This Is How Bird Flu Is Affecting Soybeans

Technical Outlook

BONDS (MAR) 02/03/04: The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 111.19 and then again at 112.02, while swing support hits at 110.23 and below there at 110.10. 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 110.10.

T-NOTES(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 112.28. 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 113.23 and then again at 114.00, while swing support hits at 113.05 and below there at 112.28. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.

STOCK INDICES RECAP

2/2/2004

Maybe the market took the sharp increase in ISM manufacturing prices as a sign that business was recovering enough to allow prices to be raised. For a long time the market has been concerned about the lack of pricing power and now maybe there is some relief being seen. We also think that concern over bird flu and a rising US Dollar has made US stocks look a little more attractive to foreign investors. Other traders suggested that oversold technicals provided the lift to prices Monday and after adjusting the recent COT reports for the action late last week a technical short covering rally is a good argument.

Technical Outlook

S&P500 (MAR) 02/03/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Underlying support comes in at 1127.05 and 1119.03, with overhead resistance at 1142.55 and 1150.03. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 1119.03.

S&P E-Mini (MAR): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1118.94. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1142.88 and then again at 1150.44, while swing support hits at 1127.13 and below there at 1118.94. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (MAR) The downside closing price reversal on the daily chart is somewhat negative. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The market should run into resistance at 1502.00 and above there at 1519.00 with support at 1475.00 and 1465.00. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1465.0.

MINI DOW (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market should run into resistance at 10556 and above there at 10619 with support at 10424 and 10355. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10355. With the close higher than the pivot swing number, the market is in a slightly bullish posture.

CURRENCY MARKET RECAP

2/2/2004

With the impending G7 meeting ahead, it seems that the market is going to give the bull camp in the Dollar a temporary lift. In fact, we would not be surprised if the bird flu situation isn’t causing some money to flee the Pacific Rim and flow toward the US. It did not seem like US economic numbers released Monday were that supportive of the Dollar but some suggest that higher pricing in the ISM readings is something that increases the odds of a tightening of rates later this year. Significant technical damage in the Pound and Canadian would seem to speak of even more losses in those markets in the days ahead.

Technical Outlook

YEN (MAR): 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. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 94.96 and above there at 95.13, with the yen finding support around 94.66 and below there at 94.53. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.13.

EURO (MAR): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.2326. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2326, with overhead resistance at 1.2482. 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

2/2/2004

We have to think that a combination of a rising Dollar and concerns for the Asian economy started the liquidation ball rolling in the gold and silver and then technical stop loss buying accentuated the selling. Even though gold and silver had recently liquidated a large number of spec and fund longs the markets remained overbought and vulnerable and with the Dollar pointing higher and the hope for ever expanding Asian physical demand being tempered its not surprising that so many longs threw in the towel.

Technical Outlook

SILVER (MAR): The close below the 2nd swing support number puts the market on the defensive. Initial support for silver is at 588.3 and below there at 575.7 with resistance likely at 610.9 and 620.3. 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 575.7.

GOLD (APR): Support for gold today comes in near 390.93, while resistance is pegged at 407.53. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 390.93. Daily studies pointing down suggests selling minor rallies. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The market’s short-term trend is negative as the close remains below the 9-day moving average.

COPPER MARKET RECAP

2/2/2004

For most of the last two weeks the copper market has mostly been able to discount the potential for a SARS like development off the bird flu outbreak. However, the copper market is moderately overbought and somewhat vulnerable to the ebb and flow of economic sentiment in the Pacific Rim. Furthermore, given the numbers of new bird flu cases reported in Shanghai over the weekend, the longs in copper have to be concerned. However, with the rather large LME stock decline and a prediction that world base metals demand is set to rise 7% in 2004 copper should have a firm underpin.

ENERGY MARKET RECAP

2/2/2004

A massive recovery bounce sparked by rumors of a US refinery problem but with recent temps much colder than expected and the market posting a series of losses last week the bounce might have been short covering. The Venezuelan Oil Minister ruled out a production increase in the upcoming meeting suggesting that the only two likely outcomes were a cut or steady production and that was a slightly supportive development. Many traders suggested that the spread action in the crude was indicative of a supply problem within the US.

