Daily Recaps - 2022.02.15
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Note: Data is collected using the closing values of the previous session and calculations and analysis are run at the same time. Technical commentary is based solely on statistical indicators and does not necessarily correspond to any fundamental analysis that may appear elsewhere in this report. Data sources can and do produce bad ticks that can cause computation errors. Please verify before use.
BOND MARKET
While treasury prices were down ahead of today's US PPI report, the report itself was justification for further downside action. However, despite a 1% month over month increase in US producer prices and a 9.7% year-over-year gain in producer prices, treasuries failed to show significant post report declines. In other words, treasury bonds showed very little in the way of bearish momentum. In fairness to the bear camp the treasury bond market did make a new low for the move perhaps because the trade "anticipated" the jump in producer prices.
Technical Outlook
BONDS (MAR) 02/16/2022: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's short-term trend is negative as the close remains below the 9-day moving average. The market tilt is slightly negative with the close under the pivot. The next downside target is now at 149-120. The 9-day RSI under 30 indicates the market is approaching oversold levels. The next area of resistance is around 151-150 and 152-210, while 1st support hits today at 149-270 and below there at 149-120.
10 YR TREASURY NOTES (MAR) 02/16/2022: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The market's short-term trend is negative as the close remains below the 9-day moving average. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 125-050. The market is approaching oversold levels on an RSI reading under 30. The next area of resistance is around 125-310 and 126-125, while 1st support hits today at 125-115 and below there at 125-050.
STOCK INDICES
Significant gains in equity prices today were justified by several different storylines. First and foremost, the slight moderation of tensions along the Ukrainian border provided risk on sentiment but that sentiment was justified by very positive earnings and sales figures from Burger King, Tim Hortons, and Marriott. The market was hitting on all cylinders with the NASDAQ rising by 1% off reduced geopolitical anxiety and from strength in several chip sector company shares.
Technical Outlook
S&P E-MINI (MAR) 02/16/2022: Declining momentum studies in the neutral zone will tend to reinforce lower price action. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next downside objective is 4355.57. The next area of resistance is around 4501.87 and 4528.06, while 1st support hits today at 4415.63 and below there at 4355.57.
E-MINI NASDAQ (MAR) 02/16/2022: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The cross over and close above the 18-day moving average indicates the intermediate-term trend has turned up. Market positioning is positive with the close over the 1st swing resistance. The next downside objective is now at 14112.00. The next area of resistance is around 14783.75 and 14895.00, while 1st support hits today at 14392.25 and below there at 14112.00.
MINI-DOW (MAR) 02/16/2022: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The market now above the 18-day moving average suggests the intermediate-term trend has turned up. The market setup is supportive for early gains with the close over the 1st swing resistance. The next downside target is 34140. The next area of resistance is around 35179 and 35385, while 1st support hits today at 34557 and below there at 34140.
PRECIOUS METALS
The gold market posted a massive range of $36 and forged a reversal of sorts by falling back from the initial upside breakout. Clearly weakness in energies because of the slight tempering of anxiety between Russia and Ukraine had an equally negative impact on flight to quality instruments like gold, silver, and treasuries. On the other hand, the bull camp should be disappointed in the markets lack of upside action following a month over month 1% gain in US producer prices. In fact, the markets also ignored a year-over-year gain in producer prices of 9.7%!
Technical Outlook
COMEX SILVER (MAR) 02/16/2022: A positive indicator was given with the upside crossover of the 9 and 18 bar moving average. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The market's close above the 9-day moving average suggests the short-term trend remains positive. A negative signal was given by the outside day down. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next upside target is 24.403. The next area of resistance is around 23.847 and 24.403, while 1st support hits today at 22.903 and below there at 22.514.
COMEX GOLD (APR) 02/16/2022: Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. The downside closing price reversal on the daily chart is somewhat negative. The market setup is somewhat negative with the close under the 1st swing support. The next upside target is 1895.1. The next area of resistance is around 1872.4 and 1895.1, while 1st support hits today at 1836.2 and below there at 1822.7.
COPPER
In addition to risk on flowing from equities, the moderation of anxiety between Russia and the Ukraine helped copper post a positive session. Furthermore, the bull camp was emboldened by another decline in daily LME copper warehouse stocks and from a report that Chinese copper concentrate imports last year were at a record level. In our opinion, Chinese demand for scrap copper will decline as smelting inside the country contributes significantly to the Chinese pollution problem.
Technical Outlook
COMEX COPPER (MAR) 02/16/2022: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market's close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next downside objective is 4.45. The next area of resistance is around 4.57 and 4.60, while 1st support hits today at 4.50 and below there at 4.45.
