Reasons To Remain Long Metals

Technical Outlook

BONDS (MAR) 12/12/2003: The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for bonds is at 109.24 and then again at 110.06, while swing support hits at 108.04 and below there at 106.30. A positive signal for trend short-term was given on a close over the 9-bar moving average. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 110.06.

T-NOTES(MAR) Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 113.08. The market’s close above the 2nd swing resistance number is a bullish indication. The major trend is down with the cross over back below the 40-day moving average. Near-term resistance for the T-Notes is at 112.29 and then again at 113.08, while swing support hits at 111.19 and below there at 110.20. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

12/11/2003

The stock market managed a surprise run Thursday possibly because the FOMC meeting minutes suggested that the Fed will in fact remain on hold for an extended period of time. For stocks to see that the status quo will remain in place well into 2004 is a positive and because the market is approaching a holiday window the trade is catching a little euphoria wave. Maybe the market took the retail sales readings to be more important than the initial claims and that is surprising because the Fed minutes also suggested that the jobs market might not fully recover until 2005.

Technical Outlook

S&P500 (MAR) 12/12/2003: There could be more upside follow through since the market closed above the 2nd swing resistance. Underlying support comes in at 1063.75 and 1054.08, with overhead resistance at 1077.85 and 1082.28. The close above the 9-day moving average is a positive short-term indicator for trend. The crossover up in the daily stochastics is a bullish signal. The near-term upside objective is at 1082.28.

S&P E-Mini (MAR): A bullish signal was given with an upside crossover of the daily stochastics. The next upside target is 1082.63. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1078.25 and then again at 1082.63, while swing support hits at 1063.75 and below there at 1053.63. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

NASDAQ (MAR) A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The market should run into resistance at 1442.00 and above there at 1453.50 with support at 1404.00 and 1377.50. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1377.50. The market now above the 40-day moving average suggests the longer-term trend is up.

CURRENCY MARKET RECAP

12/11/2003

The Dollar Index continued to make upside headway and is getting into levels on the charts that might begin to foster long term stop loss buying. It is also possible that the world likes the idea that US interest rates are going to remain steady and that US stocks are showing signs of strength. It is also clear that repetitive intervention by the BOJ is serving to prop up the Dollar and that could be making the Dollar a little stronger than it would be otherwise. Lastly it should be noted that BOJ intervention indirectly impacts the Canadian Dollar and with Canada posting some extremely negative housing numbers it would seem that some of the bloom has come off the rose of the Canadian economy.

Technical Outlook

YEN (MAR): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Swing resistance is targeted at 93.15 and above there at 93.26, with the yen finding support around 92.70 and below there at 92.36. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 92.36.

EURO (MAR): Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 1.2054. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2054, with overhead resistance at 1.2266. The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

12/11/2003

A significant failure in the gold market was probably fostered by follow through gains in the Dollar. While the gold and silver markets have been dependant on a lower Dollar there are other reasons to remain long the metals. In fact, for the first time in years we are actually seeing economists from Wall Street suggesting that inflation risks are growing. In other words, it could become critical for the bull camp to find a new theme if the Dollar continues climb.

Technical Outlook

SILVER (MAR): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 554.5 and below there at 547.7 with resistance likely at 559.3 and 565.0. A positive signal for trend short-term was given on a close over the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 547.7.

GOLD (FEB): Support for gold today comes in near 401.28, while resistance is pegged at 409.48. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 401.28. It is a slightly negative indicator that the close was under the swing pivot. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

12/11/2003

The copper market traded on both sides of unchanged Thursday but ended weak despite a very strong showing from the US stock market. Gains the US Dollar might be discouraging some long interest in US copper and we have to think that a rising Dollar discourages the Chinese from buying US copper. Some traders also expressed concern about the Shanghai weekly copper stocks reading to be released Friday morning.

ENERGY MARKET RECAP

12/11/2003

The energy complex continued to waffle, as if prices were overbought and buyers were backing away from the market. It is a telling sign that natural gas prices sagged in the face of a bigger than expected weekly inventory draw of 111 bcf. The market might have been focusing on the fact that natural gas inventories currently stand at a 190 bcf surplus to year ago levels. In conclusion, both the regular energy complex and natural gas prices have failed to respond bullishly to bullish supply readings! It is also clear that a moderating of cold temperature forecasts and an extensively overbought technical condition served to undermine natural gas prices Thursday.

Technical Outlook

CRUDE OIL (FEB): It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 31.45 and below there at 31.08, with resistance pegged at 32.05 and 32.28. The upside crossover of the 9 & 18 bar moving average is a positive signal. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 32.28.

UNLEADED GAS (FEB): Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 88.45. The market tilt is slightly negative with the close under the pivot. Resistance today is at 88.45, while support should be found around 86.05. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (FEB):It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 86.93, with resistance is at 90.53. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 90.53.

