2 Reasons Currency Traders Favor The Dollar

Technical Outlook

#BONDS (JUN) 05/11/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 104.17 and then again at 105.01, while swing support
hits at 103.27 and below there at 103.21. 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 103.21. The 9-day RSI under 20 suggests the market is extremely
oversold.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 108.04. The market’s close below the pivot swing number is a mildly
negative setup. Near-term resistance for the T-Notes is at 108.22 and then again
at 108.29, while swing support hits at 108.09 and below there at 108.04. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 20, the 9-day RSI indicates the market is
extremely oversold.

 

STOCK INDICES RECAP

5/10/2004

The stock market started the session out
extremely weak, attempted to recover into mid session, failed into the early
afternoon trade and seemed to be locked in a bear tilt. The market seems to be
undermined by the fear of rising interest rates, geopolitical uncertainty and
couldn’t even put on a happy face following a promise of more oil supply from
the world’s largest producer. In short, the bear camp seems to have control over
prices and the extensive oversold status of the market seems to be of little
consequence.

Technical Outlook

#S&P500 (JUN) 05/11/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
gap down on the day session chart is bearish with more selling pressure possible
today. Underlying support comes in at 1076.25 and 1070.63, with overhead
resistance at 1089.75 and 1097.63. The market’s short-term trend is negative as
the close remains below the 9-day moving average. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 1070.63. With a reading under 30, the 9-day RSI is approaching oversold
levels.

S&P E-Mini (JUN): The market made a new contract
low on the break. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. The next downside objective is 1066.25. The
close below the 1st swing support could weigh on the market. Near-term
resistance for the S&P Mini is at 1092.50 and then again at 1104.25, while swing
support hits at 1073.50 and below there at 1066.25. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market is
approaching over sold levels on an RSI reading under 30.

NASDAQ (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The market should run into resistance at 1405.50 and above there at
1415.25 with support at 1385.50 and 1375.25. Momentum studies are declining, but
have fallen to oversold levels. The next downside target is 1375.3.

MINI DOW (JUN) 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 10041 and above there at 10154 with support
at 9864 and 9800. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 9800. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The 9-day RSI
under 30 indicates the market is approaching oversold levels.

 

CURRENCY MARKET RECAP

5/10/2004

The Dollar continues to avoid the condemnation
being thrown against the US stock market, possibly because some currency traders
see the potential for US inflation and possibly because some traders think that
the US Fed is still the most likely central bank to hike interest rates. One has
to wonder where the Dollar might be trading if the Iraqi prisoner debacle
weren’t holding the Dollar down. It was a little surprising that the Euro
managed to hold up the best against the Dollar in the action Monday!

Technical Outlook

#CURRENCIES 05/11/04: YEN (JUN): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The gap lower price action on the day session chart is a
bearish indicator for trend. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Swing resistance is
targeted at 88.36 and above there at 88.64, with the yen finding support around
87.75 and below there at 87.42. The close under the 40-day moving average
indicates the longer-term trend could be turning down. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
87.42. The 9-day RSI under 30 indicates the market is approaching oversold
levels.

EURO (JUN): 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 1.1790. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.1790, with overhead resistance at 1.1896. 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

5/10/2004

The commodity liquidation tilt continues to weigh
on gold, silver and platinum. In addition to the fear that Chinese demand is
tapering off it would also seem like the rising Dollar is pushing even more
longs to dump gold and silver positions. Some traders are suggesting that the
lack of support off soaring energy prices and other geopolitical developments
has simply resulted in longs giving up on the precious metals. Unfortunately the
neither gold, nor silver is liquidated down to a level that one can discount
additional stop loss selling waves in the sessions ahead. However, the reversal
action late Monday has to give the bear camp a little to think about in the
overnight action. In fact, because gold and silver managed to shake off the big
early losses it would seem like the aggressive liquidation tilt has run its
course temporarily.

