| Commodities Daily Hotline 24 August 2010 By Jackson Wong, Analyst |
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Rice, the staple diet in numerous countries, is undergoing a sharp rally at the moment. The impact of this will be profound.
From 9.5, prices produced a breakaway gap at 10. Then, the commodity consolidated briefly last week and is now pushing into new multi-week highs (see right).
Where is the upside target for the current rally? Technically, we pencil in 12.2, the reaction high in May. An upleg to that level would generate headlines and we would not be surprised to see more momentum buying. We go long the contract.
While gold has risen steadily of late, Platinum's performance is more muted. In fact, prices are now at the psychologically important support at $1500. A break below this level would open the gate for a flurry of selling. We watch to sell.
Silver remains rangebound, under pressure from gold's consolidation.
Lumber
is failing to extract an upside breakout yesterday, despite have travelled all the way to the top of the range. Au contraire, a dip back 200 looks like a possibility.
Crude Oil has fallen in ten of the last thirteen days. This drags prices a long way back to the major support zone at $71 (see right).
Should we sell into this downtrend? From a risk-reward perspective, we think not, simply because the trend is short-term oversold. The price risk lies on the upside. We watch to establish a long near that $70 level, anticipating a rally back to highs.
For Natural Gas, the trend is more bearish because prices already broken the $4.3 support.
Lastly, Coal looks seriously oversold. From $72, prices slumped to $63 yesterday, taking the commodity back into the long-term base (see right). While this delays the breakout, we expect the downtrend to find support at around $60.
| Symbol | Stock | Close | % Change | Volume |
| RR1 | Rough Rice CBOT 1st Month Continuation | 11.625 | +4.0% | 2,699 |
| W 2 | Wheat CBT (cont) | 744.25 | +2.1% | 8,533 |
| CAX0 | Wheat MATIF (November 2010) | 214.25 | +2.1% | 10,145 |
| W Z0 | Wheat CBT (December 2010) | 725.5 | +1.9% | 37,043 |
| W 1 | Wheat CBT 1st Month Continuation | 725.5 | +1.9% | 37,043 |
| Symbol | Stock | Close | % Change | Volume |
| QZ2 | Coal | 63.4 | -3.1% | 0 |
| QZV0 | Coal (October 2010) | 63.4 | -3.1% | 0 |
| LB2 | Lumber CME (cont) | 229.2 | -2.8% | 39 |
| XB1 | Gasoline RBOB NYME 1st Month Continuation | 188.1 | -2.3% | 19,852 |
| MO1 | Carbon Emission (Cont) | 15.58 | -1.8% | 2,182 |
P&F Breakouts: Aug 23, 2010.
| Symbol | Name | Signal | Signal Price |
Price Objective |
Stoploss | Latest Close |
| CAX0 | Wheat MATIF (November 2010) | Bull | 213.00 | 227.75 | 209.50 | 214.25 |
| LMPBDS03 | Lead LME 3 Months | Bear | 2055.00 | 1968.00 | 2133.00 | 2048 |
| LMNIDS03 | Nickel LME 3 Months | Bear | 21200.00 | 19800.00 | 22000.00 | 21200 |
P&F breakouts identify medium-term trend changes. "Bull" breakouts occur when a stock reverses its downtrend by posting a "higher high". "Bear" breakouts are the inverse.
Key Day Reversals : August 23, 2010
| Code | Name | Signal | Latest | Close Change |
| MO1 | Carbon Emission (Cont) | Peak | 15.58 | -0.28 |
| MOZ0 | Carbon Emission IPE (Dec 00) | Peak | 14.82 | -0.25 |
| LB2 | Lumber CME (cont) | Peak | 229.20 | -6.70 |
| HG2 | Copper CMX (cont) | Trough | 331.65 | +0.05 |
Key day reversals are technical signals formed by stocks posting an "outside day" of a higher high and a lower close. Sells/Peaks occur on countertrend reversals from a bullish trend and buys/Troughs occur on countertrend reversals from bearish trends. Signals are particularly powerful when occurring after a period of overextension.
