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Cotton: Strong Start to the Year; Need Strong Economy to Hold

by on January 4, 2012

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The market has seen a very strong recovery bounce into the New Year and it may take a continued strong global economic view ahead in order to rationalize the recent strength. Exports have come in much better than expected in the past few months and there is also increased concern that producers in the US and China will back away from the market and plant less acres for the coming year just as global demand is improving. This would assume that emerging market growth continues on a firm pace and that the European debt situation does not slow global growth prospects. The International Cotton Advisory Committee indicates that China has acquired a total of near 2.1 million tonnes of cotton from producers to replace reserve stocks and also about 1 million tonnes of foreign cotton to add to reserves. Non-China cotton stocks are expected to increase by 26% this season to 8.7 million tonnes, the largest in four years. Global production for the 2011/12 season is expected to reach 26.8 million tonnes, up 8% from last year and that global demand is expected near 23.9 million tonnes, down 2% from last year. The market surged higher yesterday to close 4.4% higher on the day to push to the highest level since November 18th. Traders see short-term support from rebalancing efforts by index funds and from active “across the board” buying of commodity markets yesterday in anticipation of a stronger environment for commodities in 2012. Outside market forces were extremely supportive yesterday and look neutral for today. Global ending stocks look burdensome to start the 2012/13 season and this is expected to cap the market on corrective bounces. Cotton was the worst performing commodity market in 2011 dropping a whopping 36.6% for the year. The USDA attache in India revised their crop production forecast for the 2011/12 season down by 750,000 bales to 34.25 million bales. Commodity Index traders held a net long position of 51,276 contracts in the last COT report. For the two major index funds, traders believe that these funds will be buying near 11,000 contracts in the first week of the year. ICE certified deliverable stocks increased to 39,395 bales from 39,394 bales the previous session but from 49,998 bales last week.

TODAY’S GUIDANCE: Look for technical signs of a near-term top near key resistance for March cotton at the 95.78 to 97.80 zone with support back at 93.60 and 91.42. Index fund buyers may be more active this week before the buying slows.

TODAY’S MARKET IDEAS: Position traders might look to establish bearish put strategies for the first quarter and we would not rule out another leg down longer-term objective.

Energy: Supported Off Geopolitical and Macro Econ Events

by on January 3, 2012

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CRUDE OIL MARKET FUNDAMENTALS: While crude oil might be held back by last week’s US inventory readings, the combination of a risk-on vibe and ongoing Iranian saber rattling leaves the bull camp with the edge to start today. In fact, with February crude oil threatening the highest price levels since early December in the early going today, the bull camp looks to have the advantage of the headlines. With Iran calling for the absence of foreign forces in the Gulf and the US apparently signing into law new more specific sanctions against Iran over the weekend, the battle lines appear to be drawn between the two verbal combatants. With the addition of favorable Chinese PMI data and potentially dovish dialogue from Chinese officials, the bull camp would appear to have the fundamental edge to start the holiday shortened week. With supportive currency market action and noted gains in US equities, crude oil and other physical commodity markets are likely to attempt to add to their initial gains. While the EIA crude oil stocks report last week showed an unexpected build, current supplies are still 11.947 million barrels below year ago levels. Part of the build last week came from a notable increase in imports on the week, which jumped to a rate of 8.99 million barrels per day. Another reason for the recent build of crude oil stocks might have come from the closure of the US Houston Channel. The Commitments of Traders Futures and Options report as of December 27th for Crude Oil showed Non-Commercial traders were net long 210,278 contracts, an increase of 5,300 contracts. The Commercial traders were net short 228,605 contracts, an increase of 5,282 contracts. The Non-reportable traders were net long 18,327 contracts, a decrease of 19 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 228,605 contracts. This represents an increase of 5,281 contracts in the net long position held by these traders. We see a very critical pivot point on the charts up at $101.77 in February crude oil, with important support pegged just below the market this morning at 101.05. The bulls have the edge but macro economic information has to stay definitively positive, to actually engineer a sustained upside breakout.

