2 Reasons Bonds Gained Today
BOND MARKET RECAP
10/6/2003
The Treasury market did pretty well Monday
considering the sea change that was seen with the latest US payroll report. Some
traders suggested that the bond market rally was almost exclusively short
covering but with the political anxiety high in the Middle East it is possible
that some fresh buyers came into the fray. The strength in the equity market
could have weighed on the bonds but apparently bonds were strong enough to
overcome outside negative influences. The US economy report slate was empty
Monday and that probably resulted in simple short covering from the massive
losses last Thursday and Friday.
Technical Outlook
BONDS (DEC) 10/07/03: The daily closing price
reversal up is positive. It is a slightly negative indicator that the close was
lower than the pivot swing number. Near-term resistance for bonds is at 109.30
and then again at 110.11, while swing support hits at 108.28 and below there at
108.07. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 108.07.
T-NOTES(DEC) The upside closing price reversal on
the daily chart is somewhat bullish. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 111.31. The market’s close below the pivot
swing number is a mildly negative setup. 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 113.07 and then again at 113.15, while swing support hits at 112.15 and
below there at 111.31. The market’s short-term trend is negative as the close
remains below the 9-day moving average.
STOCK INDICES RECAP
10/6/2003
Very impressive action in the stock market
Monday, as the market wasn’t put off by thin holiday type trading, or by an
empty economic report slate. The equity market appears to be factoring in a
favorable earnings report cycle that is soon to be kicked off. Even the threat
of escalating Middle East tensions and a falling Dollar were discounted by the
bull camp as they pushed prices back up toward the September highs. Some traders
almost completely discounted the upside action because the volume was so light.
Technical Outlook
S&P500 (DEC) 10/07/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1029.90 and 1024.75, with overhead resistance at 1037.50 and
1039.95. The market’s short-term trend is positive on a close above the 9-day
moving average. 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 1039.95.
S&P E-Mini (DEC): The market made a new contract
high on the rally. 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 1040.94. The market has a slightly positive tilt with the
close over the swing pivot. Near-term resistance for the S&P Mini is at 1038.13
and then again at 1040.94, while swing support hits at 1029.38 and below there
at 1023.44. A positive signal for trend short-term was given on a close over the
9-bar moving average.
NASDAQ (DEC) 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 market should run into resistance at 1395.00 and above there at
1399.00 with support at 1379.00 and 1367.00. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next upside target
is 1399.0.
CURRENCY MARKET
RECAP
10/6/2003
A major range down trade Monday undermines the
bull track temporarily fostered by last week’s monthly payroll report. The trade
was watching the recent lows closely in the Dollar, as that would seem to
rekindle the bear tilt that existed in the Dollar for most of the month of
September. While some might suggest that the lack of economic news Monday
allowed the Dollar to slide others indicated that the Treasuries saw flight to
quality buying off the Middle East tensions and the US stock market was
moderately strong and neither of those developments supplied any support to the
Dollar. In other words, the Dollar could have grasped any number of bullish
factors Monday but instead chose to fail.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. It is a slightly
negative indicator that the close was lower than the pivot swing number. Swing
resistance is targeted at 90.46 and above there at 90.66, with the yen finding
support around 90.06 and below there at 89.86. 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
89.86. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
EURO (DEC): Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 1.1515. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1515, with overhead resistance at 1.1793. The
market’s short-term trend is positive on a close above the 9-day moving average.
The gap down on the day session chart is bearish with more selling pressure
possible today.
PRECIOUS METALS
RECAP
10/6/2003
Renewed weakness in the Dollar combined with the
Middle East tensions supported gold but we suspect that some short profit taking
was seen during the session. With the Dollar falling back to the vicinity of the
recent lows it is entirely possible that some sellers are growing concerned
about their positions. It is also possible that an extension of the Dollar
downside will push some recently liquidated longs back into the fray as the
Dollar was the primary trade focus for the most recent gains the Dollar. The
silver market made a new low for the move Monday morning suggesting that the
liquidation tilt might not be over and by the weakness in silver it would appear
that the Dollar action isn’t that important to silver.
Technical Outlook
SILVER (DEC): It is a slightly negative indicator
that the close was lower than the pivot swing number. Initial support for silver
is at 476.5 and below there at 470.5 with resistance likely at 481.5 and 486.5.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 470.5. The 9-day RSI
under 30 indicates the market is approaching oversold levels.
GOLD (DEC): Support for gold today comes in near
369.05, while resistance is pegged at 376.65. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 369.05. The market’s close below the pivot
swing number is a mildly negative setup. The market’s short-term trend is
negative as the close remains below the 9-day moving average.