CORN MARKET RECAP

12/11/2003

The corn market opened weaken slid lower and then managed to bound back right in the face of a steep soybean price decline. The December USDA report, released before the opening, put the ending stocks at 1.299 billion bushels versus the average trade estimate of 1.282 billion bushels. World corn endings stocks were lowered again to 74.24 from 76.45 last month and 100.71 million last year. Weekly export sales, released before the opening, were expected to come in near 800,000-1.0 million tons but came in at 1.03 million, as compared with 849,700 tons last week. It should also be noted that the USDA announced a 147,000-ton corn sale to an unknown destination. Therefore, demand in corn is strong and world stocks are still tightening.

Technical Outlook

CORN (MAR) 12/12/2003: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 257 3/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 257 3/4 today, with support at 242 3/4. The close above the 9-day moving average is a positive short-term indicator for trend. The outside day up gives the market a positive tilt. The upside daily closing price reversal gives the market a bullish tilt.

SOY COMPLEX RECAP

12/11/2003

The soybean market closed sharply lower mostly because the USDA report gave the market an excuse to break down. Long liquidation off the USDA report seemed to be over exaggerated as the ending stocks were pegged at 125 million to the average trade estimate of 117 million bushels. The ending stocks remains close to what many traders feel is a pipeline minimum for the end of the season but apparently the market felt the need to balance an overly long spec position. Weekly export sales, released before the opening, came in at 360,300 tons compared to expectations of 400,000-600,000 tons. However, it should also be noted that the Chinese delegation announced a purchase of 1.5 million tons of US soybeans next week on Chinese television and that would seem to puff up futures export sales data. Considering the sales and the announcement of future sales the trade was really surprised by the magnitude of the selling.

Technical Outlook

SOYBEANS (JAN) 12/12/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next area of resistance is around 776 and 788 1/2, while 1st support hits today at 757 and below there at 750 1/2. A negative signal for trend short-term was given on a close under the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 788 1/2.

MEAL (JAN): Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 235.6. First resistance comes in at 231.8, with support at 226.2. The close below the 9-day moving average is a negative short-term indicator for trend. The market setup is somewhat negative with the close under the 1st swing support.

BEAN OIL (JAN): A positive signal for trend short-term was given on a close over the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 27.61. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 28.36 and above there at 28.69. Support should be encountered at 27.82 and 27.61.

WHEAT MARKET RECAP

12/11/2003

After a neutral reaction to the USDA report news, the market collapsed to close sharply lower with active long liquidation from funds and speculators noted in the pit. Some moisture in Kansas this week, the possibility of more early next week and slow exports may have helped trigger the break. News that China bought 500,000 tons of wheat from Canada was seen as “lost business” instead of as “strong China demand”. The USDA pegged ending stocks at 583 million bushels as compared with the average trade estimate for ending stocks at 582 million bushels (range 557-600). Last month the USDA forecast was 608 million. World ending stocks were revised slightly higher to 127.9 million tons as compared with 165.6 million for the 2002/2003 season and 201.1 million tons the previous year. Prior to the opening, Egypt bought 175,000 tons of US wheat at their optional origin tender for January 1-15 delivery. Weekly export sales came in at 464,400 tons as compared with 358,000 tons necessary each week to reach the new (higher) USDA forecast for the season. Cumulative sales have already reached 69.4% of the USDA forecast for the season as compared with 62.3% on average for this time of the year.

Technical Outlook

WHEAT (MAR) 12/12/2003: Bearish daily studies indicate selling minor rallies this session. The close below the 1st swing support could weigh on the market. Expect near-term support around 384 and below there at 379 1/4, with resistance levels at 394 3/4 and 400 3/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 379 1/4.

LIVE CATTLE RECAP

12/11/2003

February cattle closed slightly higher in choppy trade finding support from the pork rally and from a lack of new selling interest on the move to the lowest level since November 5th early in the session. The 645 point break off of the contract high took just 7 trading sessions and short-term technical indicators are overdone. Talk of another storm in the plains for early next may have provided some underlying support. Cash markets are down as much as $5.00 on the week and packer profit margins are deep in the red. Daily cattle slaughter came in at 133,000 head as compared with trade expectations at 122,000-127,000 head. The higher slaughter indicates better than expected packer demand. Boxed-beef cut-out values were up 57 cents to $157.37 which may have helped trigger some of the short-covering.