PRODUCT MARKET FUNDAMENTALS: GASOLINE: February RBOB prices have also started the new trading week in a positive track, with prices reaching the highest level since November 9th. It goes without saying that gasoline prices are garnering some support from fears of conflict in the Middle East, but the bulls have added resolve because of a favorable macro economic condition. With EIA inventory data recently showing an unexpected decline in US gasoline supplies and demand views slightly improved overnight, one might suggest that the bull camp has support from both the supply and demand front this morning. We think that recent volatility in ethanol profit margins and the end of the ethanol subsidy is another element that is providing support to gasoline prices over the last several weeks. While many might want to downplay the importance of the end of the subsidy for ethanol, traders should expect to see a noted increase in RBOB price volatility in 2012 because of the potential to periodically idle up 2% to 4% of the US gasoline additive supply chain. The Commitments of Traders Futures and Options report as of December 27th for Gasoline (RBOB) showed Non-Commercial traders were net long 56,048 contracts, an increase of 6,094 contracts. The Commercial traders were net short 63,052 contracts, an increase of 9,810 contracts. The Non-reportable traders were net long 7,005 contracts, an increase of 3,717 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 63,053 contracts. This represents an increase of 9,811 contracts in the net long position held by these traders. Critical support in February RBOB is seen at $2.6780 and resistance is pegged at the 200 day moving average up at $2.7277.

HEATING OIL: Like the rest of the energy complex, February heating oil managed a distinct upside breakout on the charts this morning and in the process the market rose to the highest level since December 13th. Not surprisingly, the ongoing war of words between the US and Iran gave the market part of its upward track today, but prices were also given an added boost by positive macro economic news from both China and the Euro zone overnight. While EIA inventory data recently showed an unexpected build in distillate supplies, inventories were still 20.605 million barrels below last year and 3.448 million barrels below the five year average. It is also possible that slightly colder US temps ahead are providing some minimal support to prices but mild weather so far this winter could require severe cold to actually create a physical shortage of US heating supplies. The Commitments of Traders Futures and Options report as of December 27th for Heating Oil showed Non-Commercial traders were net long 10,850 contracts, an increase of 2,248 contracts. The Commercial traders were net short 22,077 contracts, an increase of 5,399 contracts. The Non-reportable traders were net long 11,228 contracts, an increase of 3,152 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 22,078 contracts. This represents an increase of 5,400 contracts in the net long position held by these traders. Initial resistance in February heating oil is seen up at $2.99 and critical support looks to come in this morning just below the current market at $2.9530. The 200 day moving average in February heating oil today is seen up at $3.0575.

TODAY’S ENERGY MARKET GUIDANCE: The bulls have control to start and with the new sanctions from the US signed into law over the weekend, one might expect to see further reactions from the Iranians. Therefore, oil looks to be supported off geopolitical events, macro economic events and even because of currency market action. In the event that US numbers are positive later this morning and the trade starts to kick around the prospect of positive US payroll data at the end of this week, it is possible that energy prices will claw out a series of gains directly ahead.

Stocks: Bulls Start Off In Control. Will Need More Support to Hold

by on January 3, 2012

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

Global equity markets have started out on a positive footing overnight in the wake of mostly positive international economic readings and seemingly because of upbeat comments from Chinese leadership. However, the Chinese situation wasn’t overly upbeat, as Chinese officials suggested that softer growth in that country ahead might prompt an easing of policies and some in the trade might have hoped that China was already in an easing posture. On the other hand, world equity markets saw favorable German unemployment readings and for the time being, that seems to have papered over the fears toward Euro zone sovereign debt. Some bulls might be partially off balance as a result of fears of soaring oil prices but to start today that issue seems to be sitting on a back burner. In fact, with Indian equities trading higher, European stocks showing early gains and early indications of a 20 to 23 point higher opening in the US S&P contract, the bull camp looks to have a solid edge to start. Furthermore the trade is also expecting to see something positive from the US scheduled report slate this morning and that might give the bull camp an added measure of bullish psychology.

