Gold Options Report – May 17, 2012
Summary
June Gold settled at $1574.90 per troy ounce, a gain of $38.30 for the day.
Market Recap:
Gold futures roared higher on Thursday, rebounding from strong technical support on yesterday’s lows. A large miss in the Philly Fed Manufacturing index also provided a lift for the metal, possibly on expectations it would increase the likelihood of additional easing from the Fed (something also hinted at in the April minutes released yesterday). At the same time, there seemed to be little in the way of constructive developments in Europe: Fitch downgraded Greece, German 10-year bonds traded to record low yields and Moody’s has stated its intention to downgrade several Spanish banks in the near futures.
Active Options
M 1575 C, M 1600 C
M 1550 P
Q 1640 C, Q 1550 P
Z 1600 C, Z 1800 C, Z 1950 C, Z 2000 C
G 1700/2000/2300 Call Butterfly
Directional Commentary:
Options: Fences reversed sharply toward the call on the back of a massive rally. After two weeks of heavy downside put-buying, and increasing volatility, the bounce from the low was furious. Volatility was bid on a combination of speculative buying and scramble for upside protection. A well-known investment bank and a fund were seen buying the February 1700/2000/2300 Call Butterfly in large volumes near the end of the trading session. Options activity was bullish. Conclusion: Slightly Bullish
Technical: June Gold rallied extremely aggressively on Thursday, rebounding from support at the December low of 1523.90. Today’s move negates the sharp downtrend from May 1st. From here, futures are likely to seek to retest resistance between 1600 and 1640. From there, we would expect futures to trend towards either 1800 or test the December low again. We will be watching volumes (both today and yesterday had high volumes, higher yesterday) and open interest interest for additional trend confirmation. Conclusion: Slightly Bullish
EXCHANGE NEWSWIRE, 17 May 2012
CME submitted an edited request to expand its grains trading hours to 21 hours, instead of 22 hours as in the earlier plan it had submitted to CFTC, Reuters reported.
Broadway Technology: six interest rate swaps trading venues, including Bloomberg, have agreed to take trading technology from Broadway Technology, the Financial Times reported. This takes place as broker-dealers in the US make their final preparations for incoming Dodd-Frank regulations in a challenge to established IDBs ICAP and Tullett Prebon.
LME Chairman Brian Bender was quoted in WSJ saying that throughout the bidding process, “LME has made clear its view that the exchange doesn’t need to be sold, and that bidders will have to show compelling reason for a transaction if they are to convince shareholders that a sale is a good idea.” Read more
Daily Technicals
JUL WHEAT Resist: 643, 651-652, 661 1/2* ST Trend: Up
(638 3/4) Supprt: 626 1/2, 621 3/4 Obj: 661 1/2 TRP: 610.25
Comment: Yesterday’s sharp rally signals a reversing upturn and projects climbing advances to 661 1/2*.
The strong close favors continuation rallies. A close over 643 will promote continuation rallies. We may see
minor consolidation of gains in the upper half of yesterday’s rally, but narrow congestion should bull flag to
setup for rallies. Only a close under 610 1/4* rekindles bear trend forces.
JUL CORN Resist: 626 1/4, 632, 638 1/4* ST Trend: Up
(620) Supprt: 610 1/2, 608, 602 3/4 Obj: 638 1/4 TRP: 590.75
Comment: Yesterday’s sharp rally signals a reversing upturn and projects climbing advances to 638 1/4.
The strong close favors continuation rallies. A close over 626 1/4 will promote continuation rallies. We may
see minor consolidation of gains in the upper half of yesterday’s rally, but narrow congestion should bull
flag to setup for rallies. Only a close under 590 3/4* rekindles bear trend forces.
JUL SOYBEANS Resist: 1424 1/4, 1429*, 1450 ST Trend: Down
(1422) Supprt: 1400 1/4, 1389, 1350 1/2* Obj: 1350 1/2 TRP: 1460.50
Comment: The short term trend forces are down with the formation projecting selloffs that could drop
against 1350 1/2* weekly support. A close under 1380 will promote continuation selloffs. The past couple
rebounding days hints flagging corrections, but rallies contained to the lower half of Friday’s downturn will
keep bear forces in control. A close over 1429* is needed for a multi-day recovery phase to probe over
1450 and test the 1460 1/2* resistance.
Read More: GRI Technical 5.17.12
Morning Grain Comments: Thursday, May 17, 2012
OPENING CALLS: Steady/Mixed REASON: Week’s trend continues generally higher, supported by escalating weather concerns
EXPORT SALES @ 7:30 AM , CATTLE ON FEED @ 2 PM TOMORROW
MORNING TRIVIA: What percentage (hint: a common fraction) of Americans require some type of vision correction?
MARKET HEADLINES:
- Quick Editorial: the grains finished mixed this morning but it was a well supported
overnight session in general, following yesterday’s closing rally;
hot and (in places) dry U.S. weather forecasts are already raising anxiety, with
30+ million acres of corn & beans still to plant. The U.S. did lose out on some
export business overnight, but the ’11/12 contracts remain hot commodities… - Tokyo-based import execs said that Japan has only covered one quarter of its
feed corn needs for July-Sep, with traders hesitant to buy due to high prices;
they did purchase 500k tonnes of South American corn for July-Sep today,
though, with more purchases reportedly in the works. Japan took 300k tonnes
from Brazil and 200k from Argentina, with Brazil cheaper than U.S. supplies
for that period, and Brazil likely to be the origin for any upcoming lots as well - Philippine importers bought three cargoes (162k tonnes) of Australian feed
wheat at $271-272/tonne for Sept-Oct shipment; Japan bought 159k tonnes of
milling wheat in their regular weekly tender as planned, including 106k
tonnes from the U.S., 21k from Canada, and 32k from Australia; and Jordan
bought 50k tonnes of optional-origin wheat in a tender for 100k this morning. Read more
Morning Gold Call – May 17th
Gold Options Report – May 16, 2012
Summary
June Gold settled at $1536.60 per troy ounce, a loss of $1536.60 for the day.
Market Recap:
Gold continued its withering sell-off on Wednesday against escalating Greek uncertainties and a surging dollar. Jon Nadler, a prominent gold analyst at Kitco, only today pointed out “the dollar’s.. 13-day long advance has now been classified as the longest winning one ever since the trade-weighted index has been created.” Investors, presented with headlines such as the ECB suspending operations with Greece banks for “incomplete recapitalization,” have opted to sell the Euro, sell European stocks, sell commodities on faltering demand, and seek safer pastures. Gold is not viewed as providing that safety. While futures rallied at the hint of additional easing in the April FOMC minutes released this afternoon, the gains faded quickly as traders turned back to the broad disinvestment cycle.
Active Options
M 1500 P, M 1550 C
N 1550 C, N 1450 P
Q 1540 P, Q 1500 P
X 1400/1300 P. Spread
For yesterday’s full report, click here
