2 Reasons Bonds Rose Today

Technical Outlook

BONDS (MAR) 02/02/04: A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 111.25 and then again at 112.03, while swing support hits at 110.28 and below there at 110.09. 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 110.09.

T-NOTES(MAR) 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 112.27. It is a mildly bullish indicator that the market closed over the pivot swing number. 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 113.23 and then again at 113.28, while swing support hits at 113.06 and below there at 112.27. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

1/30/2004

One has to give the bull camp credit in the stocks as the market has been able to discount negative news and keep profit taking losses to a minimum. Certainly seeing the Chicago Purchasing Managers and University of Michigan readings come in strong helped the stock market forget the disappointing GDP reading. In the end, one might have to admit that a +4.7% GDP reading is a pretty impressive reading when compared to other countries. However, the Dollar was softer and bonds were higher and that could keep the market choppy to lower in the near term. The President indicated that he still intended to cut the deficit in half but that might result in less stimulative spending and the stock market might be a little concerned about the pace of the recovery in the coming quarters.

Technical Outlook

S&P500 (MAR) 02/02/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Underlying support comes in at 1127.55 and 1123.63, with overhead resistance at 1133.85 and 1136.23. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 1123.63.

S&P E-Mini (MAR): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1123.56. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1133.63 and then again at 1136.06, while swing support hits at 1127.38 and below there at 1123.56. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (MAR) The downside closing price reversal on the daily chart is somewhat negative. The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. It is a slightly negative indicator that the close was lower than the pivot swing number. The market should run into resistance at 1503.00 and above there at 1514.50 with support at 1484.00 and 1476.50. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1476.5.

MINI DOW (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market should run into resistance at 10531 and above there at 10570 with support at 10406 and 10320. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10320. With the close higher than the pivot swing number, the market is in a slightly bullish posture.

CURRENCY MARKET RECAP

1/30/2004

The trend in the Dollar is pretty much up in the air. Just when it seemed like the Dollar might be in for a run up the US numbers disappointed the trade and that basically took the heart out of the rally. With the US economic numbers mixed Friday the trade still can’t settle on a near term direction. In fact, unless the ECB hints at some kind of intervention it is possible that the US Dollar will slide next week into the US payroll report.

Technical Outlook

YEN (MAR): The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 94.86 and above there at 95.01, with the yen finding support around 94.51 and below there at 94.31. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.01.

EURO (MAR): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.2301. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2301, with overhead resistance at 1.2561. 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 gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/30/2004

The Dollar was down enough to prompt a little pre-weekend short covering in gold and the higher gold action prompted some light buying in silver. We also have to think that the second and third set of US economic numbers were strong enough to give gold and silver a lift merely from the hope of improving physical demand. It is also possible that the market was expecting more weekend talk from central banks about the prospect of raising their reserve requirements. In order to get the gold back into a bull posture many in the trade think the March Dollar will have to fall down below 86.44.

Technical Outlook

SILVER (MAR): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 621.0 and below there at 617.3 with resistance likely at 626.1 and 629.0. 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 617.3.

GOLD (APR): Support for gold today comes in near 398.08, while resistance is pegged at 406.28. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 398.08. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is negative as the close remains below the 9-day moving average.

COPPER MARKET RECAP

1/30/2004

All it took was another supply threat and copper easily exploded to new contract highs. With a Chilean mine strike the market sees the prospect of two supply problems the Grasberg shutdown and now a BHP facility. With the Chinese coming back buyers from their extended holiday and the US getting at least some positive economic news Friday, there was very little to keep the copper market from rising. There is historical precedence for copper prices significantly above current levels.

ENERGY MARKET RECAP

1/30/2004

The energy market showed some divergence Friday as crude oil was firm and the products were weak in the first half of the session. While we think that week ending short covering provided some of the long interest it is also clear that heating consumption is coming in a little higher than many expected. It is also clear that the recent cold pattern was a little more extreme than what the trade expected. However, the anticipation of mild temps is apparently keeping a lid on the market. With the OPEC meeting on the horizon and many members openly talking against a cut prices might not get the usual support.

