Corn, Soybeans Surged Today: Here’s What Traders Expect Tomorrow

Technical Outlook

BONDS (JUN) 3/10/2004: The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 116.01 and then again at 116.13, while swing support hits at 114.29 and below there at 114.05. 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 116.13. The market is approaching overbought levels with an RSI over 70.

T-NOTES(JUN) The rally brought the market to a new contract high. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 116.22. The market’s close above the 2nd swing resistance number is a bullish indication. 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 116.14 and then again at 116.22, while swing support hits at 115.23 and below there at 115.08. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels.

STOCK INDICES RECAP

3/9/2004

The stock market managed to deflect early selling, recovered into mid session but then faded again in the afternoon. There seems to be little macro economic optimism in the market place and therefore more longs are expected to take profits. With prices making more new lows for the year and the upcoming economic report slate thin we see little reason for the bear case to be discarded. In fact, with the small specs still net long coming into the action Tuesday there would seem to be plenty additional selling fuel in the marketplace. Rising gold and silver prices might now begin to give rise to inflation concerns which is very negative considering that the economy isn’t strong enough to weather higher interest rates.

Technical Outlook

S&P500 (JUN) 3/10/2004: It is a slightly negative indicator that the close was under the swing pivot. Underlying support comes in at 1133.35 and 1129.78, with overhead resistance at 1142.65 and 1148.38. 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 1129.78.

S&P E-Mini (JUN): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1129.00. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for the S&P Mini is at 1143.75 and then again at 1150.00, while swing support hits at 1133.25 and below there at 1129.00. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

NASDAQ (JUN) A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The market should run into resistance at 1445.00 and above there at 1454.75 with support at 1429.00 and 1422.75. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1422.75.

MINI DOW (MAR) The close below the 9-day moving average is a negative short-term indicator for trend. The market should run into resistance at 10477 and above there at 10548 with support at 10365 and 10324. 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 10324. It is a slightly negative indicator that the close was under the swing pivot.

CURRENCY MARKET RECAP

3/9/2004

The Dollar managed to finish higher despite an attempt to breakout to the downside. Some traders think that the Richmond Fed figures were supportive but they could be seen in a bearish or bullish light. For the Dollar to have rallied we have to suspect some intervention as US bonds were higher and the US stock market was weak. Maybe the ECB was some how involved in the late bounce in the Dollar. The US economic report slate remains thin for the coming session and that could mean more back and forth action. Some suggest that weak German numbers followed by partially decent US numbers were enough to turn the tide but that is really thin reasoning.

Technical Outlook

YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. Swing resistance is targeted at 90.66 and above there at 91.33, with the yen finding support around 89.66 and below there at 89.33. The market back below the 40-day moving average suggests the longer-term trend could be turning down. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 91.33. The market is approaching over sold levels on an RSI reading under 30.

EURO (JUN): 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 1.2450. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2232, with overhead resistance at 1.2450. The close above the 9-day moving average is a positive 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

3/9/2004

Very impressive action in gold, without the benefit of a weak Dollar really changes the outlook for gold, as the previously one dimensional market has expanded its base of trade. It seems from Press reports that fund buying in silver gold was the dominating feature in the action and that suggests that fresh money is coming in and that the COT readings are mostly meaningless. Some funds are looking for an inflation play because of other commodity price sensitivity and some are seeing inflation mentioned more and more on Wall Street type shows and the prospect is becoming a little more acceptable.

Technical Outlook

SILVER (MAY): The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Initial support for silver is at 704.0 and below there at 684.0 with resistance likely at 714.8 and 732.0. 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 714.8. The market is approaching overbought levels with an RSI over 70. The market made a new contract high on the rally.

GOLD (APR): Support for gold today comes in near 398.08, while resistance is pegged at 409.88. 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 409.88. There could be more upside follow through since the market closed above the 2nd swing resistance. The close above the 9-day moving average is a positive short-term indicator for trend.

COPPER MARKET RECAP

3/9/2004

The copper market continued to exhibit excessive volatility on the downside as the capital and margin selling seemed to dominate again. Over the last couple of days the market has been confronted with some slightly negative fundamental developments but nothing that would fully justify the type of washout seen in the market. Certainly concern over the sagging macro economic condition is damaging to sentiment in copper but we have to think that stop loss selling is the main driving force. Some trader’s think that the Chinese are fully covered but with prices falling so aggressively if they have any uncovered needs they would be back in play soon.

ENERGY MARKET RECAP

3/9/2004

A minor down day was probably fostered by profit taking and fears of a minor crude stock increase in the upcoming weekly stats. We would have expected the market to rally considering the EIA statements which brought up concerns of a price spike off the Venezuelan situation and comments that US gasoline stocks would fall 8 million barrels by March 31st. However, the EIA also suggested that World and US demand would fall in the 1st and 2nd quarters and that probably gave the longs an incentive to take profits and stand aside. It would seem that the basic bull case in unleaded of tight stocks remains in place but the market is less concerned about those issues in the near term.

