Here’s What Drove Gold Higher Today
BOND MARKET RECAP
10/26/2004
December Bonds closed down 0-05 at 114-06. This
was 0-02 up from the low and 0-11 off the high.
December 10 Yr Treasury Notes finished down 0-030
at 113-255, 0-075 off the high and 0-020 up from the low.
The Treasury market disappointed the longs
Tuesday following a rather sharp decline in the Conference Board consumer
confidence reading. Even more importantly the Treasury market discounted a
rather surprising decline in the expectations component of the Consumer
sentiment report. However, it is likely that soaring equity prices glossed over
the dismal economic reading. Lastly with mostly weaker energy prices during the
session consumers and investors were temporarily feeling better about the
economy. Also dampening Bond and note prices were comments from the Fed’s
Ferguson that the US economy was expected to continue expanding.
Technical Outlook
BONDS (DEC) 10/27/2004: 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 swing indicator gave a moderately
negative reading with the close below the 1st support number. The next upside
objective is 114-22. The next area of resistance is around 114-10 and 114-22,
while 1st support hits today at 113-26 and below there at 113-21.
TNOTES (DEC) 10/27/2004: 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 market setup is somewhat negative with the close under
the 1st swing support. The near-term upside objective is at 114-045. The next
area of resistance is around 113-280 and 114-045, while 1st support hits today
at 113-170 and below there at 113-140.
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STOCK INDICES RECAP
10/26/2004
December S&P finished up 16.2 at 1111.5, 0.3 off
the high and 16.8 up from the low.
December S&P E-Mini closed up 16.25 at 1111.5.
This was 17 up from the low and 0.5 off the high.
December Dow closed up 141 at 9881. This was 140
up from the low and 4 off the high.
December Dow E-Mini finished up 143 at 9883, 3
off the high and 142 up from the low.
The stock market appeared to be poised to short
covering prior to the opening and with energy prices initially weak we think
that the short covering tilt was given a little boost. However, it is also
possible that a series of decent earnings reports gave the market an added lift
as well as favorable dialogue from a US Fed member. Supposedly the Fed’s
Ferguson suggested that the question on the US economy was how fast it would
grow and not whether it would grow. Surprisingly the Dow led the rally which
isn’t a big shock because the Dow was easily the most oversold index coming into
the action Tuesday morning. A big rebound in AIG gave the Dow a lift possibly
because the company itself is seemingly skirting the lawsuit threat levied by
the New York District attorney.
Technical Outlook
S&P 500 (DEC) 10/27/2004: The crossover up in the
daily stochastics is a bullish signal. Daily stochastics are showing positive
momentum from oversold levels, which should reinforce a move higher if near-term
resistance is taken out. 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 1124.47. The next area of resistance is around 1120.05 and 1124.47, while
1st support hits today at 1102.95 and below there at 1090.28.
SP EMINI (DEC) 10/27/2004: The crossover up in
the daily stochastics is a bullish signal. Daily stochastics are showing
positive momentum from oversold levels, which should reinforce a move higher if
near-term resistance is taken out. A positive signal for trend short-term was
given on a close over the 9-bar 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 near-term upside objective is at
1124.75. The next area of resistance is around 1120.00 and 1124.75, while 1st
support hits today at 1102.50 and below there at 1089.75.
NASDAQ (DEC) 10/27/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
below the 9-day moving average is a negative short-term indicator for trend. The
outside day up is a positive signal. Market positioning is positive with the
close over the 1st swing resistance. The next downside target is 1420.50. The
next area of resistance is around 1453.00 and 1458.50, while 1st support hits
today at 1434.00 and below there at 1420.50.
MINIDOW (DEC) 10/27/2004: The daily stochastics
have crossed over up which is a bullish indication. Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. A positive signal for trend
short-term was given on a close over the 9-bar moving average. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The next upside target is 9993. The next area of resistance is
around 9955 and 9993, while 1st support hits today at 9811 and below there at
9704.
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CURRENCY MARKET RECAP
10/26/2004
December US Dollar finished up 21 at 8529, 15 off
the high and 35 up from the low.
December Euro finished down 0.44 at 127.5, 0.65
off the high and 0.27 up from the low.
