The Surprising Thing About This Market
BOND MARKET RECAP
1/20/2005
March Bonds closed up 0-06 at 114-05. This was
0-19 up from the low and 0-05 off the high.
March 10 Yr Treasury Notes finished up 0-050 at
112-025, 0-030 off the high and 0-105 up from the low.
The Treasury market was down early but then
managed to bounce into mid session off a much weaker than expected Philly Fed
survey. The leading indicator report might have been considered somewhat better
than expected but with the Philly readings the slowest readings in 1 1/2 years
the market could hardly remain in negative territory. Some might suggest that a
gain in the Philly Fed employment Index mitigates the slide in the headline
reading but the magnitude of the headline decline was probably, in the end more
significant. We suspect that falling energy prices limited the rise in
Treasuries during the session but with equity prices remaining weak the outside
market influence was probably mixed.
Technical Outlook
BONDS (MAR) 01/21/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The upside closing price reversal on the daily chart is somewhat bullish. The
market has a slightly positive tilt with the close over the swing pivot. The
next upside target is 114-28. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 114-19 and
114-28, while 1st support hits today at 113-25 and below there at 113-07.
TNOTES (MAR) 01/21/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The major trend could be turning up
with the close back above the 18-day moving average. The close over the pivot
swing is a somewhat positive setup. The next upside objective is 112-145. The
next area of resistance is around 112-100 and 112-145, while 1st support hits
today at 111-290 and below there at 111-200.
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STOCK INDICES RECAP
1/20/2005
March S&P finished down 7.2 at 1176.3, 6.7 off
the high and 2.3 up from the low.
March S&P E-Mini closed down 7.25 at 1176.25.
This was 2.25 up from the low and 6.75 off the high.
March Dow closed down 54 at 10475. This was 20 up
from the low and 73 off the high.
The stock market is lucky to be seeing only
moderate selling, as the US economic numbers Thursday were a further undermine
to a market that can’t seem to put on a happy face. The stock market basically
ignored or discounted better than expected earnings from a number of bellwether
issues and also mostly discounted another sharp decline in energy prices. Even
more surprising is that fact that the US energy supply tightness situation is
repairing and yet Wall Street either doesn’t know or doesn’t care. The market
probably can’t count on the remainder of the earnings reports to come in as
favorable as those in the initial wave but even if the reports are good the
market doesn’t seem to be in a position to care.
Technical Outlook
S&P 500 (MAR) 01/21/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down. A
bearish signal was triggered on a crossover down in the daily stochastics. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The gap down on the day session chart is
bearish with more selling pressure possible today. The market setup is somewhat
negative with the close under the 1st swing support. The next downside target is
1168.30. The next area of resistance is around 1180.60 and 1186.30, while 1st
support hits today at 1171.60 and below there at 1168.30.
SP EMINI (MAR) 01/21/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down. A
crossover down in the daily stochastics is a bearish signal. Daily stochastics
are trending lower but have declined into oversold territory. The major trend
has turned down with the cross over back below the 18-day moving average. The
gap down on the day session chart is bearish with more selling pressure possible
today. The close below the 1st swing support could weigh on the market. The next
downside objective is 1168.38. The next area of resistance is around 1180.75 and
1186.37, while 1st support hits today at 1171.75 and below there at 1168.38.
NASDAQ (MAR) 01/21/2005: 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 18-day moving average is an indication
the longer-term trend has turned down. More selling pressure is likely given
yesterday’s gap lower price action on the day session chart. The close below the
1st swing support could weigh on the market. The next downside objective is
1505.50. The 9-day RSI under 30 indicates the market is approaching oversold
levels. The next area of resistance is around 1534.00 and 1547.50, while 1st
support hits today at 1513.00 and below there at 1505.50.
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CURRENCY MARKET RECAP
1/20/2005
March US Dollar finished up 29 at 8393, 14 off
the high and 42 up from the low.
March Euro finished down 0.39 at 129.64, 0.26 off
the high and 0.2 up from the low.
March Euro Dollar closed unchanged at 97.025.
This was equal to the low and 0.015 off the high.
March Canadian Dollar closed down 0.43 at 81.01.
This was 0.16 up from the low and 0.27 off the high.