S&P 500: A huge gap up opening seems to have established a rather lofty ambition by the S&P bulls this morning. With the opening rally posting the highest trade since the October 27th spike high, the bull camp probably needs to see mostly positive US scheduled data just to add to the early gains. In fact, the 1282.40 level might be seen as an extremely critical pivot point in the first two trading sessions of this week. However, the bull camp does seem to have the benefit of several merger/buyout stories overnight but the fear of turmoil in the Middle East might keep some would-be bulls on the sidelines. The Commitments of Traders Futures and Options report as of December 27th for S&P 500 Stock Index showed Non-Commercial traders were net long 8,722 contracts, an increase of 6,998 contracts. The Commercial traders were net short 14,913 contracts, an increase of 2,164 contracts. The Non-reportable traders were net long 6,190 contracts, a decrease of 4,836 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 14,912 contracts. This represents an increase of 2,162 contracts in the net long position held by these traders. The bulls have control as long as the March S&P manages to hold above 1270.00 this morning.

DOW: After some extremely volatile action last week, the March Dow contract looks to start the holiday shortened week on a very positive track. In addition to a small measure of catch up buying action, the Dow might be cheered by the prospect of a more supportive PBOC policy stance ahead and the index is also likely to draft favorably off a quasi risk-on vibe. A key resistance point in the March Dow contract was seemingly violated early this morning at 12,346, with yet another critical pivot point seen up at 12,381. In fact, the bull camp has to feel confident in their position, as long as the March Dow manages to hold above 12,340 through the flow of scheduled US data later this morning. The Commitments of Traders Futures and Options report as of December 27th for Dow Jones Index $5 showed Non-Commercial traders were net long 17,834 contracts, a decrease of 4,223 contracts. The Commercial traders were net short 20,208 contracts, a decrease of 4,030 contracts. The Non-reportable traders were net long 2,373 contracts, an increase of 193 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 20,207 contracts. This represents a decrease of 4,030 contracts in the net long position held by these traders.

NASDAQ: With a big range up extension forged this morning that would seem to confirm the moderately bullish bias from the overnight action will be extended into the US Tuesday trade action. However, the tech sector appears to be catching a ride from big picture macro economic developments instead of from the tech sector news and therefore the bulls have to hope that scheduled US data adds to the bullish vibe later this morning. The Commitments of Traders Futures and Options report as of December 27th for Nasdaq Mini showed Non-Commercial traders were net long 14,628 contracts, a decrease of 7,678 contracts. The Commercial traders were net short 30,195 contracts a decrease of 6,122 contracts. The Non-reportable traders were net long 15,567 contracts, an increase of 1,557 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 30,195 contracts. This represents a decrease of 6,121 contracts in the net long position held by these traders.

TODAY’S MARKET IDEAS: The bulls have control to start but to add markedly to the impressive initial pulse up in prices might require favorable US numbers, more merger and acquisition news and quiet on the Euro debt front into their close later this morning.

Interest Rates: Markets Hopeful EU Will Figure Something Out

by on November 30, 2011

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While the Euro zone situation doesn’t seem to be markedly improved as a result of the latest EU Ministers decision to expand the EFSF, the market continues to be hopeful that something constructive will eventually be patched together (within the coming ten days) which in turn will meet the current liquidity requirements of troubled EU members. In other words, the EU seems to be inclined to take a case by case approach and so far they don’t seem to be poised to implement a Euro bond or an overly aggressively leveraged EFSF fund. With the German November jobless rate overnight falling to the lowest level in 20 years, the Germans aren’t seeing the urgency of the situation and they also seem deaf to the threat of a Euro zone contagion and that might be why their leadership is generally against writing a blank check to put down the speculation against weak EU members. Somewhat surprisingly, a widespread bank downgrade move by S&P overnight didn’t rekindle macro economic anxiety, which in turn left US Treasuries flat footed to start the Wednesday US trade action. In looking forward, the US trade will see an extremely active US scheduled report flow today with a sampling of private jobs/employment estimates, a Pending home sales report, an ISM manufacturing report, a PMI reading and in the early afternoon action, the market will also be presented with a Fed Beige book release. With the Euro zone situation this morning relatively calm, that could allow for a more significant reaction to the private jobs surveys, especially if the employment situation improves, as is generally expected by the trade. While the ADP payroll figure rarely tracks the monthly US official reading, seeing estimates for the report today, calling for a jobs gain that is 40,000 to 50,000 above the prior month’s US non farm payroll gain, it is possible that Treasuries could see a bit of macro-economic pressure early today. With the trade also expecting a minor improvement in the ISM and in the Pending home sales figures, that could give the bear camp some added resolve. However, news that the Euro zone jobless figure touched the highest level since records began and news that the ECB was seeing heavy use of its deposit facility, should mean that concern for the Euro zone will remain a supportive force, even if the economic news from the US gets most of the markets attention this morning. In the event that both private US job sector reports point to US growth today and with the trade still hopeful of something constructive from the EU summit, before the deadline 10 days out, the bear camp might feel like they have a slight measure of control in the trade today.

