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Commodities Daily Hotline
10 October 2014                             By Cornelia Dichio, Analyst
Chart of the day: Crude fall becomes oversold...

 

The decline by Oils gathered speed on Thursday.  Acceleration is a trend-ending feature but the turning point is difficult to predict.  Another aspect to the short-term fall worth mentioning is that the decline for Crude (as well as Gasoline and Heating Oil) is oversold.  We continue to hold a short trade in Crude, which is pointing towards next chart support at the 2012 floor at 82.07, and tighten the stop to 86.5, to guarantee a profit.

 

Daily Comment:

 

The weakness in most Energy contracts has helped send the CRB Index lower.  The chart on the right displays the Commodities index reasserting the downtrend from this year's earlier top formation.  The gauge points towards the late-2013/early-2014 floor at 272.036.  A clearance of the 50-day moving average would be required to significantly improve the aspect of this picture.

In Grains, the CBT Wheat product has recorded a 2.9% loss for yesterday's session.  Like the LIFFE issue before it, the counter move from oversold appears to be baulking at downtrend resistance from the shorter-term MA line.  There is a danger of a revisit of the contract low at 466.25 (106.6 for the UK-traded instrument). 

In the Softs grouping, Cotton's recovery from the oversold contract low (60.83) also appears to be stalling at the barrier posed by the 50-day MA.  A sustained clearance of that line is required to lend the chart pattern a basing aspect; thus removing the risk of a renewal of the downtrend.

Also in this sector, Sugar initially extended its recovery.  However, intraday resistance arrived at 17.20 leading to a fall back beneath the late-September high and 50-day MA.  This gives rise to 'bull trap' fears for a further pullback over the short term.  Therefore, we book the remaining profit, 0.85%, on the long trade held in this commodity.

In contrast, Coffee registered a 3.4% gain yesterday.  Former resistance in the 210 region looks to be converting into support.  Nonetheless, with the RSI remaining at a high level, there is still the risk of a deeper correction from overbought, and so we remain on the sidelines.

In Meats, Cattle contracts have encountered intraday resistance at the latest contract highs, at 245.45 for the Feeder issue shown here, and 169.6 for the Live instrument.  Perhaps this signals the start of a correction from overbought in the pair.  Initial support levels are at 222.40 and 157.45 respectively.

 

Gainers / Losers
Top 5 Gains.
SymbolStockClose% Change
KCZ4Coffee NYBOT (December 2014)221.65+3.4%
KC1Coffee NYBOT 1st Month Continuation221.65+3.4%
KC2Coffee NYBOT (cont)225.45+3.3%
SIZ4Silver CMX (December 2014)17.418+2.1%
SI1Silver CMX 1st Month Continuation17.418+2.1%
Top 5 Losses.
SymbolStockClose% Change
CT2Cotton (cont)62.27-4.0%
XAUPHLX Gold & Silver Index78.963-3.8%
W Z4Wheat CBT (December 2014)493.25-2.9%
W 1Wheat CBT 1st Month Continuation493.25-2.9%
DBOOil25.28-2.8%
 
The Commodities Model Portfolio
Commodities Model Portfolio Longs
Date Stock Code Type Open Price Current Price % P&L Stop Comment
6 Oct 2014 White Maize SAFEX (December 04) WZZ4 Long 1867.2 1866 -0.06% 1740
Commodities Model Portfolio Shorts
Date Stock Code Type Open Price Current Price % P&L Stop Comment
25 Sep 2014 Orange Juice (November 2014) JOX4 Short 140.25 143.2 -2.10% 154
8 Oct 2014 Crude Oil NYME (November 2014) CLX4 Short 87.85 85.77 +2.37% 86.5
  • The remaining profit is booked on long Sugar.
  • The stop is tightened on short Crude.

 