COPPER MARKET RECAP
10/6/2003
The copper market is behaving like prices are a
little overbought and considering the significant early spike up to 84.40,
December copper prices were 300 points above the prior weeks lows. Apparently
the market moved quickly to price in the improved macro economic outlook
inspired by the favorable US economic numbers last week. Some physical traders
complained that copper prices are getting ahead of themselves and that overall
demand hasn’t improved enough to justify run away price gains.
ENERGY MARKET RECAP
10/6/2003
The combination of normal seasonal refinery
maintenance and problems at an Indiana refinery made the slightly cool
temperature mix more important than should have been the case Monday. The fact
that Arab and Israeli tensions were flaring also supported prices despite the
lack of a linkage between the tensions and physical supply flow. We have to
think that the Nigerian strike threat will continue to loom and in a sense
providing persistent underlying support to prices. US temperatures are expected
to warm and that could serve to temper the recent upside tilt.
Technical Outlook
CRUDE OIL (DEC): It is a mildly bullish indicator
that the market closed over the pivot swing number. Support for crude is keyed
on 30.11 and below there at 29.91, with resistance pegged at 30.52 and 30.73.
The market’s close on the 9-day moving average is neutral. .
UNLEADED GAS (DEC): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 82.75. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. Resistance today is at 82.75, while
support should be found around 79.95. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The 9-day RSI over 70
indicates the market is approaching overbought levels.
HEATING OIL (DEC): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 81.29, with resistance is at 83.59. The market’s
short-term trend is positive on a close above the 9-day moving average. Momentum
studies are trending higher, but have entered overbought levels. The near-term
upside objective is at 83.59. With a reading over 70, the 9-day RSI is
approaching overbought levels. The daily closing price reversal down puts the
market on the defensive.
CORN MARKET RECAP
10/6/2003
While the market respected critical chart support
at 220 the technical action isn’t such that the bull camp should be emboldened.
Early weakness in wheat and soybeans might have put the corn into a position
where most buyers were simply chased to the sidelines. Argentina 2003-2004
planting progress was pegged at 21% as of last Friday. Weekly export inspections
in corn were 33.773 million bushels versus 32.015 million bushels the prior week
Dupont suggested that they would development a “Bio-Refinery” that concentrates
on alternative fuels and the by-product output of corn and that could be seen as
a minor but somewhat stale supportive story line.
Technical Outlook
CORN (DEC) 10/07/03: 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 near-term upside objective is at 223 1/2.
The market’s close below the pivot swing number is a mildly negative setup.
Market resistance comes in at 223 1/2 today, with support at 219 . The market’s
short-term trend is negative as the close remains below the 9-day moving
average.
SOY COMPLEX RECAP
10/6/2003
A wild session in beans was seen Monday with the
market rejecting early weakness and eventually managing an impressive gain. The
fact that the market managed to reject a gap lower opening is even more
impressive of a distinction for the bull case. Some in the trade are suggesting
that prices will have to continue to rise until the pace of export business is
reduced. The early weakness might have come off ideas that weekend harvest
action revealed slightly better production than many expected. The market is
faced with a week ending USDA report and that could serve to keep prices
volatile all week long. Weekly export inspections in soybean were 9.332 million
bushels versus 6.859 million bushels the prior week.
Technical Outlook
SOYBEANS (NOV) 10/07/03: The daily closing price
reversal up is positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next area of resistance is around
693 and 699 1/2, while 1st support hits today at 674 1/2 and below there at 662
1/2. The market’s close above the 9-day moving average suggests the short-term
trend remains positive. 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 662 1/2.
MEAL (DEC): Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 194.6. The upside closing
price reversal on the daily chart is somewhat bullish. First resistance comes in
at 204.0, with support at 198.3. The market’s short-term trend is positive on a
close above the 9-day moving average. It is a mildly bullish indicator that the
market closed over the pivot swing number.
BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. 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 24.27. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The daily closing price
reversal up is positive. Daily swing resistance is found at 25.23 and above
there at 25.43. Support should be encountered at 24.65 and 24.27. The 9-day RSI
over 70 indicates the market is approaching overbought levels.
WHEAT MARKET RECAP
10/6/2003
Prices forged an aggressive gap down trade and
showed very little interest in bouncing off the weak price levels. The fact that
Egypt bought Australian wheat instead of US wheat really undermined the action
Monday. Weekly export inspections for wheat came in at 27.811 million bushels
compared to 22.613 million bushels the prior week. Prices were apparently unable
to find much in the way of buyers despite the lower price action and that would
seem to hint at even more long liquidation. Even European cash wheat prices were
soft suggesting that the weakness is broadly dispersed.
Technical Outlook
WHEAT (DEC) 10/07/03: The gap lower price action
on the day session chart is a bearish indicator for trend. The close below the
2nd swing support number puts the market on the defensive. Look for near-term
support at 337 1/2 and below there at 335 3/4, with resistance levels at 344 and
348 3/4. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The daily stochastics have crossed over down
which is a bearish indication. The next downside target is 335 3/4.