Stocks: Lots of Headwinds for Stocks Ahead.

by on November 30, 2011

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Global equity markets were facing a number of negative headwinds overnight, including an S&P ratings downgrade of 15 banks, some disappointment with the Euro rescue fund efforts and further signs that China might be slowing. After yesterday’s close, S&P lowered their ratings for 15 major global banks by one notch, and that pressured global equity markets in the overnight action. Asian equity markets were considerably lower, led by weakness in the Chinese Shanghai Composite. While there is evidence that export growth to Europe has slowed, this morning’s unexpected move by China’s Central Bank to cut bank reserve requirement ratios has helped to turn the early tone positive. Meanwhile, global equity markets maybe holding up better than might be expected given general disappointment over the latest Euro zone rescue fund developments. Some analysts indicate that the size of the fund has fallen short of the 1-trillion mark, forcing EU ministers to pursue other more creative funding options, like the IMF. Perhaps the trade is hopeful that the EU will eventually do what is necessary and perhaps the trade is simply anticipating favorable private US payroll data this morning, which is expected to show gains to levels not seen since April. The markets also appear to be anticipating a positive read on Chicago ISM and pending home sales figures.

S&P 500: Overnight and early morning action in the December S&P 500 has formed a bullish outside day reversal that reflects a positive shift in sentiment. While the index came under overnight pressure following the S&P ratings downgrade of 15 major global banks, action taken by the PBOC this morning to ease monetary policy has helped to shift the tide in favor of the bulls. Meanwhile, the December S&P 500 showed a level of vulnerability yesterday, held back by underperformance in the financial sector. Shares of Tiffany & Co were down nearly 9.0% yesterday, following weaker than expected earnings and holiday sales warnings. The December S&P 500 is on a bullish track this morning after taking out yesterday’s high (1203.00), which leaves the next level of resistance at last week’s gap of 1209.00 to 1214.00.

DOW: The December E-mini Dow had a gap lower opening Tuesday evening in the wake of a surprise banking sector downgrade from S&P. While this might help explain the relative underperformance of the banking sector during yesterday’s trade, it did pressure shares of Bank of America below $5.00 in after-hours trade. Yesterday’s bankruptcy filing of AMR has the potential to provide an added drag on the shares of Boeing today, and also that could put recent Airbus sales in jeopardy. The short term trend in the December E-mini Dow offers the bull camp the advantage, with 11,615 as resistance. Near term support for the index comes in at 11,436.

NASDAQ: December NASDAQ reversed overnight losses this morning in the wake of China’s Central bank decision to reduce reserve requirement ratios. While this should inject a level of optimism into tech-related shares this morning, there are also positive headlines involving Yahoo. Reports that a private-equity group has offered $16.70 for a minority stake in Yahoo should provide an added lift. That offer is a little more than 6.0% above Tuesday’s settlement price. The bull camp gets the early nod, with resistance at 2245.00, then at the November 21st gap up to 2249.75.

TODAY’S MARKET IDEAS: With the month of November drawing to a close, there is the potential for end-of-month volatility today. Some traders note signs of institutional buying in the futures market, and that is a force that could gain more traction toady and in coming week’s as funds wind down for the year. In the meantime, US equity markets face growing negativity surrounding the European debt crisis (slow on specifics) and slow-growth concerns in India and China. These negative forces have been put at bay to start this morning’s, but they present headwinds to any meaningful upside attempt. This morning’s flow of US economic data is expected to come in positive, and disappointment there could leave the bull drive vulnerable. Given the prevailing intermediate down trending patterns in the December E-mini Dow and S&P 500, we continue to view rallies as selling opportunities.

