What’s Ahead For Gold
BOND MARKET RECAP
10/13/2003
Even with the Treasury market closed for Holiday,
it would seem that the developments from the action Monday will put pressure on
Treasuries when they resume trading. Not only did the Fed come out with some
very favorable dialogue on the recovery but with the stock market moderately
higher on the session Monday that should also favor the bear camp on Tuesday.
Technical Outlook
BONDS (DEC) 10/14/03: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Near-term
resistance for bonds is at 108.22 and then again at 109.03, while swing support
hits at 107.18 and below there at 106.27. 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 106.27.
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 111.19. With the close over the 1st swing
resistance number, the market is in a moderately positive position. 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 112.25 and then again at 113.01,
while swing support hits at 112.02 and below there at 111.19. The market’s
short-term trend is negative as the close remains below the 9-day moving
average.
STOCK INDICES RECAP
10/13/2003
The stock market saw support from favorable Fed
dialogue and from mostly favorable US corporate earnings reports. Motorola
seemed to get the bullish tilt rolling Monday morning but it would appear that
the stock market is going to maintain a slow and steady upward bias instead of
quickly rushing higher and becoming technically overbought. The Fed even
suggested that they are seeing signs of firms hiring and that growth in the 4th
quarter could be significantly above 3.25%! Just to round out the bullish
environment Monday, the Dollar was higher and energy prices were somewhat
weaker.
Technical Outlook
S&P500 (DEC) 10/14/03: With the close over the
1st swing resistance number, the market is in a moderately positive position.
Underlying support comes in at 1040.90 and 1036.60, with overhead resistance at
1048.70 and 1052.20. 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 1052.20.
S&P E-Mini (DEC): The market made a new contract
high on the rally. Rising stochastics at overbought levels warrant some caution
for bulls. The next upside objective is 1052.88. 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 1049.25 and then again at 1052.88, while swing
support hits at 1040.75 and below there at 1035.88. A positive signal for trend
short-term was given on a close over the 9-bar moving average.
NASDAQ (DEC) 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. A positive setup occurred with the close over
the 1st swing resistance. The market should run into resistance at 1427.50 and
above there at 1434.75 with support at 1409.50 and 1398.75. Short-term
indicators suggest buying dips today. Studies are showing positive momentum, but
are now in overbought territory so some caution is warranted. The next upside
target is 1434.8.
CURRENCY MARKET
RECAP
10/13/2003
While the US pit action was closed on Monday, the
US Dollar posted enough upside action in the GLOBEX session, to foster short
covering in the Dollar Tuesday morning. Even though the US economic report slate
was empty Monday, the trade did get another round of supportive dialogue from
the newswires Monday morning. In fact given such favorable dialogue from the US
Fed one could make a case that the economic differential actually favors the
Dollar over the Euro.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. 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 92.37 and above there at 92.57, with the yen finding support around
92.08 and below there at 91.99. Studies are showing positive momentum, but are
now in overbought territory so some caution is warranted. The next upside target
is 92.57. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
EURO (DEC): 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 1.1702. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1702, with overhead resistance at 1.1868. The
market’s short-term trend is positive on a close above the 9-day moving average.
The gap down on the day session chart is bearish with more selling pressure
possible today.
PRECIOUS METALS
RECAP
10/13/2003
The gold market seemed to under perform both
silver and copper action on Monday, possibly because the Dollar showed signs of
trading higher in its limited session. In fact, the outlook for the US economy
is improving so quickly that it would not be surprising to see the Dollar down
trend diffuse itself in the near term. However, the outlook on the economy is
becoming so favorable and with rising energy prices the odds of a little
inflation support for precious metals prices is growing. In fact, with the best
demand period of the year directly ahead for the world’s largest importer
(India) the gold could get sustained support in coming sessions. Overall the
metals seem poised to get some benefit off the macro economic condition!
