Commodities Start April Under Pressure
With banks and government offices closed in North American and most markets closed entirely across Europe it looks like April is starting off on a relatively quiet note today and then back to work in earnest tomorrow.
The biggest action overnight was in Japan where the Nikkei fell 1.8% as traders position ahead of this week’s big Bank of japan meeting, the first under the new administration. Chinese stocks fell slightly following mixed PMI that improved over last month, but not as much as the street had hoped.
Greece released its manufacturing PMI data today with Orthodox Easter not until May this year. The data indicates that despite all of the bailouts and austerity, conditions in Greece just aren’t getting any better and in fact are continuing to worsen. I’m not sure when the surveys are taken so it’s unknown if the impact of the Cyprus mess will show up in European PMI numbers for this month or next. Regardless, the outlook for Europe doesn’t appear very bright until politicians come up with better ways for dealing with debt problems and start looking for ways to kick start growth.
This morning finds US indices consolidating last week’s gains with the S&P 500 holding on to Thursday’s record Daily, Weekly, Monthly and Quarterly all-time high close. Trading may remain light through the day although we could see some action mid-morning when ISM PMI and construction spending are released.
Grains are particularly active in commodities, selling off hard again following reports of higher than expected stockpiles in corn last week and fears that higher prices could potentially lead to higher plantings this year. Copper is sliding again, which suggests that overall attitudes toward the global economy and the outlook for resource demand remain sour. In energy markets, gasoline and natural gas appear to be reasserting their normal seasonal trends as we come out of a cold March.
Significant economic announcements released overnight include:
US Markit manufacturing PMI 54.6 vs previous 54.9
China official manufacturing PMI 50.9 vs street 52.0 and previous 50.1
China HSBC manufacturing PMI 51.6 vs previous 50.4
India manufacturing PMI 52.0 vs street 54.2
South Korea manufacturing PMI 52.0 vs previous 50.9
Japan manufacturing PMI 50.4 vs previous 48.5
Greece manufacturing PMI 42.1 vs street 43.0
US consumer confidence 78.6 vs street 72.5
Economic reports due later this morning include:
9:00 am ET Brazil manufacturing PMI
10:00 am ET US ISM manufacturing PMI street 54.1
10:00 am ET US ISM prices paid street 59.8 vs previous 61,5
10:00 am ET US construction spending street 1.0%
10:30 am ET Mexico manufacturing PMI
North American indices
US30 is bumping up against channel resistance near 14,585. On a breakout the next cluster of measured potential resistance appears in the 14,760 to 14,800 area with current support near 14,500.
SPX500 is consolidating above its 1,565 breakout point which may become support. RSI is not overbought, so there’s still room to rally. Next measured resistance levels appear near 1,570 then 1,595 on trend.
NDAQ100 is sitting just below 2,825 resistance where a breakout would complete a bullish ascending triangle. Next resistance on a breakout appears at prior highs near 2,845, and 2,880 with neasured moves suggesting 2,860 or 2,890 could be tested.
US SmallCap 2000 continues to trade in the 935 to 955 range as it takes a rest within a broader uptrend.
Canada60 successfully tested channel support neat 725 with resistance still in place near 745.
UK and European Indices
Major indices across Europe are closed today for Easter Monday.
Gold is hovering near $1,600. Key uptrend support moves up toward $1,590 with next support on a breakdown near $1,560. RSI suggests upward mo stalling. Next resistance on a bounce remains near $1,620 then $1,635.
Silver is breaking down today taking out $28.25 to signal the start of a new downleg on trend. RSI rolling over suggests downward momentum accelerating again. Next measured and prior support appears in the $26.50 to $27.00 zone.
Platinum appears to be stabilizing in the $1,545 to $1,585 range with a positive RSI divergence suggesting downward momentum slowing. A break through $1,600 would be needed to confirm the start of a new recovery trend.
Copper is breaking down again today taking out $3.35 to signal the start of a new downleg. Next potential downside support appears in the $3.32-$3.30 area then closet to $3.00.
US crude continues to slump back after smacking into resistance near $97.50 last week. This appears to be a normal correction of an overbought RSI after a big rally. Initial support appears near $96.00 then $95.30.
UK crude is consolidating it’s recent breakout near $110.00 while RSI above 50 suggests upward momentum continues to strengthen. Next upside resistance near $110.00 then $112.50 on trend.
Gasoline remains in a seasonal uptrend, currently hovering near $3.10 with next resistance near $3.18 then $3.22 and support near $3.06.
Natural Gas looks vulnerable. It has dropped back under $4.00 while RSI has rolled back under 70, both bearish technical signs appearing just has home heating season ends. Next support in a seasonal correction appears near $3.85 then $3.65.
Corn is getting pounded for a second straight day taking out $6.75, a key support/resistance level. Next support appears near $6.50, $6.15 and $5.85.
Soybeans are testing $14.00 again today. With RSI indicating downward momentum remains intact with technical room to fall further as its not oversold, channel support near $13.60 could potentially be retested with initial bounce resistance near $14.40.
Wheat is testing $6.70 support once again after an attempt to breakout of a falling channel failed breakout attempt last month. On a breakdown, channel support near $6.25 could easily be tested followed by the $5.80 to $6.00 area.
Cotton remains in an uptrend with RSI bouncing off of 50 and price moving up off a higher low near 86.00. Currently testing 90.00 next upside resistance appears near 94.00 then 98.75.
USDCAD remains below its $1.0180 breakdown point while RSI remains below 50 suggesting an emerging downtrend that would be confirmed by a break of uptrend support near $1.0150. Next support after that near $1.0100 then par.
EURUSD is stabilizing near $1.2820 but remains in a downtrend with RSI under 50 and next key support near $1.2760 then $1.2660 on trend.
GBPUSD is holding steady near $1.5200 today, testing the neckline of an H&S base.