Reuters

(Reuters) – Hedge funds and other money managers liquidated more than $2 billion in gold futures over a week, trade data on Friday showed, before a forceful rebound in the precious metal potentially tripped up some of them.

The majority of fund managers also appear to have bet wrongly against wheat, as suggested by the data from the Commodity Futures Trading Commission which showed a net “short” or bearish position against the grain which finished this week with its highest weekly gain in 16 years.

“It’s still early to say if this rebound in wheat and gold will hold. But it’s safe to assume that at least some hedge funds got burnt this week trying to ride the two markets all the way down,” said Adam Sarhan at Sarhan Capital in New York.

Fund managers had been dumping gold since the start of May after election woes in Greece and new fears over Spain’s finances put the euro zone crisis at the forefront of investor concerns. Traders initially selling the precious metal to cover losses in stocks and other markets were later joined by those betting that gold itself was overpriced and due for correction.

Trade data released by the CFTC showed the net “long” managed money in U.S. gold — which reflects bullish bets on the shiny metal — fell by $2.2 billion to $12.2 billion for the week ended May 15.

The drop came after hedge funds and money managers reduced to 78,619 the number of net gold contracts they held on the COMEX division of the New York Mercantile Exchange, versus the 92,498 contracts at the end of the week to May 8.

It was the smallest net long position for funds in gold since December 2008, when speculators were bailing out of all financial markets at the height of the global economic crisis.

COMEX gold’s benchmark contract, June, fell around $82 an ounce, or 5 percent, between May 8 and 15, settling at a four-month low of around $1,557.

After falling for another session, it suddenly snapped back the last two days of this week, surging to nearly $1,598 before closing above $1,591 on Friday.

It was the sharpest two-day rally for gold since October, a rebound believed to have caught a number of funds that had been on the short end of the market.

“It’s all a question of when you exited your shorts in gold this week, or whether you did at all. If you had gone short since the May 1 high of $1,672, yes, you’d have made quite a lot of money. Those who went short at $1,550 and stayed short, would have certainly lost,” Sarhan said.

In the case of wheat, the managed money fell by $117 million to a net short of around $1.5 billion for the week to May 15.

U.S. wheat futures added about 16 percent to prices this week — the largest weekly gain since 1996 — as hot and dry weather kept fears simmering about crop losses in the U.S. Plains and inRussia.

CFTC data also showed the overall managed money in U.S. commodities falling for a second week in a row to its lowest level in nearly 5 months.

Net longs held by hedge funds and other money managers across 24 U.S. futures markets fell by nearly $8 billion, to settle at around $62 billion for the week to May 15. The last time net longs for managed money were at those levels was in the week to December 27.

(Editing by Bob Burgdorfer)

The NYSE Composite Broke Below Its 200 DMA line

Friday, May 18, 2012
Stock Market Commentary:

Stocks and a slew of other “risk assets” fell for a third straight week after the latest round of economic and earnings data suggests the global economy is slowing, not growing. Now that we are in the latter half of earnings season, the reaction by the major averages has been less than stellar as all the major averages have given back most of their gains for the year. Our longstanding clients know that we not only focus on the actual numbers but how the major averages (and individual stocks) react to the numbers. This allows us to see how the market participants are “voting” and helps us filter out the noise and focus on what matters most: price. So far the action is not ideal. We find it worrisome to see all the major averages fall and stay below April’s lows & their respective 50 DMA lines. It is important to note that the Russell 2000 and NYSE composite are below their respective 200 DMA lines (which is not a healthy sign). At this point, the next level of support for the other popular averages is their respective 200 DMA lines..

Monday-Wednesday’s Action- Stocks Fall As Greece Woes Flare Up Again:

Stocks fell on Monday as fresh concerns spread regarding the EU Debt crisis. Greece returned to the spotlight after a political impasse caused many to question whether or not the debt-laden state will be able to form a new elected government. In other EU news, debt yields surged of other countries in the euro zone periphery. This sent the euro to a fresh 2012 low and set the stage for the risk-off theme for the rest of the week.

