More Upside Follow Through For Crude Oil?

Technical Outlook

BONDS (DEC) 11/19/2003: The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 111.27 and then again at 112.05, while swing support hits at 110.22 and below there at 109.27. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 112.05. The market is approaching overbought levels with an RSI over 70.

T-NOTES(DEC) The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.19. It is a mildly bullish indicator that the market closed over the pivot swing number. The major trend is down with the cross over back below the 40-day moving average. Near-term resistance for the T-Notes is at 114.11 and then again at 114.19, while swing support hits at 113.17 and below there at 112.31. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

11/18/2003

The stock market continues to be undermined by concerns of anemic growth. The fact that China and the U.S. may be entering into a trade war is simply another barrier to full recovery and a negative for the equity market. Comments from the Fed seemed to support the market early but in the end buyers were in short supply. With the U.S. CPI report showing an unchanged reading, some in the trade remain concerned about deflation. In general, the earnings reports that continue to flow are positive and should help firm up support underneath recent lows. However it would appear that market lacks a conclusive bullish catalyst and that could leave prices choppy. In order to arrive at full recovery in the global economy, the U.S. and China will have to settle their trade differences without delay and the stock market will be watching closely. A significant decline in the U.S. dollar also probably serves to discourage international buyers of U.S. securities and that is another reason why the U.S. market is finding it difficult to round up buying power.

Technical Outlook

S&P500 (DEC) 11/19/2003: The market setup is somewhat negative with the close under the 1st swing support. The outside day down gives the market a bearish tilt. The daily closing price reversal down is a negative indicator for prices. Underlying support comes in at 1024.45 and 1019.28, with overhead resistance at 1041.55 and 1053.48. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside objective is now at 1019.28. Short-term indicators on the defensive. Consider selling an intraday bounce.

S&P E-Mini (DEC): The new contract high and close below the previous day’s low constitutes a key reversal which is a bearish signal. The outside day down and close below the previous day’s low is a negative signal. A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1018.75. The swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for the S&P Mini is at 1041.50 and then again at 1053.75, while swing support hits at 1024.00 and below there at 1018.75. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

NASDAQ (DEC) The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The market should run into resistance at 1386.25 and above there at 1419.63 with support at 1339.75 and 1326.63. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1326.63.

CURRENCY MARKET RECAP

11/18/2003

The U.S. dollar came under pressure as a result of an unchanged Consumer Price Index reading. It is also possible the dollar came under pressure as a result of the trade issues with China. The U.S. Treasury Secretary suggested early in the session, that the US Dollar would be supported against massive depreciation but that intervention should never be ruled out entirely. In other words, the US didn’t seem to mind that the Dollar was falling sharply but might not allow things to get carried away. Therefore, it is possible the market is anticipating further declines in the Dollar, in order to enforce the wishes of the U.S. administration with respect to Chinese trade relations. Consequently all currencies look to benefit from the dollar weakness and therefore we could easily see a return to recent highs and possibly even new contract highs in most foreign currencies. Because the Euro was so technically oversold heading into the action Tuesday, it deservedly saw the biggest short covering reaction. In the end, it would appear as if a new wave down is under way in the Dollar Index.

Technical Outlook

YEN (DEC): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Swing resistance is targeted at 93.01 and above there at 93.29, with the yen finding support around 92.17 and below there at 91.61. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 93.29.

EURO (DEC): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.2089. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1711, with overhead resistance at 1.2089. Stochastics are rising from over sold levels which is bullish and should support higher prices. The market is becoming somewhat overbought now that the RSI is over 70. Follow-through selling is indicated by the key reversal down. The market rallied to a new contract high. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

11/18/2003

The gold market got a lift from a massive decline in the U.S. Dollar and because of rising economic uncertainty. Concerns of a trade war between the U.S. and China provided the economic uncertainty and could have been responsible for the excessive decline in the U.S. Dollar. In any regard, the gold market is back in a strong position but still confronted with psychological resistance at $400. It should be noted that recent open interest statistics on the gold options market indicate a significant holding of $400 calls. With six days to expiration in the December options, and the market close to the $400 strike price, it is possible that prices could become extremely volatile. Considering the magnitude of the downside breakout in the Dollar Index during the session Tuesday, it would seem that more gains are in-store for gold. The silver market continues to follow the gold market and both metals markets should be lifted by ongoing choppiness in the equity markets. It is also possible that flight to quality buying is being stimulated by the threat of a trade war between the U.S. and China.

Technical Outlook

SILVER (MAR): The market setup is supportive for early gains with the close over the 1st swing resistance. Initial support for silver is at 532.1 and below there at 522.3 with resistance likely at 537.1 and 545.6. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 537.1. Daily studies suggest buying dips today.

GOLD (FEB): Support for gold today comes in near 391.80, while resistance is pegged at 403.80. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 403.80. Short-term indicators suggest buying pullbacks today. Market positioning is positive with the close over the 1st swing resistance. The close above the 9-day moving average is a positive short-term indicator for trend.