Technical Outlook

CRUDE OIL (MAR): It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 32.73 and below there at 32.40, with resistance pegged at 33.37 and 33.68. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 32.40.

UNLEADED GAS (MAR): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 94.47. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 99.47, while support should be found around 94.47. The downside closing price reversal on the daily chart is somewhat negative. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (MAR):The market’s close below the pivot swing number is a mildly negative setup. Heating oil should encounter support around 88.76, with resistance is at 94.96. 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. 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 88.76.

CORN MARKET RECAP

1/30/2004

After ADM discounted the impact of Avian flu on the grain markets the corn started to get on a roll that eventually left the market in a much improved technical condition. Early in the session the market was given a big leg up by the announcement of a 215,000 metric ton corn sale for 2003-2004 to an unknown destination. Corn might also have been lifted by the reiteration that the Brazilian corn crop might be 2.8% lower than the prior year but that was already mostly expected by the market. Lastly considering the size of the recovery it is certainly possible that the market managed to trip a number of technical buy stops.

Technical Outlook

CORN (MAR) 02/02/04: 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 268 1/2. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 281 1/2 today, with support at 268 1/2. The market’s short-term trend is positive on a close above the 9-day moving average.

SOY COMPLEX RECAP

1/30/2004

The soybean market surprised the trade with a rejection of weak price action and a very firm closing rally. While the outlook for the Brazilian crop was reconfirmed to be 14% above year ago levels that numbers is still below what the USDA estimated and therefore, the market can continue to focus on demand instead of supply. Soybeans were also lifted by statements for ADM, as they basically suggested that the impact of the Avian flu on the grain markets was overstated. Also noted in the trade were reports that Argentina was attempting to discount the impact of Asian rust on the Argentine soybean crop.

Technical Outlook

SOYBEANS (MAR) 02/02/04: A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 827 and 831 3/4, while 1st support hits today at 811 1/2 and below there at 800 3/4. 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 800 3/4.

MEAL (MAR): 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 249.0. First resistance comes in at 258.3, with support at 252.9. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close above the 2nd swing resistance number is a bullish indication.

BEAN OIL (MAR): 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 28.73. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 29.52 and above there at 29.73. Support should be encountered at 29.02 and 28.73.

WHEAT MARKET RECAP

1/30/2004

The wheat market gapped up and finished ultra strong and would appear to be poised for even more gains. News that Argentine wheat exports had declined by 6% combined with ideas that demand for the new crop was soaring to put prices into a strong climb. The market also saw news that the Chinese delegation had firmed up its schedule to visit the US and that is a very supportive development. In conclusion, the market is simply enamored with the prospect of demand!

Technical Outlook

WHEAT (MAR) 02/02/04: The gap upmove on the day session chart is a bullish indicator for trend. 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. Look for near-term support at 385 1/2 and below there at 381 , with resistance levels at 392 and 394 . The market’s close above the 9-day moving average suggests the short-term trend remains positive. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 381 .

LIVE CATTLE RECAP

1/30/2004

April cattle closed 77 higher on the session due to short-covering at the end of the month, positioning ahead of the Cattle inventory report from the USDA and forecasts for 4-8 inches of snow into the feedlot regions over the weekend. Weakness in the beef market and deep in the red packer profit margins contributed to the 165 lower close for the week. Boxed beef cut out values were down $1.00 to $137.17. Beef production for the week was down 2.4% from last week and down 10.3% from last year but the lack of exports, poor demand weather on the east coast and mid-west and an increasing supply of market-ready cattle expected in the weeks ahead helped keep the market in a downtrend on the week.

Technical Outlook

CATTLE (APR) 02/02/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 72.25. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 72.95 and below there at 72.25. Market resistance is at 73.90 and then again at 74.15. The daily closing price reversal up is positive. The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend.

LEAN HOGS RECAP

1/30/2004

April hogs closed 135 higher on the session and up 225 points on the week. Forecast for more bitter cold in the Midwest next week and hopes for a jump in exports helped trigger the active commercial and fund buying. The CME 2-day lean index for the period ending January 28th came in at $57.49, up $.30 on the day and up from $51.74 on January 16th. The lack of a significant premium for futures and export hopes helped support. The reduced slaughter pace supported solid gains in bellies and with cash markets steady to slightly higher, traders are optimistic to see higher cash next week. Pork production for the week was down 5.3% from last week but still up 2% from last year.

