Gold And Silver Diverged, But This Is The Weakest Metal
BOND MARKET RECAP
11/8/2004
December Bonds closed down 0-09 at 111-31. This was
0-04 up from the low and 0-07 off the high.
December 10 Yr Treasury Notes finished down 0-050 at
112-085, 0-025 off the high and 0-040 up from the low.
The Treasury market was mostly weak again on
Monday despite the fact that the Kansas City Fed Manufacturing Index was
unchanged and the stock market was under liquidation pressure. It is possible
that another moderate decline in crude oil prices improved the economic outlook
enough to rekindle long term selling pressure on Treasuries even though the
market reached a significantly oversold condition last Friday. Some traders now
expect the Treasury market to drift lower into the FOMC meeting where many
expect the Fed to hike rates by 25 basis points. A Treasury auction saw a bid to
cover ration of 1.89 and non competitive bids of 1.45 billion early Monday
morning.
Technical Outlook
BONDS (DEC) 11/09/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. 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 now at 111-18. The next
area of resistance is around 112-06 and 112-15, while 1st support hits today at
111-24 and below there at 111-18.
TNOTES (DEC) 11/09/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next downside target is now at
112-000. The next area of resistance is around 112-130 and 112-175, while 1st
support hits today at 112-045 and below there at 112-000.
Â
STOCK INDICES RECAP
11/8/2004
December S&P finished down 1.2 at 1166.5, 0.8 off
the high and 3.9 up from the low.
December S&P E-Mini closed down 1.25 at 1166.5.
This was 4.25 up from the low and 1 off the high.
December Dow closed up 7 at 10397. This was 45 up
from the low and 3 off the high.
December Dow E-Mini finished up 6 at 10396, 4 off the
high and 42 up from the low.
The stock market managed a corrective slide early
Monday and did so even in the face of sharply lower crude oil prices. However,
it is possible that the equity market was partly unnerved by the US military
offensive in Iraq. We also think that a sharply lower US Dollar is causing some
concern as is the relative proximity of the coming FOMC meeting. Some traders
were concerned about the prospect of higher interest rates but the only
scheduled economic news of the session failed to provide fodder for the rate
hike crowd as the Kansas City Fed Manufacturing Index was unchanged from the
prior months reading. There continues to be an undertow of concern for more
legal action in the drug stocks area as Pfizer came under excess pressure from
rumors that it was under investigation.
Technical Outlook
S&P 500 (DEC) 11/09/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The close above the 9-day moving average is a positive short-term
indicator for trend. The market’s close below the pivot swing number is a mildly
negative setup. The near-term upside target is at 1170.42. The market is
becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 1168.84 and 1170.42, while 1st support hits today at
1164.15 and below there at 1161.03.
SP EMINI (DEC) 11/09/2004: Momentum studies are
trending higher but have entered overbought levels. 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 1170.93. The market is approaching
overbought levels with an RSI over 70. The next area of resistance is around
1169.12 and 1170.93, while 1st support hits today at 1163.88 and below there at
1160.44.
NASDAQ (DEC) 11/09/2004: 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. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside target is at
1540.25. The market is becoming somewhat overbought now that the RSI is over 70.
The next area of resistance is around 1536.00 and 1540.25, while 1st support
hits today at 1526.00 and below there at 1520.25.
MINIDOW (DEC) 11/09/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. 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 next upside objective is 10433. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 10420 and 10433, while 1st support hits today at 10374 and
below there at 10341.
Â
CURRENCY MARKET RECAP
11/8/2004
December US Dollar finished up 10 at 8417, 6 off the
high and 32 up from the low.
December Euro finished down 0.34 at 129.12, 0.51 off
the high and 0.06 up from the low.
December Euro Dollar closed down 0.015 at 97.565.
This was 0.01 up from the low and 0.005 off the high.
December Canadian Dollar closed up 0.49 at 83.78.
This was 0.28 up from the low and 0.21 off the high.
December British Pound finished up 0.04 at 184.97,
0.55 off the high and 0.17 up from the low.
December Swiss closed down 0.24 at 84.71. This was
0.14 up from the low and 0.34 off the high.
December Japanese Yen closed up 0.17 at 94.93. This
was 0.18 up from the low and 0.11 off the high.
