Watch The Dollar On Friday Morning

Technical Outlook

BONDS (DEC) 11/7/2003: Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Near-term resistance for bonds is at 107.29 and then again at 108.25, while swing support hits at 106.20 and below there at 106.07. A negative signal for trend short-term was given on a close under the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 106.07.

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 110.25. The market’s close below the pivot swing number is a mildly negative setup. Near-term resistance for the T-Notes is at 111.24 and then again at 112.07, while swing support hits at 111.01 and below there at 110.25. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

11/6/2003

We still get the sense that the market is discounting evidence of expanding growth but it is also clear that a number of markets faded today ahead of the monthly payroll report release. All we can say is that the majority of the information being released points to a continued expansion of the growth pattern currently in place. It seems that the major negative of the day came in before the opening as the market faded off the BOE rate hike. In other words, the market takes the negative view that higher interest rates is bearish even though the UK central bank thinks its economy is so strong that it needs to hike rates to discourage inflation from surfacing.

Technical Outlook

S&P500 (DEC) 11/7/2003: Market positioning is positive with the close over the 1st swing resistance. Underlying support comes in at 1052.10 and 1042.05, with overhead resistance at 1065.50 and 1068.85. 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 objective is at 1068.85. The market is becoming somewhat overbought now that the RSI is over 70.

S&P E-Mini (DEC): A new contract high was made on the rally. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1068.88. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for the S&P Mini is at 1065.50 and then again at 1068.88, while swing support hits at 1052.00 and below there at 1041.88. 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.

NASDAQ (DEC) A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The market should run into resistance at 1461.00 and above there at 1467.50 with support at 1435.00 and 1415.50. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1467.50.

CURRENCY MARKET RECAP

11/6/2003

The Dollar forged another upside breakout on the charts and deserved the upside breakout given the economic information released Thursday morning. If the Dollar manages to get another sweep of favorable economic news Friday morning the result could be significant long-term stop loss buying (short covering). The UK rate hike Thursday morning reconfirms that the UK economy is very strong and that the Pound will be a strong competitor for funds. In fact, the Euro seems to be the odd man out in all currency cross spreads and could be expected to get hammered under a good set of US numbers Friday morning.

Technical Outlook

YEN (DEC): A negative signal for trend short-term was given on a close under the 9-bar moving average. The close below the 1st swing support could weigh on the market. Swing resistance is targeted at 90.94 and above there at 91.14, with the yen finding support around 90.65 and below there at 90.56. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 90.56. Bearish daily studies indicate selling minor rallies this session.

EURO (DEC): 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 1.1346. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1346, with overhead resistance at 1.1462. 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. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

11/6/2003

Gold and silver traders have to be disappointed with the action Thursday. Certainly gold should fade in the face of Dollar gains but at the same time we would expect gold and silver to get some support from the idea that the US economy is recovering. Maybe the gold trade was upset that the BOE raised rates as that could be seen as a sign that inflation isn’t going to get a chance to kick up in the UK. We would think that gold and silver would both find significant buying interest on hard breaks, as physical demand should improve under lower prices and a growing economy. Right now, it would not appear that the metals are paying any attention to actual supply and demand issues.

Technical Outlook

SILVER (DEC): The close below the 1st swing support could weigh on the market. Initial support for silver is at 493.2 and below there at 491.6 with resistance likely at 497.1 and 498.2. A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 491.6. Bearish daily studies indicate selling minor rallies this session.

GOLD (DEC): Support for gold today comes in near 377.58, while resistance is pegged at 384.58. 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 377.58. It is a slightly negative indicator that the close was under the swing pivot. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

11/6/2003

Copper prices exhibited some weakness after seeing another big pulse up and that hints at the overbought status of prices around 96.15. Some traders expressed concern with long positions ahead of the ultra critical monthly payroll report. We don’t think that copper has paid too much attention to the macro economic case but the market was pretty hopped up on the bullish prospects around this week’s highs. In the event that the payroll report is strong copper prices should quickly return to the highs.

ENERGY MARKET RECAP

11/6/2003

The energy complex decided that the gains on Wednesday were a little overdone especially after one sees the weather forecast for the Eastern US. While some cooling is taking place, temps are really not tracking below normal and therefore the reaction in prices early this week was probably a little overstated. Also dampening sentiment Thursday were reports that the EIA lowered winter gas demand forecasts by 2% versus a year ago. However, the EIA suggested that overall 4th quarter oil demand would increase by +130,000 barrels. Seeing a forecast for lower gas demand flies in the face of the expectations but those forecasts are based on weather and no one can forecast the weather more than a week out.

