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TFC Commodity Trading Forum

Providio's Market Commentary for March 23, 2012


Petroleum: 22Mar Declining Chinese factory activity and European headline (and German) PMI data is putting a slowing global economy back in the headlines and is therefore pressuring Petro prices. Our technical picture of the complex is solidly negative and not Oversold.

The May Crude contract seems to be targeting the lower boundary (103.70) of our noted potential bull flag over the past three weeks. A failure to breakout above should return the market back to $100 and target the previous lows at 96.30. If the formation does play out, a classic move would rally $8-10 from the breakout. That projects to 116-118 for the May WTI Crude contract.

All three Petro stocks remain at the upper end of their average ranges for this time of year.

Volatility is starting to rise, potentially handicapping option purchases for protection and new positions

Seasonal Snapshot: After a brief pause, all three Petroleum contracts’ patterns are in an upward bias until the end of April.

Equities: 22Mar Our Rates of Change continue to ease and drag on our positive Momentum indicator. The Dow’s has turned negative and is still leading the weakness. SP is not too far behind.

SP and Dow futures are also back inside our 1 STD Bollinger Band and testing the 21-day moving averages. On more weakness, pay close attention to the lower end of the mid-Feb congestion area, which roughly coincides with the early March consolidation lows:

SP: 1371; 1330

Dow 12950; 12700

NASDAQ 2648; 2526

We call readers’ attention to an interesting piece on the cost of protecting the downside:


The VIX Index is starting to perk up after a multi-week descent to historically low levels.

On a “micro” note, we are not equity analysts, or seasoned stock investors, but we do notice a number of gaps left open on Apple’s (AAPL) daily charts all the way down $384.85 (15Dec). When considering how much of the recent S&P earnings growth has been supplied by Apple, we wonder what closing some of those gaps to the downside would do to the S&P. They recently announced a dividend and stock repurchase plan, as well. Not exactly “expansionary”. As always, we welcome any feedback…

Seasonal Snapshot: The 5yr patterns of all three markets is in a pronounced upward bias until early May. The 15&30yrs’ follow suit, but are not nearly as steep.

Grains: 22Mar All three markets we track have taken back most of their probes lower and seem to be consolidating their recent weakness. Weather continues to pose downside risks.

Our Trend indicator is sustaining its negative turn across the entire complex and should be watched closely. Volatility is starting to uncoil a bit.

We remind readers of our recent weather notes:

“As a point of weather market speculation, we wonder whether the very warm winter will lead to an equally warm, dry summer, putting pressure on the Corn crop. This may lead to a buying opportunity if a material sell-off occurs. Stay tuned for further news in this vein.”

Corn: 22Mar More consolidation of the recent weakness. The May contract found support at rising trend line support at 635. The wider consolidation range, in place since coming off the $8 level last August is bound by 585-672. The upper end fits neatly below now gently falling 200-day moving average.

Our Trend, Momentum, and RSI indicators are all falling. Tuesday’s sizable increase in Volume validates the weakness. However, watch overall recent trending lower Volume. Additionally, it should be noted that prices ran into the 2 STD upper Bollinger Band over the last week.

Seasonal Snapshot: The 30-Year pattern heads modestly higher April 2. The 5-year and 15- years are modestly predisposed to negative action until the end of March.
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