December Euro Dollar closed down 0.005 at 97.72.
This was 0.005 up from the low and 0.01 off the high.
December Canadian Dollar closed down 0.31 at
81.54. This was 0.17 up from the low and 0.34 off the high.
December British Pound finished down 0.58 at
182.86, 0.75 off the high and 0.21 up from the low.
December Swiss closed down 0.35 at 83.32. This
was 0.2 up from the low and 0.42 off the high.
December Japanese Yen closed up 0.02 at 93.96.
This was 0.1 up from the low and 0.29 off the high.
The US Dollar managed a short covering bounce
Tuesday and probably did so off favorable US Fed dialogue and a favorable trade
in the US equity market. However, the Dollar was held back from even more short
covering by weak US economic numbers. The Fed suggested that the question on the
US economy is how fast it will grow instead of whether it will grow or not. With
the Euro and the Swiss significantly overbought recently it’s understandable
that both those currencies saw such significant corrective action on Tuesday but
it would seem as if the trend remains up in the Euro and down in the Dollar.
Technical Outlook
YEN (DEC) 10/27/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. The upside closing price reversal on the daily chart is
somewhat bullish. It is a slightly negative indicator that the close was under
the swing pivot. The next upside target is 94.39. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 94.15 and 94.39, while 1st support hits today at 93.77 and below there at
93.62.
EURO (DEC) 10/27/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. The close below the 1st swing support could weigh on the
market. The next upside objective is 128.51. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
127.95 and 128.51, while 1st support hits today at 127.04 and below there at
126.68.
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PRECIOUS METALS RECAP
10/26/2004
December Gold closed down 2.3 at 427.6. This was
1.9 up from the low and 2.2 off the high.
December Silver finished down 0.04 at 7.34, 0.045
off the high and 0.09 up from the low.
January Platinum closed down 8.1 at 844.9. This
was 3.4 up from the low and 5.1 off the high.
Gold and silver prices declined in what appeared
to be a profit taking session that was in turn inspired by a profit taking
bounce in the US Dollar. Certainly the recent COT report showed the gold and
silver markets to be significant overbought, especially if one adjusts the
position for the gains made since the COT report was measured. A story out of
London suggested that gold needed to broadened its investment appeal and that
gold should be used as a hedge against the loss of personal wealth due to
economic uncertainty. Generally we think that the fear and uncertainty is what
drove gold to within close proximity of 16 year highs on Monday.
Technical Outlook
SILVER (DEC) 10/27/2004: Momentum studies are
trending higher but have entered overbought levels. The market’s short-term
trend is positive on the close above the 9-day moving average. The market’s
close below the pivot swing number is a mildly negative setup. The next upside
target is 746.4. The next area of resistance is around 740.8 and 746.4, while
1st support hits today at 727.3 and below there at 719.4.
GOLD (DEC) 10/27/2004: 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 market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next upside objective is 431.7. The next area of resistance is
around 429.6 and 431.7, while 1st support hits today at 425.6 and below there at
423.6.
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COPPER MARKET RECAP
10/26/2004
December Copper finished up 0.50 at 128.15, 1.15
off the high and 0.65 up from the low.
The copper market was mostly positive on Tuesday,
despite the fact that both gold and silver prices were weak. We suspect that a
rising equity market and at least initially lower energy prices gave the market
a lift. The trade also reported increased fund long interest and that seemed to
leave the overall balance of the trade in a positive position. However, some
traders suggested that spread trading volume was a large portion of the volume
and that usually suggests to us that the market is lacking a definitive opinion.
The Fed was also out with some favorable macro economic talk and that could have
given the copper market an additional lift.
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ENERGY MARKET RECAP
10/26/2004
December Crude Oil closed up 0.63 at 55.17. This
was 1.32 up from the low and 0.08 off the high.
December Heating Oil closed up 0.59 at 157.65.
This was 3.35 up from the low and 0.35 off the high.
December Unleaded Gas finished up 1.49 at 142.15,
0.15 off the high and 3.15 up from the low.
December Natural Gas finished up 0.54 at 9.36,
0.04 off the high and 0.48 up from the low.