Technical Outlook
SILVER (DEC): 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. Initial support for silver is at
492.0 and below there at 483.3 with resistance likely at 496.5 and 504.0. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. Daily stochastics are showing positive momentum from oversold
levels which should reinforce a move higher if near-term resistance is taken
out. The next upside target is 496.5.
GOLD (DEC): Support for gold today comes in near
368.63, while resistance is pegged at 380.03. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 368.63. With the close over the 1st swing resistance number, the market
is in a moderately positive position. The market’s short-term trend is negative
as the close remains below the 9-day moving average. The outside day up is a
positive signal. The upside closing price reversal on the daily chart is
somewhat bullish.
COPPER MARKET RECAP
10/13/2003
An explosive rally in copper didn’t appear to be
pinned to any specific development as the funds were apparently willing to rush
into fresh long when prices climbed above 87.80. There have been some minor
production problems but the source of the aggressive buying interest Monday
seemed to be mostly speculative in nature. Certainly the Fed’s upbeat assessment
of the US recovery and the favorable stock market action helped foster the move
but for the market to forge a 240 point gain on the usual news flow is quite
surprising. We have seen some copper production shut down in the past because of
excessive energy prices but we are probably not to that level just yet.
ENERGY MARKET RECAP
10/13/2003
We suspect that the trade was profit taking and
simply balancing the technically overbought condition in the unleaded market as
there would seem to be very little change in the fundamental outlook for energy
prices. Apparently Nigerian sources continue to see significant shortages but as
of yet haven’t seen price cap rules violated. The energy complex might have seen
some thin support from concerns of Iraqi sabotage over the weekend but given
marginally lower action seen for most of the session Monday the market was
simply ignoring potentially bullish supply information.
Technical Outlook
CRUDE OIL (DEC): It is a mildly bullish indicator
that the market closed over the pivot swing number. Support for crude is keyed
on 31.82 and below there at 31.49, with resistance pegged at 32.31 and 32.47.
The market’s close on the 9-day moving average is neutral. .
UNLEADED GAS (DEC): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 87.50. It is a slightly negative indicator that the close
was lower than the pivot swing number. Resistance today is at 87.50, while
support should be found around 84.90. 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.
HEATING OIL (DEC): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 87.15, with resistance is at 89.55. 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 89.55. With a reading over 70, the 9-day RSI is approaching
overbought levels.
CORN MARKET RECAP
10/13/2003
The December corn market seemed to find some
support off the 215 1/2 level and because the soybean market action made it
difficult to press the short side of corn. New crop corn is supposedly getting
support from the idea that soaring soybean prices might reduce the interest in
corn acres in 2004 and that could make the low world ending stocks reading more
important. The corn market is now thought to be net spec short some 80,000 to
85,000 contracts, which is an overly short position, but nowhere near the record
short reading. The trade is also thinking that increased farmer selling could
step up to pressure corn prices for at least the next 5 to 10 sessions.
Technical Outlook
CORN (DEC) 10/14/03: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 214 1/4. The market’s close above the 2nd swing resistance
number is a bullish indication. Market resistance comes in at 219 3/4 today,
with support at 214 1/4. The upside crossover (9 above 18) of the moving
averages suggests a developing short-term uptrend.
SOY COMPLEX RECAP
10/13/2003
Extremely volatile action in beans with some
traders suggesting that the market isn’t holding as much of the upside as would
be expected given the recent fundamental news. However, it is a bad time of the
year to expect sustained volatility as the US crop is coming closer to a clear
definition. Other traders point to improving South American weather and the
potential for a 20% increase in production over the prior years output as a
reason for the back and forth rally of the past two sessions. Evidence of
ongoing Chinese demand probably keeps the market from paying too much attention
to an expanding overbought technical position in soybeans.
