snapshot: All three patterns are in a pronounced upward bias until the beginning of Aug.

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.
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