MA Crossovers : August 23, 2010
| Code | Name | Signal | Latest | Close Change |
| CRY | CRB Index NYFE | Dead | 266.03 | -0.98 |
Moving Average (MA) crossovers identify longer-term changes of trend. We scan for "Golden" (bullish) and "Dead" (bearish) signals occurring when an instrument’s 50-day MA crosses its 200-day MA.
| Date | Stock | Code | Type | Open Price | Current Price | % P&L | Stop | Comment |
| 26 Jul 2010 | Carbon Emission IPE (Dec 00) | MOZ0 | Short | 13.53 | 14.82 | -9.53% | 15 | |
| 5 Aug 2010 | Sugar NYBOT (October 2010) | SBV0 | Long | 18.83 | 20.07 | +6.59% | 17.4 | |
| 12 Aug 2010 | Lean Hogs CME (LH Oct 2010) | LHV0 | Long | 74.625 | 78.225 | +4.82% | 76.5 | |
| 16 Aug 2010 | Tin HG LME 3 Months | LMSNDS03 | Long | 20675 | 20460 | -1.04% | 18500 | |
| 17 Aug 2010 | Gold CMX (Oct 10) | GCV0 | Long | 1226.3 | 1227.3 | +0.08% | 1200 | |
| 17 Aug 2010 | Natural Gas NYME (October 10) | NGV0 | Short | 4.245 | 4.084 | +3.79% | 4.5 | |
| 18 Aug 2010 | Oats CBT (December 10) | O Z0 | Long | 290.25 | 285 | -1.81% | 277 | |
| 20 Aug 2010 | Silver CMX (December 2010) | SIZ0 | Long | 18.365 | 18.042 | -1.76% | 17.55 | |
| 20 Aug 2010 | Rapeseed LIFFE (November 10) | IJX0 | Short | 369.5 | 358.25 | +3.04% | 372 |
| Symbol | Name | Comment | Close | 1 day | Support | Resistance |
| CRY | CRB Index NYFE | Corrects from overbought. Approaches potential support near both the 50 and 200-day As. | 266.03 | -0.4% | 263.63 | 280.83 |
| MOZ0 | Carbon Emission IPE (Dec 00) | Tests resistance near both the 50 and 200-day MAs. | 14.82 | -1.7% | 13.34/14.17 | 15.49/14.65 |
| CLV0 | Crude Oil NYME (October 10) | Falls towards support mid-base, near 75. | 73.1 | -1.0% | 7.12 | 83.4 |
| XBV0 | Gasoline RBOB NYME (October 10) | 'Bull trap' reaction. Falls towards the early-July low. | 183.9 | -1.5% | 184.17 | 210.83 |
| HOV0 | Heating Oil NYME (October 10) | 'Bull trap' reaction. Tests support near 202.8. | 197.65 | -0.8% | 196/202.81 | 223.73 |
| NGV0 | Natural Gas NYME (October 10) | Reacts from the 'Peak' KDR high near 5. Dips to a new low during Wed. | 4.084 | -1.3% | 4.279 | 5.01 |
| QZV0 | Coal (October 2010) | Corrects from overbought. | 63.4 | -3.1% | 63.55 | 72.1 |
| GCV0 | Gold CMX (Oct 10) | Short-term uptrend. | 1227.3 | -0.0% | 1127.7/1157.5 | 1220.8 |
| PAZ0 | Palladium NYME (Dec 10) | Retests 500 resistance. | 485.4 | +1.5% | 442.2 | 517.7 |
| PLV0 | Platinum NYME (October 10) | Reacts to resistance at the June high. Support at 1500. | 1508.6 | -0.4% | 1489/1532.6 | 1617.9 |
| SIZ0 | Silver CMX (December 2010) | Broadly rangebound. Falls towards the pattern lows, and support at the 200-day MA. | 18.042 | +0.0% | 17.4 | 18.75 |
| LMAHDS03 | Aluminium HG LME 3m | Corrects from overbought. | 2040 | 0.00% | 1920/1947.5 | 2266.5 |
