Here’s Why Gold Sprang To Life

Technical Outlook

BONDS (DEC) 11/11/03: It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 107.19 and then again at 108.02, while swing support hits at 106.22 and below there at 106.08. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 106.08.

T-NOTES(DEC) Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 110.21. The market’s close below the pivot swing number is a mildly negative setup. Near-term resistance for the T-Notes is at 111.15 and then again at 111.24, while swing support hits at 110.30 and below there at 110.21. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.

STOCK INDICES RECAP

11/10/2003

The stock market continues to behave poorly and given the numbers Monday one would have expected the bull camp to mount some type of rally. In the end, the market continues to doubt the recovery, is dredging up terrorism fears or is thinking that the Fed is poised to hike rates at the first sign of optimism toward the economy. Despite the Fed promising to keep interest rates low for the foreseeable future it would seem that the market is not confident that rates will stay steady. Many traders are also suggesting that the numbers have been better than anyone would have expected and yet stock prices won’t rally and therefore the market must need a more significant correction.

Technical Outlook

S&P500 (DEC) 11/11/03: The market’s close below the pivot swing number is a mildly negative setup. Underlying support comes in at 1042.05 and 1038.98, with overhead resistance at 1050.35 and 1055.58. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 1038.98.

S&P E-Mini (DEC): The key reversal down puts the market on the defensive. The market made a new contract high on the rally. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1038.13. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1051.00 and then again at 1057.13, while swing support hits at 1041.50 and below there at 1038.13. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (DEC) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. The market should run into resistance at 1429.50 and above there at 1446.75 with support at 1403.50 and 1394.75. Short-term indicators on the defensive. Consider selling an intraday bounce. The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near-term support is penetrated. The next downside target is 1394.8.

CURRENCY MARKET RECAP

11/10/2003

We think a pattern in set in the Dollar, with strong US economic numbers unable to support the Dollar. The fact that the Canadian and the Yen were significantly higher Monday would seem to suggest that major recoveries are due in those currencies in the days ahead. However, it is also clear from the pace of US numbers that the economic differential between the US and Euro zone continues to favor the Dollar. Traders continue to suggest that the US Dollar will be unable to rally without the US stock market behaving much better than has been the case over the last several sessions.

Technical Outlook

YEN (DEC): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 92.81 and above there at 93.25, with the yen finding support around 91.95 and below there at 91.53. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 93.25. Short-term indicators suggest buying dips today.

EURO (DEC): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 1.1540. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1428, with overhead resistance at 1.1540. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

11/10/2003

With the Dollar failure Monday the gold market sprang to life Monday after a muted opening. In addition to the Forex support for gold it would seem that the market was picking up a little flight to quality support from the Saudi Arabia situation. It should also be noted that the gold market is keeping true to the track posted last week, where weak US economic numbers (or weak equity market action) provided gold with support. In other words, the inability to see stock prices rise following the favorable monthly payroll report is something that has raised economic anxiety levels in the marketplace.

Technical Outlook

SILVER (DEC): The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 505.8 and below there at 501.4 with resistance likely at 508.5 and 512.3. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 501.4.

GOLD (DEC): Support for gold today comes in near 381.50, while resistance is pegged at 390.70. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 381.50. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is positive on a close above the 9-day moving average.

COPPER MARKET RECAP

11/10/2003

The copper market continued to behave like an overbought market with buyers standing back from several key chart support areas. One would have expected the 256,000 copper deficit figure from the ICSG to be supportive of prices for the January through August 2003 time frame. However, the copper market, like the stock market is apparently not enamored with the macro economic outlook. In fact, until the Chinese show an interest to step back into the long side it is possible that prices will remain choppy to weak. He macro economic numbers from the US Monday were very favorable but the weaker early equity market action just kept copper from seeing the bright side of the equation Monday.

ENERGY MARKET RECAP

11/10/2003

The energy complex failed to hold early gains off the Saudi bombing and the colder than expected weather in the US. Apparently the market was given an added lift by the assumption that the early rally was sparked mostly by ideas that al-Qaida was behind the attack and that in turn suggests a potential pattern of Saudi Arabian attacks ahead. Some traders suggested that December crude oil prices might have reached a slightly overbought condition around the highs Monday, especially if the outlook for the economy is going to remain muted and suspect.