Stocks opened higher but ended lower on Tuesday after a report was released that showed a possible run on Greek banks. The report said $800B was withdrawn from Greek banks which is not an insignificant sum. This added more pressure to the already questionable presence of Greece in the already fragile euro zone. On the economic front, a slew of data was released. Retail sales rose by +0.1% in April which missed the Street’s estimate for a +0.2% gain. The Consumer Price Index was flat from the prior month, while core CPI rose by 0.2%. Meanwhile, the Empire State Manufacturing Index for May easily topped estimates and rose to 17.1 from 6.6 in April.

Stocks opened higher on Wednesday after the heads of state of France & Germany (Hollande and Merkel) said they want Greece to stay in the euro zone. Housing starts in the US jumped 2.6% while building permits fell by -7%. A slew of housing stocks rallied on the news. However, the bears showed up (again) after the minutes of the latest Fed meeting showed that FOMC members were not immediately considering QE3.

Thursday & Friday’s Action: Fitch Slashes Greece’s Credit Rating & Moody’s Cuts A Slew of Spanish Banks

Stock fell hard on Thursday after yields on Spanish debt jumped above 6%, Fitch downgraded Greece’s credit rating by one notch (to CCC from B-), and a slew of economic data missed estimates. Weekly jobless claims in the US were unchanged at 370,000 while leading indicators fell for the first time in seven months and the Philly Fed index fell sharply. Moody’s, another popular rating agency, downgraded a slew of Spanish banks which put more pressure on the already troubled euro. Stocks were relatively quiet on Friday after the much anticipated Facebook finally priced at $38 a share. Of course, the opening print was $43.

Market Outlook- In A Correction

From our point of view, the market is back in a correction now that all the major averages are back below their respective 50 DMA lines. April’s lows were breached and in the short term should now serve as resistance.  As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!

Reuters

NEW YORK | Thu May 17, 2012 9:04am EDT

(Reuters) – New U.S. claims for unemployment benefits were unchanged last week, according to government data on Thursday that will do little to ease concerns about a recent slowdown in jobs growth.

COMMENTS:

DOUG ROBERTS, CHIEF INVESTMENT STRATEGIST, CHANNEL CAPITAL RESEARCH.COM, SHREWSBURY, NEW JERSEY

“What we’re seeing is a deterioration. This is further confirmation that it (earlier improvement) was largely due to the warm weather, it might have been due to the manufacturing surge we had last year.”

ELLEN ZENTNER, SENIOR U.S. ECONOMIST, NOMURA SECURITIES, NEW YORK

“The April increase in initial jobless claims is very obviously the effect of seasonal adjustment issues surrounding the Easter holiday. Claims have now returned to levels similar to what we saw in March when the economy created 150,000 jobs and that’s likely to provide the underpinning for the baseline forecast for payrolls in May.

“Over the past two weeks is the first time that there was evidence that claims had come back down from the troubling increase that we saw over April. This is the third straight week that claims have remained lower, definitely proving that April was an anomaly.

“That’s good news because it means there are still supportive job conditions in the economy, which are of course necessary for the U.S. recovery to continue. ”

ADAM SARHAN, CHIEF EXECUTIVE OF SARHAN CAPITAL IN NEW YORK

“The trend in the jobs market over the past few weeks has been one of steady to a little weaker than expected. The concern for investors is whether the economy will continue to grow, and if the job market will remain pressured.”

DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT

“A bit higher than expected with a prior upward revision so a sense that claims have stalled around this 370,000. This report is for the nonfarm payrolls survey week, and so about 18,000 less than for the April nonfarm payrolls survey week suggesting some better risk for the nonfarm payrolls report. Don’t take that to heart; it’s a tough correlation to bet on.”

SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK:

“It is not very surprising, this has been on the disappointing side. We are really not showing much momentum in the labor market at this time. This is the reference week for May employment. It does seem like the underlying progress in the labor market has hit its maximum and has sort of stabilized at this point.”

URL: http://www.reuters.com/article/2012/05/17/us-usa-economy-jobless-claims-idUSBRE84G0OQ20120517

Prominent hedge fund manager John Paulson held on to his ETF bullion holdings in the first quarter of this year, profiting from an early surge in gold prices before the market tanked, a regulatory filing by his company showed on Tuesday.

It was the first time Paulson had retained his position in the SPDR Gold Trust [GLD  150.35   0.61  (+0.41%)   ] since the second quarter of 2011. He slashed his holdings in the world’s largest gold ETF in two earlier quarters due to what analysts suspected were client redemptions.

Other major fund managers with positions in SPDR Gold, including billionaire financier George Soros, also turned positive on the ETF during the first quarter, some raising their holdings sharply.

John Paulson

Paulson & Co owned 17.3 million shares in SPDR Gold at the end of March 31, virtually unchanged from Dec. 31, a regulatory filing to the U.S. Securities &
Exchange Commission showed.

The gamble resulted in a paper gain of nearly $180 million for the company as the value of its ETF holdings rose to $2.81 billion from $2.63 billion amid rising bullion prices.

The spot price of gold [XAU=  1548.80    4.70  (+0.3%)   ], which tracks trades in bullion, jumped 11 percent in January as the market appeared on course to test September’s record highs above $1,920 an ounce.

The rally, however, lost steam abruptly, with gold falling a cumulative 4 percent in February and March before finishing the quarter up nearly 7 percent. The sell-off has deepened since, taking gold to below $1,545 an ounce by Friday’s close, down more than 1 percent for the year.

Analysts read the first quarter filing by Paulson as a sign that the hedge fund manager, a well-known gold bull, has not lost his faith in the precious metal as a long hedge against inflation.

Paulson has to date been the biggest holder of SPDR shares, using them to hedge currency exposure, while other managers such as David Einhorn and Daniel Loeb have favored more-discrete investments in physical bullion.

Still some expected him to join the herd and cut some of his holdings in gold before the second quarter was through.

“There’s absolutely no question in my mind that large institutions have been net sellers in gold over the past two weeks,” said Adam Sarhan at New York’s Sarhan Capital. “The fact that Paulson has been coming under a lot of pressure on his other holdings may force him to liquidate as well.”

During the first quarter, Paulson was also bullish in outlook in his outlook for gold-miners such as Barrick Gold Corp [ABX.TO  36.18    0.95  (+2.7%)   ] andIAMGold Corp [IMG.TO  9.77    0.29  (+3.06%)   ], accumulating more shares in the companies.

Soros, Others Add to ETFs

Billionaire financier George Soros increased his position in SPDR Gold to nearly $52 million in the first quarter from $13 million previously.Last year, Soros, who had called gold “the ultimate bubble”, had largely dumped his stake in the ETF before the metal ran up to a record peak of $1,920.30 per ounce in September.

Other major institutional investors, including PIMCO and the Teacher Retirement System of Texas, also boosted their GLD holdings during the quarter.

Eric Mindich’s Eton Park Capital, which held only SPDR gold options during the fourth quarter, was back to holding to common shares as well.

Overall holdings in the SPDR Trust rose just over 8 percent in the first quarter, after a 2 percent gain in the fourth, according to data obtained from SPDR’s website. Gold ETF holdings increased as the price of bullion rose more than 6 percent in the first quarter.

URL: http://www.cnbc.com/id/47438426

Reuters

(Updates with markets’ close; technical comment on CRB)

    * CRB at lowest since October 2010
    * U.S. crude, copper, gold near 4-month lows
    * Raw sugar rebounds after nearing 20-month bottom

    By Barani Krishnan
    NEW YORK, May 14 (Reuters) - The selloff in commodities deepened o n M onday, with U.S. crude oil sinking below $95 and a
benchmark index for resource markets touching a 19-month bottom, as Greece's political woes exacerbated fears that trouble in
Europe would drag down demand for raw materials.
    The euro's slide to December lows sent the dollar rallying anew, further pressing commodities which are mostly
priced in the U.S. currency.