Special Report: Fourth Quarter Petroleum Update

by on November 29, 2011

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The recent rise in nearby crude oil prices above $103 didn’t seem to elicit many complaints of excess speculation in the energy markets. Perhaps this was because the move was not accompanied by an increase in speculator net long positions. Regardless, this rally seems to confirm that supply and demand conditions in the market have tightened, even in the face of a possible recession. In other words, the world threw a recession party and the energy complex failed to show up.

Crude oil prices recently topped out a two-month rally on reports that the flow of crude oil from the Seaway pipeline would be shifting directions. Where previously it had flowed north from the Gulf Coast to Cushing, Oklahoma, it was announced that it would now flow from Cushing to the Gulf Coast. This is expected to alleviate the glut of supply at Cushing and ease tightness at the Gulf Coast, where refiners had been using Brent crude and others as feedstocks. This move has had a major impact on the Brent/WTI spreads. Tight North Sea supplies were one of the key factors that sent Brent’s premium to WTI to a record wide level of $28.00 in October. As conditions changed by mid-November, that spread fell below $6.00. While part of the decline in the premium of Brent relative to West Texas Intermediate was aggressive unwinding out of long Brent/short WTI positions, it was also pressured by the flow change in the Seaway pipeline.

This is widely seen as a force that will draw demand back to WTI crude oil and eventually chew down one of the world’s largest supply caches at Cushing and thereby lift WTI prices relative to Brent.

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Metals: With risk on vibe in place week starts off positive

by on November 28, 2011

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OUTSIDE MARKET DEVELOPMENTS: While equity markets in Asia and Europe were generally higher during overnight trading, early indications are that US equity markets will open with substantial gains later on this morning. The US Dollar is sharply lower against most of the major currencies this morning. An Italian newspaper is reporting that Italy may receive a 600 billion Euro loan from the IMF if their debt problems get worse, although the IMF later denied that report. Belgium has passed a new austerity budget and may be closing in on forming a new government. A major credit rating agency warned that the current debt crisis could threaten the sovereign debt ratings of all Euro zone nations. The only major US economic number to be released this morning will be October New Home Sales at 9:00 AM.

GOLD MARKET FUNDAMENTALS: With an initial risk on vibe in place, precious metals and a host of physical commodities are starting off the week on a very positive track. In addition to sharp overnight gains in equities, noted strength in the Euro and calls for a wave of global stimulus, the bull camp in gold might be embracing a number of potentially bullish themes. However, the back bone of the bullish vibe today seems to be hope that the IMF might be poised to help Italy with as much as 600 billion Euros and that would certainly seem to be a large enough backstop to quell debt fears from Italy. With the reversal of last week’s vulnerable stance in gold, it is also possible that gold is seeing some classic short covering buying interest this morning. With the rise this morning, December gold has reached up to the highest level since November 21st and that might be the result of a measure of short covering. However, given the action in equities and the broad based price gains being seen in a number of physical commodity markets this morning, there might also be some justification for fresh outright buying of gold. With the gains starting in Asia and the Asian trade pointing to hope for Italian debt relief, commentary from the IMF might be critical for gold this week. It is also possible that part of gold’s gains today are the result of OECD calls for global stimulus, as several countries including the Euro zone, might be poised to reduce rates in an effort to cushion the world economy against Euro zone affairs. Others have even suggested that the US and UK need to launch additional QE measures as austerity in the UK and forced spending cuts in the US are expected to be a check on future growth rates. Some gold players might be buying gold off hopes that this Friday’s US Non Farm payroll reading will contribute to the risk on view. News that a major gold producer saw some reduced output probably isn’t contributing significantly to the bullish vibe this morning.

