Stocks Move Cautiously Higher
S&P – Stock index futures are slightly higher this morning on value buying in U.S. stocks overseas and positive news from Citigroup. Citi will be receiving a $7.5 billion cash infusion from the Abu Dhabi Investment Authority, making the government the second largest shareholder. The move showed that there are still plenty of funds on the sidelines and offered some reassurance to the beleaguered banking sector. Yesterday's late sell-off did little to reassure traders, with e-mini S&P futures falling to their lowest levels since mid-March. The 10 percent decline from all-time highs in the S&P has kept traders on the sidelines, and it seems as though any good news – such as strong Black Friday sales – has been more than offset by dismal reports like the additional write-downs expected from HSBC. The December e-mini has honored the 1405 support area thus far, but a close below this figure could lead to sell-offs into the 1360's. Momentum has moved slightly higher, but at a much slower pace than RSI this morning, suggesting further downside may lie ahead. In addition to 1405, support can be found at 1383, while resistance comes in at 1425 and 1450.
Soybean – January Soybeans closed at new record highs yesterday in an indecisive day of trading. Beans and related products have gotten a lift recently from stronger Crude Oil prices and a weaker U.S. Dollar. The weaker U.S. currency is expected to result in higher export sales figures for the week, although some of the enthusiasm among traders has worn thin due to expectations that the December 1st USDA report will show higher stocks than previously expected. After making a strong run over the past month and a half, the market remains technically overbought and bulls are worried that funds will begin to liquidate longs to take profits. January Beans are giving conflicting technical signals. Momentum is showing bullish divergence from the RSI, which suggests that the near-term technical bias remains to the upside. This is tempered, however, by a spinning top candlestick, which suggests a negative short-term bias. Slow stochastics are showing overbought levels and there was a bearish crossover following yesterday's indecision. Support comes in at 1080 and 1057, while resistance may be found at 1115 and 1187.
Cocoa – March Cocoa is lower in early trading on strong exports from the Ivory Coast, the world's largest grower. There were concerns that the farmers' union may block ports, resulting in a price spike last week. Delays in shipments could have decreased the quality of the crop, but these fears never materialized. The market has felt downward pressure in recent days due to the larger-than-expected early harvest figures, but the market has failed to break sharply due to concerns that the turmoil between the farmers' union and the government over subsidies has not gone away. March Cocoa is currently trading at the 1930 support area this morning and traders will focus on how the market reacts at this level. Momentum is slightly outpacing both price and RSI, suggesting the market will continue to trade in the 1900-1975 range. In addition to 1930, support can be found at 1912 and 1898, while resistance comes in at 1960 and 1975.
Rob Kurzatkowski, Commodity Analyst
