John Carter Futures Analysis: Commodities, Currencies, and Equities

In today’s futures update, we start with a review of commodities markets where live cattle is one that has been uncorrelated to the market and holding a nice uptrend. This sets up for a less stressful trading opportunity given the volatility we have seen in equity markets, and we would look to buy on pullbacks given the clean uptrend. Coffee is another market we’re looking at that has been very strong. Cotton has been beaten down but a reversal may be in the works so we will continue to monitor the squeeze indicators for a change in momentum. Soybeans, corn, and wheat are sitting on major support, and look like the charts are worth a shot for a long scalp. The dollar has been extremely strong and appears to have significantly more upside based on the long-term chart. A way to play this aggressively is to short the Euro. The Aussie-dollar has come down already a great deal due to its correlation with commodity markets, and doesn’t appear to have as much potential for a move as the Euro. The British pound also has a similar look. In general, we’re looking to get short non-dollar currencies on bounces. Moving on to equities, we got a bounce to close the week, but we think a bounce will be short-lived and volatility will be back soon. If the Nasdaq is able to take new highs, we would consider this thesis negated. We’re paying special attention to the Russell 2000 and XLE energy ETF. The XLE has continued to sell off aggressively and saw no bounce, and without any recovery in this market it is hard to believe the stock market will be able to get going to the upside. Bonds continue to be very strong even while equities bounce, which is bullish, and this is a market we want to play, specifically the notes which are setting up for a squeeze. Oil and gold can’t catch a break with dollar strength and we see those markets heading lower.