2010-02-14

Spring time look at various markets

General Markets/Longer Term perspective

Grains

Rice (ZRk10)

Rice is an illiquid market in grains sector and runs on its own mind usually. Recently rice was breaking new highs but it was soon followed by a sharp correction. The current correction is appears to be in some sort of final stage but there is still some bearishness left in the chart which can be traded. The current chart is turned back down from the resistance zone (which provided some support on the upside). 89 dEMA has also provided resistance and a bear flag has formed which provides a projection of 13.00-12.90 upon down side breakout. Breach of the resistance zone will negate this analysis. Also interesting to note is that the downside projection will establish a head and shoulder pattern on the longer term chart and it would create the next set of interesting development in this market.


UK GILT (Rh10 – Liffe)

The chart look strongly bearish now even tough there are strong "supporting" talks of extended Quantitative Easing and rates being low for a sustained time. Kind of indicates that the markets are pricing in some sort of bond market strike for UK govt bonds. Selling the rallies and breakouts below with stop above 118 remains the game. German BUND (GBLh10 - Eurex) is bit stronger looking chart but worth watching if support starts pulling out of EURO Zone as well.

SOFTS

Many markets which witnessed strong bull run have been showing sharp correction. This indicates some sort of "fundamental" shift taking place.

Cocoa (CCk10)

Cocoa has reached 200d MA and is looking bearish. 3225 is key area for bears to short further. If that does not hold, bull market may still be intact as the current EW count would point to wave 4 completion. Breakdown below is selling opportunity. It would be interesting to track how this market behaves. It has had a strong run up given the supply shortage and perceived strong demand. That now appears to be fully priced in and any wiggle on each side may move the market strongly.

Orange Juice (OJk10)

Appears to be consolidating in an apex. Need to watch for a breakout either side. As of now I feel that there is still some bullishness left in OJ and it may breakout higher if it breaks on upside from appex. A pullback to 126-118 will still keep the bull market intact for longer term buys. Sideline while the apex makes up its mind.

 

Sugar (SBk10)

It could be a bit early and pre-mature to call an over-all end of Bull market in Sugar but the early indications are that the bulls have run their course and sugar may be ripe for a fall from current levels. There is a nice bear flag and possibly a longer term top at 30.40. Breach of 89 dEMA should provide further confirmation. If the analysis is correct, the next pullback should target 24.50-23.50 area in near term and should setup for further shorts upon rallies. Breach of 29 on upside would negate this analysis. If this is start of a bear market in Sugar, we can see sugar as low as 20-18 level in medium term. Worth keeping an eye on London (Liffe) White Sugar market (Wk10) as well. That is not as bearish as US Sugar but if London start breaking down, US sugar will go down much further.

Coffee (KCk10)

Coffee has breached the support trend line and also 89/200 dMA. I would not be surprised to see Coffee going down to 122.50-119.50 level if the down trend continues. London Coffee (RCk10 Liffe) is also not providing any support.

Cotton (CTk10)

Cotton is slightly confusing. On one hand I feel that the top is in and market should turn down, and on the other hand, the pullback has been very strong and it is possible that the top might be taken. I would like to watch 81.00 region for resistance. If 81.00 holds, may be the top is in and rallies can be sold. Also if the pullback turns out to be merely holiday madness, the correction could be to as low as 58-48 region. As of now I remain on sideline and watch the development but this market remains in interesting zone and worth keeping a close eye.

… to be continued ….