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Commodities Daily Hotline
4 April 2014                             By Cornelia Dichio, Analyst
Chart of the day: Hogs s-t top heavy

 

The Lean Hogs instrument just kept on rising earlier in the year, in spite of the very high level of the RSI momentum indicator, which confirmed that the rally was extremely overbought.  This state of affairs could not go on indefinitely and a corrective phase started in mid-March.  Resistance at that high, at , was reaffirmed at the end of the month.  Now, the chart pattern looks short-term top heavy, and a further retracement of the previous advance would seem to be on the cards.  A short trade is opened, with the stop placed at 135 for now.

 

Daily Comment:

 

Also in the Meats sector, the Feeder Cattle issue renewed the uptrend on Thursday, recording a new contract high at 180.6, after another brief correction from overbought.  We continue to hold a long trade in the commodity and raise the stop to 174; keeping this just beneath uptrend support at the 50-day MA.

In Softs, Lumber has recorded a 1.7% loss.  The recovery has been practically retraced after finding resistance beneath the hefty top.  A breach of the August-March floor at 324.5 is likely to lead to additional slippage towards the June platform near 310.  We will consider selling should that occur (break under 324.5). 

Precious Metal Palladium has edged closer to March resistance near 800.  Although a breach in uptrend support at the shorter-term MA is required to cause significant pattern damage, last month's barrier may well cause a reaction.  Therefore, we err on the side of caution and book the profit, 1.13%, on the long trade. 

In the Industrial Metals sector, Tin has firmed within the range forming beneath the October barrier; and sideways area along 24000.  We watch to buy in the event of a crossing of that hurdle, for the upside scope towards the early-2013 ceiling over 25000.

Gasoline has failed to maintain the break under the sideways area along 285.  A 'bear trap' recovery is underway, pointing towards intial resistance near 295.

Also in the Energy sector, Heating Oil has rebounded from previous support at the lows of the broad band (partially shown), near 284.  The price heads back to initial resistance, which is also drawn around 295, from the late-March recovery high.

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
NG1Natural Gas NYME 1st Month Continuation4.47+2.4%
NGK4Natural Gas NYME (May 14)4.47+2.4%
NG2Natural Gas NYME (cont)4.499+2.3%
BOK4Soybean Oil CBT (May 2014)41.67+2.0%
BO1Soybean Oil CBT 1st Month Continuation41.67+2.0%
Top 5 Losses.
SymbolStockClose% Change
LB2Lumber CME (cont)328.8-2.8%
LH2Lean Hogs CME (cont)123.5-1.8%
LBK4Lumber CME (May 2014)328.9-1.7%
LB1Lumber CME 1st Month Continuation328.9-1.7%
KO1Palm Oil 1st Mth Continuation2675-1.4%
 
