Sunday, January 8, 2012

Futures Charts of Interest (01/08/12)

Starting the week off looking at some bond charts, we are clearly sitting at critical levels here. All of our bond charts (30-yr, 10-yr, 5-yr) are bullish from an ichimoku perspective. Respective kumo are bullish, tenkan-sen above kijun-sen, and chikou above prior price levels. 

Shorter terms bonds have held up better, relatively, than the 30-yr, which essentially pierced it's recent uptrend line. We have been basing out for the past 4 months or so and I believe it will soon come time to see whether or not the complex has been setting up for continuation higher, or a possible reversal or trend.

The chart above is for the March Eurodollar (/GE) contract. Clearly we can see an inverted H&S pattern with a neckline breakout looking imminent. A breakout here brings us a measured move to 99.72, which would equate to new contract highs. I would love to hear some thoughts on the implications of such a move from some of the bond guys, whom I respect dearly (you know who you are).

Above we have a 240 minute chart of copper. Many traders have been watching copper do its triangulation thing over the past months and, here too, we appear to be coming to a resolution. We broke out of a smaller triangle within our triangle last week and appear to be coming back to backtest. 

We are sitting at a critical area. If the 3.39 level is not held, I'd expect to see an attempt at a downside break, and vice versa. Very difficult to anticipate anything here.

I believe all these charts along w/ my analysis of crude here, point us to the fact that the stars seem to be aligning for our next significant movement in our markets. My guess, if I had to make it, would be to lean higher in the commodity and equity space, along with a potential bond top. Regardless, it'll be important to watch for a resolution of these patterns as well as follow through.

Wheat has treated me well over the end of 2011 and beginning of 2012. I believe we may be in a massive longer term falling wedge. Shorter term, I am watching the current levels to try a long entry. I think the charts above are pretty self-explanatory but please do not hesitate to ask if you have questions or disagree.