Here’s What You Need To Know About The Dollar
BOND MARKET RECAP
10/25/2004
December Bonds closed up 0-05 at 114-11. This was
0-02 up from the low and 0-11 off the high.
December 10 Yr Treasury Notes finished up 0-050
at 113-285, 0-060 off the high and 0-015 up from the low.
The Treasury market continues to get direct
and indirect support from soaring energy prices, as crude oil prices exploded to
a new even higher level early in the session and that in turn casts an even
bigger shadow on the economy. Surprisingly the market saw a stronger than
expected existing home sales reading and that only marginally diffused the
upward track in bonds and notes. Given that bullish sentiment toward energy
prices remains firmly entrenched we suspect that regularly scheduled economic
numbers will continue to be discounted. It would seem like the falling Dollar is
robbing the Treasury market of some buy orders as the fear of further Dollar
declines is overshadowing the fact that Treasury prices are certainly attractive
in Dollar weighted terms.
Technical Outlook
BONDS (DEC) 10/26/2004: The rally brought the
market to a new contract high. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The close
above the 9-day moving average is a positive short-term indicator for trend. The
market has a slightly positive tilt with the close over the swing pivot. The
near-term upside target is at 114-30. The 9-day RSI over 70 indicates the market
is approaching overbought levels. The next area of resistance is around 114-20
and 114-30, while 1st support hits today at 114-05 and below there at 113-31.
TNOTES (DEC) 10/26/2004: A new contract high was
made on the rally. Daily stochastics have risen into overbought territory which
will tend to support reversal action if it occurs. The market’s short-term trend
is positive on the close above the 9-day moving average. The gap upmove on the
day session chart is a bullish indicator for trend. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside
objective is at 114-085. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 114-025 and
114-085, while 1st support hits today at 113-250 and below there at 113-210.
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STOCK INDICES RECAP
10/25/2004
December S&P finished down 0.4 at 1095.5, 1.5 off
the high and 6 up from the low.
December S&P E-Mini closed down 1 at 1095. This
was 7 up from the low and 2 off the high.
December Dow closed down 9 at 9740. This was 43
up from the low and 30 off the high.
December Dow E-Mini finished down 5 at 9744, 27
off the high and 61 up from the low.
The stock market started out extremely weak,
traded weaker and then managed a slight mid day rally. Apparently the market was
emboldened by steel merger talk and by favorable Kellogg earnings and optimistic
forward views. It is also possible that ongoing strength in existing home sales
served to give the market some support but in the end the mid day correction in
energy prices was the main force take the pressure off stock prices. In the near
term all attention will be given to the direction of oil prices. So far, the
erosion in the Dollar doesn’t seem to have caused the US stock market too much
turmoil but that could be the next shoe to drop.
Technical Outlook
S&P 500 (DEC) 10/26/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. It is a slightly negative indicator that the close was under the swing
pivot. The next downside objective is 1086.88. The next area of resistance is
around 1099.25 and 1101.87, while 1st support hits today at 1091.75 and below
there at 1086.88.
SP EMINI (DEC) 10/26/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market’s close
below the 9-day moving average is an indication the short-term trend remains
negative. The market tilt is slightly negative with the close under the pivot.
The next downside target is 1084.75. The next area of resistance is around
1099.50 and 1102.75, while 1st support hits today at 1090.50 and below there at
1084.75.
NASDAQ (DEC) 10/26/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next downside objective is now at 1422.50. The
next area of resistance is around 1441.50 and 1448.50, while 1st support hits
today at 1428.50 and below there at 1422.50.
MINIDOW (DEC) 10/26/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 9-day moving average is a negative short-term indicator for
trend. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside objective is 9649. Some caution in
pressing the downside is warranted with the RSI under 30. The next area of
resistance is around 9791 and 9825, while 1st support hits today at 9703 and
below there at 9649.
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CURRENCY MARKET RECAP
10/25/2004
December US Dollar finished down 89 at 8508, 50
off the high and 23 up from the low.
December Euro finished up 1.48 at 127.94, 0.31
off the high and 0.29 up from the low.
December Euro Dollar closed unchanged at 97.725.
This was equal to the low and 0.025 off the high.
December Canadian Dollar closed up 0.93 at 81.85.
This was 0.42 up from the low and 0.17 off the high.
December British Pound finished up 1.59 at
183.44, 0.24 off the high and 0.29 up from the low.