"Risk-on assets in general are falling due to the fact that investors are starting to understand the reality of the fact that the global economy is going to slow, not grow, in the near future," said Adam Sarhan, chief executive at New York's Sarhan Capital. 
    Efforts to form a coalition government in Greece after its May 6 elections remained inconclusive, throwing into limbo the
country's debt commitments. European Union policymakers warned Athens it cannot remain in the euro zone if it tears up bailout
program agreements.

   China's move to free up more cash from its banks for lending after the dismal industrial production data it issued last week
reaffirmed some investors' fears that the No. 2 economy was less resilient than thought.
    Lingering concerns about the huge trading losses revealed at top U.S. bank J.P. Morgan last week -- and whether an
investigation by the U.S. Securities and Exchange Commission could lead to more fallout in the affair -- was another negative
for markets. The bank's Chief Investment Officer Ina Drew had already resigned over the losses, which experts say could exceed
$3 billion.
    Crude oil in New York settled at a five-month low under $95.

    Copper's benchmark three-month contract in London closed below $8,000 per tonne the first time in nearly a
month.. Benchmark U.S. gold futures hit a four-month trough.
    Soybeans traded in Chicago plumbed a six-week low.

    "PANIC MODE"
    "A lot of these longs in soybeans are being held by the same traders who had money in Greece and the European Union, JPMorgan
-- there are two black eyes right there," said Karl Setzer, a market analyst for Iowa-based MaxYield Cooperative.
    "These guys are in panic mode right now. They might have to take some profits out of commodities to cover losses on the
financials."
    The Thomson Reuters-Jefferies CRB index, a closely followed indicator for commodities, fell 1.2 percent to settle
below 290 points -- its lowest since October 2010. The CRB is now down nearly 6 percent on the year after a downtrend that
began with the slide in oil prices over the past few weeks.

    The index is also down more than 20 percent from the highs of early May 2011, when commodity markets were mostly surging on
the back of a weaker dollar amid speculation the U.S. Federal Reserve might extend a stimulus plan.	

    CRB COULD FALL MORE

    Reuters technical analyst Wang Tao predicted on May 8 that the CRB could drop to as low as 286.85 within a week, or by May
15.

 "This wave is the third leg of a three-wave cycle that started at the May 2, 2011, high of 370.72, unfolding towards the 50 percent Fibonacci projection level at 286.85," he wrote.

    In Monday's session, the CRB was largely weighed down by the drop in U.S. crude oil, its leading commodity which accounts for
nearly a quarter of its weighting.

   U.S. crude settled at $94.78 a barrel, breaking the market's $95 psychological support. It fell to $93.65 during the session,
a low not seen since Dec. 19.

    London's Brent crude     closed at $111.57, down 0.6 percent.

    Not all commodities closed lower, though. U.S. raw sugar futures neared a 20-month bottom but
then bounced up to settle a quarter percent higher. Robusta coffee also bucked the trend, rising to an eight-month high on tight supplies due to strong demand in emerging markets.

URL: http://af.reuters.com/article/commoditiesNews/idAFL1E8GE8T20120514

Reuters

NEW YORK/LONDON (Reuters) – Copper crumbled to a four-month low on Monday as commodities slumped broadly on fears of a slowdown in global economic growth triggered by political deadlock in Greece and further signs of a struggling Chinese economy.

Most other metals also fell, with nickel sinking to a 2012 low below $17,000 a tonne, aluminum touching a 4-1/2-month floor, and tin and zinc each falling to their lowest levels in four months.