March British Pound finished up 0.48 at 186.75,
0.17 off the high and 0.66 up from the low.
March Swiss closed down 0.27 at 84.21. This was
0.12 up from the low and 0.19 off the high.
March Japanese Yen closed down 0.56 at 97.03.
This was 0.17 up from the low and 0.65 off the high.
Once again the Dollar managed to rise as if it
was being lifted by invisible forces. In fact, in the wake of an extremely weak
Philly Fed Survey it would not have been surprising to see the March Dollar
index come under aggressive profit taking selling. Some suggested that strong
employment readings within the Philly Fed report saved the Dollar but we think
that the market was saved by the fact that the Euro, Swiss, and Canadian made
some extremely negative trades on the charts early in the session and that
undermined those currencies ability to recover even on an economic misstep in
the US. Traders should noted that a number of currencies are approaching 100 day
moving average lines on the charts!
Technical Outlook
YEN (MAR) 01/21/2005: The close below the 40-day
moving average is an indication the longer-term trend has turned down. The daily
stochastics gave a bearish indicator with a crossover down. Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The major trend has turned down with the cross over back below the
18-day moving average. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside target is now at
96.33. The next area of resistance is around 97.44 and 97.96, while 1st support
hits today at 96.62 and below there at 96.33.
EURO (MAR) 01/21/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The market tilt is slightly negative
with the close under the pivot. The next downside target is now at 129.20. The
market is approaching oversold levels on an RSI reading under 30. The next area
of resistance is around 129.86 and 130.11, while 1st support hits today at
129.41 and below there at 129.20.
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PRECIOUS METALS RECAP
1/20/2005
February Gold closed down 0.7 at 422.6. This was
2.3 up from the low and 0.7 off the high.
March Silver finished down 0.067 at 6.558, 0.022
off the high and 0.088 up from the low.
April Platinum closed down 4.2 at 863.7. This was
3.2 up from the low and 2.3 off the high.
Both gold and silver were lucky to escape the
session Thursday with a positive tilt especially with the Dollar mounting
another quasi technical breakout on the upside. Even more surprising is the fact
that gold and silver managed to recoil from early losses in the wake of much
slower than expected US economic information. Some traders suggested that gold
and silver might have found solid support around the lows Thursday but we
suspect that the net spec and fund long is still rather burdensome. It was a
little impressive that gold managed to downplay the news of rising production
but once again it is clear that the market isn’t paying a lot of attention to
the supply and demand fundamentals.
Technical Outlook
SILVER (MAR) 01/21/2005: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. More selling pressure is likely given yesterday’s gap lower price
action on the day session chart. The market tilt is slightly negative with the
close under the pivot. The next upside target is 665.2. The next area of
resistance is around 661.3 and 665.2, while 1st support hits today at 650.4 and
below there at 643.2.
GOLD (FEB) 01/21/2005: Daily momentum studies are
on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The major trend has turned down with the cross
over back below the 18-day moving average. It is a slightly negative indicator
that the close was under the swing pivot. The near-term upside target is at
425.2. The next area of resistance is around 424.1 and 425.2, while 1st support
hits today at 421.1 and below there at 419.2.
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COPPER MARKET RECAP
1/20/2005
March Copper finished up 0.55 at 141.50, equal to
the high and 1.60 up from the low.
Copper prices chopped around but managed a mostly
positive track on the day Thursday. We would not have been surprised to see the
market fade in the wake of the much softer than expected US Philly Fed survey
and the rather lackluster Leading Indicator report. In the end the market would
still seem to be positively biased technically and we suspect that the attention
will be heavy on the Friday morning release of Shanghai copper stocks. In fact,
after the recent hope for improved Chinese demand and talk of more supply
tightness in China, the weekly Shanghai copper stocks report takes on a very
important standing.
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ENERGY MARKET RECAP
1/20/2005
March Crude Oil closed down 0.55 at 47.31. This
was 0.60 up from the low and 0.49 off the high.
March Heating Oil closed down 0.67 at 132.86.
This was 1.66 up from the low and 2.44 off the high.
March Unleaded Gas finished down 0.64 at 127.56,
0.64 off the high and 2.16 up from the low.
March Natural Gas finished up 0.03 at 6.35, 0.05
off the high and 0.15 up from the low.