Technical Outlook

CRUDE OIL (MAR): The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 33.83 and below there at 32.14, with resistance pegged at 36.13 and 36.74. The market’s short-term trend is positive on a close above the 9-day moving average. 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 32.14.

UNLEADED GAS (MAR): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 93.93. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. Resistance today is at 106.63, while support should be found around 93.93. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):With the close over the 1st swing resistance number, the market is in a moderately positive position. Heating oil should encounter support around 88.84, with resistance is at 98.04. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average. 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 88.84. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish.

CORN MARKET RECAP

2/2/2004

The corn market moved sharply lower and gave back all of Friday’s gains on renewed concerns that the bird flu situation in Asia is still expanding and that the situation could soon begin to negatively impact the economy in Asia. In addition, news that the fund net long position for the futures and options report reached a new record high of near 155,000 contracts added to the long liquidation sell-off. Weekly export inspections came in at 38.6 million bushels as compared with trade expectations for 35-40 million. Cumulative shipments have now reached 784.4 million bushels this season as compared with just 631.9 million bushels last year at this time. Heavy weekend rains in Argentina added to the negative tone.

Technical Outlook

CORN (MAR) 02/03/04: 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 266 1/4. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Market resistance comes in at 276 1/4 today, with support at 266 1/4. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. Daily studies pointing down suggests selling minor rallies.

SOY COMPLEX RECAP

2/2/2004

The soybean market gave back all the impressive gains posted Friday and then some as the market saw negative ramifications from the spread of Bird flu and improving weather conditions in Argentina. Reports that Brazilian January soybean export sales increased by 39% is a negative as is a fresh view that Brazilian production is looking stronger. We also think that the bird flu threat is causing some weak handed longs to liquidate. Weekly export inspections came in at 27.665 million bushels compared to 29.807 million and that also provided some light liquidation. With the size of the fund long in soybeans one can hardly discount significant chart violations like those seen Monday morning.

Technical Outlook

SOYBEANS (MAR) 02/03/04: The close below the 2nd swing support number puts the market on the defensive. The next area of resistance is around 801 1/2 and 813 1/2, while 1st support hits today at 784 and below there at 778 1/2. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close under the 40-day moving average indicates the longer-term trend could be turning down. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 778 1/2.

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 239.8. First resistance comes in at 248.6, with support at 241.6. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market is in a bearish position with the close below the 2nd swing support number.

BEAN OIL (MAR): 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 28.71. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 29.13 and above there at 29.31. Support should be encountered at 28.83 and 28.71. Short-term indicators on the defensive. Consider selling an intraday bounce.

WHEAT MARKET RECAP

2/2/2004

The wheat market came under pressure from the long liquidation sell-off due to sharp drop in soybeans but the selling slowed on the news of a lack of significant moisture over the weekend in western Kansas. Weekly export inspections came in at 20.2 million bushels as compared with trade expectations for 23-28 million. Cumulative shipments have now reached 747.1 million bushels this season as compared with just 597.0 million bushels last year at this time. The USDA is using preliminary production for 2004 at 2.190 billion bushels from 2.337 billion last year. Hopes of China buying more US wheat in mid-February when a buying delegation comes to the US helped provide some underlying support but the long liquidation trend shown in the COT report was seen as negative.

Technical Outlook

WHEAT (MAR) 02/03/04: The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 382 and below there at 378 1/2, with resistance levels at 388 1/2 and 391 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 391 1/2.

LIVE CATTLE RECAP

2/2/2004

April cattle moved lower again with funds noted as holding a hefty net long position in the weekend COT report and noted as sellers on the session. The snow storm in the southern plains was more bark than bite with light rains noted in many areas but the heavy snow did not materialize. However, another snow storm is projected for Wednesday in the feedlot regions. Boxed beef cut out values were down 39 cents to $136.45 as compared with $144.69 last week at this time. A lack of much reaction to the bullish Cattle Inventory report and a lack of new news to help bring about optimism for exports ahead added to the bearish tone.