Copper closed below $8,000 per tonne for the first time in nearly a month, shedding more than 2 percent of its value and falling in line with other risk assets like crude oil and equities as Greece’s inability to form a government and concerns over a deepening Chinese slowdown presented a limited demand outlook for the industrial metal. <MKTS/GLOB>

“Risk-on assets in general are falling due to the fact that investors are starting to understand the reality of the fact that the global economy is going to slow, not grow, in the near future,” said Adam Sarhan, chief executive of Sarhan Capital.

London Metal Exchange (LME) three-month copper tumbled as far as $7,813 a tonne, its cheapest since January 12, before $178 or by 2.2 percent to close at $7,835 a tonne.

In New York, the July COMEX contract dropped 9.40 cents or 2.6 percent to settle at $3.5540, after moving from a four-month low at $3.5425 and $3.6745.

On Sunday, China cut bank reserve requirements to free up an estimated 400 billion yuan ($63.5 billion) for lending in a bid to avert a sudden slowdown in the world’s second-largest economy. [ID:nL4E8GC03Q] The move fed concern about global growth, already dampened by the political turmoil in Europe.

Also on Sunday, coalition talks in Greece faltered, increasing the chance of a new election in mid-June. An inconclusive vote on May 6 left the country’s political leaders divided on its 130 billion euro bailout, with neither side able to form a government.

“The euro zone remains in focus and the break below key support at $8,000 (a tonne) saw further liquidation in copper with the market still under heavy pressure from macro jitters and also following disappointing euro zone manufacturing output,” said VTB Capital analyst Andrey Kryuchenkov.

“The Chinese reserves cut provided very little support with the market largely ignoring it and hoping for a rate cut in the future instead.”

Data on Friday from the Commodity Futures Trading Commission (CFTC) continued to reflect an indecisive market, with longs rising by 1,500 lots and shorts adding 1,900 lots, resulting in a small net decline in the net long position.

An unexpected drop in euro zone industrial production March added to signs that the bloc is heading into recession, while Spain’s short-term debt costs rose at auction and its 10-year yields soared.

While demand prospects looked cloudy, copper’s supply-side situation remained tight.

Latest LME data showed copper stocks fell 2,975 tonnes to 218,300 tonnes, the lowest since Oct 2008 and equivalent to four days of global consumption.

This failed to lift copper prices, however, especially after the premium for cash copper over the three-month price narrowed to $37.50 at one point, from more than $110 last week – indicating nearby supply tightness could be easing.

NOT ABOUT LIQUIDITY

In China, investors were considering whether its move to cut bank reserve ratios was behind the curve, coming as it has after data last week showing the world’s No. 2 economy slowed further in April.

This followed the weakest first-quarter growth in nearly three years. Also last week, data showed China’s copper imports fell nearly 19 percent to an eight-month low, while its output of refined copper fell for the first time since January.

“It’s not about liquidity, it’s about real demand. So the liquidity improvement will not help because there’s simply no demand out there,” said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.

In other metals, tin shed $425 to close at $20,050 a tonne, having hit a four-month low of $20,007 a tonne earlier.

Indonesia, the world’s largest tin exporter, plans to introduce new quotas to limit mineral exports, as well as a 20 percent duty on mineral exports by certain companies, Indonesian government officials said on Friday.

Aluminum ended off $20 at $2,025 a tonne, after hitting a 4-1/2 month floor of $2,019 a tonne earlier.

Russia’s UC RUSAL Plc <0486.HK>, the world’s biggest aluminum producer, posted an 84 percent drop in first-quarter net profit as prices fell, potentially fuelling a shareholder row over the company’s refusal to sell its stake in Norilsk Nickel <GMKN.MM>.