Technical Outlook

CRUDE OIL (APR): It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 35.89 and below there at 35.58, with resistance pegged at 36.68 and 37.16. The close below the 9-day moving average is a negative short-term indicator for trend. 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 35.58.

UNLEADED GAS (APR): Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 102.97. The market tilt is slightly negative with the close under the pivot. Resistance today is at 110.17, while support should be found around 102.97. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market back below the 40-day moving average suggests the longer-term trend could be turning down.

HEATING OIL (APR):It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 86.80, with resistance is at 91.80. 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 86.80.

CORN MARKET RECAP

3/9/2004

The market pushed sharply higher, led by active fund and speculative buying ahead of the USDA supply/demand report for release before the opening tomorrow morning. Traders are looking for ending stocks to come in near 901 million bushels (range 841-951) as compared with 901 million bushels last month. Taiwan will tender overnight for 20,000 tons of US corn. The firm basis level yesterday was an indication that producer selling slowed on the break in futures. World ending stocks for the report are expected to remain near historically low levels (25 year lows). If there are changes in the world numbers, traders are looking for a slight reduction in production from South America and a possible reduction in world demand due to bird flu problems in Asia. Deliveries this morning totaled 201 contracts. The Bush Administration is threatening to file a WTO complaint against Mexico over the tax in Mexico which has shut-down US exports of high-fructose corn syrup. By mid-session, funds had already bought 3500 contracts and funds were noted buyers on the late surge to new highs for the day.

Technical Outlook

CORN (MAY) 3/10/2004: 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 291 1/2. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 307 1/2 today, with support at 291 1/2. The close above the 9-day moving average is a positive short-term indicator for trend.

SOY COMPLEX RECAP

3/9/2004

The soybean market surged higher on active fund and speculative buying ahead of the USDA Supply/Demand report for release in the morning, which is expected to show production losses from Brazil and maybe Argentina for the past month. The market found support from the USDA announcement of a sale of 165,000 tons of US soybeans to unknown destination for 2004/2005 delivery. Trade estimates for the Brazil crop size have been coming in between 54.4 million tons and 56.9 million tons as compared with last months USDA forecast of 61 million tons. In addition to lower Brazil production, bird flu in Asia and lower crush margins in China have traders looking for a reduction in world demand to partially offset the lower production forecast. Traders are looking for ending stocks on Wednesday morning to come in near 121 million bushels (range 105-125) as compared with 125 million bushels last month. Ideas that the market is oversold after yesterdays sharp losses helped to provide some support. Reports from Thailand that the country may be bird-flu-free over the near-term helped support meal while gains in palm oil overnight helped to support oil. This morning there were 75 contracts deelivered against the March soybeans, 3 contracts against March meal and 0 against March oil. Soybean registrations with the CBOT were down to 355 lots from 397 lots posted on Friday afternoon. Funds were active buyers and had already bought near 5000-6000 contracts by mid-session.

Technical Outlook

SOYBEANS (MAY) 03/10/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next area of resistance is around 959 and 965 1/2, while 1st support hits today at 935 and below there at 917 1/2. The market’s close on the 9-day moving average is neutral. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 917 1/2.

MEAL (MAY): 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 279.5. First resistance comes in at 287.5, with support at 282.7. The close above the 9-day moving average is a positive short-term indicator for trend. Market positioning is positive with the close over the 1st swing resistance.

BEAN OIL (MAY): A positive signal for trend short-term was given on a close over 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 31.83. 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. Daily swing resistance is found at 34.39 and above there at 34.79. Support should be encountered at 32.91 and 31.83.

WHEAT MARKET RECAP

3/9/2004

The market opened mixed and closed firm following the other grains higher ahead of the USDA report for release in the morning before the opening. Position squaring ahead of the USDA supply/demand report and ideas that the market is oversold help provide some support with the market searching for some stability after the steady losses off of the February 23rd highs. South Korea will tender on Wednesday to buy 22,000 tons of US wheat. Traders are looking for ending stocks for tomorrow morning to come in near 533 million bushels (range 509-555) as compared with 534 million bushels last month. Deliveries this morning were 9 contracts with strong commercial stoppers. CBOT registrations totaled 2160 lots, down from 2213 posted on Friday afternoon. Rains from last week are expected to support improving crop conditions ahead but in weekly reports last night crop conditions deteriorated for the week ending March 7th. In the Kansas report, crops rated good to excellent condition fell to 35% from 40% last week. Crops rated poor to very poor came in at 34% as compared with 32% last week. While rains across the southern plains last week helped recharge the soils, the lack of rain in the forecast may have helped provide some support.

Technical Outlook

WHEAT (MAY) 3/10/2004: The market has a slightly positive tilt with the close over the swing pivot. Expect near-term support around 367 1/2 and below there at 364 3/4, with resistance levels at 373 and 375 3/4. 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 364 3/4.

LIVE CATTLE RECAP

3/9/2004

The cattle market experienced solid gains into the close after choppy, two-sided trade for the session. The uptrend in the beef market, expectations for a firm tone in the cash market and the discount of futures to cash were seen as the important factors. Talk of steady to higher cash trade this week helped support and so did talk of improved packer profit margins. Cattle were offered in the cash market at $87 in the panhandle, up $2.00 from last week. Boxed-beef cut-out values were up 91 cents to $142.49 as compared with $138.55 last week at this time.