COPPER MARKET RECAP

11/18/2003

The copper market saw buying interest from Chinese sources and also received support from concerns of a strike at a Canadian copper producing facility. With March copper over 350 points below its recent highs, evidence of Chinese buying in the early action simply combined with the threat of a strike to send prices sharply higher. In the end, the combination of developments Tuesday was more than enough of a catalyst to completely reverse the recent down ward pattern in prices. It’s should also be noted that LME copper stocks mounted a significant 4,100 ton decline overnight and that suggests that supplies are still tightening. It would certainly help copper to see a better macro economic outlook but in the near-term, internal copper fundamentals seem to be capable of carrying prices higher without outside help.

ENERGY MARKET RECAP

11/18/2003

The energy complex after starting out weaker on the session but managed to right the ship and close firm. With products leading the way on the upside, the trade showed concern that the new US energy bill might make it difficult to meet gasoline demand this winter. In other words, having MTBE outlawed is thought to create difficulty in supply gasoline in the coming quarter. Some in the trade are also now expecting a tightening of U.S. product inventories in the weekly reports due out Wednesday. Initially the market thought that crude and gasoline stocks were set to decline and that is an “about face” from the expectations heading into the session Tuesday morning. Supposedly, many oil companies fear that eradicating MTBE and using ethanol will be too difficult to implement quickly and that regional gasoline shortages are going to spark sharp rallies in gasoline prices.

Technical Outlook

CRUDE OIL (JAN): The outside day up gives the market a positive tilt. The market rallied to a new contract high. The upside daily closing price reversal gives the market a bullish tilt. There could be more upside follow through since the market closed above the 2nd swing resistance. Support for crude is keyed on 31.75 and below there at 30.38, with resistance pegged at 33.65 and 34.18. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 34.18. The market is becoming somewhat overbought now that the RSI is over 70.

UNLEADED GAS (JAN): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 95.41. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Resistance today is at 95.41, while support should be found around 84.61. The outside day up is somewhat positive. The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

HEATING OIL (JAN): There could be more upside follow through since the market closed above the 2nd swing resistance. Heating oil should encounter support around 84.16, with resistance is at 94.76. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 94.76. The market is becoming somewhat overbought now that the RSI is over 70. The outside day up gives the market a positive tilt. The market rallied to a new contract high. The upside daily closing price reversal gives the market a bullish tilt.

CORN MARKET RECAP

11/18/2003

March corn was down nearly 10 cents from Thursday’s highs before finding some decent support at the 240 1/2 level but the lower close for the third session in a row is a negative short-term factor. Weakness in the soybeans and wheat due to trade disputes with China helped drive the market down early but the sharp drop in the dollar and news that South Korea passed on an overnight tender to buy 75,000 tonnes of corn from China helped provide some support. Firm demand from the gulf and firm cash basis levels in the country due to tight producer holding helped provide underlying support as well.

Technical Outlook

CORN (MAR) 11/19/2003: Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 237 3/4. The market setup is somewhat negative with the close under the 1st swing support. Market resistance comes in at 246 3/4 today, with support at 237 3/4. The close below the 9-day moving average is a negative short-term indicator for trend. Short-term indicators on the defensive. Consider selling an intraday bounce.

SOY COMPLEX RECAP

11/18/2003

Uncertainty of the “reason” that the China soybean buying delegation cancelled their trip to Chicago this week sent the market spiraling lower into the mid-session. Initially, the trip was cancelled as 1 of the 5 buying groups could get visas in order for the trip. However, the cancellation came at the same time that the Bush administration is beginning to talk tough on trade issues and are threatening to slap on tariffs on textile imports from China. This sent the dollar sharply lower and the cotton market collapse. This also triggered active speculative long liquidation selling in soybeans. The US is expected to supply near 10 million tonnes of the 22 million tonne import estimate from China. Good weather in South America added to the bearish tone into the middle of the session. Ideas that the market was overdone on the downside and that the weaker dollar could support active new buying helped support the recovery into the close.

Technical Outlook

SOYBEANS (JAN) 11/19/03 The market tilt is slightly negative with the close under the pivot. The next area of resistance is around 790 1/2 and 798 3/4, while 1st support hits today at 763 1/2 and below there at 744 3/4. The market’s close on the 9-day moving average is neutral. Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 798 3/4.

MEAL (JAN): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 233.6. First resistance comes in at 241.4, with support at 236.9. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot.

BEAN OIL (JAN): A positive indicator was given with the upside crossover of the 9 & 18 bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 27.61. It is a slightly negative indicator that the close was lower than the pivot swing number. The market made a new contract high on the rally. Daily swing resistance is found at 27.30 and above there at 27.61. Support should be encountered at 26.70 and 26.41.

WHEAT MARKET RECAP

11/18/2003

March wheat closed sharply lower led by weakness in the soybeans, ideas of an overbought condition, fears that China and the US are in a minor trade dispute and the forecasts for some rains into the central and southern plains this weekend. In addition, there was a lack of new buying interest on the early break. Longs turned nervous on the China news and there is also some concern that the recent surge in prices may cause near-term export sales news to fall-off and since late last week there has been little export news except hopes that China will buy near 3 million tonnes of wheat on the world market and that 1 million tonnes would come from the US. Retracement support levels for March wheat include 400 3/4 and 395 1/2 while the steep uptrend channel support comes in at 4.00 on Wednesday and 4.02 3/4 on Thursday.