URL: http://www.cnbc.com/id/47417080

Candles

There are little tidbits of wisdom that I have picked up over my years; here is a list of some things that all traders should take to heart:

1. Don’t apply logic to the stock market
So often I see people make decisions in the market on what makes sense to them. It makes sense to buy stocks when the company insiders are buying. It makes sense to buy stocks that are making positive announcements. It makes sense to listen to what the President has to say about the company’s prospects. However, all that matters is what the market thinks of the company and whether the buyers are more motivated than the sellers. So often, the market does things that do not make any sense until we later learn of what motivated the market to do what it did. Remember, the market is forward looking, most times, what makes sense is judged on what has happened in the past.

2. Never average down on a losing position
Buying more of a bad thing is not much different than continually betting on a losing horse. Winners win for a reason, and until your stock starts to show that it is a winner, don’t add more to a bad situation. If you like a company whose stock is losing you money, sell it. You can always buy it back later when the market starts to like it again.

3. Successful investing is not about being right, it is about making money
Most good traders are usually wrong. They will lose small amounts often and make big amounts occasionally. What matters is how much they make over a large number of trades. Don’t try to always be right, simply work to make money.

4. Resist doing what feels comfortable
We have a tendency to look for the market to prove our decision is a correct one before we make our move. The problem is that this often means we are too late to capitalize on the opportunity. We have to move before the crowd, and that often feels like a dangerous thing to do.

5. Anyone can get lucky in the short term, only good traders succeed in the long term
Don’t confuse making money in the stock market with knowing what you are doing. It is easy to get lucky on a stock or on a sector and enjoy gains that give credence to your analysis method. However, short term winners often give back all of their gains because they fail to recognize their success as luck.

6. Be patient with your winners, not with your losers
The natural tendency is to sell your winners too early and hold on to your losers, hoping for a turnaround. A simple, but not easy, thing to do is reverse this tendency. When the market proves you right, wait to sell on a signal that indicates the stock is likely to go lower. When the market proves you are wrong, let the trade go and take the loss.

7. Publicly available information is priced in to the stock, don’t rely on it to make decisions
Once information, no matter how good, is made public, it loses its usefulness to you.
Public information is priced in to the stock by the market of investors. Information only has value to you if the market has not priced it in.

8. Make sure your trading strategy has an edge
A trading strategy is only worth trading if it can be shown that it consistently makes money. Establish your trading rules and test them over a variety of market conditions so you know that it is effective. Time spent testing a strategy to prove it is a money maker can save you a lot of money in the market.

9. People lie, markets don’t
I have learned the hard way to never trust what people say, their actions say much more. Learn to read the market and understand it’s message. No matter how much insight a person may have, recognize that they have a bias based on their own emotional attachment to money.

10. It is easier to trade with the trend than against it
Understand the mood of the market and trade with it. Don’t chase euphoria, but seek to buy stocks that are in the control of the buyers. Don’t sell on fear, but seek to sell stocks that are under seller control.

Source: Stockscores.com Perspectives for the week ending April 28, 2012

Friday, May 11, 2012
Stock Market Commentary:

Stocks and a slew of other “risk assets” fell for a second straight week after the latest round of economic and earnings data suggests the global economy is slowing, not growing. Now that we are in the latter half of earnings season, the reaction by the major averages has been less than stellar. Remember, we not only focus on the actual numbers but how the major averages (and individual stocks) react to the numbers. This allows us to see how the market participants are “voting” and helps us filter out the noise and focus on what matters most: price action. So far the action is not ideal. We find it worrisome to see all the major averages fall below their respective 50 DMA lines again.

Monday-Wednesday’s Action- Stocks Tank On Fresh EU Woes:

Stocks were flat on Monday as investors digested two important elections in France & Greece over the weekend. The larger and more important election was in France where socialist candidate Francois Hollande won the second round of French Presidential elections. Greek voters were all over the map, rejecting the status quo and not giving a majority to any one party. Greece’s finances are still a mess as the public remains fragmented and the country is still taking bailout money.  Risk assets fell on Tuesday as fresh concern spread regarding the health and sustainability of the Eurozone. Rumors spread that Greece will be forced to leave the Eurozone as the nation continues to tackle its ongoing debt crisis. Gold plunged below several critical technical areas of support on the news, most important its multi-year upward trendline. Stocks fell again on Wednesday after yields on Spanish debt topped 6% which is not ideal. A slew of European stocks were smacked as concern spread regarding the health and sustainability of the euro.

