Why The Yen Concerns Bond Traders

Technical Outlook

BONDS (MAR) 01/29/04: 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 swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for bonds is at 111.32 and then again at 113.14, while swing support hits at 109.17 and below there at 108.16. 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 108.16. Short-term indicators on the defensive. Consider selling an intraday bounce.

T-NOTES(MAR) The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. 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 111.09. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 113.32 and then again at 115.06, while swing support hits at 112.01 and below there at 111.09. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

1/28/2004

The stock market apparently didn’t like the statements from the Fed which seemed to be suggesting that rates would not be on hold as long as previously indicated. In other words, the stock market saw very soft regularly scheduled economic information but still managed to show concern for the potential of rising interest rates. The fact that the Fed saw balanced risks should have mitigated the liquidation pressure in stocks but the fact that the Fed is still concerned about jobs in the near term is not something that can be discounted easily. For most of the session corporate news seemed to favor the bull camp but the Fed news evidently shifted the focus of the trade.

Technical Outlook

S&P500 (MAR) 01/29/04: The market is in a bearish position with the close below the 2nd swing support number. Underlying support comes in at 1117.25 and 1109.53, with overhead resistance at 1140.35 and 1155.73. 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 1109.53.

S&P E-Mini (MAR): The key reversal down puts the market on the defensive. 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 1109.56. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Near-term resistance for the S&P Mini is at 1140.88 and then again at 1156.06, while swing support hits at 1117.63 and below there at 1109.56. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (MAR) 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 1516.25 and above there at 1546.13 with support at 1472.75 and 1459.13. Short-term indicators on the defensive. Consider selling an intraday bounce. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1459.1.

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 10580 and above there at 10721 with support at 10357 and 10275. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10275. The close below the 2nd swing support number puts the market on the defensive.

CURRENCY MARKET RECAP

1/28/2004

The Dollar soared and did so because of some mundane Fed dialogue. We think the market was effectively carried away with the Fed statements and that eventually the state of the US recovery could serve to check up the rise in the Dollar. However, in the near term a number of central banks might be considering an increase in gold reserves and that might be another way to help firm up the Dollar which in turn could allow some central banks to avoid rate cuts. The 87.34 level in the Dollar remains a critical pivot point.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The swing indicator gave a moderately negative reading with the close below the 1st support number. Swing resistance is targeted at 94.95 and above there at 95.27, with the yen finding support around 94.31 and below there at 93.99. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.27.

EURO (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 1.2338. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2338, with overhead resistance at 1.2696. The market’s short-term trend is negative as the close remains below the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/28/2004

The gold market mounted an initial rally after the Dollar started out weaker, recovered off the idea that a number of central banks might raise their reserve holdings of gold. However, after the gold closed the US Dollar exploded off FOMC commentary and that could end up catching the gold a little overbought. We also have to think that silver and platinum might be a little put off by the fact that the Fed was still pretty concerned over the pace of recovery in the US job sector. In the end seeing the Dollar breakout up on the charts is not an insignificant development.

Technical Outlook

SILVER (MAR): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 655.5 and below there at 645.3 with resistance likely at 661.8 and 670.5. 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 661.8.

GOLD (APR): Support for gold today comes in near 408.78, while resistance is pegged at 420.18. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 420.18. Consider buying pull-backs since daily studies are bullish. With the close over the 1st swing resistance number, the market is in a moderately positive position. 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.

COPPER MARKET RECAP

1/28/2004

A new high in copper confirms the existence of the bull market and probably signals the end of the Chinese holiday. We also have to think the potential for labor problems will leave the market in an upward posture. In fact, with the Chinese returning to the fray and the threat of two labor problems and a production disruption at another facility the bull camp would seem to have full control.

ENERGY MARKET RECAP

1/28/2004

The energy complex had to have a change of heart as the API and DOE figures appeared to be bullish but the market didn’t respond. In fact, the only negative development in the inventory numbers was a rise in crude oil stocks. The sharp declines in gasoline stocks could be a development that eventually rekindles the bull market for the coming summer but in the near term the market is simply not afraid that winter demand will cause a severe shortage so prices above $35 were simply too expensive. It is also becoming widely accepted that US temps are going to be pretty mild for the first part of February.

