T-Note (H&S Pattern Confirmed)

Friday's action confirmed a H&S Top pattern with the close below the neckline.  The objective is ~ 126 17/32 with stops in at 131 5/32.  Friday's low found support at a previous swing low (green support line), it's 50 EMA, and the Monthly S1 pivot.  If we can get a break below this support area, then you should see a test of the pattern objective.  There is also a 100 EMA and a Monthly S2 pivot in the same area as the pattern objective.  This could be a good area for the T-Note to bounce higher and test the highs if we can get there.  I expect the current support area to hold for a few days before moving lower.

10 Year Note

There is a possible H&S Top forming on the daily chart for the December T-Note futures.  This market has had a huge run up this past year and is due for a correction.  Even if the H&S objective is met, the bull trend will still be intact so this could still be a good time to short this market for a quick profit.  First, we got bearish divergence on the RSI.  Prices made higher highs (Head) with RSI failing to do the same showing a slowing of momentum.  Today also saw a close below  the 10 and 20 EMA.  We have some big news ahead of us tomorrow and Friday.  Will this market finally see a correction? or will new highs be made again?

CCI (Update)

Back on May 8th I wrote about a double top pattern being activated with a close below 635.07.  The objective of 580.87 was achieved on September 23rd.  It took 4 months to reach this point with alot of sideways action before the big breakdown.  This isn't surprising given the huge run-up in this index.  There was alot of bullish energy to shake off.  The question now is will we see a move back to recent highs OR is the commodity top already in at the April highs? 

Cotton (Update)

About a week back I wrote:  "there is some potential support in this 130-150 area.  We touched the top end of this range today.  Let's see if we get a bounce from somewhere in this area in the next few days.  You saw the first real signs of buying in 3 weeks with the lower shadow on today's candle.  I expect some lower prices before we get a significant bounce."  Since then we saw a brief rally followed by lower lows, another brief rally followed by lower lows.  The market made 3 new lows as momentum slowed down: the RSI showed bullish divergence and the MACD got a bullish crossover a few days back.  All this took place in the 130-150 zone (low was 142.06).  The market closed today at 159.86 for a nice 10+ point rally.  Let's see if it goes and tests 175-180 zone, which was previous support.

CCI (weekly chart)

The double top formation on the weekly chart was confirmed Friday with a close below 653.07.  The downside objective is ~ 580.87 with stops around 670.00.  The two peaks were formed with a bearish divergence in the RSI: new highs with slowing momentum.  You also had a bearish MACD crossover weeks ago.  These were the first warning signs of a possible correction.  I would expect a bounce in the next week considering how quickly we sold off.  I don't expect the recent highs to be taken out anytime soon.  I think we reach the downside double top ojective of 670.00.

CCI update

We have seen significant selling the past two days since confirmation of the H&S Top.  The objective of 658.07 was reached early today and continued much lower.  The weekly chart shows a potential double top formation as well.  If we get a close below 635.07 tomorrow it will be confirmed.  This would signal even more downside action with the potential objective around 580.87.  Commodities have been overbought for quite some time now and the technicals were pointing to a possible correction at these levels.  If you weren't able to get short any commodity markets you should have at least been liquidating any long positions.

Continuous Commodity Index

Commodities have been on an absolute tear since Dec 2008 with a return of around 89% on the CCI over that span.  However, this market may finally see a correction.  The market just recently tested the March 7th high and has sold off since.  It took 7 days from the March swing high down to the March swing low and took 25 more days to get back and make a new swing high.  This negative skew is a bearish sign and shows stronger downside momentum.  Over the past couple weeks we formed a H&S Top formation on the daily chart at a previous resistance point.  We got confirmation today with close below the neckline.  The downside objective is ~ 658.07 with stops @ 687.74.  The weekly chart also shows some bearish signs with a negative divergence on the RSI.  If this pattern holds to form, then you should see a big correction in most off the commodity markets including the metals. 

Cotton

July Cotton reached its H&S Top objective today ~ 149.03.  It reached this area pretty quickly: over 39 points in just 12 trading days.  The reward to risk ratio was a solid one: 2.63 to 1.00.  It takes deep pockets to trade this market, but if you have the capital it would've meant risking ~ 7475 to make ~ 19660 on a one lot.  Not bad for less than 3 weeks work.  Yesterday I stated there is some potential support in this 130-150 area.  We touched the top end of this range today.  Let's see if we get a bounce from somewhere in this area in the next few days.  You saw the first real signs of buying in 3 weeks with the lower shadow on today's candle.  I expect some lower prices before we get a significant bounce.