Technical Outlook

CRUDE OIL (JAN): It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 30.43 and below there at 30.21, with resistance pegged at 30.82 and 30.99. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 30.99.

UNLEADED GAS (JAN): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 83.63. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 83.63, while support should be found around 81.83. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (JAN): The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 83.18, with resistance is at 84.88. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 84.88.

CORN MARKET RECAP

11/10/2003

The corn market closed 2 1/2 cents lower on the session in spite of sharply higher trade in wheat and soybeans. A lack of any confirmation of export sales to China or to South Korea as rumored on Friday and fears of a large production numbers for Wednesday’s USDA production report helped pressure. News of 100,000 tonnes of US corn sold to unknown destination failed to provide much support. Weekly export inspections came in at 31.3 million bushels as compared with 27-30 million expected. Cumulative exports for the season have reached 317.7 million bushels as compared with 256 million bushels last year at this time. Given the sharp increase in the fund net long position in the past week, traders are hesitant to buy corn ahead of the USDA report.

Technical Outlook

CORN (MAR) 11/11/03: Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 237 . The market’s close below the pivot swing number is a mildly negative setup. Market resistance comes in at 242 1/2 today, with support at 237 . The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.

SOY COMPLEX RECAP

11/10/2003

January soybeans closed 13 1/2 higher on the session and up 24 cents from the lows of the day. Fund selling slowed into mid-session due to good export inspection numbers and commercial buying was also noted and tied to rumors of more buying from China. Position ahead of Wednesday mornings USDA Supply/demand report and production report added to the bullish tone. Crop production may be resided slightly lower and demand numbers are running well ahead of the normal pace for both export and crush so if there are significant changes, higher demand and tighter ending stocks are likely. Weekly export inspections came in at 55.55 million bushels as compared with 45-48 million expected. Cumulative exports for the season have reached 235.6 million bushels as compared with 224.8 million bushels last year at this time.

Technical Outlook

SOYBEANS (JAN) 11/11/03: The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 774 1/2 and 781 1/4, while 1st support hits today at 749 1/2 and below there at 731 1/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 731 1/4.

MEAL (MAR): Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 229.4. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 238.0, with support at 233.1. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 24.23. A positive setup occurred with the close over the 1st swing resistance. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. Daily swing resistance is found at 25.67 and above there at 25.91. Support should be encountered at 24.83 and 24.23. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up.

WHEAT MARKET RECAP

11/10/2003

March wheat closed 6 cents higher on the session and to the highest level since the August 18th contract highs. Continued dryness in Argentina during the reproductive stage, dryness in western Kansas and hopes for continued interest in US wheat from Egypt, Ukraine or China added to the positive tone. Weekly export inspections came in at 18.8 million bushels as compared with 18-22 million expected. Cumulative exports for the season have reached 502.8 million bushels as compared with 404.8 million bushels last year at this time. The shift to better than expected export pace could be the trigger for the USDA to raise their export forecast for Wednesday’s report. Traders look for ending stocks to come in near 609 million bushels as compared with 633 million from the October forecast.

Technical Outlook

WHEAT (MAR) 11/11/03: A positive setup occurred with the close over the 1st swing resistance. Look for near-term support at 390 1/2 and below there at 383 1/4, with resistance levels at 401 1/2 and 405 1/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 405 1/4. The 9-day RSI over 70 indicates the market is approaching overbought levels.

LIVE CATTLE RECAP

11/10/2003

December cattle closed limit-up with near 600 buy orders in the December contract still unfilled into the close. With talk of cash cattle trading near $105-$107 this week, steady to $2.00 higher than last week, buyers were still active in the December futures which remain at a significant discount to the cash market. Commercial and fund buyers were active early in the session before the market failed to generate new sellers on a slightly higher move early in the session. The big discount is scaring away new sellers and small speculators were noted as light buyers which was thought to be short-covering. As of November 4th, small speculators were still net short over 7600 contracts. Boxed-beef cut-out values were up $.20 to $170.69. Slaughter came in at 101,000 head as compared with trade expectations at 95,000-118,000 head.

Technical Outlook

CATTLE (DEC) 11/11/03: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 99.40. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 97.62 and below there at 96.55. Market resistance is at 99.05 and then again at 99.40. A new contract high was made on the rally. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The 9-day RSI over 70 indicates the market is approaching overbought levels.