December Swiss closed up 1.21 at 83.67. This was
0.22 up from the low and 0.2 off the high.
December Japanese Yen closed up 0.47 at 93.94.
This was 0.04 up from the low and 0.23 off the high.
The US Dollar fell to another low and did so
without much in the way of back and fill. In other words, it would seem like the
market is convinced in the need to push the Dollar even lower. Helping
facilitate the slide in the Dollar during the action Monday were comments from
the ECB’S Trichet that the Euro zone recovery is ongoing and that the soaring
Euro is serving to mitigate the rise in energy prices. In other words, the Euro
zone is thought to be less impacted by the out of control energy price
structure. Even decent US economic numbers released during the session seemed to
have no bullish impact on the value of the Dollar.
Technical Outlook
YEN (DEC) 10/26/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. If yesterday’s gap
higher on the day session chart holds, additional buying could develop this
session. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. The near-term upside target is at 94.25. The
market is becoming somewhat overbought now that the RSI is over 70. The next
area of resistance is around 94.07 and 94.25, while 1st support hits today at
93.81 and below there at 93.72.
EURO (DEC) 10/26/2004: A new contract high was
made on the rally. Rising stochastics at overbought levels warrant some caution
for bulls. A positive signal for trend short-term was given on a close over the
9-bar moving average. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session. The market’s close
above the 2nd swing resistance number is a bullish indication. The near-term
upside objective is at 128.54. The market is approaching overbought levels with
an RSI over 70. The next area of resistance is around 128.24 and 128.54, while
1st support hits today at 127.64 and below there at 127.35.
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PRECIOUS METALS RECAP
10/25/2004
December Gold closed up 4.3 at 429.9. This was
0.7 up from the low and 2.1 off the high.
December Silver finished up 0.047 at 7.38, 0.075
off the high and 0.03 up from the low.
January Platinum closed up 8.1 at 853. This was 5
up from the low and 5 off the high.
Both Gold and silver prices rose to new highs for
the move Monday and did so off a host of factors. In addition to the sharply
lower US Dollar buying, we also think that flight to quality buying was present.
Certainly the whole concern over the US trade deficit exploding is given even
more credence under the sharp Dollar slide and the perpetual rise in energy
prices seen early Monday morning. So far, neither gold nor silver is that
concerned about deflation and so far, neither market is putting too much stock
in the potential for inflation. Therefore, while the fund and small spec long
position is rising in gold and silver one can’t say that the bulls have factored
in every bullish story.
Technical Outlook
SILVER (DEC) 10/26/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. The close over the pivot swing is a somewhat positive
setup. The near-term upside objective is at 749.6. The next area of resistance
is around 743.3 and 749.6, while 1st support hits today at 732.8 and below there
at 728.7.
GOLD (DEC) 10/26/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is positive on the close above the 9-day moving average. Follow through buying
looks likely if the market can hold yesterday’s gap on the day session chart.
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. The
near-term upside objective is at 433.0. The 9-day RSI over 70 indicates the
market is approaching overbought levels. The next area of resistance is around
431.3 and 433.0, while 1st support hits today at 428.5 and below there at 427.5.
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COPPER MARKET RECAP
10/25/2004
December Copper finished down 2.90 at 127.65,
2.35 off the high and 2.00 up from the low.
The copper market appeared to pay attention to
the long term forecast calling for a supply and demand balance in 2005. After a
couple years of anticipating an ongoing supply deficit it would seem that the
tightness is now set to mitigate. Furthermore, if the outlook for the global
economy is suspect that could mean that demand in 2005 might end up being softer
than what many anticipated. Also contributing to the major washout in copper
were reports of fund selling and acknowledgement that a strike was settled. One
can hardly fault copper for showing signs of weakness in the face of what
appears to be extremely negative macro economic conditions.
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ENERGY MARKET RECAP
10/25/2004
December Crude Oil closed down 0.63 at 54.54.
This was 0.34 up from the low and 0.91 off the high.
December Heating Oil closed down 2.70 at 157.06.
This was 0.76 up from the low and 3.34 off the high.
December Unleaded Gas finished down 3.38 at
140.66, 3.64 off the high and 0.46 up from the low.
December Natural Gas finished down 0.17 at 8.82,
0.20 off the high and 0.07 up from the low.