December Propane closed down 0.02 at 0.96. This
was 0.00 up from the low and 0.00 off the high.
The energy market started out weak, started to
rally mid morning and then fell back into mid session. Surprisingly the energy
complex paid little attention to the talk from OPEC that they were shooting for
an excess capacity of 10-15%. Later in the session, the IEA actually whipped up
bullish sentiment by suggesting that rising oil demand from China, the US and
India is serving to increase the risk of an oil shock. The IEA also suggested
that surging global demand might triple by 2030, which is a very long term
forecast but nonetheless served to support the natural gas market.
Technical Outlook
CRUDE OIL (DEC) 10/27/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The market’s short-term trend is positive on the
close above the 9-day moving average. The daily closing price reversal up on the
daily chart is somewhat positive. Market positioning is positive with the close
over the 1st swing resistance. The next downside target is 53.46. With a reading
over 70, the 9-day RSI is approaching overbought levels. The next area of
resistance is around 55.87 and 56.26, while 1st support hits today at 54.47 and
below there at 53.46.
UNLEADED (DEC) 10/27/2004: 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 daily closing price reversal up on
the daily chart is somewhat positive. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next downside objective
is now at 138.10. The next area of resistance is around 143.80 and 144.70, while
1st support hits today at 140.50 and below there at 138.10.
HEATING OIL (DEC) 10/27/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. A positive signal for trend short-term was given
on a close over the 9-bar moving average. The upside daily closing price
reversal gives the market a bullish tilt. It is a slightly negative indicator
that the close was under the swing pivot. The next downside objective is 153.20.
The 9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 159.49 and 160.60, while 1st support hits
today at 155.80 and below there at 153.20.
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CORN MARKET RECAP
10/26/2004
December Corn finished up 1 1/2 at 206 3/4,
1 off the high and 3 up from the low. March Corn closed up 1 3/4 at 217 1/4.
This was 2 3/4 up from the low and 3/4 off the high.
Weakness in the other grains and fears of more
harvest selling pressures ahead helped to pressure the market early in the
session but a lack of speculative sellers limited the losses and export news
helped support another round of speculative short-covering into the close. News
that the USDA confirmed a sale of 165,000 tons of US corn to unknown destination
helped provide some support. In addition, South Korea bought 52,500 tons of
optional origin corn overnight. The US crop is now 55% (as of Sunday) which was
in line with trade expectations. However, a wet forecast for the next week could
slow progress which is well behind a normal pace in the far northern states such
as Minnesota. Support for December corn comes in at 204 and 202 with 207 1/4 and
209 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/27/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside target
is at 210 1/4. The next area of resistance is around 208 3/4 and 210 1/4, while
1st support hits today at 204 3/4 and below there at 202 1/4.
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SOY COMPLEX RECAP
10/26/2004
November Soybeans finished down 2 at 539, 2 1/2
off the high and 4 up from the low. January Soybeans closed down 1 1/4 at 544.
This was 5 up from the low and 1 1/2 off the high.
December Soymeal closed down 1.8 at 156.6. This
was 0.3 up from the low and 2.1 off the high.
December Soybean Oil finished down 0.07 at 21.79,
0.06 off the high and 0.24 up from the low.
Some light selling from producers helped to ease
cash soybean markets and triggered the sell-off into the mid-session for futures
but selling interest was low and the market held support to close 4 cents off of
the lows of the day. Export news was quiet and so was the trade on the floor.
The CBOT lowered margin requirements for soybeans and meal effective for Tuesday
and there was talk on the floor again today that US crushers are interested in
sourcing oil receipts. Indonesia bird flu problems have hurt demand psychology
for the meal market and traders remain concerned for massive South American
crops this winter. For the monthly crush report, for release on Thursday,
traders are looking for the September crush near 120-121.5 million bushels, oil
stocks near 1.065 billion pounds and meal stocks at 250,000 tons. November
soybean support comes in at 534 and 527 with resistance at 541 1/2 and 552 1/4.
Technical Outlook
BEANS (NOV) 10/27/2004: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. 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. The
market tilt is slightly negative with the close under the pivot. The near-term
upside objective is at 545. The next area of resistance is around 542 1/4 and
545, while 1st support hits today at 535 3/4 and below there at 532 1/4.