Thursday & Friday’s Action: Stronger Consumer Confidence Offsets JPM $2B Snafu

Stocks rallied on Thursday and Friday as Eurozone fears eased and consumer sentiment in the U.S. surged to the highest level since January 2008! On Thursday, hope spread that Greece would manage to put together a government that would help them stay in the Eurozone. Investors were also happy to see the latest round of decent economic data be released from the U.S. Before Thursday’s open, the Labor Department said weekly jobless claims fell by 1,000 which does not particularly bode well for ailing jobs market. A separate report showed that the trade deficit widened in March, due in part to higher oil prices and a slew of Chinese goods outweighing record exports. After Thursday’s close JP Morgan (JPM) reported a surprise $2B loss for the second quarter due to poor risk management from the Chief Investment Office. One of the most important lessons we learned from the entire 2008 financial meltdown was that nothing is rock solid, not JPM or  even governments! Stocks rallied on Friday after consumer confidence surged to the highest level since January 2008! A separate report showed that the producer price index (PPI) matched estimates which helped allay inflation woes.

Market Outlook- In A Correction

From our point of view, the market is back in a correction now that the Dow Jones Industrial Average, S&P 500, Nasdaq composite, Nasdaq 100, and the Russell 2000 are back below their respective 50 DMA lines. April’s lows were breached but the bulls are fighting to defend that level. The next level of support is March’s lows and then the 200 DMA lines. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!

Reuters

TECHNICALS- US soybean breakdown turns bullish view bearish

Tuesday, 08 May 2012 16:55:57
By Carole Vaporean

NEW YORK, May 8 (Reuters) – U.S. soybean futures <Sc1> exhibited a clear bearish signal on Tuesday when they broke below a key trendline, rupturing channel support that has been growing since early 2012.

On the daily continuation chart, the trend break occurred at $14.58 per bushel, with technical selling accelerating on the break down.

At the Chicago Board of Trade, actively traded July <SN2> tumbled 27-1/2 cents, or 1.9 percent, to $14.38-1/4 a bushel. [GRA/]

Next downside targets now sit at prior lows of $14.13, $14.07 and a 50-day moving average that currently points to $13.99-3/8 per bushel.

Tuesday’s trend support breakdown was one of several bearish signals to emerge over the last week.

Adam Sarhan of Sarhan Capital said he sold soybeans on Tuesday once it broke below his stop-loss sell area of $14.56 and he is currently flat bean futures.  

Soybean prices had traded in a well-defined upward channel since early 2012, advancing until April 27 when they reached $15.09, their highest on the continuation chart since July 2008. 

   But, Sarhan points out, prices quickly pulled off that high, marking the first technical indication that “something was wrong.” 

 ”That was a classic upside breakout from a long side base. But, it was not a good sign that it promptly negated that break,” the analyst said, explaining that normally, a break higher should be followed by another move up, or at least a sideways pattern, to confirm the bullish view. 

The second sign came with the Tuesday’s break of trendline support.  

   ”That just confirmed that the bears are getting stronger and have taken control of this market in the short term,” he said. 

   A third bearish technical signal came when soybeans closed lower on the day they reached their 3-3/4-year peak. 

   ”Whenever a market gets to a new high and on the same day falls and closes lower, that’s not a good sign,” said Sarhan. 

   Calling all three signals together, “a line in the sand,” he added that the tone in the soybean market switched from being overtly bullish last week to overtly bearish in the short term.  

   As long as prices remain below the trendline at $14.58, which now serves as resistance, the bearish view holds.  

If bean prices jump back above the trendline, the bulls can regain the upper hand. By Tuesday’s close, however, prices remained sharply lower, extending earlier losses to $14.38-1/4 per bushel.