December Propane closed up 0.01 at 0.98. This was
0.00 up from the low and equal to the high.
The energy complex forged an aggressive early
rally but then faded as fund buying dried up and the market digested a series of
potentially bearish information. For instance, the Norway Oil Minister indicated
that he might order the shipping companies back to work. Furthermore, the market
saw a private forecast that OPEC October production actually managed to increase
by 200,000 barrels per day. In the Wall Street Journal the market saw signs that
Russia was working aggressively to expand its export capacity and that is
another minor negative. The inability to hold gains into the close is also a
little against the recent pattern in energy prices.
Technical Outlook
CRUDE OIL (DEC) 10/26/2004: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The close above the 9-day moving average is a positive
short-term indicator for trend. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The next downside objective
is now at 53.44. The next area of resistance is around 55.16 and 55.93, while
1st support hits today at 53.92 and below there at 53.44.
UNLEADED (DEC) 10/26/2004: The daily stochastics
gave a bearish indicator with a crossover down. Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The market’s short-term trend is positive on the close above the 9-day
moving average. The close below the 2nd swing support number puts the market on
the defensive. The next downside target is now at 137.36. The next area of
resistance is around 142.71 and 145.55, while 1st support hits today at 138.61
and below there at 137.36.
HEATING OIL (DEC) 10/26/2004: 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
close above the 9-day moving average is a positive short-term indicator for
trend. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. The next downside target is
153.61. The next area of resistance is around 159.10 and 161.80, while 1st
support hits today at 155.01 and below there at 153.61.
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CORN MARKET RECAP
10/25/2004
December Corn finished up 3 1/2 at 205 1/4,
1 1/4 off the high and 3 1/2 up from the low. March Corn closed up 3 1/4 at 215
1/2. This was 3 1/4 up from the low and 1 1/4 off the high.
Strength in the soybean market and a lack of new
selling interest helped to support steady short-covering support for corn
futures. The active harvest selling pressures expected in the weeks just ahead
helped to limit the gains. However, gulf basis levels were higher due to strong
demand from exporters and a tight near-term supply (producers not actively
selling) helped to support the solid gains. In addition, talk of recent sales by
China on the world market into the heart of the US harvest helped to sour the
demand outlook. The sharp drop in the US dollar and news that speculators are
holding a net short position (futures and options combined) at 118,646 contracts
added to the positive tone for fear of additional short-covering ahead. Weekly
export inspections came in at 40.99 million bushels as compared with trade
expectations at 25-28 million bushels. This news added to the positive tone.
Weekly exports need to average 41.4 million bushels to reach the USDA
projection. Cumulative shipments have reached 11.5% of the USDA forecast for the
season as compared with 15.5% as the 5-year average for this time of the year.
Traders expect the weekly crop progress report, released after the close, to
show harvest near 54% complete as compared with 44% last week. Support for
December corn comes in at 204 and 202 with 207 1/4 and 209 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/26/2004: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. The crossover
up in the daily stochastics is a bullish signal. Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The market’s short-term trend is positive on the close above the
9-day moving average. There could be more upside follow through since the market
closed above the 2nd swing resistance. The near-term upside objective is at 209
1/4. The next area of resistance is around 207 1/2 and 209 1/4, while 1st
support hits today at 203 and below there at 200.
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SOY COMPLEX RECAP
10/25/2004
November Soybeans finished up 11 at 541, 4 off
the high and 8 1/2 up from the low. January Soybeans closed up 13 1/4 at 545
1/4. This was 10 1/4 up from the low and 2 3/4 off the high.
December Soymeal closed up 2 at 158.4. This was
1.5 up from the low and 1.1 off the high.
December Soybean Oil finished up 1.01 at 21.86,
0.03 off the high and 0.86 up from the low.
Continued tightness in the cash market and news
that the small speculator was holding a record high net short position helped to
support active short-covering and the strong gains for the soybean complex. Gulf
basis jumped 5 cents which added to the positive tone as producer selling is
slow at the same time that demand is strong. More stops were activated on a move
over last week’s highs. Today’s rally brought the market above the pre-October
USDA report high and to the highest level since September 21st. Fund
short-covering was also noted. Weekly export inspections came in at 43.3 million
bushels as compared with trade expectations at 32-36 million bushels. China took
21.7 million bushels of the total. This news added to the positive tone. Weekly
exports need to average 19.1 million bushels to reach the USDA projection.