Cotton (update)

It's time to revisit the July Cotton H&S pattern that was confirmed back on 4/12.  This market has sold off very hard since then and closed limit down today at 153.39.  The objective for this pattern is 149.03, which is in the crosshairs.  There is a possible support zone in the 129.70-150.35 area.  I expect this market to test this area and get an oversold bounce.  Fib support calls for a test to 140.00 or so with strong support around the 131.75 area.  Let's see if we meet our objective and if a bounce occurs in this area.

Crude (July)

Crude has rolled over, but wanted to update the July action one last time.  The market did sell off in the resistance zone and found support at the second of three support levels.  I expect a run to test the recent highs.

Cocoa (July)

There is a possible sell set-up taking place in July Cocoa.  The 3200-3225 area is showing a confluence of fib resistance.  A butterfly pattern has formed on the 120M chart and the move up off the recent lows has been weak.  You have some deep retracements and left handed skewing, which are both signalling a possible stall at higher prices.  There is also a grouping of pivot resistance between 3183 and 3221 (DR2, WR2, MP).  I'm looking to short around 3210 with a stop at 3290 with an initial target of 2940.

Cotton

Cotton has moved into July from March.  So I will now focus on the July chart.  Yesterday we got confirmation of a h&s top with a close below the upward sloping neckline.  This patterns target is around 149.05 with an initial stop at 203.30.

Crude

Crude hit a high of 113.46 and sold off hard forming a bearish engulfing pattern.  There was plenty of resistance ahead- I expected a bit higher move before strong selling.  As it turned out it caught some pressure in the early part of the sell zone.  There's some possible support zones to watch for: 106.75-107.25 and 105.00-105.50.

Crude Oil

May Light Crude Oil is starting to head into a resistance zone.  There is a cluster of fib resistance tracing to some pivot points as far back as Aug '10.  I would label this zone from 113.15-121.15 with some stiff resistance around the 117.50 area.  In front of this level you also have some pivot point resistance lining up with the MR2 @ 115.25 and WR2 @ 116.92.  The most recent move up of the 97.02 pivot low has been strong with a shallow retracement and a 3:2 skew breakout.  The 261, 361, 461 extensions of this pattern are 113.15, 117.14, and 121.13 respectively.  I would expect these recent run-up to stall around one of these extensions as it also coincides with some fib resistance from much older patterns.  Let's see if we can stretch a bit higher, stall, and then retest the 108.25 pivot high.

Cotton

Cotton has not been able to close below the upward sloping neckline of the possible h&s top formation.  It now is an 8 point trendline.  The market bounced off this area hard last Tuesday.  However, the market failed to make a new high and saw some sellers come in on late Thursday and Friday.  We are seeing some consolidation the past 4 weeks and it will be interesting to see if we make new highs or take out that trendline next week.

Cotton

Cotton has found support the past 3 days at the rising window from the gap up made back on March 18th.  You also have a 5 point upward sloping trendline in the same area, which also happens to be the neckline of the possible H&S top that maybe forming.  Friday found some negative trading: new highs on selling.  This rising window/neckline area will be a key area this coming week.  If we can get a break below 192.23 on Monday you could see a good move lower.  This move would be made with a pivot of less than 50%, which is bearish AND with a 2:1 skew, which is also bearish.  Initial support would be seen around the 183.00-186.00 area.  This zone features horizontal support, the double top tgt, monthly and weekly pivot point support and a 50 DMA.  I could see a move to this area and then a possible retest of the neckline.  Let's see how this week plays out.

Cotton



Cotton has been on an impressive up move since mid 2010 appreciating over 150%.  However, we are starting to see some signs of a possible h&s top forming.  The above chart shows the LS, H, and RS have all formed.  We are now just waiting for confirmation, which would be a close below the red neckline.  A mini double top formed and was confirmed yesterday.  This formation projects down to around 183.00.  If the h&s formation gets confirmed the objective is down to around 151.50.  The LS was formed with an engulfing pattern, the H formed with a shooting star, and the RS formed with a piercing line.  All reversals were confirmed with bearish candlestick patterns and shows stiff resistance up at these levels.  We also saw some divergence on the RSI between the LS and H.  Finally we got a bearish crossover on the MACD soon after the H was formed and have gotten back to back closes under the 10 and 20 DMA's.  We do face some possible support at the rising window just above the neckline.  Let's see if we can get a close below this area.  If so, the 50 DMA will be the next area of possible support as it also coincides with the double top objective.  I would expect a bounce at this area and a retest of the upward sloping neckline.