MEAL (DEC) 10/27/2004: 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. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. The
near-term upside objective is at 159.4. The next area of resistance is around
157.8 and 159.4, while 1st support hits today at 155.4 and below there at 154.7.
BEANOIL (DEC) 10/27/2004: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are trending higher but have entered overbought levels. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The near-term upside target is at 22.04. The
next area of resistance is around 21.94 and 22.04, while 1st support hits today
at 21.64 and below there at 21.45.
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WHEAT MARKET RECAP
10/26/2004
December Wheat finished down 1/2 at 315 1/2, 3/4 off the high
and 4 up from the low. March Wheat closed up 1 1/4 at 328. This was 5 1/2 up
from the low and 1 off the high.
The market closed near the high end of a quiet
trading session with an inside day. Ideas that the sharp rally on Monday was
overdone and light long liquidation selling from speculators helped pressure the
market early in the session but a lack of aggressive selling helped limit the
losses. The weekly crop progress report showed that the US freshly planted
winter wheat crop is rated 76% in good to excellent condition as compared with
53% last year at this time. The crop is now 85% planted. The crop was planted
and emerged in much improved soil conditions this year but new crop July wheat
closed higher on the session in spite of the improved conditions. Export news
remains slow but traders are hopeful for a Pakistan tender of near 500,000 tons
soon. High or near record high ocean freight rates could keep buyers selective
for the short-term. Talk of some rains in Australia helped limit the supply
concerns and weather has improved in Argentina in the past week as well.
December wheat support comes in at 312 and 309 with resistance at 321 1/4 and
324 1/4.
Technical Outlook
WHEAT (DEC) 10/27/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The close over the pivot swing
is a somewhat positive setup. The near-term upside target is at 319 1/4. The
next area of resistance is around 317 3/4 and 319 1/4, while 1st support hits
today at 313 1/4 and below there at 310.
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LIVE CATTLE RECAP
10/26/2004
December Live Cattle closed up 0.07 at 87.25.
This was 0.50 up from the low and 0.52 off the high.
November Feeder Cattle finished up 0.10 at
111.37, 0.47 off the high and 0.27 up from the low.
December cattle inched higher in quiet trade as a
weak tone in the futures was offset by strong pork values and a firm cash market
outlook for this week. As a result, the market consolidated Monday’s losses but
traders looking for higher cash markets are concerned with hefty near-term
supply of all meats and heavy cattle slaughter weights. US trade officials are
quickly approaching other key US beef export market participants in hopes of
opening up beef trade after an initial agreement with the Japanese on the
weekend. Countries like South Korea and Taiwan could open up trade (resume beef
imports) soon. Boxed-beef prices were up 94 cents to $143.39 at mid-session as
compared with $141.24 last week at this time. Slaughter came in at 127,000 head
as compared with trade estimates at 124,000-127,000 head.
Technical Outlook
CATTLE (DEC) 10/27/2004: 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. The upside daily closing price reversal gives the market a bullish
tilt. The market’s close below the pivot swing number is a mildly negative
setup. The next downside target is 86.250. The next area of resistance is around
87.750 and 88.270, while 1st support hits today at 86.750 and below there at
86.250.
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LEAN HOGS RECAP
10/26/2004
December Lean Hogs closed up 0.72 at 66.22. This
was 0.32 up from the low and 1.25 off the high.
February Pork Bellies finished down 0.25 at
94.47, 1.07 off the high and 0.67 up from the low.
The hog market pushed sharply higher early in the
session led by a firm tone for cash markets but the close (which was up 72 on
the session) was near the lows of the day and below the opening which is
considered a short-term overbought signal. The market challenged Friday’s highs
before the weak close. Cash hogs were steady to higher which helped support the
bounce but the market is called .50 lower for tomorrow. The lower pork profit
margins for the packer was seen as a limiting factor for the cash market and
could slow the slaughter pace. In fact, slaughter came in at 389,000 head as
compared with 390,000-400,000 expected. The CME 2-Day Lean Index for the period
ending October 22nd was reported at 70.26, up 37 cents from the previous session
and down from 77.01 on October 7th.
