Providio’s Daily Futures Market Commentary for Feb 8, 2012 (Part 3)

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Interest Rates: 08Feb Apparently, the Eurozone failed to come up with a credible bailout plan that is actually agree to AND signed off on. Despite this, the US Interest Rate market, which has stood in as the safety/fear trade, was unable to resume a positive bias. Although longer term trends obviously are pointed higher, the 2 longer dated Treasuries we track are both biased negatively for the near-term. Shorter-term contracts and the Euro-Bunds mirror this action.
Seasonal Snapshot: The 5-year heads lower until mid-Feb.
The 15 and 30 yr patterns head generally sideways until the contract changes in late Feb. However, about Jan 21 or so, there is a relatively sharp, quick downdraft, but that recovers about a week later.
The 2yr has a positive bias until Jan 22, a which point its tendencies vary from modestly to sharply lower.

Metals:
Gold: 08Feb The April contract was able to forge a higher high than yesterday during the Asian session, but fell back again on the European open and now US sessions. The market is struggling with last week’s high at 1765 and, larger picture, has failed to test the previous, 08Nov high of 1808. This keeps the market in a wide consolidation range, looking for direction with a double bottom in place (29Dec & 26Sep) around 1525-1530. Our falling Rate of Change is threatening to pull Momentum negative. Another failure at those lowsr would be likely quite negative.
Our Volatility measure is perking up a bit, but the last two times this occurred (late Dec and late Jan) another fall to lower levels followed. If this time repeats the pattern, Volatility would sink to very low levels. Explore option purchases.
Seasonal Snapshot: Divergence between the 30yr consolidation and the 5&15yr patterns, which rally well into Feb.

Copper: 08Feb Copper continues to consolidate its strength to new recent highs (394.00) last week. It has held in testing the 380 lows and essentially seems to be using the falling 200-day moving average as a fulcrum after retaking this level 26Jan.
That said, our falling Rate of Change pulled Momentum negative on Monday giving a modestly weaker tone to the market moving forward.
Seasonal Snapshot: Weakness in all three patterns ends on 06Feb, when a month-long rally lasts until 05Mar.

Softs:
Cocoa: 08Feb Despite recent action being modestly supportive, this market’s technicals remain quite negative. Yesterday’s turning in secondaries gave way in the face of more negative action. Add to that the fact that the RSI is is still in the mid 40s and this market has room to fall. Support in the 2220-2230 area has held.
Seasonal Snapshot: 5 and 15 year patterns are modestly bullish until Feb 17. 30 year pattern is generally sideways until mid-March. All 3 patterns are negative from Feb 17-20.

Coffee: 08Feb A consolidation day with a Doji on falling Volume. Running into resistance at the 21-day Moving Average. Mixed technical picture as Trend is down but our Momentum based indicators are positive. If Coffee fails to get above the 222.50 resistance, this classifies the rally as a failure and new lows becomes increasingly likely.
Seasonal Snapshot: All 3 Patterns trend higher until Feb 23.

Cotton: 08Feb New lows and then some short covering ahead of tomorrow’s big USDA Crop report. Cotton’s recent negative dynamic has been driven my prospects of lower global demand. All technicals point to continuing negative action. With the RSI only in the mid 40s, there is plenty of room to run to the downside.
Seasonal Snapshot: Mixed to modestly lower signals until approximately Feb 13. At that point a powerful Trend higher sets in until approximately March 4. Pay attention to near-term fundamentals.

Sugar: 08Feb Consolidation day with a Doji and lower (though still heavy) Volume. All technicals remain positively biased. Closing in on Overbot.
With the current rising 200-day Moving Average now rising shallowly, it seems likely that the 2500 resistance level will only be the first test.
Be aware of any sell offs that get near 2300.
Seasonal Snapshot: Modestly higher bias until Feb 19 or so. At that point as we shift to later months than March, the market will enter a period of generally negative bias until mid-April

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Disclaimer: There is risk 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.