Technical Outlook

WHEAT (MAR) 11/19/2003: Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Expect near-term support around 395 and below there at 392 1/4, with resistance levels at 405 and 412 1/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 392 1/4.

LIVE CATTLE RECAP

11/18/2003

December cattle closed limit-up after a gap higher opening as concerns over cattle performance due to a potential snow-storm into the plains and the impact which this may have on a further delay in cattle marketings in the weeks just ahead helped support. In addition, boxed-beef cut-out values were stronger than expected Monday afternoon and at mid-session; boxed-beef cut-out values were up $1.66 to $169.00. The start of the winter season is probably the most positive factor for the market as the current storm track would only impact cattle in the Dakota’s and northern Nebraska but the cold and wet weather could slow weight gains on feedlots farther south. Cash cattle were bid at $92.00 in the plains with offers at $98 and $100. Cash cattle last traded at $97 on Friday, down $7.00 from previous trade. Active beef sales on Monday had some traders believing that post-Thanksgiving buying is picking up.

Technical Outlook

CATTLE (FEB) 11/19/2003: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 90.02. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Support should be encountered at 90.55 and below there at 90.02. Market resistance is at 91.20 and then again at 91.37. If yesterday’s gap higher on the day session chart holds, additional buying could develop this session. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

11/18/2003

December hogs closed moderately higher on the session finding support from the limit-up move in the cattle market and from talk that the market is close to a seasonal peak in production. Traders seemed hopeful that the heavy rains across the mid-west would slow marketings and support higher cash markets for tomorrow. For Thursday’s USDA monthly cold storage report, traders are looking for end of October belly stocks to come in near 20.0 million pounds (range 18.2-21.0) as compared with 10.4 million pounds last year. The 2-day lean index was down 46 to 49.773. Slaughter came in at 392,000 head as compared with trade estimates at 390,000 to 395,000 head.

Technical Outlook

HOGS (FEB) 11/19/2003: Market positioning is positive with the close over the 1st swing resistance. Resistance levels comes in at 57.12 and 57.32 today, while support is around 56.62 and then 56.32. The downside crossover of the 9 & 18 bar moving average is a negative signal. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 56.32.

COCOA MARKET RECAP

11/18/2003

Cocoa prices recoiled away from the recent high, as the market is simply not buying into the political anxiety threat. As we suspected the sharp rally off the October lows enticed some physical movement of beans to the market. In other words, the rally from $1,450 to $1,592 attracted farmer selling and in effect put a lid on prices. Because the trade documented late selling, it is possible that follow-through on the downside will be seen Wednesday. For prices to be weak in the face of a rebel declared emergency really suggests that the market isn’t being scared by the political uncertainty at the Ivory Coast. Some traders expected the US cocoa market to find support off the declining Dollar but in the end no support was found and that really points to a weaker price structure than many expected.

Technical Outlook

COCOA (MAR)11/19/03 The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1554 and above there at 1595 with support at 1498 and 1483. 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 1483.00.

COFFEE MARKET RECAP

11/18/2003

March coffee remains confined to its recent trading range with the market appearing to be making a bottom, but there is still no technical confirmation of this. The lack of fresh news kept the trade very choppy. In other news, coffee exports fell 3% in Oct vs year ago among 9 Latin American countries. The market continues to be capped by origin sales from Vietnam & Indonesia and with ample supplies available roasters are not willing to chase the market. For the first month of the 2003/04 season, Mexico’s coffee exports were +22% in October vs year ago.

Technical Outlook

COFFEE (MAR)11/19/03 The market has a slightly positive tilt with the close over the swing pivot. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 63.50.The Coffee contract should run into resistance at 63.10 and above there at 63.50 with support at 62.05 and 61.40. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/18/2003

The market continues to find support from trade houses and speculators on minor corrections as the technical set-up is somewhat supportive. Ideas that commodity prices are too cheap and that sugar will benefit from the expansion in world consumption is helping to support the market as money managers seem to be looking for commodities which are not only in technical uptrends but that are also near historically low price levels. The market managed to close 1 tick higher on the session and up 8 points from the lows of the session. While Brazil cash basis levels were weaker this week, there appears to be increased interest from China and Indonesia over the near-term. There was talk that China may have bought near 50,000-100,000 tonnes in the past week.

Technical Outlook

SUGAR (MAR) 11/19/2003: The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 6.40, with support found at 6.22. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 6.40.

COTTON MARKET RECAP

11/18/2003

Reports from Reuters that the Bush Administration tended to set new quotas on Chinese clothing imports triggered a sharp sell-off in the March cotton. China has been the most active buyer of US cotton over the last several months and a political move to discourage that is bearish. If March cotton fails to hold 75.28, prices could fall back to 71.97, which is a 50% retracement of the August/October rally.

Technical Outlook

COTTON (MAR) 11/19/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Next resistance area comes in at 77.39 and then again at 78.81, while support is targeted at 75.00 and 74.03. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 74.03. The gap lower on the day session chart is bearish and puts the market on the defensive.