Technical Outlook
SOYBEANS (NOV) 10/14/03: A new contract high was
made on the rally. A positive setup occurred with the close over the 1st swing
resistance. The next area of resistance is around 738 1/2 and 746 1/2, while 1st
support hits today at 724 and below there at 717 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 746 1/2. The 9-day RSI over 70 indicates the market is
approaching overbought levels.
MEAL (DEC): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 222.4. The
rally brought the market to a new contract high. First resistance comes in at
219.5, with support at 214.8. The market’s short-term trend is positive on a
close above the 9-day moving average. With the close over the 1st swing
resistance number, the market is in a moderately positive position. With a
reading over 70, the 9-day RSI is approaching overbought levels.
BEAN OIL (DEC): 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 27.36. A positive setup occurred with the close over the 1st swing
resistance. A new contract high was made on the rally. Daily swing resistance is
found at 27.04 and above there at 27.36. Support should be encountered at 26.38
and 26.04. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
WHEAT MARKET RECAP
10/13/2003
With the export information delayed until Tuesday
the wheat market is left pretty much in a listless position. European wheat was
also very quiet with low volume trade noted in most markets. Despite the lack of
action the December wheat contract managed to breakout above the last 4 days
action. While the US Dollar pit action was closed for Holiday the Euro was
significantly lower in electronic action and that could leave the US wheat trade
disappointed from an export expectation.
Technical Outlook
WHEAT (DEC) 10/14/03: The outside day up and
close above the previous day’s high is a positive signal. The daily closing
price reversal up is positive. A positive setup occurred with the close over the
1st swing resistance. Look for near-term support at 329 1/2 and below there at
322 3/4, with resistance levels at 338 1/2 and 341 1/4. 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 322 3/4.
LIVE CATTLE RECAP
10/13/2003
October cattle closed limit up for the 6th
session in a row and December and February cattle also closed limit-up due to
soaring cash markets and sharply higher beef prices. Cattle in the southern
plains traded as high as $108.00 which is up $13-$16 from last year and a new
all-time higher for cash cattle trade. Boxed-beef cut-out values were up $8.07
to $181.72 which is up from $158.18 last week at this time and also a new
all-time high. With pork production in the US down 13% from a year ago last
week, a lack of cattle from Canada and even tighter supplies of available cattle
for this week, the cash fundamentals remain positive. Futures are now holding a
massive discount to the cash market and if there is any sign that cash can hold
at current levels for a few weeks, the limit-up moves could continue for a
while. Pools of unfilled buy orders were noted near 3000 contracts for October,
1500 contracts for December and 300 for February cattle.
Technical Outlook
CATTLE (DEC) 10/14/03: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 93.75. A positive setup occurred with the
close over the 1st swing resistance. Support should be encountered at 93.75 and
below there at 93.75. Market resistance is at 93.75 and then again at 93.75. A
new contract high was made on the rally. The gap upmove on the day session chart
is a bullish indicator for trend. 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
10/13/2003
December hogs closed limit up and into new
contract highs as the situation in the cattle market is driving all of the
sellers out of the pork complex. Traders feel that the surge in cattle prices
will eventually support better demand for pork and higher hog prices. Cash hogs
were steady to .50 higher and are called steady for tomorrow. Pork cut-out
values were up 97 cents to 60.63 as compared with 60.31 last week at this time
and with the hefty rise in pork production, higher pork values will be seen as a
positive demand factor.
Technical Outlook
HOGS (DEC) 10/14/03: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 61.40 and 61.95 today, while support is around
59.20 and then 57.55. The rally brought the market to a new contract high. 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 61.95. With a reading over 70, the 9-day RSI is
approaching overbought levels.
COCOA MARKET RECAP
10/13/2003
A moderate short covering rally Monday in cocoa
might signal a temporary end to the aggressive selling pressure. However, prices
haven’t managed to move up and away from the critical consolidation low zone of
1420 basis the December contract and that could leave the market open to stop
loss selling if that support is violated later this week. The London market
continued to note light industry buying which suggest that commercial players
are still going hand to mouth and covering some needs on minor price weakness.