Technical Outlook

#P-METALS 05/11/04: SILVER (JUL): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 563.8 and below there at 545.1 with resistance
likely at 573.2 and 589.3. 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 up which is a bullish indication. The next upside target is 573.2.
The daily closing price reversal up is positive.

GOLD (JUN): Support for gold today comes in near
369.50, while resistance is pegged at 385.10. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 369.50. 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. With a reading under 30, the 9-day RSI is
approaching oversold levels.

 

COPPER MARKET RECAP

5/10/2004

Copper prices seemed to track alongside the
equity market and with the reports of overnight Chinese bargain hunting maybe
copper has found some support on the charts. The liquidation tilt in copper
should begin to mitigate the excessive selling from the small spec and fund camp
but we are not sure if the market will see hedge selling by producers if the
macro economic case continues to worsen. Reports that steel supplies might have
been backing up inside China was another issue that seemed to pressure copper
Monday morning as some traders assumed that meant copper supply was also set to
rise.

 

ENERGY MARKET RECAP

5/10/2004

The energy complex looked to open strong over the
weekend following an attack on an Iraqi oil pipeline but by the opening
sentiment had reversed sharply by the Saudi Oil Minister comments. With the
Saudi Oil Minister suggesting that OPEC might be in a position to provide an
additional 1.5 million barrels of oil in the June meeting the market rushed to
extract some of the speculative premium out of prices. However, seeing OPEC
provide 1.5 million barrels from the June 3rd meeting might not see any extra
oil into the US until the first of July and by then the gasoline situation could
still be extremely tight. One should also note that world demand rises in the
summer and that an additional 1.5 million barrels per day might not solve the
inventory condition. In the end, seeing the edge come off the tightness
situation something that should deflate prices.

Technical Outlook

#ENERGIES 05/11/04: CRUDE OIL (JUL): The market
is in a bearish position with the close below the 2nd swing support number.
Support for crude is keyed on 38.30 and below there at 37.93, with resistance
pegged at 39.20 and 39.73. The market’s short-term trend is positive on a close
above the 9-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 37.93.

UNLEADED GAS (JUL): 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
122.42. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 128.92, while support should be found around
122.42. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

HEATING OIL (JUL): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 96.32, with resistance is at 100.12. The market’s
short-term trend is positive on a close above the 9-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
96.32. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

CORN MARKET RECAP

5/10/2004

Weekend rains, more rain in the forecast for much
of this week and expectations that the early planted crop will get off to a
great start has triggered active long liquidation selling from the funds. As of
May 4th, the commitment-of-Traders report with options showed that larger
traders (funds) were holding a net long position of near 131,000 contracts.
Traders look for the weekly crop progress report to show that producers have
planted near 80-85% of the crop as of Sunday and with 1-3 inches of rain
expected across the cornbelt for the week, crop conditions are thought to be
near ideal to reach optimal yield this season and traders already assume a
record crop. While there is a bullish supply/demand outlook for the new crop
season, and higher acreage and good yields will be needed just to avoid a
further drawdown in ending stocks, the focus of attention remains on a near
perfect start to the growing season. Weekly exports for inspection came in at
32.9 million bushels as compared with trade expectations that exports would be
near 25-28 million bushels. Cumulative sales have reached 1.264 million tons
from 1.012 million tons last year at this time. Deliveries this morning were 116
contracts. Support levels for December corn include and 287 1/2 which would
represent a 50% correction of the October to April rally. Resistance comes in at
295 and 297 1/2.

Technical Outlook

#CORN (JUL) 05/11/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 293. The market is in a bearish position with the close
below the 2nd swing support number. Market resistance comes in at 307 today,
with support at 293. The market’s short-term trend is negative as the close
remains below the 9-day moving average. With a reading under 30, the 9-day RSI
is approaching oversold levels.