March Propane closed down 0.02 at 0.72. This was
equal to the low and equal to the high.
After seeing the recent builds in crude and
gasoline stocks it is not surprising that the energy complex slid in the action
Thursday. However, with US weather remaining mostly mild into next week the bull
case is a little thin. Even after a private tanked monitoring service suggested
that OPEC oil flows were falling off in the most recent weekly measurement the
market only showed minor short covering impetus. On the other hand, the IEA
continues to toss out ideas of strong demand for 2005 and that seemed to provide
some additional support to prices.
Technical Outlook
CRUDE OIL (MAR) 01/21/2005: A crossover down in
the daily stochastics is a bearish signal. Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The swing indicator gave a moderately negative reading with
the close below the 1st support number. The next downside target is 46.20. The
next area of resistance is around 47.85 and 48.37, while 1st support hits today
at 46.77 and below there at 46.20.
UNLEADED (MAR) 01/21/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The near-term upside objective is at 129.98. The next area of resistance
is around 128.96 and 129.98, while 1st support hits today at 126.16 and below
there at 124.38.
HEATING OIL (MAR) 01/21/2005: Momentum studies
are trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. A negative
signal was given by the outside day down. The market tilt is slightly negative
with the close under the pivot. The near-term upside objective is at 137.15. The
next area of resistance is around 134.91 and 137.15, while 1st support hits
today at 130.81 and below there at 128.96.
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CORN MARKET RECAP
1/20/2005
March Corn finished up 1 at 197 3/4, 1/2
off the high and 1 3/4 up from the low. May Corn closed up 3/4 at 204 3/4. This
was 1 3/4 up from the low and 1/2 off the high.
The early bounced stemmed from the technical
oversold condition of the market and a firm tone in cash basis as grain movement
is difficult due to river movement problems and producer selling remains
relatively light considering the massive crop. However, weak export signals
helped to pressure the market into the mid-session as Taiwan bought 60,000 tons
of Argentina corn overnight and traders remain concerned that South Korea is
sourcing corn from China. With weak export news after the recent break, trade
psychology is that lower prices may be necessary to promote increased export
interest. Fears of increased planted acreage for the coming season have added to
the bearish psychology. The late recovery and higher close is impressive in the
face of a weak wheat trade and bearish export psychology. Resistance for March
corn comes in at 197 1/2 and 198 1/2 and with 195 3/4 and 191 as next support.
Technical Outlook
CORN (MAR) 01/21/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down. A
positive signal was given by the outside day up. With the close over the 1st
swing resistance number, the market is in a moderately positive position. The
next downside target is now at 195 1/4. The next area of resistance is around
198 3/4 and 199 1/2, while 1st support hits today at 196 3/4 and below there at
195 1/4.
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SOY COMPLEX RECAP
1/20/2005
March Soybeans finished up 5 1/2 at 523 1/4, 1
off the high and 7 3/4 up from the low. May Soybeans closed up 2 1/4 at 521.
This was 4 1/4 up from the low and 1 off the high.
March Soymeal closed up 3.4 at 158.9. This was
3.9 up from the low and 0.1 off the high.
March Soybean Oil finished down 0.05 at 19.56,
0.24 off the high and 0.04 up from the low.
Tight supplies of ready to move soybeans helped
support the early bounce in March soybeans and commercial bull spreading has
supported the March/May spread to an inversion of 1 1/2 cents from a March
discount of 3 1/4 cents on Friday. River movement is difficult and producers are
still not moving soybeans on the market as much as would be expected with the
bumper crop in the bins. A strong recover in nearby meal prices added to the
positive tone. A USDA official in Brazil predicting a possible 10% yield loss
due to Asia rust with a current working estimate of 61 million tons for Brazil
production as compared with the official USDA estimate of 64.5 million tons
added to the support. The sharp rise in open interest from January 11th is seen
as a bearish technical development as the market fell 38 cents from the January
11th peak. Resistance for March soybeans comes in at 524 1/2 and 528 3/4 with
support at 515 and 510.
Technical Outlook
BEANS (MAR) 01/21/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
setup is supportive for early gains with the close over the 1st swing
resistance. The next downside target is now at 513. The next area of resistance
is around 527 1/2 and 530 1/4, while 1st support hits today at 519 and below
there at 513.