The Dollar forged a new low for the move Monday but
did manage to recoil from the slide despite almost no change in market
sentiment. The biggest gainer on the session was the Canadian, as ECB official
seemed to throw out some verbal intervention against the Dollar slide. In other
words, buyers were a little concerned about paying up for the Euro considering
the disdain of the ECB President. Some traders are willing to pressure the
Dollar into the FOMC meeting because they seem to think that higher interest
rates will keep the US growth rate down and that is the only real threat to the
Dollar shorts.
Technical Outlook
YEN (DEC) 11/09/2004: The daily stochastics gave a
bullish indicator with a crossover up. 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. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next upside target is 95.20. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 95.07 and 95.20, while 1st support hits today at 94.79 and
below there at 94.63.
EURO (DEC) 11/09/2004: 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 close over the pivot swing is a somewhat positive
setup. The next upside objective is 129.80. The market is approaching overbought
levels with an RSI over 70. The next area of resistance is around 129.40 and
129.80, while 1st support hits today at 128.84 and below there at
128.67.
Â
PRECIOUS METALS RECAP
11/8/2004
December Gold closed down 0.9 at 433.4. This was 1.5
up from the low and 1.2 off the high.
December Silver finished down 0.018 at 7.487, 0.093
off the high and 0.067 up from the low.
January Platinum closed down 2.3 at 849.6. This was
5.4 up from the low and 2.2 off the high.
The gold and silver market diverged for most of the
session Monday as the Dollar waffled around unchanged. We suspect that gold was
seeing some profit taking after the massive run last week and with the Dollar at
times attempting to rally we can understand the desire by some longs to move
back onto the sidelines. Surprisingly the silver and copper markets were strong
and that might be the result of improved physical demand and because of a
growing amount of inflation talk. An extremely hot PPI report from the UK and
talk about manufacturers gaining pricing power led some to speculate that silver
might be the way to play the next wave up in the precious metals markets.
Unfortunately the platinum market wasn’t buying in the inflation track and that
left platinum in the weakest posture of all the precious metals.
Technical Outlook
SILVER (DEC) 11/09/2004: 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. It is a mildly bullish indicator that the market closed over the pivot
swing number. The near-term upside objective is at 765.4. The next area of
resistance is around 756.7 and 765.4, while 1st support hits today at 740.8 and
below there at 733.4.
GOLD (DEC) 11/09/2004: 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. The close over
the pivot swing is a somewhat positive setup. The near-term upside target is at
436.0. The next area of resistance is around 434.7 and 436.0, while 1st support
hits today at 432.1 and below there at 430.7.
Â
COPPER MARKET RECAP
11/8/2004
December Copper finished down 0.15 at 136.15, 1.65
off the high and 0.65 up from the low.
Copper prices continued to grind higher and are being
helped by ongoing hope for Chinese buying, tightening exchange stocks and a
generally lower Dollar. The trade is also still concerned about a possible
strike and is perpetually seeing signs of expanding Asian demand. The surprising
thing is that other base metals prices are also rising even though many traders
have recently expecting higher Chinese interest were going to snuff out demand.
With the improvement in the economy some traders now think that December copper
prices will have the ability to make new highs before the contract goes off the
board.
Â
ENERGY MARKET RECAP
11/8/2004
December Crude Oil closed down 0.52 at 49.09. This
was 0.49 up from the low and 0.50 off the high.
December Heating Oil closed down 0.77 at 136.64. This
was 1.54 up from the low and 1.61 off the high.
December Unleaded Gas finished down 1.15 at 127.53,
0.97 off the high and 1.78 up from the low.
December Natural Gas finished down 0.35 at 7.60, 0.34
off the high and 0.05 up from the low.
December Propane closed down 0.01 at 0.88. This was
equal to the low and 0.00 off the high.
Crude oil prices were at times $1.01 below the prior
close but prices did manage to bounce into mid-session. According to the Middle
East economic survey, OPEC is raising production but is also getting closer and
closer to capacity. However, because of Nigerian production problems OPEC didn’t
really managed to put out as much production in October as some might have
expected and that might have prompted the short covering into mid session
Monday. It is also possible that the forecast of below normal temps later in the
week gave heating oil and natural gas a needed lift around the lows Monday.