Technical Outlook

CATTLE (APR) 02/03/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 71.82. It is a slightly negative indicator that the close was lower than the pivot swing number. Support should be encountered at 72.55 and below there at 71.82. Market resistance is at 73.75 and then again at 74.22. The downside closing price reversal on the daily chart is somewhat negative. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

2/2/2004

April hogs surged higher after a lower opening due to higher than expected cash trade, higher pork cut-out values and continued hopes of increasing exports ahead. Cash hogs were expected to be under some pressure early this week but came in at steady to $1.00 higher which was seen as a bullish surprise. The sell-off from the highs was triggered by expectations for warmer weather in spite of heavy snows in some areas and from the perception of an overbought condition after a 400 point gain in just 4 trading sessions. The CME 2-day lean index for the period ending January 29th came in at $57.67, up $.18 on the day and up from $54.74 on January 22nd. Funds were noted as active buyers on the session and with the weekend COT report showing the largest net short position by the speculator since 1998 helped to trigger short-covering from both large and small speculators.

Technical Outlook

HOGS (APR) 02/03/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Resistance levels comes in at 60.77 and 61.40 today, while support is around 59.22 and then 58.30. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 61.40. With a reading over 70, the 9-day RSI is approaching overbought levels.

COCOA MARKET RECAP

2/2/2004

The cocoa market posted a generally quiet session Monday with the market trading on both sides of unchanged. Apparently some industry buyers showed up on the early break in a development that might suggest a near term bottoming. A firmer Dollar continues to promote interest in London cocoa over US cocoa and that minimize the markets ability to bounce off the recent low. Origin sales continue to countervail the impetus to short cover but considering the magnitude of the downside since the January highs it would be surprising not to see a return to 1550 basis the May contract.

Technical Outlook

COCOA (MAR)02/03/04 The daily closing price reversal up is positive. The market has a slightly positive tilt with the close over the swing pivot. Cocoa should run into resistance at 1546 and above there at 1556 with support at 1515 and 1494. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1493.75.

COFFEE MARKET RECAP

2/2/2004

The coffee market managed to reject more of the big range down from last week but still failed to close back above the Friday close. Guatemala reported a 24% decline in January coffee exports after seeing October through January exports decline by 25% and those figures could have supported prices slightly. Brazilian January exports totaled 1.2 million bags according to CECAFE and that figure is down markedly from the December tally but that isn’t a surprise. In general the fundamentals seem to be supportive but prices have come a long way off the November lows.

Technical Outlook

COFFEE (MAR)2/3/04 The market has a slightly positive tilt with the close over the swing pivot. 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 objective is now at 72.35.The Coffee contract should run into resistance at 76.00 and above there at 76.65 with support at 73.85 and 72.35. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/2/2004

March sugar closed lower Monday and is not set to test the recent low at 5.58 as the market failed to see any upside follow through after putting in a weekly reversal last week. The cash market started the week quiet as the market still awaits news of expected purchases from Egypt, Syria, China and Indonesia. However, with the market again failing to make an upside breakout above the 5.90 to 6 cent area and another religious holiday in the Middle East, cash traders could be sidelined anticipating lower prices ahead. The bearish commitment of traders’ setup encouraged more fund selling on Monday and traders from this group could press the short side this week in an attempt to force small specs out of the market, which could start on a break below 5.58 in the March contract.

Technical Outlook

SUGAR (MAR) 02/03/04: The market is in a bearish position with the close below the 2nd swing support number. Swing resistance comes in at 5.84, with support found at 5.60. 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. The next downside objective is now at 5.60.

COTTON MARKET RECAP

2/2/2004

Cotton futures traded lower on fund sales as the market failed to hold Friday’s gains and amid continued concerns that China has stepped back from the market. The market is also digesting the National Cotton Council’s prospective planning report released late last week which they forecasted at 14.76 million acres which was higher than trade expectations ranging between 14.1 and 14.2 million acres. Last week’s export sales were poor and with cotton prices still trading significantly above the August 2003 lows, prices may need to come down some more to attract new buyers. Key support for May cotton is 69.41.

Technical Outlook

COTTON (MAR) 02/03/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. Next resistance area comes in at 69.81 and then again at 71.43, while support is targeted at 67.48 and 66.77. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 66.77. ORANGE JUICE (MAR)2/3/04 The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 62.30 and above there at 63.00 with support at 61.00 and 60.40. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 60.4.