Technical Outlook

CRUDE OIL (DEC): The daily closing price reversal down is a negative indicator for prices. The close over the pivot swing is a somewhat positive setup. Support for crude is keyed on 29.90 and below there at 29.57, with resistance pegged at 30.62 and 31.01. The market’s close on the 9-day moving average is neutral. .

UNLEADED GAS (DEC): 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 83.94. The market has a slightly positive tilt with the close over the swing pivot. Resistance today is at 83.94, while support should be found around 79.34. The market could take on a defensive posture with the daily closing price reversal down. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (DEC): The close over the pivot swing is a somewhat positive setup. Heating oil should encounter support around 80.44, with resistance is at 84.24. The close above the 9-day moving average is a positive short-term indicator for trend. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 84.24. The daily closing price reversal down is a negative indicator for prices.

CORN MARKET RECAP

11/6/2003

While corn was impressive early in the session the bull camp has to be disappointed with the performance in light of the ultra strong export sales readings. For the week the USDA pegged corn exports at 1.447 million tons off expectations of 1.2 to 1.5 million. It is surprising that a 1.447 million ton export figure could in any way be bearish but the market managed to work that type of sentiment into the market. Offsetting the bullish demand look is the idea that the coming USDA report is going to see another increase in production of 200 to 300 million bushels.

Technical Outlook

CORN (DEC) 11/7/2003: 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 230 1/4. It is a slightly negative indicator that the close was under the swing pivot. Market resistance comes in at 240 1/4 today, with support at 230 1/4. The close below the 9-day moving average is a negative short-term indicator for trend. The daily closing price reversal down is a negative indicator for prices.

SOY COMPLEX RECAP

11/6/2003

January soybeans closed 8 cents lower on the session and 14 cents off of the highs of the day as there was little new buying support after the higher opening. The market opened up strong on news of strong exports. Weekly export sales hit an all-time high this past week at 1.849 million tons (1.4 from China) as compared with 169,900 tons necessary each week to reach the USDA projection. Cumulative sales have reached 68.6% of the USDA forecast for the entire season as compared with 43.6% on average for this time of the year. Profit-taking from speculators and commercial hedge selling pressures were noted after there was a lack of new buying interest in spite of the strong sales.

Technical Outlook

SOYBEANS (JAN) 11/07/03 The market could take on a defensive posture with the daily closing price reversal down. The market tilt is slightly negative with the close under the pivot. The next area of resistance is around 772 1/2 and 783 1/4, while 1st support hits today at 757 1/2 and below there at 753 1/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 753 1/4.

MEAL (DEC): Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 239.6. The daily closing price reversal down is a negative indicator for prices. First resistance comes in at 247.1, with support at 241.4. The close below the 9-day moving average is a negative short-term indicator for trend. The close over the pivot swing is a somewhat positive setup.

BEAN OIL (DEC): A negative signal for trend short-term was given on a close under the 9-bar moving average. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 24.86. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 25.41 and above there at 25.72. Support should be encountered at 24.98 and 24.86. Short-term indicators on the defensive. Consider selling an intraday bounce.

WHEAT MARKET RECAP

11/6/2003

After the market moved to the highest level since August 20th, March wheat closed 1 1/2 lower on the session and down 6 1/2 cents from the highs of the day. Dry and cold weather is stressing the crop in Western Kansas and there is no rain in the forecast and dry weather in Argentina is stressing the maturing winter wheat crop during reproductive period which could hurt yields. Weekly export sales came in at 946,700 tons as compared with 389,800 tons necessary each week to reach the USDA projection and trade expectations for 550,000-750,000 tons. Cumulative sales have reached 58.3% of the USDA forecast for the season as compared with 54.3% on average for this time of the year. Europe may allow more US wheat imports soon and traders are also optimistic that former Soviet Union countries could be US wheat. Funds were noted sellers of near 1100 contracts.

Technical Outlook

WHEAT (DEC) 11/7/2003: The market could take on a defensive posture with the daily closing price reversal down. The market has a slightly positive tilt with the close over the swing pivot. Expect near-term support around 370 3/4 and below there at 367 3/4, with resistance levels at 380 and 386 1/4. 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 386 1/4.

LIVE CATTLE RECAP

11/6/2003

December cattle opened and closed at limit-up and into new contract highs as the pool of unfilled buy orders was already 1500 contracts by mid-session. Packers bought cattle in the panhandle at $104 late Wednesday and paid as high as $105 this morning before the opening which was up $2.00-$4.00 from last week and left December cattle at a substantial discount to the cash market. Boxed-beef cut-out values were down 1 cent to $169.68. Slaughter came in at 130,000 head which brought cumulative slaughter for the week to 464,000 head as compared with 493,000 head last week and 517,000 last year. Cold and wet weather into the plains this weekend and news that the Senate asked the USDA to slow down their move to begin imports from Canada were also seen as positive.