   Otherwise, the bears will dominate and send prices even lower.   

(Reporting By Carole Vaporean; Editing by Bob Burgdorfer)

Reuters

Gold down 2 percent, breaks below $1,600 on euro fears

By Frank Tang

NEW YORK | Wed May 9, 2012 1:28am IST

(Reuters) – Gold fell around 2 percent in heavy trading on Tuesday, briefly breaking below $1,600 an ounce as worries that the euro zone debt crisis could worsen triggered a technical selloff.

Gold retraced some losses as other commodities and Wall Street also recovered. Still, the day’s tumble cut gold’s gain so far in 2012 to less than 3 percent.

Option volatility spiked as investors bought put options to protect against further downside risk in bullion prices. The precious metal breached a series of technical support levels, suggesting more weakness to come.

Bullion this year has tended to trade in tandem with riskier assets such as stocks and oil, and has not staged many safe-haven rallies this year during times of economic uncertainty.

Analysts said political uncertainty in Greece and a change of leadership in France had investors doubting whether Europe would come through with the billions of euros needed to bail out its troubled economies.

“Absent new monetary stimulus, gold doesn’t make sense. When people are fearful of the fiat currencies eroding their wealth, that’s when gold catches its bid,” said Jeffrey Sherman, commodities portfolio manager of the $33 billion asset manager DoubleLine Capital.

Spot gold dropped 1.9 percent on the day to $1,607.70 an ounce by 3:16 p.m. EDT (1916 GMT), its largest daily decline in a month. It hit a session low of $1,594.94 an ounce, its cheapest price since January 4.

Gold’s has declined $180 from its 2012 high of $1,790 on February 29 after Fed Chairman Ben Bernanke did not hint at a third round of government bond purchases, or quantitative easing, which has underpinned the metal. A strong run of U.S. economic data has further reduced hopes for U.S. monetary easing.

U.S. gold futures for June delivery settled down $34.60 at $1,604.50 an ounce.

Trading volume was on track for its strongest showing in more than a month and about 40 percent above its 30-day average, preliminary Reuters data showed.

U.S. Treasuries rallied with the dollar, putting pressure on other commodities such as crude oil and copper. Losses on Wall Street also pressured precious metals.

“With stocks slumping and with treasuries rallying and risks generally rising … investors are withdrawing from the gold market, perhaps as margin calls are made, forcing investors to liquidate precisely when they don’t want to,” Andrew Wilkinson, chief economic strategist at Miller Tabak & Co said in a note.

The CBOE Gold ETF Volatility Index .GVZ, often referred to as the “Gold VIX” — based on options of the SPDR Gold Trust — rallied 11 percent to a reading of 18.6.

Bill Luby, a private investor and author of a blog called “VIX and More,” said there appeared to be lots of put buying in the GLD which has inflated the Gold VIX, which was hovering near a historically low level despite Tuesday’s spike.

TECHNICAL OUTLOOK BLEAK

Analysts said gold could fall further if it fails to hold above $1,600 an ounce as there is little underpinning from technical charts under that level.

“The fact that support has been broken on a daily, weekly and monthly time frame suggest that this selloff could get worse,” said Adam Sarhan, CEO of investment research and consultant Sarhan Capital.

Sarhan said gold was already testing the lows of 2012 when Tuesday’s heavy losses sent the metal below heavy daily and weekly support between $1,620 and $1,630 an ounce as well as its 18-month upward trendline on monthly charts.

Silver was down 1.8 percent on the day at $29.47 an ounce. Platinum fell 1.1 percent on the day to $1,505.74 an ounce and palladium slid 3.1 percent to $621.97 an ounce.

(Additional reporting by Doris Frankel in Chicago and Amanda Cooper in London; Editing by David Gregorio and Jim Marshall)

URL: http://in.reuters.com/article/2012/05/08/us-markets-precious-idINBRE8390RW20120508