The Press thinks the rally Monday was almost entirely limited to speculative
interests which make the rally even more suspect.
Technical Outlook
COCOA (DEC)10/14/03 The daily closing price
reversal up is positive. The market setup is supportive for early gains with the
close over the 1st swing resistance. Cocoa should run into resistance at 1536
and above there at 1573 with support at 1445 and 1391. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1390.75.
COFFEE MARKET RECAP
10/13/2003
The coffee market remains in a steep downtrend
and good rains in key producing areas of Brazil over the weekend kept the bear
camp in control. December coffee closed 65 lower on the session to the lowest
level since August of 2002 and the close was 105 points from contract lows. Some
areas received hefty amounts of over 2 inches of rain over the past 3 days which
other areas received near 1/2 inch or less. Roaster buyers were a little more
active in the 2004 contracts on the break but do not seem to be in any great
hurry to increase coverage. Traders are looking for Wednesday’s monthly coffee
stocks report to show a decline of 50,000 to 210,000 bags during September as
compared with 6.227 million bags at the end of August. CSCE exchange stocks were
down 2,614 bags to 4.427 million bags with 53,891 bags pending review.
Technical Outlook
COFFEE (DEC)10/14/03 The gap lower price action
on the day session chart is a bearish indicator for trend. The market tilt is
slightly negative with the close under the pivot. Momentum studies are
declining, but have fallen to oversold levels. The next downside objective is
now at 60.00.The Coffee contract should run into resistance at 60.90 and above
there at 61.20 with support at 60.3 and 60.00. The market’s short-term trend is
negative as the close remains below the 9-day moving average.
SUGAR MARKET RECAP
10/13/2003
After a gap lower and move to the lowest level
since November of 2002, March sugar managed to close 1 tick higher on the
session and 10 points off of the lows of the day. The rally may be a minor
victory for the bulls but the market seems stuck with bearish near-term cash
fundamental news. In addition, there is talk that the market is too oversold for
more downside trade action but the COT report over the weekend showed that small
speculators still hold a hefty net long position and this group looks vulnerable
for more long liquidation selling ahead. Producer selling was not seen on the
break near the opening and trade houses bought enough to encourage the bounce
into the close.
Technical Outlook
SUGAR (MAR) 10/14/03: The upside closing price
reversal on the daily chart is somewhat bullish. The market’s close below the
pivot swing number is a mildly negative setup. Swing resistance comes in at
6.11, with support found at 5.81. The market’s short-term trend is negative as
the close remains below the 9-day moving average. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 5.81.
COTTON MARKET RECAP
10/13/2003
December cotton closed 26 lower on the session
but managed to consolidate mast of the gains from last week in spite of the
bearish USDA news from Friday. Traders are anxious to see if the recent surge in
prices will slow demand for US cotton. Heavy rains on some areas of China over
the weekend could have hurt quality of the crop with 1/2 to 1 1/2 inches
reported. However, the outlook for drier and warmer weather into Friday this
week may ease fears that the China situation is getting even more bullish. With
good weather for the US and for China this week and the market still trying to
absorb the bearish news from the USDA, futures seem a bit overbought. The China
Textile Industry Association has sent a report to the government requesting that
the government allocate more tariff rate quotas for 2004 and let them out early.
The Association is hoping for an allocation of near 2.0 million tons for 2004
(near 9.2 million bales) from 894,000 tons this year (3.9 million bales). The
Cotlook index was up 90 cents to 69.70.
Technical Outlook
COTTON (DEC) 10/14/03: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. Next resistance area comes in at 71.88 and then again at 72.53,
while support is targeted at 70.69 and 70.15. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 72.53. The 9-day RSI over 70 indicates the market is
approaching overbought levels. A new contract high was made on the rally. The
downside closing price reversal on the daily chart is somewhat negative.