Technical Outlook

CRUDE OIL (MAR): The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 32.98 and below there at 32.53, with resistance pegged at 34.26 and 35.09. 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 32.53.

UNLEADED GAS (MAR): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 94.67. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 101.87, while support should be found around 94.67. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (MAR):The market’s close below the 1st swing support number suggests a moderately negative setup for today. Heating oil should encounter support around 91.49, with resistance is at 99.69. Daily studies pointing down suggests selling minor rallies. 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 91.49.

CORN MARKET RECAP

1/28/2004

March corn prices gapped lower as funds unloaded long positions on uncertainties surrounding world feed demand as a result of the Asian bird flu. At last count, 23 million birds in 10 countries have been destroyed and the number continues to grow. The actual reduction in feed usage so far has been very minimal, but the uncertainty of future feed needs has the market shifting to a bearish psychology. With funds holding a huge net long position, there could be more follow through selling this week. Export sales estimates for corn range between 600,000 and 900,000 tons vs 999,400 last week.

Technical Outlook

CORN (MAR) 01/29/04: 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 266 3/4. The market is in a bearish position with the close below the 2nd swing support number. Market resistance comes in at 275 3/4 today, with support at 266 3/4. The market’s short-term trend is negative as the close remains below the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

SOY COMPLEX RECAP

1/28/2004

Like corn, May beans gapped lower on growing concerns that the worsening Asian bird flu will sharply lower feed usage this year. Forecasts for Argentina to receive moderate to heavy rain in growing areas that have been dry added the selling pressure. Meal saw additional selling from traders disappointed that the FDA did not ban the use of meat & bone meal in feed for poultry and pigs which would have boosted usage of meal. May beans look set to fill a gap left in early January with support down at 780. Export sales estimates for soybeans range between 400,000 and 600,000 tons vs 499,100 last week. Meal exports are estimated b etween 25,000 and 100,000 tons vs 79,100 tons last week and Oil sales are estimates between none to 5,000 tons vs 700 tons last week.

Technical Outlook

SOYBEANS (MAR) 01/29/04: The gap lower price action on the day session chart is a bearish indicator for trend. The close below the 2nd swing support number puts the market on the defensive. The next area of resistance is around 817 and 835 , while 1st support hits today at 792 and below there at 785 . 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 785 .

MEAL (MAR): 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 245.2. The gap down on the day session chart is bearish with more selling pressure possible today. First resistance comes in at 254.8, with support at 247.8. 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 28.48. The close below the 2nd swing support number puts the market on the defensive. The gap lower price action on the day session chart is a bearish indicator for trend. Daily swing resistance is found at 29.21 and above there at 29.58. Support should be encountered at 28.66 and 28.48.

WHEAT MARKET RECAP

1/28/2004

After an early rally off unwinding of cross grain spreads, May wheat headed south dragged lower by the sell-offs in corn and beans. Funds, who had recently built up a large net long position, were heavy sellers along with commercial traders. The market is still smarting over Egypt choosing Australian wheat over US wheat in tender business. Winterkill worries for the winter wheat crop are also receding. Export sales estimates for wheat range between 300,000 and 500,000 tons vs 1,840,900 tons last week.

Technical Outlook

WHEAT (MAR) 01/29/04: The close below the 2nd swing support number puts the market on the defensive. Look for near-term support at 369 and below there at 365 1/2, with resistance levels at 380 and 387 1/2. 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 365 1/2.

LIVE CATTLE RECAP

1/28/2004

April cattle fell below support levels Wednesday weighed down by lower cash prices, a lack of export business and a weather related dip in demand for beef. Boxed beef cut-out vales fell $1.58 to $140.52 while traders don’t expect cash cattle to trade any higher than $84 vs $87 last week. With no export business, supply is set to rise this year. In 2003 exports represented 8.6% of US production and with the mad-cow scare halting exports, the US market will have to absorb a lot more beef this year. The snowstorm hitting the east coast will also temporarily dent demand, which can never be recaptured.