Daily Analysis

Symbol Name Comment Close 1 day Support Resistance
CRYCRB Index NYFEReasserts the downtrend towards the Jan floor.276.41-0.4% 272.036/275.362283.234/280.91
CLX4Crude Oil NYME (November 14)S-t decline accelerates. RSI low.85.77-1.8% 81.5/82.0795.07/94.9
XBX4Gasoline RBOB NYME (Nov14)Fall from resistance at the 50-day MA becomes oversold.227.49-1.9% 211.19259.33/255.86
HOX4Heating Oil NYME (Nov 14)Extends the oversold decline.253.66-1.5% /289.24/272.02
NGX4Natural Gas NYME (Nov 14)Falls to the lows of the late-Jul/Oct range. Questions base theory.3.845-0.3% 3.654/3.7864.184
QZZ4Coal (Dec 14)Extends the oversold fall.52.7-0.6% /62/60.4/60.02
GCZ4Gold CMX (Dec 14)Rebounds from oversold. Failed break under the late-2013 floor (1185).1225.3+1.6% 1183.31297.6/1243.2
PAZ4Palladium NYME (Dec 14)Recovers from oversold and the upper side of the prior base. Probes the 200-day MA.800.5+0.5% 699.1/735850.65/825.45
PLF5Platinum NYME (January 15)Recovers from the oversold and accelerated contract low.1278.3+0.9% 1186.51377.2/1350.2
SIZ4Silver CMX (December 2014)Oversold fall towards the Feb 2010 low pauses.17.418+2.1% 15.73/16.6419.95/18.885
LMAHDS03Aluminium HG LME 3mOversold decline reverses by sideways trading around 1900.1950+0.5% 1836/18852184/2119.5/1978?
LMCADS03Copper Grade A LME 3mHolds the ranging retreat from sideways trading near 7200 to support along 6600.6720+1.2% 6513.25/65917108.75/6992
LMPBDS03Lead LME 3 MonthsPauses the fall near the Mar/Apr lows.2088+0.4% 2013.25/20322279.15/2148
LMNIDS03Nickel LME 3 MonthsPossibly reasserting the downtrend from the m-t top after a brief recovery from oversold.16675+0.8% 14830/15695/1586919990/17501
LMSNDS03Tin HG LME 3 MonthsReasserts the oversold decline towards the round 20000 level.20200+0.2% 18809/20000?23070/21468
LMZSDS03Zinc Special HG LME 3 MonthsMoves over the 50-day MA. Potential top extension.2336+0.7% 2173/22162416
FCX4Feeder Cattle CME (November 2014)Overbought rally finds some intraday resistance at the latest contract high.241.525-0.6% 206.15/222.4245.75?
LCZ4Live Cattle CME (Dec 14)Overbought uptrend finds intraday resistance at the latest contract high.165.875-1.3% 147.225/157.45169.6
LHZ4Lean Hogs CME (Dec 14)Ranging between support at the 200-day MA and the overbought Sept high.95.625+0.5% 84.275/90.9?105.5/99
C Z4Corn CBT (December 14)Counter move from the oversold contract low towards downtrend resistance at the 50-day MA.344.75+0.4% 318.25381/358/350.5
O Z4Oats CBT (December 14)Extends the broad band. Continues to find resistance at the upper boundary.343.75+0.1% 311.5/326379.25/361.75
IJX4Rapeseed LIFFE (November 14)S-t rally slows near the late-Jul high Potential base extension.326.25-0.5% 300.5/308.75359.75/335.5
S X4Soybeans CBT (November 14)Oversold decline reverses.942+0.7% 9041089.25/999.75
SMZ4Soybean Meal CBT (December 2014)Oversold s-t decline reverses, finding support above the 2012 floor.313.5+1.2% 288.8/295.1398.3/366.6
BOZ4Soybean Oil CBT (December 2014)Ranging between the 50-day MA and Sept floor. Potential base? Tests the upper boundary.33.01-0.0% 31.5237.36/33.83
W Z4Wheat CBT (December 2014)Recovery from oversold slows on the approach to downtrend resistance at the 50-day MA.493.25-2.9% 466.25591/579.25
QKX4Wheat LIFFE (November 2014)Counter move from oversold finds intraday resistance at 116.5; near the downtrend channel at the 50-day MA.112.3-1.2% 106.6124/120
CCZ4Cocoa NYBOT (December 2014)Pullback from the overbought contract high tests Sept support; near the 200-day MA.3057+0.6% 2874/30193399
KCZ4Coffee NYBOT (December 2014)Possibly reasserting the advance. RSI remains high.221.65+3.4% 176.4/211249.65/243/225.5
CTZ4Cotton (December 2014)Recovery from the contract low stalls near the 50-day MA.63.94-1.5% 60.8368.48/65.29
LBX4Lumber CME (November 2014)Strong rally slows by the Aug high.345.3-0.2% 318.2/325364.5/354.3
JOX4Orange Juice (November 2014)Pauses the downtrend. The 'Trough' KDR low (139.4) of 26 Sept holds.143.20.00% 125.9/139.4153.4/145.5
SBH5Sugar NYBOT (March 2015)Recovery finds intraday resistance at 17.2. Falls back under the 50-day MA.16.7-1.3% 15.51/15.8917.87/17.2


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