MEAL (MAR) 01/21/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The major trend
has turned down with the cross over back below the 18-day moving average. The
market has a bullish tilt coming into today’s trade with the close above the 2nd
swing resistance. The next downside objective is now at 154.0. The next area of
resistance is around 160.8 and 161.9, while 1st support hits today at 156.9 and
below there at 154.0.
BEANOIL (MAR) 01/21/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. The daily closing
price reversal down is a negative indicator for prices. It is a slightly
negative indicator that the close was under the swing pivot. The next downside
objective is now at 19.33. The next area of resistance is around 19.70 and
19.89, while 1st support hits today at 19.42 and below there at 19.33.
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WHEAT MARKET RECAP
1/20/2005
March Wheat finished down 4 1/4 at 294 3/4, 4 1/4 off the high
and 1 1/4 up from the low. May Wheat closed down 4 at 302 1/4. This was 1 3/4 up
from the low and 4 off the high.
A weak tone for the export market and the massive
world crop production from 2004 continue to pressure the market but some light
concerns with the winter wheat crop due to flooding in the southern Midwest
region helped provide underlying support; especially to the new crop July.
Overnight reports of a possible 5% drop in European production for 2005 and a
9-10% drop in Ukraine grain production for 2005 helped spark some underlying
support as well. While world wheat production jumped 68 million tons for 2004,
world ending stocks increased by just 15 million tons. The market fell
moderately late in the session on news that the EU agreed to open an export
tender for free-market wheat with subsidies. EU officials indicated that the
tender would be for a maximum of 2 million tonnes. This is the first such tender
since June of 2003 and added to the export competition concerns for the US wheat
exporter. March wheat support comes in at 292 1/4 with resistance at 298 1/2 and
300 1/2. A new contract low would leave 285 3/4 as next downside technical swing
count.
Technical Outlook
WHEAT (MAR) 01/21/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The major trend has turned down with the cross over back below the 18-day moving
average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is 290. The next
area of resistance is around 297 1/2 and 301, while 1st support hits today at
292 and below there at 290.
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LIVE CATTLE RECAP
1/20/2005
February Live Cattle finished up 0.17 at 89.52,
0.12 off the high and 0.67 up from the low.
January Feeder Cattle closed down 0.05 at 106.20.
This was 0.40 up from the low and 0.20 off the high.
Cattle closed slightly higher after the early
pork induced sell-off failed to attract new selling interest. Ideas that the
market is oversold and that the 285 point sell-off off of Monday’s peak for
February cattle had already priced-in the weaker cash market tone helped support
the bounce. Hope of progress in the Japan/US discussions to re-open beef trade
may have helped support the tone as well. Boxed-beef cut-out values were down
$.83 to $154.69 at mid-session as compared with $153.38 one week ago. Slaughter
came in at just 112,000 head as compared with trade expectations of
115,000-120,000 head. This was the third day in a row with slaughter well below
trade expectations and could be a sign of weaker demand from the packer and a
weaker tone for cash market trade.
Technical Outlook
CATTLE (FEB) 01/21/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal up is a
positive indicator that could support higher prices. It is a slightly negative
indicator that the close was lower than the pivot swing number. The next
downside objective is 88.600. The next area of resistance is around 89.900 and
90.170, while 1st support hits today at 89.150 and below there at 88.600.
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LEAN HOGS RECAP
1/20/2005
February Lean Hogs finished down 1.42 at 74.35,
0.65 off the high and 0.47 up from the low.
February Pork Bellies closed down 0.20 at 93.72.
This was 1.07 up from the low and 0.82 off the high.
News of lower cash markets and ideas that pork
production could rise in the days ahead as producer marketings accelerate with
the rising temperatures helped to trigger the early weakness. Fund long
liquidation selling added to the bearish tone with the gap lower opening at the
lowest level since January 10th helping to trigger increased technical selling.
The market attracted additional sell-stops on the move to a new low for the
year. The weakness in the cash market (down.50 cents) combined with the premium
of futures to cash and the near record average weights helped trigger the more
bearish psychology. The 2-Day Lean index for the period ending January 18th was
up.52 to 73.12 as compared with 72.20 one week previous. Slaughter came in at
398,000 head as compared with trade expectations of 397,000-400,000 head.