LIVE CATTLE RECAP
10/6/2003
The market surged to new contract and all-time
highs on active buying from speculators, the discount of futures to the cash
market and a still tight supply of market-ready cattle. Packers did not release
bids in the cash market today but showlists are slightly higher than last week
with some cattle carried over which were unsold last week. Slaughter was 120,000
head as compared with 131,000 last week but still higher than trade expectations
at 114,000-120,000 head. The slower slaughter pace last week may help to
stabilize beef prices which were down near $3.00 last week. Boxed-beef cut-out
values at mid-session today were up 46 cents to $157.83.
Technical Outlook
CATTLE (DEC) 10/07/03: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 89.15. 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. Support should be encountered at
86.80 and below there at 85.50. Market resistance is at 88.62 and then again at
89.15. A new contract high was made on the rally. The market’s close above the
9-day moving average suggests the short-term trend remains positive. The 9-day
RSI over 70 indicates the market is approaching overbought levels.
LEAN HOGS RECAP
10/6/2003
The market pushed moderately higher on the
session and managed to fill the entire gap left after the last Hogs and Pigs
report before closing 77 higher on the session which was down 65 from the highs
of the day. The big slaughter from last week was negative and producer some
early pressure but the market found support from soaring cattle prices and good
weather for harvest which might temporarily slow the producer marketings pace.
Cash markets were mixed with some locations steady and others like Iowa/Minn
down .75 cents.
Technical Outlook
HOGS (DEC) 10/07/03: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 55.87 and 56.60 today, while support is around
54.32 and then 53.50. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The major trend could be turning up with
the close back above the 40-day moving average. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at
56.60.
COCOA MARKET RECAP
10/6/2003
A big range day in cocoa saw the market probe the
downside but the majority of those losses were rejected. Therefore, the bias
would seem to be down but the momentum for the downside apparently isn’t that
impressive. There is talk that Ivory Coast producers are beginning to hedge
against the coming harvest and that alone might press prices toward the last two
months lows. After seeing a series of concerning crop stories in early September
the wire has been mostly devoid of supportive crop talk.
Technical Outlook
COCOA (DEC)10/07/03 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1572 and above there at 1598 with support at 1520 and 1494. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1494.00.
COFFEE MARKET RECAP
10/6/2003
A gap down trade in coffee would seem to project
a slide back toward the consolidation lows around 62.50. With rainfall in the
forecast the coffee market saw cause to liquidate some of the recent spec long
plays and the selling seemed to be exaggerated by the amount of fund selling
interest. Seeing rain into the flowering period really removes some of the
uncertainty and allows the sellers to step into the fray with less risk.
Technical Outlook
COFFEE (DEC)10/7/03 The gap lower price action on
the day session chart is a bearish indicator for trend. Could see some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Daily stochastics are showing positive momentum from oversold
levels which should reinforce a move higher if near-term resistance is taken
out. The near-term upside objective is at 64.20.The Coffee contract should run
into resistance at 63.70 and above there at 64.20 with support at 62.75 and
62.30. The market’s short-term trend is negative as the close remains below the
9-day moving average. The major trend is down with the cross over back below the
40-day moving average.
SUGAR MARKET RECAP
10/6/2003
A major range down trade should undermine sugar
prices especially since the last COT report showed the small spec position to be
net long 17,115 contracts. Apparently a series of stop loss sell orders were
violated Monday and it would appear that the funds were very interested sellers.
Producer selling should have added pressure but ideas that Brazilian exports
were running below year ago levels should have been a countervailing force. Also
a holiday thinned trade might have made it easier to pressure sugar prices.
Technical Outlook
SUGAR (MAR) 10/07/03: The market is in a bearish
position with the close below the 2nd swing support number. Swing resistance
comes in at 6.57, with support found at 5.97. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The major trend is
down with the cross over back below the 40-day moving average. The daily
stochastic’s gave a bearish indicator with a crossover down. Momentum studies
are trending lower from high levels which should accelerate a move lower on a
break below the 1st swing support. The next downside objective is now at 5.97.
COTTON MARKET RECAP
10/6/2003
The cotton market flashed higher despite the
massive range posted last Friday. More than likely the market is being supported
by weather fears as we progress deeper into the harvest mode. Delta/Southeast
rains expected and that could slow harvest and leave open bolls vulnerable. In
short until the harvest is further along the market can fear the worst and send
prices upward. Open interest in cotton is very high at 99,134 contracts and that
combines with a wet 6 to 10 day forecast for a wide portion of the southern US
and that is very supportive to prices.
Technical Outlook
COTTON (DEC) 10/07/03: 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. Next resistance area comes in at 69.04 and then again at 69.32,
while support is targeted at 67.94 and 67.12. The daily stochastics have crossed
over up which is a bullish indication. The next upside target is 69.32.