SILVER MARKET FUNDAMENTALS: While the gold market has forged a noted upside breakout overnight, December silver as of this writing wasn’t able to rise above the Friday highs. However, a broad based physical commodity market rally and significant gains in equities have fostered a favorable environment to start today and December silver has forged an early gain in excess of $1.00 an ounce. Some players even suggest that massive voter turn out in the Egyptian election is contributing to the optimism today. With a weaker dollar and hopes for another “European Plan” to contain the debt contagion, silver is seeing a number of optimistic tracks in the headlines this morning. However, for December silver to catch a definitive wave of technical short covering buying, might require a rise back above last week’s highs around the $33.04 level. In the near term, calls for global stimulus from the OECD and ideas that the IMF could ride to the rescue, have calmed frayed nerves and given the risk on crowd a temporary but suspect edge. The ultra bulls in silver might also suggest that silver is drawing some buying interest from hopes of a decent gain in US Non Farm payrolls at the end of this week.

PLATINUM: Platinum is catching some lift from the strong gains in gold prices overnight. However, gold seems to have caught a lot of initial support from favorable Asian hopes for the Euro zone. A weaker dollar and sharply higher equities also gives the platinum bulls some hope this morning. With January platinum to the lows Friday, sitting as much as $67 an ounce below last week’s highs, it is possible that a portion of today’s initial rise is indeed technical short covering buying. However, with calls for global stimulus from the OECD overnight, a bullish tilt toward the Euro zone situation and very positive US holiday sales talk, platinum is seeing a very favorable physical commodity market environment to start the new trading week. Initial support in January platinum is seen down at $1,558 and there might not be much in the way of resistance until the quasi double top of $1,574.

Sugar: Many Factors Keeps on Downside Pressure On

by on November 23, 2011

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Renewed supply concerns with trade house forecasts for a world production surplus of as high as 8 million tonnes plus a more aggressive long liquidation selling trend from speculators into the holiday helped to drive the market sharply lower yesterday. While there was talk of the oversold condition basis traditional technical indicators, the weekend COT report showed that large and small speculators combined were still holding a net long position of 82,559 contracts. Fears of a slowing global economy plus a continued move by fund traders to lighten up on long positions helped to drive the market sharply lower yesterday. There was a noted lack of new buying from commercial traders. March sugar closed sharply lower on the session yesterday and pushed down to the lowest level since June 2nd. News that India will allow the export of 1 million tonnes of white sugar helped to pressure London and the selling overflowed into New York. Outside market forces were not strong enough to offset the long liquidation selling and selling accelerated on the move under Monday’s lows. Brazil rains have slowed old crop production but traders see the rains as beneficial to the 2012/13 production.

TODAY’S GUIDANCE: The downside break-out and lack of commercial support plus further weakness in outside market forces overnight could keep the market on the defensive today.

TODAY’S MARKET IDEAS: March sugar resistance is at 23.86 with 22.36 as next downside objective. There is some chart support at 22.88.

Cocoa: Under Pressure but Avoid New Low Ground

by on November 23, 2011

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The cocoa market was finally able to post a positive result yesterday, although there is more than $300 worth of losses to recover from the past two weeks of trading. March cocoa went through a choppy and volatile trading session on Tuesday but was able to make a sizable recovery after posting a new multi-year low. Support from outside markets proved to be a key factor, as the market was able to post a daily gain for the first time since November 7th. While heavy near-term supplies continue to pressure the market, reports of dry weather over Ivory Coast production areas may have triggered the rebound. In addition, short-covering in front of the Thanksgiving holiday may have helped to lift prices further away from the early lows. Cocoa port arrivals in the Ivory Coast have been running well behind last season’s pace but a producer stockpiling program has not been effective in lifting prices out of their recent slide. Other major West African cocoa producing nations such as Ghana and Cameroon are projected to have their second record high cocoa crops in a row.

TODAY’S GUIDANCE: March cocoa is back under pressure this morning, although prices were able to avoid extending the recent selloff down to new low ground. If cocoa’s fundamentals remain negative and outside markets continue to be sluggish, prices are likely to go into tomorrow’s holiday down near multi-year low levels.

TODAY’S MARKET IDEAS: March cocoa close-in resistance is at 2440, with 2380 and then 2355 as the next downside objectives. Given the steep drop in prices since early November, traders should wait for a more extensive bounce before entering the short side of the market.