ENERGY MARKET
What goes up aggressively can fall aggressively! Obviously, a moderation of tensions between Russia and the Ukraine reduces the threat of lost Russian supply and that takes the heart out of the bull case. However, there were bearish developments beyond the Ukraine situation with a forecast calling for record Permian basin production next month and a jump in Bakken basin production next month. This week's Reuters poll projects EIA crude stocks to decline by 1.8 million barrels, gasoline stocks to rise by 600,000 barrels, distillate stocks to decline by 1.2 million barrels and for natural gas storage to decline by 182 to 208 BCF.
Technical Outlook
CRUDE OIL (APR) 02/16/2022: The daily stochastics gave a bearish indicator with a crossover down. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The next downside objective is now at 86.38. The next area of resistance is around 92.25 and 94.81, while 1st support hits today at 88.03 and below there at 86.38.
RBOB GAS (APR) 02/16/2022: A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market's short-term trend is positive on the close above the 9-day moving average. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The next downside target is now at 270.63. The next area of resistance is around 286.79 and 294.42, while 1st support hits today at 274.89 and below there at 270.63.
HEATING OIL (APR) 02/16/2022: The daily stochastics gave a bearish indicator with a crossover down. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market's close above the 9-day moving average suggests the short-term trend remains positive. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next downside objective is now at 265.70. The next area of resistance is around 282.42 and 289.23, while 1st support hits today at 270.66 and below there at 265.70.
CORN
May corn closed sharply lower on the session and followed the wheat market down on the day. The latest commitments of traders report showed a hefty net long position in corn and speculative selling was active after news of some better weather in South America and news that Russia indicated some military units would return to their bases after training exercises near the Ukrainian border. Talk that diplomacy is still on the table to help ease tensions helped to pressure as well. Corn imports to the European Union reached 10.12 million tonnes for the 2021/22 season, compared with 10.46 million tonnes the same time a year ago.
Technical Outlook
CORN (MAR) 02/16/2022: A bearish signal was triggered on a crossover down in the daily stochastics. Declining momentum studies in the neutral zone will tend to reinforce lower price action. The market's short-term trend is positive on the close above the 9-day moving average. The close below the 2nd swing support number puts the market on the defensive. The next downside objective is 621 3/4. The next area of resistance is around 648 and 661 3/4, while 1st support hits today at 628 and below there at 621 3/4.
SOY COMPLEX
May soybeans closed moderately lower on the session and the selling push the market down to the lowest level since February 4. The outlook for improving rain amounts for southern Brazil and Argentina helped to pressure. In addition, corn and wheat were under pressure with the easing of tensions in Ukraine as Russia pulled back some troops after military exercises near the border. Exporters announced the sale of 101,000 tons of US soybeans for delivery to Mexico. The NOPA report showed January crush at 182.216 million bushels, down 2.3% from the record high in December and 1.3% below January of last year. This was well below trade expectations for 186.7 million bushels and below the range of estimates 183.7-188.5 million bushels. Soybean oil stocks came in at 2.026 billion pounds, which was near expectations but up 12.6% from last year and near expectations even with the much smaller crush pace than expected.
Technical Outlook
SOYBEANS (MAR) 02/16/2022: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was lower than the pivot swing number. The next downside objective is now at 1520 3/4. The next area of resistance is around 1568 1/2 and 1590, while 1st support hits today at 1534 and below there at 1520 3/4.
SOYMEAL (MAR) 02/16/2022: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The market's short-term trend is negative as the close remains below the 9-day moving average. The market setup is somewhat negative with the close under the 1st swing support. The next downside objective is 428.6. The next area of resistance is around 445.3 and 454.7, while 1st support hits today at 432.3 and below there at 428.6.
SOYBEAN OIL (MAR) 02/16/2022: Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The market's short-term trend is positive on the close above the 9-day moving average. The market's close below the pivot swing number is a mildly negative setup. The next downside objective is 63.99. The next area of resistance is around 66.31 and 66.72, while 1st support hits today at 64.95 and below there at 63.99.
WHEAT
May wheat opened slightly higher on the session and closed sharply lower on the day. Tensions in the Black Sea region are easing after Russia announced military units would return to base after conducting training maneuvers near the Ukraine border. In addition, traders believe that improved weather in Russia could result in a larger than expected wheat crop. Egypt will issue a tender to import wheat next week. The market may have also seen some pressure from what looks to be improving weather conditions in the forecast for the US.
Technical Outlook
WHEAT (MAR) 02/16/2022: The close under the 60-day moving average indicates the longer-term trend could be turning down. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The close below the 1st swing support could weigh on the market. The next upside objective is 812 1/4. The next area of resistance is around 794 and 812 1/4, while 1st support hits today at 765 1/2 and below there at 755.