Cumulative shipments have reached 14.2% of the USDA forecast for the season as
compared with 15.7% as the 5-year average for this time of the year. Traders
expect the weekly crop progress report, released after the close, to show
harvest near 80-84% complete as compared with 71% last week. November soybean
support points move up to 534 and 527 with resistance at 552 1/4 and 561 3/4.
Technical Outlook
BEANS (NOV) 10/26/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The near-term
upside objective is at 552 1/4. The next area of resistance is around 547 1/4
and 552 1/4, while 1st support hits today at 534 3/4 and below there at 527 1/2.
MEAL (DEC) 10/26/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. With the
close over the 1st swing resistance number, the market is in a moderately
positive position. The next upside target is 160.9. The next area of resistance
is around 159.7 and 160.9, while 1st support hits today at 157.1 and below there
at 155.7.
BEANOIL (DEC) 10/26/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. Follow through buying looks likely if the market
can hold yesterday’s gap on the day session chart. The market’s close above the
2nd swing resistance number is a bullish indication. The next upside target is
22.54. The next area of resistance is around 22.30 and 22.54, while 1st support
hits today at 21.42 and below there at 20.77.
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WHEAT MARKET RECAP
10/25/2004
December Wheat finished up 7 1/2 at 316, 3 1/2 off the high
and 7 up from the low. March Wheat closed up 8 at 326 3/4. This was 8 up from
the low and 2 1/4 off the high.
Fund short-covering seemed to be the over-riding
factor to support a recovery in wheat prices to start the week. Strength in
soybeans and a lack of new bearish fundamental news supported a minor bounce
today which snowballed into a major run higher as funds turned active buyers.
Weekly export inspections came in at 19.3 million bushels as compared with trade
expectations at 18-20 million bushels. Weekly exports need to average 15.5
million bushels to reach the USDA projection. Cumulative shipments have reached
48% of the USDA forecast for the season as compared with 43.2% as the 5-year
average for this time of the year. Traders await a possible tender for 500,000
tons from Pakistan and traders look for the weekly crop progress report,
released after the close to show winter wheat plantings at 82% complete from 78%
last week. Rains in the past week have helped ease fears of stress for the
Argentina wheat crop. December wheat support comes in at 314 1/2 and 309 with
resistance at 321 1/4 and 324 1/4.
Technical Outlook
WHEAT (DEC) 10/26/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s short-term trend is positive on the close above the
9-day moving average. 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. The next upside objective is 325 1/2. The next area of
resistance is around 321 1/4 and 325 1/2, while 1st support hits today at 310
3/4 and below there at 304 3/4.
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LIVE CATTLE RECAP
10/25/2004
December Live Cattle closed down 0.85 at 87.17.
This was 0.27 up from the low and 1.12 off the high.
November Feeder Cattle finished down 0.15 at
111.27, 0.82 off the high and 0.27 up from the low.
December cattle opened higher off of a Japan/US
agreement to resume beef trade but the bearish USDA Cattle-on-Feed report from
Friday and ideas that it will be months before Japan shipments pick up.
Boxed-beef prices were down 44 cents to $141.93 at mid-session as compared with
$139.74 last week at this time. Higher than expected placements pressured the
deferred contracts while the slow marketings pace and confirmation of hefty
weights in the weekly slaughter report added to the bearish tone. In addition,
the month cold storage report showed hefty frozen beef stocks, up 22% from last
year which could hint at lower than expected demand.
Technical Outlook
CATTLE (DEC) 10/26/2004: The major trend has
turned down with the cross over back below the 40-day moving average. Momentum
studies trending lower at mid-range should accelerate a move lower if support
levels are taken out. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The outside day down and close below the
previous day’s low is a negative signal. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The next downside
target is 86.000. The next area of resistance is around 87.850 and 88.770, while
1st support hits today at 86.470 and below there at 86.000.
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LEAN HOGS RECAP
10/25/2004
December Lean Hogs closed down 0.70 at 65.50.
This was 0.45 up from the low and 0.80 off the high.
February Pork Bellies finished up 0.70 at 94.72,
0.62 off the high and 1.17 up from the low.