Technical Outlook
HOGS (DEC) 10/27/2004: 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. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The next upside objective is 68.020. The next area of resistance is
around 67.000 and 68.020, while 1st support hits today at 65.450 and below there
at 64.900.
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COCOA MARKET RECAP
10/26/2004
December Cocoa finished up 8 at 1457, 4 off the
high and 11 up from the low.
Cocoa prices were mostly higher as some trade
buying boosted prices despite the potential negative price influence being
thrown off by the marketing strife. Apparently the marketing block was only
lifted temporarily and that seemed to prompt the commercial players to enter on
minor weakness Tuesday morning. In the end, the market is reigned in on the
upside by the threat of harvest flow and reigned in on the downside by the
threat of a marketing block.
Technical Outlook
COCOA (DEC) 10/27/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. A positive signal for trend short-term was given on a close over
the 9-bar moving average. A positive setup occurred with the close over the 1st
swing resistance. The near-term upside target is at 1470. The next area of
resistance is around 1464 and 1470, while 1st support hits today at 1450 and
below there at 1441.
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COFFEE MARKET RECAP
10/26/2004
December Coffee closed up 0.20 at 75.80. This was
0.70 up from the low and 0.25 off the high.
The coffee market inched higher with a quiet,
inside trading session for the second day in a row. Light speculative buying was
noted in the pit with rolling of positions to the March contract as the dominate
feature of the day. A lack of new news and a lack of new speculative selling on
news of good weather in Brazil helped to leave traders with the idea that the
focus of attention is shifting away from weather in Brazil. Demand factors are
seasonably strong and roaster buyers are active on breaks but short-term demand
seems to be satisfied. In fact, some roasters seem to be sourcing coffee from US
stocks due to near record high freight rates. Exchange stocks were down 15,597
bags to 4.671 million bags with 49,798 bags pending review. The recent decline
in exchange warehouse stocks is seen as a positive factor.
Technical Outlook
COFFEE (DEC) 10/27/2004: Momentum studies are
trending higher from mid-range, which should support 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. It is a mildly bullish indicator that the market
closed over the pivot swing number. The near-term upside objective is at 76.60.
The next area of resistance is around 76.25 and 76.60, while 1st support hits
today at 75.35 and below there at 74.75.
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SUGAR MARKET RECAP
10/26/2004
March Sugar closed up 0.12 at 8.85. This was 0.15
up from the low and 0.03 off the high.
March sugar closed moderately higher with an
inside trading session finding some support from news of cash business and ideas
that the break yesterday was overdone. Trade house buyers were active after the
lower opening failed to attract new selling and the market could not get under
Monday’s lows. Higher energy markets helped support the market and so did news
that Taiwan bought 35,000 tons of raw sugar from Australia. Taiwan is also
thought to be close to a deal for a similar amount of white sugar.
Technical Outlook
SUGAR (MAR) 10/27/2004: The major trend could be
turning up with the close back above the 40-day moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. It is a mildly bullish indicator that the
market closed over the pivot swing number. The next downside target is now at
8.64. The next area of resistance is around 8.94 and 9.00, while 1st support
hits today at 8.76 and below there at 8.64.
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COTTON MARKET RECAP
10/26/2004
December Cotton finished up 0.08 at 46.62, 0.38
off the high and 0.22 up from the low.
The cotton market inched higher in quiet trade
after the higher opening failed to attract much in the way of short-covering and
futures stayed inside of Monday’s range. While US producer selling remains
light, there is still plenty of harvest activity ahead and when other key
producing countries bring their new crop export surplus onto the market, traders
are fearful of lower world prices. Cotton bulls are hoping that US producers do
not sell the harvest and China is an active buyer over the near-term but traders
are a bit nervous over near-term demand from China for US cotton when there are
rumblings of possible tariffs on certain China textiles moving into the US.
Technical Outlook
COTTON (DEC) 10/27/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The near-term upside
objective is at 47.26. The next area of resistance is around 46.91 and 47.26,
while 1st support hits today at 46.32 and below there at 46.06.