The Futures Pattern Price Time Report for Tuesday, November 4, 2008 FINANCIALS December Treasury Bonds and Treasury Notes are trading mixed overnight. Treasury Bonds are still holding a major support area at 112’16. The Treasury Notes are also holding their support at 112’28. Trading has been light ahead of today’s election. Although the market has most likely priced in Obama as president, traders will be watching to see if the Democrats get control of the balance of power in the Senate. Also with the U.S. unemployment report due on Friday, November 7, do not look for much movement in the market until then. Trading could be choppy and directionless until Friday. Overnight the Reserve Bank of Australia cut their key interest rate by 75 basis points. This cut reflects their concern about the impending global recession. They are blaming the slow economy on poor exports due to falling commodity prices. EQUITIES Global equity markets are trading higher overnight. Bottoms appear to be rising which could lead to a breakout to the upside. The December E-Mini S&P 500 are approaching the key swing top at 992.75, but really needs to take out 1067 to be certain a bottom has been formed. The December E-Mini Dow is forming a similar bottom. This contract needs to breakout over 9898 to be certain a bottom has formed. The global markets seem to be putting the threat of a recession aside. Despite the rally, however, trading appears to be light ahead of the today’s election. There is plenty of cash available to invest, but it looks as if money managers will keep it aside until after the election results are in. Investors will be watching to see if the Democrats take control of the Senate. Look for the S&P to go after stops over 992.75. If new buyers do not surface over this price to push the market higher then look for a sharp correction. CURRENCIES The December Euro and December British Pound are trading higher overnight. Traders do not seem to be too concerned about the expected interest rate cuts on November 6. These two contracts seem to be technically driven at this time, having corrected about 50% of last week’s rally. The Euro and the Pound may feel downside pressure later in the week when the European Central Bank and the Bank of England cut interest rates. The December Japanese Yen is trading lower on the early morning strength in the U.S. stock market. Look for strength to develop in the December Canadian Dollar if commodity markets can rally. ENERGIES The overnight weakness in the U.S. Dollar is leading to some light buying in the December Crude Oil. The market appears to have made a successful test of the last main bottom at 61.30. A breakout over 70.60 is needed to turn the main trend up. Seasonal upside pressure could provide support for December Heating Oil. It is going to get cold in the Northeast and consumers will need to heat their homes. Continue to watch December Heating Oil for signs of a bottom. METALS December Gold is trading higher overnight because of the weaker Dollar. This has been a tricky market to trade. The global recessionary fears are putting downside pressure on gold, while the flooding of the markets with Dollars is leading to forecasts of inflation later. It is just a matter of time and patience before one wins over the other. The charts indicate a trade over 778.30 turns the main trend up. December Silver is also forming a bottom but needs a move through 10.64 to turn the minor trend higher. The weaker Dollar should help support January Platinum and December Copper today. Platinum could rally if 839.80 is penetrated. A move through 2.17 will turn the minor trend higher in Copper. GRAINS The weaker Dollar is should support for the Soybeans and Corn this morning. U.S. grain is cheap and a weaker Dollar is likely to lead to more interest from foreign buyers. There is a good base forming in the January Soybeans which could support the market for a 3 to 5 day rally. The move is dependent upon the strength or weakness in the Dollar. Traders are also beginning to talk about a decrease in supply in the next U.S.D.A. crop report due next week. This news could also provide support. At this time it is all about demand. Strong demand from foreign buyers is needed to support this market. SOFTS The weaker Dollar is expected to provide support across the board in the softs complex. Reports are showing that hedge funds are still liquidating positions, which is limiting gains. Hedge fund participation is the key to large movements. If hedge funds remain absent then look for limited moves to the upside on strong demand. The strong British Pound should increase some product movement in December Cocoa and December Coffee. It is all about demand at this time. Buyers have to start taking advantage of the low prices or the market is likely to continue to fall. March Sugar will move with the crude oil. Higher crude oil increases demand for sugar because it can be used as an alternative fuel source. Cheap prices and a weaker Dollar could attract demand for December Cotton. This market is trading near its low for the year. It needs both domestic and foreign demand at this time. The harvest has been going well, but without stronger demand, inventories could continue to rise. THIS BLOG IS WRITTEN FOR INFORMATIONAL PURPOSES ONLY. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. FUTURES TRADING IS NOT FOR EVERYONE. THERE IS RISK INVOLVED IN FUTURES TRADING.
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