| LMCADS03 | Copper Grade A LME 3m | Corrects from overbought. Reasserts the uptrend. | 7255 | 0.00% | 6470/7016 | 7865/7527 |
| LMPBDS03 | Lead LME 3 Months | Correction from overbought may be ending as intraday support arrives at 2032.5. | 2048 | -0.4% | 1755.5/1955 | 2400/2250 |
| LMNIDS03 | Nickel LME 3 Months | Corrects the overbought rally. | 21200 | -1.6% | 18401/20300 | 23650/22898 |
| LMSNDS03 | Tin HG LME 3 Months | Correction from overbought may be ending as support arrives at 19750. | 20460 | -0.9% | 17500/19200 | 21850/21500 |
| LMZSDS03 | Zinc Special HG LME 3 Months | Retreats from May resistance near 2200, in line with the prior high RSI. | 2044 | -0.7% | 1776/1895 | 2195 |
| FCV0 | Feeder Cattle CME (October 2010) | Downtrend pauses. | 117.65 | +0.1% | 111.725 | 115.975 |
| LCV0 | Live Cattle CME (Oct 10) | Bull trap reaction. Intraday support is noted at 94.425. | 99.75 | +0.5% | 89.85/93.25 | 97 |
| LHV0 | Lean Hogs CME (Oct 10) | Reverses up finding support above the 200-day MA. | 78.225 | +1.3% | 71.4/73.15 | 80.075 |
| PBG1 | Pork Bellies CME (February 2011) | Corrects from the latest high. | 105 | +0.5% | 99.6/103 | 108 |
| C Z0 | Corn CBT (December 10) | Possibly reasserting the uptrend. | 432.75 | -0.8% | 399.25/405.75 | 452/439 |
| O Z0 | Oats CBT (December 10) | Reacts from the Jan peak. Probes potential support at the highs of the prior range. | 285 | 0.00% | 254.5/273 | 311.5 |
| IJX0 | Rapeseed LIFFE (November 10) | Corrects from overbought. | 358.25 | -0.8% | 350.5/356.25 | 390.75 |
| S X0 | Soybeans CBT (November 10) | Reasserts the upward bias to the Dec peak. | 1005.5 | +0.1% | 997.75/1011.5 | 1060.25/1049 |
| SMZ0 | Soybean Meal CBT (December 2010) | Reasserts up towards resistance at the 2009 highs. | 294.9 | +0.6% | 275.8/286.9 | 306/303.2 |
| BOZ0 | Soybean Oil CBT (December 2010) | Overbought rally finds resistance by Jan resistance. | 39.82 | -0.7% | 38.53/39.23 | 43.34 |
| W Z0 | Wheat CBT (December 2010) | Short-term downtrend. | 725.5 | +1.9% | 600/705? | 868 |
| QKX0 | Wheat LIFFE (November 2010) | Short-term downtrend. | 149.95 | +0.2% | 129/144.5 | 169 |
| CCZ0 | Cocoa NYBOT (December 2010) | Approaches support at the Mar/May floor. | 2834 | +0.2% | 2830 | 3218/3189 |
| KCZ0 | Coffee NYBOT (December 2010) | Uptrend wobbles. | 183.25 | -1.0% | 156.4/166. | 181.55 |
| CTZ0 | Cotton (December 2010) | Surges to a new high. RSI overbought. | 84.09 | +0.6% | 72.96/76.11 | / |
| LBX0 | Lumber CME (November 2010) | Forced lower by the 50-day MA. Found s-t support at 200. | 213.3 | -1.3% | 187.2/200 | 222.8 |
| JOX0 | Orange Juice (November 2010) | Intraday support arrives near the June/July floor. | 136.15 | -0.5% | 137/137.45 | 150.9 |
| SBV0 | Sugar NYBOT (October 2010) | Finds support near both the 50 and 200-day MAs. | 20.07 | +0.6% | 16.55/17.51 | 20.2/19.88 |
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