Currencies: US Dollar Maintains Its Safe Haven Roll

by on November 15, 2011

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DOLLAR: The Dollar remains in safe-haven mode this morning as overseas risk concerns continue to smolder. While there has been no “watershed” event that has reinforced Dollar support, a clear lack of confidence with Euro zone debt solutions has lifted prices back towards last week’s highs. US economic data this morning could ease concerns on this side of the Atlantic but market focus is likely to remain on the Euro zone. The most recent Commitment of Traders report indicated that non-Commercial traders were trimming their net-long Dollar position as of last Tuesday, even as the market was heading up into new high ground. The Dollar is likely to remain well supported at these levels unless there is a major improvement in macro-economic sentiment during the near future. The Dollar may find resistance near the 78.20 level this morning and is likely to gain ground as EU debt problems dominate the markets. The Commitments of Traders Futures and Options report as of November 8th for US Dollar showed Non-Commercial traders were net long 22,088 contracts, a decrease of 1,796 contracts. The Commercial traders were net short 25,431 contracts, a decrease of 1,368 contracts. The Non-reportable traders were net long 3,343 contracts, an increase of 428 contracts. Non-Commercial and Non-reportable combined traders held a net long position of 25,431 contracts. This represents a decrease of 1,368 contracts in the net long position held by these traders.

EURO: The Dec Euro has been on the defensive this morning, unable to find benefit from well-received GDP numbers out of Germany and France. Ongoing EU debt problems continue to drag prices lower, as recent optimism with Italian and Greek government changes has evaporated quickly. The most recent Commitment of Traders report showed that non-Commercial traders were reducing their net-short Euro position as of last Tuesday, even as the market was sliding down to new lows for November. Unless there is some market confidence in an eventual resolution with these debt problems, the Dec Euro will have difficulty regaining these recent losses. The Dec Euro may find support near the 135.00 level, and could be one negative news headline away from posting a new low for this sell off. The Commitments of Traders Futures and Options report as of November 8th for Euro showed Non-Commercial traders were net short 48,250 contracts, a decrease of 6,280 contracts. The Commercial traders were net long 77,113 contracts, a decrease of 984 contracts. The Non-reportable traders were net short 28,863 contracts, an increase of 5,296 contracts. Non-Commercial and Non-reportable combined traders held a net short position of 77,113 contracts. This represents a decrease of only 984 contracts in the net short position held by these traders.

YEN: The December Yen made a sizable recovery from overnight losses, and is climbing back towards the recent highs this morning. There is clearly a flight to safety out of the Euro zone that is providing fuel for this rebound but the shadow of potential intervention will hang over the market as prices continue to climb higher. The December Yen may find resistance near the 130.15 level, and is likely to stay below Monday’s high for the move unless the EU debt situation starts to unravel later on today.

SWISS: The Dec Swiss has been in a tailspin this morning, with prices reaching their lowest levels since mid-October. A comment from a Swiss National Bank official that the Swiss Franc was “still very strong” has revived ideas that the current “peg” with the Euro may be raised to 1.25 or higher. The December Swiss may find support near the 109.00 level and will remain under pressure as long as the market feels that a “peg” change may be on the near-term horizon.

POUND: The Dec Pound finally made a downside breakout this morning, although prices have seen little follow-through to the downside. Today UK CPI numbers were weaker than expected, which may encourage the Bank of England to become more aggressive with their quantitative easing measures. The Dec Pound may find support near the 158.30 level, and may have trouble putting together a recovery unless the EU debt situation provides some signs of progress.

CANADIAN DOLLAR: The Dec Canadian has been pressured by weak commodity and equity markets, and has found little relief from sluggish Canadian economic data. Unless there is a turnaround in market sentiment, the Dec Canadian is likely to make new lows for this sell off. The Dec Canadian may find support near the 97.35 level today, and could see heavier losses if outside markets continue to deteriorate.

TODAY’S MARKET IDEAS: The Dollar should hold onto this morning’s gains through the balance of today’s session, although any improvement in market sentiment could bring this rally to a quick halt. If sentiment remains negative during the session, the Dec Swiss could extend today’s slide to a fresh low for the move.

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