- Futures Commentary -

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May 13, 2010 (FinancialWire) (Investrend Information Syndicate) (Via Brewer Futures Group) (Early Market, May 12, 2010, Report) — Yesterday the ProShares Ultra Gold ETF (NYSE: UGL) closed up 1.26% on volume of 583,000 shares, the SPDR Gold Trust (NYSE: GLD) closed up 0.62% on volume of 32.7 million shares, the Market Vectors Agribusiness ETF (NYSE: MOO) closed up 1.50% on volume of 455,900 shares, and the iPath Goldman Sachs Crude Oil ETF (NYSE: OIL) closed down 0.29% per share on volume of 1.1 million shares.

FinancialWire(tm) contributor, Brewer Futures Group, provides some related perspective and insight regarding the yesterday’s commodities markets activity:

U.S. Equity markets turned positive Tuesday night after Spain announced new austerity measures. This action helped to ease worries over Euro Zone sovereign debt problems. One of the biggest fears affecting Wall Street has been the fear of contagion in Europe. This aggressive move by Spain sent a signal to investors that it was going to be more aggressive than Greece while making attempts to contain its budget deficit and debt expansion.

Intra-day Tuesday, stock markets failed to hold onto earlier gains and finished lower for the session. Speculation that a new U.K. government had been formed helped draw buyers into the market while triggering liquidation by weaker shorts. The news out of the U.K. was positive because it indicated that the parliament would have the power to shore up the country’s budget woes while helping it improve its credit rating. That story influence trading at times yesterday.

Upside momentum was building in the June E-mini S&P 500 with a key retracement area at 1155.25 a major obstacle. Traders need to build support at that price in order to keep the rally moving forward. On the downside, a trade through 1136.25 could trigger further weakness.

June Treasury Bonds were under pressure due to the early strength in the equity markets. Traders were selling T-Bonds as they trimmed safe investments following the Tuesday night recovery in the stock market. Tuesday’s late session sell-off in the equity markets brought the T-Bond buyers back, which indicates this market still remains sensitive to stock market volatility. Besides the movement in the equity markets, Tuesday’s Treasury auction is remained a major influence on T-Bond prices later in the day.

June Gold soared to another all-time high Tuesday night. Investors continued to treat gold as a safehaven investment out of fear that renewed problems in the Euro Zone will lead to a collapse in the Euro. Traders are using gold as a hedge against the risk of holding paper currencies during this period of economic uncertainty in the EZ. Some traders also feel that inflation will increase now that EU is flooding the economic system with excess liquidity.

The Tuesday night recovery in the equity markets helped to boost the June Crude Oil contract. Technically, a support base seems to be building which could drive that contract back to 80.83 over the near-term. Fundamentally, OPEC’s announcement that demand from China will pick up the slack caused by lower demand out of the Euro Zone is helping to underpin the markets.

The U.S. Dollar Index is trying to hold on to gains but demand for higher risk assets due to the announcement of new austerity measures in Spain is making it difficult. Technically, the charts are indicating the possible development of a distributive top.

The June Euro is trading slightly better but the good news for the bulls is that downside momentum is slowing down. It seems traders are starting to accept the fact that new money is coming into Greece, Portugal and Spain which is helping to shore up short-term liquidity problems. Furthermore, the news that Spain is taking a proactive approach to contain its budget is being seen as a positive.

The June British Pound was expected to advance after it was reported that an agreement to create a new government had been reached. Traders celebrated the news that the Conservative party and the Liberal Democrats have formed a coalition to create a majority in the Parliament. The move by both parties helped to put an end to the long-standing rule of Prime Minister Gordon Brown and the Labour Party.

The formation of a new government is seen as a positive for the British Pound at this time because it provides clarity to an almost dire situation. For weeks the Sterling has succumbed to selling pressure due to the possibility of a hung parliament. This situation would have created a problem because it would have made it virtually impossible for the new government to enact the austere fiscal measures needed to balance the budget and reduce the country’s debt.

The clarity provided by the “new coalition” between the Conservatives and the Liberal Democrats comes at an important time because of the events taking place in the Euro Zone. The formation of a new government will help to provide the psychological boost the British Pound needs to reverse the current down trend.

Stronger demand for commodities and stocks yesterday morning are helped to encourage buying in the commodity linked-currencies. Higher crude oil, gold and stocks were underpinning the June Australian Dollar, June New Zealand Dollar and June Canadian Dollar. Early strength in the U.S. equity markets was also pressuring the June Japanese Yen.

Source: Courtesy of Brewer Futures Group; For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Communications via resources@investrend.com with “Brewer” in the subject line.

Streaming Research for companies and funds mentioned in FinancialWire(tm) news is available via the Investrend Research Syndicate, courtesy of Stock Smart (at http://investrend.stocksmart.com/ss/html/hpcompany.html).

Brewer Futures Group advises that futures and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. Prices in the underlying cash or physical markets do not necessarily move in tandem with futures and options prices. In no event should the content of this correspondence be construed as an express or implied promise, guarantee or implication by or from Brewer Futures Group, LLC, Brewer Investment Group, LLC, or their subsidiaries and affiliates that you will profit or that losses can or will be limited in any manner whatsoever. Loss-limiting strategies such as stop loss orders may not be effective because market conditions may make it impossible to execute such orders. Likewise, strategies using combinations of options and/or futures positions such as "spread" or "straddle" trades may be just as risky as simple long and short positions. Past results are no indication of future performance. Information provided in the above article is intended solely for informational purposes and is obtained from sources believed to be reliable. Information is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are attempted. For more information, content and/or a preferred introduction to Brewer Investment Group, LLC and/or Brewer Futures Group, LLC, contact Investrend Communications via resources@investrend.com with “Brewer” in the subject line.

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