 

SOY COMPLEX RECAP

5/10/2004

The forecast for good rains across the Midwest
triggered more long liquidation selling from speculators with fund trader’s
active sellers early. Traders look for thunderstorm activity for much of the
week across the mid-west which is expected to bring 1-3 inches of widespread
coverage with higher amounts in the drier areas of the western cornbelt. Traders
expect the weekly crop progress report tonight to show that producers have
planted 35-40% of the crop so the rain event is seen as a bearish factor which
gets the crop off to a good start. Weekly exports for inspection came in at just
3.892 million bushels as compared with trade expectations that exports would be
near 5-7 million bushels. Talk of weak demand on the international market,
rumors that China may have cancelled South American soybean purchases and the
strong dollar were also seen as bearish forces. Grain traders indicated rumors
that China processors are attempting to cancel 3 cargoes of Brazil soybeans due
to poor profit margins. Traders are looking for a significant cut in South
American production for Wednesday’s Supply/demand reports. July soybean support
comes in at 999 and 991 with resistance at 1015 1/4 and 10.29. The next key
support for November soybeans comes in at 745 1/2 with resistance at 756 and 758
1/2.

Technical Outlook

#SOYBEANS (JUL) 05/11/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 1024 and 1036, while 1st support hits today at
1001 and below there at 990. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1036.

MEAL (JUL): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 330.3.
First resistance comes in at 327.6, with support at 321.1. The market’s
short-term trend is positive on a close above the 9-day moving average. The
market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (JUL): 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 31.83. The swing indicator gave a moderately
negative reading with the close below the 1st support number. Daily swing
resistance is found at 32.73 and above there at 33.21. Support should be
encountered at 32.04 and 31.83. The close under the 40-day moving average
indicates the longer-term trend could be turning down. Short-term indicators on
the defensive. Consider selling an intraday bounce.

 

WHEAT MARKET RECAP

5/10/2004

Fund selling and a lack of new buying interest
from speculators helped to trigger the selling. Weakness in the other grains,
rains across Kansas and the forecast for rains to cool down much of the plains
this week were seen as bearish influences. The move in the dollar and a lack of
much news on the export front along with a lack of confirmation of China buying
added to the bearish tone. The Commitment-of-Traders report with options shows
the market in a classic bullish set-up with funds building a large net long
position (as of May 4th) and small specs increasing their net short position to
over 5000 contracts over the past week. The gap lower opening on a Monday along
with the fact that most of the trade since mid-March has occurred above the
current price increases the chances of more significant long liquidation selling
from funds. Weekly exports for inspection came in at 18.97 million bushels as
compared with trade expectations that exports would be near 22-24 million
bushels. Cumulative sales have reached 1.062 million tons from 793,334 tons last
year at this time. Long liquidation from fund traders seems to be the dominate
bearish force for the wheat market and a lack of new buying interest in all of
the grains is adding to the bearish sentiment ahead of the USDA reports for
Wednesday morning. July wheat support comes in at 379 and 375 with resistance at
390 and 395 1/4.

Technical Outlook

#WHEAT (JUL) 05/11/04: 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 380 and below there at 376, with resistance levels at 390 1/2 and
397. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The close under the 40-day moving average
indicates the longer-term trend could be turning down. The daily stochastics
have crossed over down which is a bearish indication. The next downside target
is 376.

 

LIVE CATTLE RECAP

5/10/2004

June cattle closed 25 higher on the session but
well off of the highs of the day. Futures continue to find support from the
discount to the cash market but selling emerged on the sharp run-up early in the
day on ideas of an extreme overbought condition. Boxed-beef cut-out values were
up $1.52 to $160.81 as compared with $159.42 last week at this time. Slaughter
came in at 130,000 head as compared with trade expectations of 120,000-128,000
head. The higher slaughter could indicate stronger than expected demand from
packers into the high demand period ahead.