However, natural gas looks extremely weak and might be vulnerable to even more
selling ahead.
Technical Outlook
CRUDE OIL (DEC) 11/09/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside target is now at 48.11. The next area of
resistance is around 49.58 and 50.08, while 1st support hits today at 48.60 and
below there at 48.11.
UNLEADED (DEC) 11/09/2004: 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. The market’s close below the pivot swing number is a
mildly negative setup. The next downside target is now at 124.58. The next area
of resistance is around 128.90 and 130.07, while 1st support hits today at
126.16 and below there at 124.58.
HEATING OIL (DEC) 11/09/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 9-day moving average is a negative
short-term indicator for trend. The market tilt is slightly negative with the
close under the pivot. The next downside objective is 133.51. The next area of
resistance is around 138.21 and 139.80, while 1st support hits today at 135.07
and below there at 133.51.
Â
CORN MARKET RECAP
11/8/2004
December Corn finished down 1 1/2 at 198, 1 1/4
off the high and 1/2 up from the low. March Corn closed down 1 1/2 at 210 1/4.
This was 3/4 up from the low and 1/2 off the high.
Traders remain concerned that producers might move a
larger percentage of the corn harvest onto the market for the remaining 25% of
harvest with storage space full. Weekly export inspections came in at 47.067
million bushels as compared with 26-30 million expected. Shipments need to
average 41.64 million bushels per week to reach the USDA projection. Cumulative
shipments have reached just 15% of the USDA forecast for the season as compared
with 18.9% as the 5-year average for this time of the year. Traders are looking
for tonight’s weekly crop progress report to show corn harvest near 73-77%
complete as compared with 65% last week. The market is in an extreme oversold
condition with the speculative net short position in the futures and options
report at a near record high 133,359 contracts as of November 2nd. Weather looks
favorable for active harvest this week with scattered rains not anticipated
until Wednesday/Thursday this week with concentration in the southern regions
which have already been harvested. Taiwan bought 46,000 tons of US corn
overnight. Support for December corn comes in at 197 and 192 1/2 with resistance
at 201 3/4 and 203 1/4.
Technical Outlook
CORN (DEC) 11/09/2004: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. 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
under the swing pivot. The next downside target is 196 1/2. The next area of
resistance is around 198 3/4 and 199 3/4, while 1st support hits today at 197
1/4 and below there at 196 1/2.
Â
SOY COMPLEX RECAP
11/8/2004
January Soybeans finished up 1/4 at 505 1/2, 5 1/2
off the high and 2 1/2 up from the low. March Soybeans closed down 1/4 at 511
3/4. This was 1 3/4 up from the low and 5 3/4 off the high.
December Soymeal closed up 1.7 at 148.7. This was 2.1
up from the low and 0.6 off the high.
December Soybean Oil finished down 0.15 at 20.12,
0.37 off the high and 0.02 up from the low.
News that China may have cancelled or delayed US
soybean cargoes helped to trigger the early weakness and the move to new
contract lows but a lack of new follow-through selling interest helped support
the bounce. There were no deliveries against the November contract overnight and
export news was quiet. The oversold condition of the market is seen as a
possible short-term supportive factor. Weekly export inspections came in at 39.1
million bushels as compared with 43-46 million expected. Shipments need to
average 17.85 million bushels per week to reach the USDA projection. Cumulative
shipments have reached 23.5% of the USDA forecast for the season as compared
with 24% as the 5-year average for this time of the year. Traders are looking
for tonight’s weekly crop progress report to show soybean harvest near 90-91%
complete as compared with 84% last week. The market is in an extreme oversold
condition with the speculative net short position in the futures and options
report at a record high 54,888 contracts as of November 2nd. January soybean
support comes in at 504 and 499 3/4 with resistance at 513 1/2 and 516.
Technical Outlook
BEANS (JAN) 11/09/2004: The market was pushed to a
new contract low. 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. The upside closing price reversal on
the daily chart is somewhat bullish. It is a slightly negative indicator that
the close was lower than the pivot swing number. The next downside target is now
at 498 1/4. With a reading under 30, the 9-day RSI is approaching oversold
levels. The next area of resistance is around 509 1/2 and 514 1/4, while 1st
support hits today at 501 1/2 and below there at 498 1/4.
