COMMODITY TRADING SCHOOL MARKET SUMMARY
DATA RELEASES 11/18/2009
8:30 AM US CONSUMER PRICE INDEX (0.2%), EX FOOD & ENERGY (0.1%)
US HOUSING STARTS (600K)
10:30 AM EIA INVENTORY (PETROLEUM)
DATA RELEASED 11/17/09
US PRODUCERS PRICE INDEX (0.3%), EX # -0.6%
INDUSTRIAL PRODUCTION (0.1% VS 0.4% EXP)
US TREASURIES gained for another session, supported by a double boost of data. Tuesday’s reading on wholesale prices posted a greater than expected drop in the core rate (reading that excludes historically volatile food and energy prices). The greater than expected decline was due primarily to a steep pullback in car and light truck prices. Treasuries also found support on a flight to quality bid after October’s reading on US industrial production came in lower than expected. While pickups in manufacturing continued in the wake of historic burn downs of wholesale inventory, the pace of gains slowed dramatically. Investors found some solace in fixed income as the benefits of playing the ongoing low interest rate environment from a security perspective became the trade of the day.
Treasuries in turn rallied to their highest levels in nearly a month. This movement may give the complex a higher perch from which to pull back though. At the very least, some consolidation should take place as traders await the latest announcement for the supply of new government debt auctions scheduled for next week. Any pullback may be weaker than previous ones however, as end of the year portfolio buying may offer an additional level of support going into December.
Technically, US 30 December futures are touching up near historically overbought levels on a daily RSI The contract is also pushing into the 61.8 Fibonacci retracement level measured from the recent high in the contract set on October 2nd. These two elements suggest a significant level of resistance that should result in a retracement back to 120-24, with 120-06 setting up as an initial support level. A break of this level could fuel strong upside momentum, allowing the market to test 121-24.
US EQUITIES posted a relatively flat session on Tuesday, ending the session mixed with a end of session paring of early losses driven by new data that highlighted continued economic weakness. US October Industrial Production rose less than expected 0.1%, reviving nagging questions regarding the sustainability of economic recovery going forward into 2010. The outlook for inflation remains muted based upon October’s Producer Price Index, which reported a significantly lower reading on the core data (factoring out food and energy prices). An end of the day rebound in prices was supported by gains in commodity prices and a string of earnings from retailers which appeared to offer a reemergence of consumer spending. Despite the recent increase in sales, the sector remains wary of the outlook for the upcoming holiday shopping season, as many consumers expected to reign in budgets and spending by making use of cash or gift resources rather than credit.
Technically, December S&P futures show little elements of change from Tuesday’s ranges. Initial resistance continues to measure at the 1115.00 level. Upside targets in the contract set up at 1123.00 and 1132.00. 1140.00 could be the 2009 top out level. 1101.70 remains a key support level. Market appears likely to remain range bound until Thursday’s session.
PREPARED BY RICH ROSCELLI AND PAUL BRITTAIN.
Email rich@binvstgrp.com
Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Whitehall Investment Management and Commodity Trading School, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.