Technical Outlook

CATTLE (APR) 01/29/04: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 72.40. The close below the 2nd swing support number puts the market on the defensive. Support should be encountered at 72.87 and below there at 72.40. Market resistance is at 74.37 and then again at 75.40. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

1/28/2004

April hogs firmed on Wednesday supported by fund buying. Slower marketings attributed to the winter weather was considered supportive. Packer profit margins have been on a decline recently and estimated at $1.20 on Wednesday, but this factor did not seem to weigh too much on the hog market. There continues to be growing optimism that US pork exports will be rising in response to the Asian bird flu, especially since the US dollar make imports cheaper. April hogs next resistance is around 58.10.

Technical Outlook

HOGS (APR) 01/29/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Resistance levels comes in at 58.42 and 58.82 today, while support is around 57.07 and then 56.12. 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 56.12.

COCOA MARKET RECAP

1/28/2004

The market continues to see spec selling pressure and with the market labeling the action Wednesday as panic selling one might expect more declines ahead. Origin selling is widely thought to adding into the liquidation pressure and with the harvest progressing one can hardly argue against more downside. Hershey came in with as expected sales projections during the trade but that really doesn’t serve to countervail the recent disappointing US demand reading.

Technical Outlook

COCOA (MAR)01/29/04 The gap lower price action on the day session chart is a bearish indicator for trend. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1552 and above there at 1589 with support at 1499 and 1483. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1482.75.

COFFEE MARKET RECAP

1/28/2004

March coffee fell back from the highs seen on Tuesday as the market’s recent sharp rally attracted aggressive origin sales this session. Funds profit taking was also cited as a feature trade. Vietnam was a noted seller after being on holiday last week. The limited amount of roaster buying which showed up at lower prices was not enough to overcome origin sales. Possibly contributing to the weaker price action was a report from Brazil’s Institute of Agricultural Economics which projected production in the country’s Sao Paulo growing region (3rd largest) would be up 19% in the 2004/05 season compared to last season.

Technical Outlook

COFFEE (MAR)1/29/04 The close below the 1st swing support could weigh on the market. 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 objective is now at 74.80.The Coffee contract should run into resistance at 77.95 and above there at 79.40 with support at 75.65 and 74.80. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/28/2004

March sugar firmed to the middle of its recent trading range, but prices still remain below critical resistance at 6 cents. Rumors that both China & Indonesia were in buying sugar provided underlying support to the market. While cash activity seems to have increased in the New Year, origin sales from Brazil & Thailand have kept a solid ceiling above the market. Producer sales are likely to continue since Brazil is expected to produce a record crop in 2004/05. If March sugar can make a break out up through 6 cents, it could cause funds to short cover since this group has recently been increasing their net short position in sugar.

Technical Outlook

SUGAR (MAR) 01/29/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Swing resistance comes in at 6.01, with support found at 5.67. 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 6.01. Consider buying pull-backs since daily studies are bullish.

COTTON MARKET RECAP

1/28/2004

Follow through long liquidation from Tuesday’s sell-ff drove May cotton prices down sharply again on Wednesday. Expectations that this week’s export sales numbers will be low for cotton since China was on holiday and concerns that China may be backing away from the US cotton market looks to have contributed to Wednesday’s decline. Also likely weighing on the market are expectations that this Friday’s cotton planting intentions survey released by the National Cotton Council could be between 14.18 million to 14.23 million acres vs 13.48 million acres last season. National Cotton Council will be releasing its US cotton consumption data for December on Thursday at 7:30 am cst, delayed from Wednesday. Estimates for Thursday’s weekly export sales range between100,000 and 160,000 bales vs 166,000 the previous week.

Technical Outlook

COTTON (MAR) 01/29/04: 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 72.03 and then again at 73.94, while support is targeted at 69.49 and 68.86. 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 68.86. The 9-day RSI under 30 indicates the market is approaching oversold levels. The gap lower price action on the day session chart is a bearish indicator for trend. ORANGE JUICE (MAR)1/29/04 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 62.10 and above there at 62.80 with support at 61.10 and 60.80. 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 60.8.