Technical Outlook

CATTLE (APR) 3/10/2004: Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 78.35. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 78.92 and below there at 78.35. Market resistance is at 79.92 and then again at 80.35. 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.

LEAN HOGS RECAP

3/9/2004

April hogs closed moderately higher on the session while staying within Mondays range as the market recovered all of Monday’s losses and tested Monday’s highs before the close which was right on the highs. Active speculative and fund buying seen as supportive. Cash hogs were $1.00 lower at Peoria but the discount of futures to the cash market and the higher trade in the 2-day Lean Index helped support. The index, for the period ending March 5th came in at 65.14, up 42 from the previous session and up from 62.03 last week at this time. A North Carolina plant with mechanical problems will not slaughter hogs today and will try to make up with a high Saturday slaughter. Ideas that the lower than expected slaughter might support the pork cut-out helped to support futures buying on the session. The weekly cold storage report, released this afternoon, is expected to show an out-movement of 200,000-700,000 pounds.

Technical Outlook

HOGS (APR) 3/10/2004: Market positioning is positive with the close over the 1st swing resistance. Resistance levels comes in at 62.72 and 63.00 today, while support is around 61.87 and then 61.30. The close above the 9-day moving average is a positive short-term indicator for trend. 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 61.30.

COCOA MARKET RECAP

3/9/2004

May cocoa prices slid early but then recovered to finish well off the lows of the day. While many funds were noted buyers of other commodities the cocoa market actually saw fund selling in the action Tuesday. We suspect that higher Ivory Coast port arrival forecasts resulted in the breakdown and with the charts damaged there might be more downside ahead as the bull fundamentals aren’t that prevalent. With fund and spec selling it would seem that the bear case has grabbed control over the market in the near term.

Technical Outlook

COCOA (MAY)03/10/04 The gap lower price action on the day session chart is a bearish indicator for trend. The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1462 and above there at 1473 with support at 1425 and 1399. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1398.75. Short-term indicators on the defensive. Consider selling an intraday bounce.

COFFEE MARKET RECAP

3/9/2004

July coffee pushed moderately lower on the session but managed to hold last weeks lows as support. The market closed 150 points lower on the session. Weakness in London from origin selling and good weather for the crops in Brazil helped trigger light long liquidation selling. A lack of roaster buying was noted after the steady openings and the lack of commercial support and light long liquidation selling from speculators helped pressure the market. Brazil exported 1.37 million bags in February, down 35% from last year. For the season (July to February) Brazil has exported 14.6 million bags as compared with 19.8 million bags shipped in the same period for the 2002/2003 season. CSCE Stocks were up 8112 bags to 4.557 million bags with 73,900 bags pending review.

Technical Outlook

COFFEE (MAY)3/10/04 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. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 71.15.The Coffee contract should run into resistance at 75.20 and above there at 76.95 with support at 72.3 and 71.15. 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.

SUGAR MARKET RECAP

3/9/2004

May sugar closed 9 higher on the session. The move to the highest level since December 18th turns the technical picture bullish and speculative buyers remain active. If funds switch from a net short to a net long position, there could be more strong buying days ahead. Fears of a bumper crop in Brazil for the coming year have offset talk of China import demand and talk of small world production deficits for the old crop season over the past month. However, indications of less than bumper-type yields for the upcoming season for a part of the center-south crop helped support solid gains in sugar. London May sugar soared to new contract highs which added to the positive tone for the New York market which is still 100 points below contract highs.

Technical Outlook

SUGAR (MAY) 3/10/2004: There could be more upside follow through since the market closed above the 2nd swing resistance. Swing resistance comes in at 6.39, with support found at 6.19. 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 6.39.

COTTON MARKET RECAP

3/9/2004

May cotton gapped lower to open below the February lows and active put buying helped drive the market limit-down into mid-session. A series of sell-stops were hit on the opening as speculative long liquidation ahead of the USDA Supply/Demand report, for release in the morning, helped to pressure the market. The trade is looking for a slight upward revision in US exports and domestic consumption and an increase in the USDA’s estimate for China production. There was not a major piece of news to send the market down the limit but active put buying and call selling was noted from a prominent Memphis merchant which helped to drive cotton prices in a downward spiral and to limit down into the close.

Technical Outlook

COTTON (MAY) 3/10/2004: A negative signal for trend short-term was given on a close under the 9-bar moving average. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Next resistance area comes in at 64.96 and then again at 66.37, while support is targeted at 63.07 and 62.59. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 62.59. The market is approaching over sold levels on an RSI reading under 30. The gap lower on the day session chart is bearish and puts the market on the defensive. ORANGE JUICE (MAY)3/10/04 The market setup is supportive for early gains with the close over the 1st swing resistance. Orange Juice should run into resistance at 62.90 and above there at 64.25 with support at 60.95 and 60.35. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 60.35.