The Commodities Model Portfolio
Commodities Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
17 Mar 2014 Cocoa NYBOT (May 2014) CCK4 Long 3027 2917 -3.63% 2850
24 Mar 2014 Coffee NYBOT (May 2014) KCK4 Long 176.4 174.6 -1.02% 160
25 Mar 2014 Cotton (May 2014) CTK4 Long 94.11 90.98 -3.33% 88
26 Mar 2014 Feeder Cattle CME (May 2014) FCK4 Long 179.125 180.15 +0.57% 174
31 Mar 2014 Soybeans CBT (May 14) S K4 Long 1460 1475.25 +1.04% 1420
31 Mar 2014 Corn CBT (May 14) C K4 Long 502 500 -0.40% 470
31 Mar 2014 Orange Juice (May 2014) JOK4 Long 153.75 154.4 +0.42% 140
Commodities Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
3 Apr 2014 Lean Hogs CME (LH Jun 2014) LHM4 Short 123.55 123.55 0.00% 135
  • A short is opened in Hogs (Chart of the Day).
  • The stop is upped on long Feeder Cattle.
  • Profits are booked on long Palladium.
  • We watch to buy Tin and sell Lumber.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
CRYCRB Index NYFERanging beneath the early-Mar high. Potential top.303.1+0.6% 279.392/299.222321.36/311.49/308.375
CLK4Crude Oil NYME (May 14)Counter move finds resistance near the early-Mar highs.100.29+0.7% 94.36/97104.48/102.32
XBK4Gasoline RBOB NYME (May 14)Failed break under the sideways area along 285. 'Bear trap' rally back to resistance near 295.291.18+1.6% 278/282.52304.14/296.57
HOK4Heating Oil NYME (May 14)Reaffirms support at the lows of the broad band in force since July.290.62+1.4% 283.93307/296.07
NGK4Natural Gas NYME (May 14)S-t downtrend pauses by potential support around 4.20-4.25.4.47+2.4% 3.85/4.2214.893/4.669/4.57
QZK4Coal (May 2014)Rally from the mid-June/mid-Feb trading band/base pauses by initial resistance.59.380.00% 55.43/58.463.6/60.53
GCM4Gold CMX (Jun 14)Correction from overbought slows.1284.6-0.5% 12331431.8/1392.2
PAM4Palladium NYME (Jun 14)Rallies from support at the 50-day MA back to the Mar high.788.85+0.1% 746.3/756.35802.45
PLN4Platinum NYME (July 14)Reverses the correction from overbought.1445.5+0.5% 1367.6/1395.21549.9/1490.1
SIK4Silver CMX (May 2014)Fall from the 200-day MA shows a loss of impetus within the late-Nov/early-Feb base.19.805-1.2% 18.8/19.575?23.145/22.215
LMAHDS03Aluminium HG LME 3mTrades above the Dec high (1839) during Thur. RSI high.1834+0.2% 1671.25/1704.251905.75
LMCADS03Copper Grade A LME 3mRecovery from oversold slows.6642.5-0.5% 6037.5/6376.257379.5/7220
LMPBDS03Lead LME 3 MonthsCounter move from oversold struggles near 2100.2055-0.2% 1986/2013.252289/2230.25
LMNIDS03Nickel LME 3 MonthsConsolidates the overbought rally above the broad band/base.16295+0.7% 14830/1569517340/16385
LMSNDS03Tin HG LME 3 MonthsRanging beneath the Oct high.23190+1.0% 21724/2245024000/23650
LMZSDS03Zinc Special HG LME 3 MonthsSmall 'bear trap' recovery finds intraday resistance at 2008.1984+0.8% 1855/19372143.5
FCK4Feeder Cattle CME (May 2014)Renews the uptrend to a new contract high.180.15+1.2% 175.7/176.375/
LCM4Live Cattle CME (Jun 14)Possibly reasserting the uptrend.137.375+0.4% 134.325/135.3139
LHM4Lean Hogs CME (Jun 14)Renews the correction from overbought. S-t top heavy.123.55-1.0% 103.45133.425
C K4Corn CBT (May 14)Overbought rally pauses by resistance from 3 Sept 2013 high.500+0.9% 452/473.25527.5/513
O K4Oats CBT (May 14)Pauses the downtrend from the early-Mar peak.414.75+1.5% 356.25/386504.5/460/422.5
IJK4Rapeseed LIFFE (May 14)S-t rally pauses beneath the overbought Mar high.411+0.3% 386.25/396429.25/419.75
S K4Soybeans CBT (May 14)Develops support near old resistance from the Mar highs.1475.25+0.9% 1365.5/1393.251496
SMK4Soybean Meal CBT (May 2014)Pauses the overbought rally after a new contract high with a (small) 'Peak' KDR.480.1+0.8% 431/450.2486
BOK4Soybean Oil CBT (May 2014)Reasserts the recovery to recent resistance at 42.35.41.67+2.0% 37.13/39.8545.83/45.05/42.35
W K4Wheat CBT (May 2014)Corrects from overbought.676+1.0% 637/669.75754.25/723.5
QKK4Wheat LIFFE (May 2014)Unwinds from overbought. Intraday support is noted at 160.163.75+0.6% 162.75172.75
CCK4Cocoa NYBOT (May 2014)Drifts to uptrend support along 2900; near the 50-day MA.29170.00% 2670/28743039
KCK4Coffee NYBOT (May 2014)Rally from the 24 Mar 'Trough' KDR and 50-day MA struggles.174.6+1.1% 162.05/166209.75/181.05
CTK4Cotton (May 2014)Pausee the uptrend.90.98-0.6% 86.12/89.84100.16/97.35
LBK4Lumber CME (May 2014)Retraces the recovery. Retests the Mar floor.328.9-1.7% 309.9/324.5366.7/345.8
JOK4Orange Juice (May 2014)Choppy uprend. Remains above initial support at the upper side of the trading band; near the 50-day MA.154.4+0.5% 141.95/146.7168.9/157.25
SBK4Sugar NYBOT (May 2014)Continues to find resistance near the early-Mar high.17.18+1.2% 15.57/16.6719.67/18.47


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