Technical Outlook

#CATTLE (JUN) 05/11/04: 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
82.50. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Support should be encountered at 83.42 and below there
at 82.50. Market resistance is at 85.82 and then again at 87.32. The daily
closing price reversal up is positive. 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

5/10/2004

June hogs closed 22 higher on the session but 150
points off of the highs of the day as the early surge higher failed to attract
new buyers and light long liquidation selling set-in for much of the session.
Ideas that the surge in pork values will help turn packer profit margins back up
helped support. Talk that packers will cut-back on slaughter has traders
anticipating lower cash markets due to reduced demand. Slaughter was 358,000
head as compared with 363,000 last week. Bellies closed strong with new all-time
highs and contract highs. The 2-day lean index for the period ending May 6th
came in at 75.92, up 64 cents from the previous session and up from 71.62 at the
end of April.

Technical Outlook

#HOGS (JUN) 05/11/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 75.70 and 77.05 today, while support is around 73.30 and then 72.25.
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 77.05.

 

COCOA MARKET RECAP

5/10/2004

The cocoa market was weak to start the session
but ended up managing a higher close. More reports of industry buying provided
the fodder for the up tick in prices but countervailing the upside track were
reports that Ivory Coast end of April stocks were 110,000 to 125,000 metric
tons. Many traders continue to be concerned about the relatively expensive cost
of US cocoa when compared to London cocoa. Currency related selling has been
seen consistently in the US cocoa market and with the Dollar gains entrenching
one might expect more of the same ahead.

Technical Outlook

COCOA (JUL) 05/11/04 The daily closing price
reversal up is positive. The market has a slightly positive tilt with the close
over the swing pivot. Cocoa should run into resistance at 1369 and above there
at 1378 with support at 1347 and 1334. Negative momentum studies in the neutral
zone will tend to reinforce lower price action. The next downside target is
1333.50.

 

COFFEE MARKET RECAP

5/10/2004

July coffee pushed sharply higher during the
action Monday and eventually managed to return to the vicinity of last week’s
highs. Firm upside action in London coffee seemed to come largely off roaster
buying talk and even more surprisingly those gains were made even in the face of
hedge selling. For many traders the coffee market won’t even make a significant
trade unless it manages to close above 72.80 or below 69.05.

Technical Outlook

COFFEE (JUN) 5/11/04 The outside day up and close
above the previous day’s high is a positive signal. The daily closing price
reversal up is positive. The market has a bullish tilt coming into today’s trade
with the close above the 2nd swing resistance. 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 74.20.
The Coffee contract should run into resistance at 73.40 and above there at 74.20
with support at 70.5 and 68.40. The market’s short-term trend is positive on a
close above the 9-day moving average.

 

SUGAR MARKET RECAP

5/10/2004

The July sugar finished the sharply lower and
would seem to be under a fund liquidation wave that was also present in many
other markets. The net spec long in sugar recent reached 122,000 contracts and
that certainly provides long liquidation fuel in a market that is being pushed
around by fund action and geopolitical uncertainty. Some traders suggested that
significant weakness in the grain market and weakness in energy prices might
have pressured sugar Monday from an ethanol perspective!

Technical Outlook

#SUGAR (JUL) 05/11/04: The gap lower price action
on the day session chart is a bearish indicator for trend. The market is in a
bearish position with the close below the 2nd swing support number. Swing
resistance comes in at 6.59, with support found at 6.25. The market’s short-term
trend is negative as the close remains below the 9-day moving average. Daily
stochastics are trending lower, but have declined into oversold territory. The
next downside objective is now at 6.25.

 

COTTON MARKET RECAP

5/10/2004

The cotton market posted what appeared to be a
significant reversal Monday and with weather putting crop conditions in good
shape we can understand some fresh longs moving back to the sidelines. However,
with the COT report showing the funds to be short 18,512 contracts last week, it
would not seem like the market has extensive selling capacity in reserve. The
trade was pointing to a gap area of 63.25 as a critical pivot point, basis
December cotton. In order to prompt upside action in cotton US certified stocks
will have to decline or US weather will have to turn a little less favorable.

Technical Outlook

#COTTON (JUL) 05/11/04: 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 65.27 and then again at 66.23,
while support is targeted at 63.82 and 63.33. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 66.23. The downside closing price reversal on the daily
chart is somewhat negative.