Technical Outlook

HOGS (APR) 02/02/04: The market’s close above the 2nd swing resistance number is a bullish indication. Resistance levels comes in at 59.82 and 60.25 today, while support is around 58.57 and then 57.75. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. 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 60.25.

COCOA MARKET RECAP

1/30/2004

Negative chart action in cocoa would seem to leave sentiment pointing down. The trade apparently had trouble finding spec and commercial buyers and the funds are simply willing to ride their positions. Considering the new lows for the move the cocoa market more than likely saw a good measure of stop loss selling into the close and that could leave sentiment negative for next week. Apparently there is more supply flowing than demand to absorb the flow of beans from the harvest.

Technical Outlook

COCOA (MAR)02/02/04 The outside day down and close below the previous day’s low is a negative signal. The downside closing price reversal on the daily chart is somewhat negative. The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1543 and above there at 1574 with support at 1498 and 1484. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1483.75. Short-term indicators on the defensive. Consider selling an intraday bounce.

COFFEE MARKET RECAP

1/30/2004

The coffee market continues to post open interest records and therefore the wild trading range on Friday is partially explained. After an attempt to smash the market sharply lower the trade managed to recover and close slightly up on the prior session. There was a La Nina forecast for late 2004 but we are not sure that specifically provided coffee with any direct trade incentive. Since the market wanted no part of the downside move, it is clear that bull sentiment controls near term pricing. CSCE coffee stocks were pegged at 4.412 million bags.

Technical Outlook

COFFEE (MAR)2/2/04 The daily closing price reversal up is positive. The market has a slightly positive tilt with the close over the swing pivot. 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 objective is now at 70.95.The Coffee contract should run into resistance at 77.40 and above there at 78.55 with support at 73.6 and 70.95. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

1/30/2004

After moving to the lowest level for the nearby contract since August of 2002, March sugar closed 9 points higher on the week. The weekly closing price reversal from a prominent low and from an oversold condition can sometimes indicate that a major low may be in place. For example, the reversal for the week of November 3rd resulted in a 97 point rally in about 5 weeks. The June 30th reversal in 2003 resulted in a 132 point rally in the following 5 weeks and the April 14th reversal last year resulted in a 3-week bounce of 81 points. All three of these examples occurred while the market was in a bear market off of the February 3rd, 2003 highs. The point is, corrective rallies off of weekly reversals are common even if the big trend is down. The fact that the reversal comes nearly 1 year from the start of the bear market may also be significant. The fundamental news in the market remains mostly bearish but there is some pent-up demand from key importers and if they also sense a near-term low might be in place or that prices seem cheap enough to increase coverage, a significant rally could occur as the pipeline is re-stocked.

Technical Outlook

SUGAR (MAR) 02/02/04: The market’s close below the pivot swing number is a mildly negative setup. Swing resistance comes in at 5.95, with support found at 5.73. 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 5.95.

COTTON MARKET RECAP

1/30/2004

May cotton closed 208 higher on the session but down but 443 lower on the week as the commercial and speculative buying emerged after a higher opening. Talk of China buying for the second day in a row added to the bullish fuel for the session after the weak data on export sales on Thursday failed to generate additional selling. The market now assumes that China buyers were on vacation last week and the long liquidation sell-off stimulated aggressive new buying. Traders expected the producer survey from the National Cotton Council for release after the close would show planting prospects near 14.0-14.5 million acres as compared with 13.84 million acres last year.

Technical Outlook

COTTON (MAR) 02/02/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. A positive setup occurred with the close over the 1st swing resistance. Next resistance area comes in at 71.63 and then again at 72.52, while support is targeted at 69.83 and 68.92. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 68.92. ORANGE JUICE (MAR)2/2/04 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Orange Juice should run into resistance at 62.40 and above there at 63.20 with support at 60.75 and 59.90. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 59.9.