Friday, January 10, 2014

Commodities Close the Week on a High Note - Crude Oil, Natural Gas, Gold, Corn and Coffee

Crude oil closed higher due to short covering on Friday as it consolidated some of the decline off last August's high. Today's mid range close sets the stage for a steady opening when Monday's night session begins. Stochastics and the RSI are oversold but remain neutral to bearish signaling that additional weakness is possible. If February extends the aforementioned decline, the June 2013 low crossing at 90.05 is the next downside target. Closes above the 20 day moving average crossing at 96.76 would confirm that a short term low has been posted. First resistance is the 10 day moving average crossing at 95.12. Second resistance is the 20 day moving average crossing at 96.76. First support is Thursday's low crossing at 91.24. Second support is the June 2013 low crossing at 90.05.

Natural gas closed higher due to short covering on Friday as it consolidated some of the decline off December's high. The high range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI remain neutral to bearish signaling that sideways to lower prices are possible near term. If February extends the decline off December's high, the 62% retracement level of the November-December rally crossing at 3.897 is the next downside target. Closes above the 20 day moving average crossing at 4.328 would confirm that a short term low has been posted. First resistance is the 20 day moving average crossing at 4.328. Second resistance is the reaction high crossing at 4.430. First support is today's low crossing at 3.953. Second support is the 62% retracement level of the November-December rally crossing at 3.897.

Gold closed higher on Friday as it extends the rally off December's low. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If April extends the rally off December's low, December's high crossing at 1266.70 is the next upside target. If April renews the decline off August's high, weekly support crossing at 1179.40 is the next downside target. First resistance is today's high crossing at 1249.00. Second resistance is December's high crossing at 1266.70. First support is December's low crossing at 1182.30. Second support is weekly support crossing at 1179.40.

Corn closed sharply higher on Friday following today's USDA report. The USDA caught the trade leaning the wrong way after releasing a lower than expected corn crop estimate for 2013's crop production and lower than expected ending stocks. The USDA estimated the 2013 corn crop at 13.925 billion bushels. The USDA juggled its harvested acreage and yields, putting the average for the crop nationwide at 158.8 bpa, which was down 1.6 bpa from its last estimate, though acreage went up 436,000. The USDA came in with a lower than expected figure on Dec. 1st corn inventories, which suggests feed usage in the first quarter of the marketing year was good despite the late harvest. That raised the total forecast for feeding during the marketing year by100 million bushels.

The USDA also increased its forecasted usage for ethanol by 50 million bushels due to strong demand. The increase usage from ethanol was offset by a 50 million bushel decline in other industrial usage, leaving ending stocks at 1.631 billion. Today's key reversal up along with the close above the previous reaction high crossing at 4.30 confirmed that a short term low has been posted. The high range close sets the stage for a steady to higher opening when Monday's night session begins trading. Stochastics and the RSI are diverging but are turning neutral signaling additional strength is possible near term. Closes above December's high crossing at 4.40 3/4 are needed to confirm that a seasonal low has been posted. First resistance is the reaction high crossing at 4.36. Second resistance is December's high crossing at 4.40 3/4. First support is today's low crossing at 4.06 1/4. Second support is weekly support crossing at 3.99 3/4.

Coffee closed higher on Friday and the high range close set the stage for a steady to higher opening on Monday. Stochastics and the RSI are diverging but remain neutral to bullish signaling that sideways to higher prices are possible near term. If March extends the aforementioned rally, September's high crossing at 12.40 is the next upside target. Closes below last Thursday's low crossing at 11.02 would confirm that a short term top has been posted.

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