MEAL (DEC) 11/09/2004: The market broke to a new
contract low. 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. The daily closing price reversal up is
a positive indicator that could support higher prices. A positive setup occurred
with the close over the 1st swing resistance. The next downside target is 145.7.
The next area of resistance is around 150.0 and 151.0, while 1st support hits
today at 147.4 and below there at 145.7.
BEANOIL (DEC) 11/09/2004: Daily stochastics are
trending lower but have declined into oversold territory. A negative signal for
trend short-term was given on a close under the 9-bar moving average. The
downside closing price reversal on the daily chart is somewhat negative. The
market tilt is slightly negative with the close under the pivot. The next
downside objective is now at 19.82. The next area of resistance is around 20.31
and 20.59, while 1st support hits today at 19.93 and below there at
19.82.
Â
WHEAT MARKET RECAP
11/8/2004
December Wheat finished up 2 1/4 at 308 3/4,
1/2 off the high and 5 1/4 up from the low. March Wheat closed up 2 1/2 at 322.
This was 5 1/2 up from the low and 1/2 off the high.
Weakness in the other grains and a lack of new export
news overnight helped to provide for choppy trade early in the session. Weekly
export inspections came in at 17.83 million bushels as compared with 22-24
million expected. Shipments need to average 15 million bushels per week to reach
the USDA projection. Cumulative shipments have reached 52.6% of the USDA
forecast for the season as compared with 47.2% on average for this time of the
year. Traders view the fact that cumulative shipments after 23 weeks in the
season are running 1% behind last years pace as a bearish factor. However, US
exports are projected at 975 million bushels this season which is down 15.8%
from last year. Iraq has set a tender to buy 100,000-150,000 tons of US hard red
winter wheat which helped support a rally in Kansas City. The market is in an
extreme oversold condition with the large trader net short position in the
futures and options report at a near record high 28,787 contracts as of November
2nd. December wheat support comes at 306 1/2 and 303 with resistance at 311 1/2
and 315.
Technical Outlook
WHEAT (DEC) 11/09/2004: Stochastics trending lower at
midrange will tend to reinforce a move lower especially if support levels are
taken out. The market’s short-term trend is negative as the close remains below
the 9-day moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next downside objective is now at
302. The next area of resistance is around 311 1/2 and 313 1/4, while 1st
support hits today at 306 and below there at 302.
Â
LIVE CATTLE RECAP
11/8/2004
December Live Cattle closed up 0.57 at 83.02. This
was 0.82 up from the low and 0.12 off the high.
January Feeder Cattle finished down 0.27 at 101.47,
0.72 off the high and 0.35 up from the low.
December cattle hit the lowest level since May 6th
before a solid bounce off of the lows to close higher in the day. The reversal
will be seen as a positive technical development and may slow the trend toward
fund long liquidation selling which has pressured the market in the past few
weeks. February cattle bounced from key support at 85.60 for the third day in a
row which is a bullish confirmation that this level might hold. Boxed-beef
prices were up $.68 to $130.85 at mid-session as compared with $137.81 last week
at this time. Ideas that the recent sharp break to a two-month low in beef
prices might stimulate demand helped to support.
Technical Outlook
CATTLE (DEC) 11/09/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. The daily
closing price reversal up on the daily chart is somewhat positive. The market
setup is supportive for early gains with the close over the 1st swing
resistance. The next downside objective is now at 81.920. Some caution in
pressing the downside is warranted with the RSI under 30. The next area of
resistance is around 83.500 and 83.800, while 1st support hits today at 82.570
and below there at 81.920.
Â
LEAN HOGS RECAP
11/8/2004
December Lean Hogs closed down 0.15 at 72.10. This
was 0.35 up from the low and 1.00 off the high.
February Pork Bellies finished up 0.67 at 102.37,
0.77 off the high and 1.27 up from the low.
The market traded mixed with December weak on
follow-through technical selling from Friday’s sweeping reversal and February
held support on the lower opening and bounced. The CME 2-Day Lean Index for the
period ending November 4th was reported at 73.27, up 75 cents from the previous
session and up from 71.13 the previous week. Cash markets surged higher last
week but had a weaker tone to start this week. February hogs typically trade at
a 500-700 point premium to the cash market at this time of the year but was
still at a discount as of the close.