Technical Outlook

CATTLE (FEB) 12/12/2003: Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 87.87. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 88.40 and below there at 87.87. Market resistance is at 89.55 and then again at 90.17. The daily closing price reversal up is a positive indicator that could support higher prices. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

12/11/2003

February experienced solid follow-through technical buying to help confirm that a significant low is in place with the key reversal on Wednesday. A close over 53.80 on Friday would be additional confirmation of a low with a weekly reversal after a contract low. Cash hogs were $1.00 higher and there is a general feeling that the market has moved past the period of greatest supply. Daily slaughter came in at 391,000 head compared to estimates between 388,000 to 395,000 head. Cold weather in the western cornbelt could limit hog marketings again on Friday. Upside follow through Thursday would be an indication at least a temp low is in place. December futures expire tomorrow and closed at 49.95 as compared with the 2-day Lean index (as of Dec 9th) at 50.16.

Technical Outlook

HOGS (FEB) 12/12/2003: The close over the pivot swing is a somewhat positive setup. Resistance levels comes in at 53.80 and 54.20 today, while support is around 52.70 and then 52.00. The close below the 9-day moving average is a negative short-term indicator for trend. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside target is now at 52.00.

COCOA MARKET RECAP

12/11/2003

A moderate correction in cocoa prices suggests that some of the near term bullish buzz has gone out of the market. In fact, given the magnitude of the setback off the recent highs it is now possible that some small spec longs are trapped in losing positions and vulnerable to stop loss selling. Supposedly the market encountered more intense origin sales and that simply added into the small spec liquidation effort. The Press also reported on improved crop conditions but that is a very minimal impact on prices at the current junction.

Technical Outlook

COCOA (MAR)12/12/03 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1716 and above there at 1768 with support at 1631 and 1598. 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 next downside target is 1597.75.

COFFEE MARKET RECAP

12/11/2003

March coffee closed 90 lower on the session and to a new low for the week as futures have now given back all of this weeks gains. The market gapped higher on the opening due to a rally in London but there was a lack of new speculative buying and some increased producer selling. Fund selling emerged to drive the market lower. CSCE exchange stocks were down 1,536 bags to 4.368 million with 40,983 bags pending review. For Monday’s monthly US Green Coffee stocks report, traders are looking for stocks to decline for the 4th month in a row. For end of November stocks, traders are looking for a decline of between 75,000 and 400,000 bags to 5.909-5.584 million bags. End of October stocks were at 5.984 million.

Technical Outlook

COFFEE (MAR)12/12/03 The close below the 1st swing support could weigh on the market. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 66.80.The Coffee contract should run into resistance at 65.60 and above there at 66.80 with support at 63.6 and 62.80. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

12/11/2003

The close back over key resistance and a continued jump in open interest leaves the sugar market in a strong technical position to reach the head and shoulders bottom formation objective at 711 after closing 5 higher on the session and 13 off of the lows of the day. Funds were active buyers again today and this overwhelmed the producer and trade house selling which is also increasing on the rally. The rally looks like more than just short-covering as open interest is up more than 24,000 contracts in just 7 trading sessions. Trade houses continue to suggest that the market is flush with supplies and Brazil is sitting on hefty old crop supplies while end user buying seems to slow with each higher close. Brazil northeast harvest is near 50% complete as of November 30th with a cane harvest pegged near 53 million tons from 51.2 million last year. Yields are thought to be higher than last year in some of the region.

Technical Outlook

SUGAR (MAR) 12/12/2003: The upside daily closing price reversal gives the market a bullish tilt. The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 6.86, with support found at 6.58. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 6.86. The market is becoming somewhat overbought now that the RSI is over 70.

COTTON MARKET RECAP

12/11/2003

The December Supply/Demand report failed to come in with any new surprises and the export sales numbers for the week were below expectations which triggered choppy, two-sided trade. Weekly export sales came in at just 154,400 bales as compared with trade estimates between 280,000 to 350,000 bales, but shipments were solid at 247,500 bales as compared with 200,000-250,000 bales expected. China was not a large buyer which had been expected again for the second week in a row. Chinese imports of US cotton have reached 2.96 million bales for the 2003/04 marketing year compared to 596,900 bales last year at this time. In the world USDA report, China is still expected to import 7 million tons for the season which remains a potentially bullish factor for world prices. Traders were looking for ending stocks to come in near 4.38 million bales (range 3.75-5.7) as compared with 4.25 million bales in last month’s supply/demand estimate. Actual ending stocks and the other estimates from the USDA were left unchanged from last month at 4.25 million bales as compared with 5.39 million this year and 7.45 million bales last year. For the world report, ending stocks were pegged at 32.19 million bales from 31.66 million bales (last months forecast) and 36.87 million bales for the 2002/2003 season.

Technical Outlook

COTTON (MAR) 12/12/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. Next resistance area comes in at 70.84 and then again at 71.75, while support is targeted at 68.94 and 67.95. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 67.95. The daily closing price reversal up is a positive indicator that could support higher prices. ORANGE JUICE (JAN)12/12/03 The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 68.95 and above there at 69.25 with support at 68.30 and 67.95. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 67.95.