What's Up, What's Down: Higher for Oil and Metal Futures

Comments for Thursday, August 14
Looking Ahead to Today By Reflecting back at Wednesday's price action

ENERGIES:

Higher for natural gas along with crude oil, heating oil and the rbob. All of the energies act like their tops are in place and should be sold on sharp rallies unless you are heavily funded or place options. However, even the options are pricey unless you go way out of the money. Then it's imperative you wait for a good retracement to enter or your chances almost become too slim in most cases as proven throughout the history of trading options. New recent lows and closes for all but the natural gas which is in a bear flag.

Prices at the pump may not drop at the same rate as oil because many gas stations are losing money or have gone out of business because of the price rallies. Therefore, I feel the gas stations will drop their prices at a slower rate in order to survive. The energies look oversold at this time and seem ripe for a retracement rally.

GRAINS:

Sharply higher for Minneapolis and Kansas City wheat along with oats while limit up for Chicago wheat, corn, rough rice, soybeans, soymeal and bean oil. As far as I can tell higher energy prices precipitated short covering in the grains which snowballed when the funds joined in. The rest of the week will be critical to see if this will lead to a turnaround.

Even so the wheat complex long term is still bearish. The rest of the grains continue to look lower overall.

METALS:

Higher for platinum, copper, gold and silver with platinum sharply higher this time. All of the metals continue to look lower overall.

MEATS

Sharply higher pork bellies again, higher for live cattle and lower for feeder cattle and lean hogs. The October cattle still looks neutral while the December contract lower although the latter broke out of its bear pennant to the upside. The October feeders closed slightly lower and is in a very strong support area looking bullish overall but not as strong as it should be because of falling corn prices excluding today. Hogs settled sharply lower causing a failed bull flag in the October contract but still bullish overall. The December hogs fell back into the middle of a good support area and is back to being neutral after today's action. Bellies gapped and closed 322 points higher in the expanded February contract. This was still over 100 points from its session's high and close to the low.

Rick Alexander has been a broker and analyst in the futures business for over thirty years. He is a Vice-President for Sales and Trading at the Zaner Group (www.zaner.com) a Chicago-based futures brokerage firm. If you would like a free booklet explaining the charts mentioned above, email Rick at ralexander@zaner.com.