Technical Outlook
HOGS (DEC) 11/09/2004: 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 market tilt is slightly negative with the close under the pivot.
The near-term upside objective is at 73.600. The next area of resistance is
around 72.770 and 73.600, while 1st support hits today at 71.450 and below there
at 70.920.
Â
COCOA MARKET RECAP
11/8/2004
December Cocoa finished up 159 at 1792, 18 off the
high and 36 up from the low.
The cocoa market exploded for the biggest run in
years Monday morning as the trade was greeted with news that the French Air
Force had moved to destroy the Ivory Coast Air Force in retaliation for the
killing of 9 French soldiers last week. Apparently French armored vehicles were
seen surrounding the Ivory Coast Presidents residence and that seems to suggest
that extreme uncertainly will continue. However, the market did note the
presence of origin selling which is a little surprising considering the view
that the Ivory Coast farmers must have of the situation.
Technical Outlook
COCOA (DEC) 11/09/2004: Momentum studies are trending
higher but have entered overbought levels. A positive signal for trend
short-term was given on a close over the 9-bar moving average. If yesterday’s
gap higher on the day session chart holds, additional buying could develop this
session. 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 target is 1841. The 9-Day RSI over 90 suggests the
market is extremely overbought. The next area of resistance is around 1819 and
1841, while 1st support hits today at 1765 and below there at 1734.
Â
COFFEE MARKET RECAP
11/8/2004
December Coffee closed up 1.55 at 79.85. This was
1.75 up from the low and 0.65 off the high.
The coffee market managed to extend the prior days
strength and has now managed to rise to the highest level since late September.
Talk about tightening stocks seems to be prompting the rise in prices and with
the coffee crop in Brazil recently posting a very large output many are thinking
that the next crop will see a cyclical contraction. It would seem that the small
spec and fund longs are fueling the rally, possibly because of technical
breakout action on the charts. The London market seemed to be roaster buying
interest and that certainly suggests that a number of different players remain
pre-disposed to buy this market.
Technical Outlook
COFFEE (DEC) 11/09/2004: 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 next upside target is 81.95. The
next area of resistance is around 81.05 and 81.95, while 1st support hits today
at 78.70 and below there at 77.20.
Â
SUGAR MARKET RECAP
11/8/2004
March Sugar closed up 0.12 at 8.60. This was 0.08 up
from the low and 0.01 off the high.
A very impressive upward thrust in sugar seemed to
shut down the generally bearish tilt in place since the October high. The buyers
in the action Monday were largely pit and trade players, which means that the
funds and small specs weren’t necessarily the driving force behind the rally.
The weekend Press was rife with talk about an increase in global ethanol use and
that might have given the sugar market a little lift, especially since the
articles were playing up the potential for Brazilian ethanol exports, which in
turn might gobble up more sugar supply inside Brazil. Recent concerns of a
record Brazilian sugar cane crop was partially to blame for the slide off the
October high and therefore, the hope for improving demand for sugar certainly
helps to diffuse the selling pattern.
Technical Outlook
SUGAR (MAR) 11/09/2004: 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. If yesterday’s gap higher on the day
session chart holds, additional buying could develop this session. 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 8.67. The next area of resistance is around 8.64 and
8.67, while 1st support hits today at 8.56 and below there at 8.50.
Â
COTTON MARKET RECAP
11/8/2004
December Cotton finished up 0.47 at 43.83, 0.37 off
the high and 0.47 up from the low.
After two months of persistent downward pressure the
December cotton managed to recoil slightly away from the recent double bottom at
43.36. The concern for the coming USDA report is generally keeping the market
under pressure as the US crop is still thought to be large at the same time that
the world production looks to be large. The recent COT report showed the small
spec and funds to be net short 22,000 contracts and with the market down since
the COT report was measured we have to think that the cotton market might come
into the USDA report net spec short close to 25,000 contracts. A cash to futures
mismatch has periodically developed but even the certificate situation has only
limited capacity to support the overall price structure.
Technical Outlook
COTTON (DEC) 11/09/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The next downside target is 42.97. The next area of resistance is
around 44.25 and 44.64, while 1st support hits today at 43.41 and below there at
42.97.