Technical Outlook
HOGS (FEB) 01/21/2005: The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The major trend has turned down with
the cross over back below the 18-day moving average. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. The
close below the 2nd swing support number puts the market on the defensive. The
next downside objective is now at 73.270. The next area of resistance is around
74.900 and 75.500, while 1st support hits today at 73.800 and below there at
73.270.
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COCOA MARKET RECAP
1/20/2005
March Cocoa finished down 1 at 1498, 14 off the
high and 5 up from the low.
The cocoa market forged another rather tight
trading range but mostly remained within the recent consolidation zone. The
trade is expecting the US cocoa grind figures on Friday to show a minor gain but
we really doubt that the figures will be impressive enough to alter the
lackluster attitude in cocoa. We suspect that continued gains in the Dollar are
undermining the cocoa market and with the fundamental track mostly uneventful
one can hardly argue against more sideways action, especially with the residual
of the main crop harvest still flowing to port.
Technical Outlook
COCOA (MAR) 01/21/2005: The stochastic indicator
is rising from oversold levels, which is bullish and should support higher
prices. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal down is a
negative indicator for prices. The market has a slightly positive tilt with the
close over the swing pivot. The near-term upside target is at 1519. The next
area of resistance is around 1507 and 1519, while 1st support hits today at 1489
and below there at 1482.
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COFFEE MARKET RECAP
1/20/2005
March Coffee closed down 2.10 at 102.00. This was
1.25 up from the low and 3.70 off the high.
Coffee opened higher and moved to the highest
level since December 30th before a combination of light producer selling, fund
profit-taking and a strong US dollar helped to trigger a sell-off. May coffee
closed 205 lower on the session with a 455 point range. While robusta supplies
are still hefty, traders believe that tightness in Arabica will support a
tightening cash market in the months ahead. Vietnam sellers seem a bit more
active than in Brazil as the Vietnam harvest is just complete. Certified coffee
stocks at the NYBOT were up 5,126 bags to 4.536 million bags with 71,527 bags
pending review.
Technical Outlook
COFFEE (MAR) 01/21/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The outside day down is a
negative signal. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The next upside objective is 107.55.
The next area of resistance is around 104.45 and 107.55, while 1st support hits
today at 99.55 and below there at 97.70.
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SUGAR MARKET RECAP
1/20/2005
March Sugar closed up 0.09 at 8.96. This was 0.12
up from the low and 0.01 off the high.
May sugar closed higher for the 7th session in a
row as the early break was met with active trade house buying support and the
positive technical action triggered aggressive buying from speculators and funds
late in the session. Talk of increased short-term demand in the cash market from
Pakistan and India continues to provide support. The potential increase in sugar
production from Brazil for the 2005/2006 season is currently seen as a
longer-term fundamental and a factor which might offset lower production in the
future from areas like Europe and the US as decades-old producer subsidy or
price programs are dismantled.
Technical Outlook
SUGAR (MAR) 01/21/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The cross over
and close above the 18-day moving average is an indication the longer-term trend
has turned positive. 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 9.06. The next area of resistance is
around 9.02 and 9.06, while 1st support hits today at 8.90 and below there at
8.81.
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COTTON MARKET RECAP
1/20/2005
March Cotton finished down 0.38 at 47.58, 0.73
off the high and 0.13 up from the low.
March cotton closed 46 lower on the session and
down 81 points down from the highs of the day. The outside day down after
hitting the highest level since October 14th turns the short-term technical
picture slightly negative. The reversal also comes from an overbought condition
and from record open interest. Fund and speculative buyers pushed the market
higher early in the session and then trade house and commercial sellers were
active which helped drive the market lower into the close. Index fund buying and
fund short-covering has provided the fuel for the strong rally off of the
December 27th lows (6.14 cents) and there could be a void of commercial buying
interest underneath the market unless there is speculative or fund buyers on a
scale down basis.
Technical Outlook
COTTON (MAR) 01/21/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The downside closing price
reversal on the daily chart is somewhat negative. It is a slightly negative
indicator that the close was lower than the pivot swing number. The near-term
upside target is at 48.59. The next area of resistance is around 48.01 and
48.59, while 1st support hits today at 47.15 and below there at 46.87.