KC WHEAT (MAR) 02/16/2022: The market back below the 60-day moving average suggests the longer-term trend could be turning down. The upside crossover of the 9 and 18 bar moving average is a positive signal. Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The market's short-term trend is positive on the close above the 9-day moving average. The market's close below the 1st swing support number suggests a moderately negative setup for today. The next upside target is 841 1/2. The next area of resistance is around 819 3/4 and 841 1/2, while 1st support hits today at 786 3/4 and below there at 775 1/2.
MINN WHEAT (MAR) 02/16/2022: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The market's short-term trend is positive on the close above the 9-day moving average. The swing indicator gave a moderately negative reading with the close below the 1st support number. The near-term upside target is at 979. The next area of resistance is around 966 and 979, while 1st support hits today at 940 and below there at 927.
LIVE CATTLE
April cattle opened near unchanged on the session and closed moderately higher on the day. A recovery in the US stock market and weakness in the US dollar were seen as positive forces. Talk of the short term oversold condition of the market after the three day setback helped to spark some buying interest. Ideas that packer profit margins are strong and will keep the pipeline active helped to support. Boxed beef cutout values that midsession came in at $271.33, down $2.63 on the day.
Technical Outlook
LIVE CATTLE (APR) 02/16/2022: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The market's short-term trend is positive on the close above the 9-day moving average. The close over the pivot swing is a somewhat positive setup. The next downside target is 145.700. The next area of resistance is around 147.470 and 148.070, while 1st support hits today at 146.300 and below there at 145.700.
LEAN HOGS
April hogs opened slightly higher on the session and closed sharply higher. Packer profit margins are good and traders see a continued strong advance in the cash market over the near term. The Lean Index jumped to 90.51 from 88.92 yesterday and this helped support the solid gains. Talk of the short-term oversold condition after the three day sell-off help support some buying. The market is still holding a much wider than normal premium to the cash market. In addition, the market is still operating under the negative technical influence of the February 10 key reversal. Resistance is at 105.15. Pork cutout values at midsession came in at $110.11, up $2.13 on the day.
Technical Outlook
LEAN HOGS (APR) 02/16/2022: Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The close above the 9-day moving average is a positive short-term indicator for trend. A positive setup occurred with the close over the 1st swing resistance. The next downside objective is 100.850. The market is approaching overbought levels with an RSI over 70. The next area of resistance is around 105.650 and 106.870, while 1st support hits today at 102.650 and below there at 100.850.
COCOA
Cocoa prices were able to find early support, but turned back to the downside before finishing Tuesday's trading session with a mild loss and a third negative daily result in a row. Indications that Ukraine/Russian tensions were being dialed down provided a boost to the cocoa market as that can help to shore up near-term demand prospects.
While the region will shift back into a dry weather pattern, recent rainfall over West African growing areas is thought to improve their mid-crop production outlook which weighed on cocoa prices late in the day.
Technical Outlook
COCOA (MAY) 02/16/2022: Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The market's short-term trend is negative as the close remains below the 9-day moving average. It is a slightly negative indicator that the close was under the swing pivot. The next downside objective is 2692. The next area of resistance is around 2740 and 2765, while 1st support hits today at 2704 and below there at 2692.
COFFEE
Coffee prices were able to build on early support and shook off a midsession pullback as they finished Tuesday's inside-day trading session with a sizable gain. The Brazilian currency rallied to a new 5-month high which provided coffee with carryover support as its recent strength eases pressure on Brazil's farmers to market their remaining near-term supply. The continued drawdown in ICE exchange coffee stocks to 22-year low provided coffee with additional support as it shows that a global shipping container shortage is still obstructing the flow of exports.
Technical Outlook
COFFEE (MAY) 02/16/2022: Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near term support is penetrated. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The next downside target is now at 245.72. The next area of resistance is around 254.27 and 255.81, while 1st support hits today at 249.23 and below there at 245.72.
SUGAR
Sugar prices could not hold onto initial support and slid to a new 1-week low, but rallied late to finish Tuesday's trading session with only a mild loss. Easing tensions between Ukraine and Russia results in a huge selloff in energy prices which put significant carryover pressure on the sugar market. However, a rally to a new 5-month high in the Brazilian currency provided late support as that eases pressure on Center-South mills to produce sugar for the global export marketplace.
Technical Outlook
SUGAR (MAY) 02/16/2022: Momentum studies are still bearish but are now at oversold levels and will tend to support reversal action if it occurs. The close below the 9-day moving average is a negative short-term indicator for trend. The market tilt is slightly negative with the close under the pivot. The next downside objective is 17.30. The next area of resistance is around 17.72 and 17.91, while 1st support hits today at 17.42 and below there at 17.30.
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