Technical Outlook

CATTLE (DEC) 11/7/2003: Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 95.60. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Support should be encountered at 95.60 and below there at 95.60. Market resistance is at 95.60 and then again at 95.60. The market made a new contract high on the rally. If yesterday’s gap higher on the day session chart holds, additional buying could develop this session. 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.

LEAN HOGS RECAP

11/6/2003

December hogs closed 25 higher with an inside trading session in quiet trade. The premium to the cash helped keep a lid on the rally while strength in the cash market (Peoria up 50 cents) and the limit-up move in cattle helped support. The CME 2-day lean Index through November 4th was up 20 cents to 48.67. While the index should continue to rally in the next few sessions, the December futures remain at a significant premium to the cash index which could be a limiting factor on the upside. Slaughter for the week has reached 1.568 million head as compared with 1.576 last week and 1.564 million last year. Saturday slaughter is expected to come in near 160,000 head and packer demand is strong. February bellies moved to the highest level since mid-October. A close above 89.25 would leave 93.40 as next resistance.

Technical Outlook

HOGS (DEC) 11/7/2003: The close over the pivot swing is a somewhat positive setup. Resistance levels comes in at 53.60 and 54.05 today, while support is around 52.75 and then 52.35. The close above the 9-day moving average is a positive short-term indicator for trend. Stochastics are rising from over sold levels which is bullish and should support higher prices. The near-term upside target is at 54.05.

COCOA MARKET RECAP

11/6/2003

It would seem that cocoa is getting the majority of the long interest from fund short covering and not necessarily from trade and commercial interests seeking forward coverage on future needs. We have to think that higher prices will discourage physical buying and could result in origin selling. We suspect that Ivory Coast farmers are beginning get some supply backed up and that might result in some pressure to sell. Traders didn’t see much of a currency impact Thursday but in the action Friday the currency effect could be quite significant.

Technical Outlook

COCOA (DEC)11/07/03 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1480 and above there at 1496 with support at 1452 and 1440. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1495.50.

COFFEE MARKET RECAP

11/6/2003

The coffee market attempted an upside breakout and then failed to sustain the thrust into the close. It would seem that the origin sellers came in and capped off the rise in prices and the small spec were also noted sellers late in the session. One should fear increased origin selling as the Vietnam crop flows to market faster in the coming weeks. We suspect that most of the recent gains were simple short covering off the low and that the speculative interest by the funds and small specs doesn’t seem to be that significant. Certainly trade and roaster buying is to be expected in the face of upside price probes but we would not expect those buyers to chase prices.

Technical Outlook

COFFEE (DEC)11/7/03 The daily closing price reversal up is positive. The market has a slightly positive tilt with the close over the swing pivot. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 58.25.The Coffee contract should run into resistance at 60.40 and above there at 61.15 with support at 58.95 and 58.25. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/6/2003

The market inched higher in quiet trade. Speculative buying and strength in London supported the early gains but the market remains in a choppy to lower deteriorating price structure with weak fundamentals. Exportable surplus supplies look to be on the rise soon with a large Thailand crop harvest beginning soon. The record crop is expected to put further pressure on Brazil exporters to move sugar on the world market. World buyers seem to be covered for future needs and seem patient to wait for a lower price level to extend coverage. Russia buying seems slow with weak internal prices due to a good beet crop of their own. Weather remains favorable for next years Brazil crop. Funds hold a big net short so a move over 610 could spark significant short-covering.

Technical Outlook

SUGAR (MAR) 11/7/2003: The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 6.09, with support found at 5.93. The close below the 9-day moving average is a negative short-term indicator for trend. 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 5.93.

COTTON MARKET RECAP

11/6/2003

March cotton closed 215 lower on the session and managed a new low since October 22nd as long liquidation selling emerged after the unchanged opening. Longs were disappointed with the lack of higher trade after solid export numbers were released before the opening. Weekly export sales came in at 275,800 bales compared to trade estimates between 220,000-300,000 bales and compared to the previous week’s sales of 1.457 million bales (record high). China was a noted buyer of 141,700 bales. However, traders are still concerned that China will slow their buying and wait to see if a more significant break occurs. Shipments were 130,200 bales vs. expectations near 100,000-125,000 bales. Heavy long liquidation selling drove futures lower while trade houses were buyers on the break. A 50% correction of the September 15th to October 30th rally leaves next chart support at 76.17.

Technical Outlook

COTTON (DEC) 11/7/2003: 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 77.06 and then again at 79.02, while support is targeted at 73.98 and 72.86. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 72.86.