The hog market fell sharply led by the 2005
contracts as December futures found some support from the discount of futures to
the cash market. News of mixed cash markets with some locations higher helped to
support the December contract as well. Next year contracts were pressured from
fears of a slowdown in pork exports next year with Japan and US officials
expected to iron out details to see US beef flowing to Japan next year. Pork
exports to Japan have surged this year during the beef ban and traders expect a
shift away from US pork this coming year. The bearish monthly cold storage
report from Friday added to the bearish tone. The CME 2-Day Lean Index for the
period ending October 21st was reported at 69.89, unchanged from the previous
session and down from 77.01 on October 7th.
Technical Outlook
HOGS (DEC) 10/26/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. It is a slightly negative indicator that the close was under the swing
pivot. The near-term upside target is at 66.820. The next area of resistance is
around 66.120 and 66.820, while 1st support hits today at 64.900 and below there
at 64.350.
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COCOA MARKET RECAP
10/25/2004
December Cocoa finished up 1 at 1449, 8 off the
high and 7 up from the low.
The cocoa market was relatively quiet and forged
a narrow range in the action Monday. There was an early inclination to put
prices under pressure because of the end to the port blockade but that news was
known well in advance of the opening this morning. Because the cocoa farmers
threatened to resume the port block November 2nd we can understand the markets
ability to find near term support despite the downgrade in political tensions.
We also have to think that a sharply lower US Dollar gave the US cocoa market a
little lift in the action Monday.
Technical Outlook
COCOA (DEC) 10/26/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close above the 9-day moving average is a
positive short-term indicator for trend. The market tilt is slightly negative
with the close under the pivot. The near-term upside objective is at 1464. The
next area of resistance is around 1456 and 1464, while 1st support hits today at
1442 and below there at 1435.
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COFFEE MARKET RECAP
10/25/2004
December Coffee closed up 0.50 at 75.60. This was
0.80 up from the low and 0.80 off the high.
The coffee market inched higher with a quiet,
inside trading session. The market found technical support from the weekly
reversal last week and from short-covering. The sharp drop in open interest and
the lack of more selling in spite of talk of more rains in Brazil suggests the
focus of attention may be shifting away from weather in Brazil. Demand factors
are seasonably strong and roaster buyers are active. Exchange stocks have also
been dropping swiftly in recent days which has added to the positive tone.
Technical Outlook
COFFEE (DEC) 10/26/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. It is a mildly bullish indicator that the market closed over
the pivot swing number. The near-term upside objective is at 77.20. The next
area of resistance is around 76.35 and 77.20, while 1st support hits today at
74.80 and below there at 74.00.
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SUGAR MARKET RECAP
10/25/2004
March Sugar closed down 0.20 at 8.73. This was
0.04 up from the low and 0.25 off the high.
March sugar collapsed to close 20 lower on the
session and well below the trading range of the past 19 trading sessions. With
speculators holding a record net long position of over 163,000 contracts, the
weak close could attract significant long liquidation selling ahead; especially
if key support levels are violated. High international freight rates and the
recent jump in prices appears to have shut-off commercial buying as end users
are waiting for lower prices to book more needs. India officials released 1.3
million tons of government stocks for sale into the domestic market in an
attempt to keep prices under control.
Technical Outlook
SUGAR (MAR) 10/26/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down. The
downside crossover of the 9 & 18 bar moving average is a negative signal.
Momentum studies are still bearish but are now at oversold levels and will tend
to support reversal action if it occurs. 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. The next downside objective is now at 8.50. The next area of
resistance is around 8.87 and 9.07, while 1st support hits today at 8.59 and
below there at 8.50.
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COTTON MARKET RECAP
10/25/2004
December Cotton finished up 0.87 at 46.54, 0.61
off the high and 0.64 up from the low.
The cotton market ran higher early in the session
led by a lack of new selling interest from producers and strength in the grain
markets. Fears that a rally could cause increased supply to move on the market
and expectations for harvest in Texas to pick-up in the next few weeks helped to
limit the gains. Higher grade cotton is moving into the government loan program
and near-term tightness in supply has helped to support the December futures.
Talk of new textile restrictions on items moving into the US from China could
end up being a bearish short-term factor if the slower textile exports were to
eat into China demand expectations.
Technical Outlook
COTTON (DEC) 10/26/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. Market positioning is positive
with the close over the 1st swing resistance. The next upside target is 47.78.
The next area of resistance is around 47.16 and 47.78, while 1st support hits
today at 45.92 and below there at 45.29.