LEAN HOGS RECAP

11/10/2003

After a higher opening, December hogs closed 70 lower on the session and down 132 from the highs of the day as long liquidation (profit-taking) selling and rolling of longs to February helped pressure. Cash market5s were mostly steady with a few locations slightly higher. The CME 2-day lean Index through November 6th was up 49 cents to 49.69 which leaves December futures at a significant premium to the cash index and helped add to the liquidation selling. The lower close in the face of a limit-up move in cattle was seen as a bearish technical development. Cash markets look steady/firm for Tuesday. Slaughter came in at 395,000 head, near the high end of expectations and compares to 390,000 last week and 356,000 head last year at this time.

Technical Outlook

HOGS (DEC) 11/11/03: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Resistance levels comes in at 53.32 and 54.27 today, while support is around 52.02 and then 51.67. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The near-term upside objective is at 54.27.

COCOA MARKET RECAP

11/10/2003

The cocoa market staged an aggressive washout Monday after forging an upside breakout last week. The fact that origin selling surfaced early in the session undermined the trade and prompted widespread profit taking from weak handed longs. Apparently the trade sees some physical cocoa movement and that could push commercial and industry buyers to the sidelines and without those buyers the trade is really without much of an underpin. On the other hand, with recent trouble in rebel areas we would certainly be careful in pressing the short side of this market until the flow of beans is firmly entrenched.

Technical Outlook

COCOA (MAR)11/11/03 The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1448 and above there at 1479 with support at 1404 and 1391. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1478.50.

COFFEE MARKET RECAP

11/10/2003

March coffee opened on Monday at a fresh 6-session high but failed to generate new buying interest and closed 100 lower on the session and down 150 from the highs. Rolling of December positions to other contracts was the primary focus of the session after the early rally attempt failed. Open interest in the December contract as of November 7th was still relatively high at 40,420 contracts. News that many coffee farms in Brazil received 1/2 to 1 1/2 inches of rain on Thursday and Friday last week helped ease the market lower as the rain seemed to be more important than the dry weather forecast for early this week because there is more rain in the forecast for later this year. The Council of Green Coffee Exporters in Brazil indicated that the country exported 1.97 million bags in October, down 31% from last year.

Technical Outlook

COFFEE (MAR)11/11/03 The outside day down and close below the previous day’s low is a negative signal. The downside closing price reversal on the daily chart is somewhat negative. The close below the 1st swing support could weigh on the market. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 60.70.The Coffee contract should run into resistance at 63.30 and above there at 64.50 with support at 61.4 and 60.70. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily studies pointing down suggests selling minor rallies.

SUGAR MARKET RECAP

11/10/2003

The close above the downtrend channel off of the August highs leaves technical resistance points at 639 and 656 with support at 613. March sugar managed to close 13 higher on the session. The weekly closing price reversal last week and a lack of new selling interest supported the higher trade on Monday. Producers are likely to be active sellers on the rally but they may be patient to see how far the bounce might be. There was a noticeable increase in inquires in the cash market and buyers might sense a near-term low as well and could increase buying. Egypt is expected to buy 40,000 tonnes of raw sugar in a tender for next Monday.

Technical Outlook

SUGAR (MAR) 11/11/03: The gap upmove on the day session chart is a bullish indicator for trend. The market’s close above the 2nd swing resistance number is a bullish indication. Swing resistance comes in at 6.34, with support found at 6.06. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average. Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 6.34.

COTTON MARKET RECAP

11/10/2003

The cotton market closed slightly lower in choppy, two-sided trade as the early bounce failed to generate new buying support. Positioning ahead of Wednesday mornings USDA supply/demand report added to the choppy tone. While the world report will be watched the closest to see if there are China revisions, traders also look for higher production from the US. The average trade estimate came in at 17.78 million bales (17.6-18.0) as compared with 17.6 million bales last month. Ending stocks are expected to come in near 4.45 million bales from 4.6 million last month but the range of estimates is as low as 3.0 million bales to as high as 5.7 million bales. China is the wild card and if the USDA increases China import numbers due to a lower production forecast, the US is expected to benefit the most. Traders are looking for a China crop near 22.33 million bales as compared with last months forecast at 25.5 million bales.

Technical Outlook

COTTON (MAR) 11/11/03: The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Next resistance area comes in at 80.51 and then again at 81.13, while support is targeted at 78.96 and 78.03. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 78.03. The downside closing price reversal on the daily chart is somewhat negative.