A Change Ahead For The Dollar?

Technical Outlook

BONDS (MAR) 02/17/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 113.05 and then again at 113.21, while swing support hits at 112.08 and below there at 111.27. 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 113.21.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.15. With the close over the 1st swing resistance number, the market is in a moderately positive position. 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 115.05 and then again at 115.15, while swing support hits at 114.16 and below there at 114.06. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/13/2004

The stock market was in a profit taking mood Friday and considering the weaker than expected US reports released early in the session the trade was right in banking some profits ahead of a long weekend. The fact that the Fed appeared to be a little more hawkish in statements Friday morning also contributed to the selling. In the end the market isn’t undermined, anxious or overbought and therefore the current correction shouldn’t be that aggressive or long lived.

Technical Outlook

S&P500 (MAR) 02/17/04: The market is in a bearish position with the close below the 2nd swing support number. Underlying support comes in at 1138.15 and 1132.73, with overhead resistance at 1152.85 and 1162.13. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. 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 1162.13.

S&P E-Mini (MAR): The key reversal down puts the market on the defensive. 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 1162.44. The close below the 1st swing support could weigh on the market. Near-term resistance for the S&P Mini is at 1153.38 and then again at 1162.44, while swing support hits at 1138.63 and below there at 1132.94. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average.

NASDAQ (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. The market should run into resistance at 1504.50 and above there at 1524.75 with support at 1471.50 and 1458.75. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1524.8. The close under the 40-day moving average indicates the longer-term trend could be turning down.

MINI DOW (MAR) 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 market’s close above the 9-day moving average suggests the short-term trend remains positive. The market should run into resistance at 10692 and above there at 10772 with support at 10563 and 10514. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 10772. The close below the 2nd swing support number puts the market on the defensive.

CURRENCY MARKET RECAP

2/13/2004

We are not sure if a major shift in fundamentals is in the process of taking place, or if the comments from the Fed were taken too seriously. With Poole suggesting that the FOMC would continue to focus on inflation and that the Fed still needs to pre-empt inflation that would certainly sound like the Fed is changing its stance. Some traders are not convinced that the idea of higher Us rates is in the cards and others don’t think a rate change would alter the Dollar trend but considering the ebb and flow of the Dollar action since the end of December we have to think that there is a chance of change ahead.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The downside closing price reversal on the daily chart is somewhat negative. The swing indicator gave a moderately negative reading with the close below the 1st support number. Swing resistance is targeted at 95.04 and above there at 95.20, with the yen finding support around 94.74 and below there at 94.60. 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 94.60.

EURO (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.2940. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2580, with overhead resistance at 1.2940. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s key reversal down is a bearish signal. The rally brought the market to a new contract high. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

2/13/2004

The gold market failed mostly because of a sudden bounce in the Dollar. In fact, the bull camp in gold might have to worry that the Fed is beginning to change its stance as Poole indicated that Inflation would be the focus of the FOMC. Therefore, the temporary move to new low ground in the Dollar is mostly discounted. The gold and silver markets continue to have a singular focus and that is the direction of the Dollar.

Technical Outlook

SILVER (MAY): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 646.9 and below there at 635.0 with resistance likely at 663.6 and 672.9. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 663.6. The downside closing price reversal on the daily chart is somewhat negative.

GOLD (APR): Support for gold today comes in near 400.78, while resistance is pegged at 422.58. 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 422.58. The market’s close below the 1st swing support number suggests a moderately negative setup for today. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The daily closing price reversal down puts the market on the defensive.

COPPER MARKET RECAP

2/13/2004

The copper market managed another pulse up but barely managed to close above the prior session close. It should be noted that the Press was picking up signs that commodity funds were aggressively buying lead futures and that might simply be another way to be long a base metal like copper. According to a report Friday the US exported 22 million kilos of copper in December, compared to 1.3 million kilos last year and that is a function of strong global demand and the weak Dollar.

ENERGY MARKET RECAP

2/13/2004

Another new high for the move Friday leaves the bull camp in charge of the near term trade. With near term weather coming in a little colder than expected and the recent US inventory readings tightening it is not surprising that prices continued to track toward the January highs. The London market specifically rose of the extension of the cold, which seems to be pulling up consumption in the second half of the winter.

Technical Outlook

CRUDE OIL (APR): The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 33.31 and below there at 33.00, with resistance pegged at 33.76 and 33.90. 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 33.90.

UNLEADED GAS (APR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 108.44. 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. Resistance today is at 108.44, while support should be found around 105.88. The gap upmove on the day session chart is a bullish indicator for trend. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (APR):The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 85.88, with resistance is at 88.38. 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 88.38. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

CORN MARKET RECAP

2/13/2004

The corn market managed to close higher after being mostly lower for most of the session. We are actually surprised that the corn market didn’t show initial favorable response to the 285,000 metric ton corn sale to an unknown location. The corn market is partially off track because of the fear of the overbought status and because of some discussions about higher US acreage numbers. The USDA attach‚ in China suggested that China ending stocks for 2004/2005 will end up at 14.4 million metric tons compared 21.44 this year and 44.4 last year and that is a significant tightening.

Technical Outlook

CORN (MAY) 02/17/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 292 1/2. It is a mildly bullish indicator that the market closed over the pivot swing number. Market resistance comes in at 292 1/2 today, with support at 283 . The market’s short-term trend is positive on a close above the 9-day moving average. The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

2/13/2004

The market traded on both sides of unchanged but managed to finish firm. The market was initially weak because of news that bird flu was being seen in Shanghai. With weakness in Gulf soybean basis, the market fears an oversupply situation and that is fostering a profit taking mentality in the front month bean contracts. Countervailing the early negative tilt in prices early Friday were reports of heavy rains in Mato Grosso that might be lowering the quality of the crops there.

Technical Outlook

SOYBEANS (MAY) 02/17/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 835 and 838 3/4, while 1st support hits today at 822 and below there at 812 3/4. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 812 3/4.

MEAL (MAY): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 240.2. First resistance comes in at 247.2, with support at 243.2. The market’s short-term trend is negative as the close remains below the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (MAY): 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 32.06. It is a slightly negative indicator that the close was lower than the pivot swing number. Daily swing resistance is found at 31.86 and above there at 32.06. Support should be encountered at 31.46 and 31.26.

WHEAT MARKET RECAP

2/13/2004

May wheat closed 6 3/4 cents lower on the session which was unchanged on the session. The market opened higher but there were rumors that China was likely to cancel purchases of US wheat for the old crop season and shift the purchases to the new crop season (after June 1st) which helped drive the market lower. Talk that China purchases for next week would just be for the new crop season helped trigger some long liquidation selling as well. The USDA attach‚ in China reported that stocks levels are expected to continue to decline for the 2004/2005 season to 28.87 million tons from 41.69 million tons last year.

Technical Outlook

WHEAT (MAY) 02/17/04: The close below the 2nd swing support number puts the market on the defensive. Look for near-term support at 380 1/2 and below there at 376 , with resistance levels at 392 and 399 . The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. The close under the 40-day moving average indicates the longer-term trend could be turning down. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 399 .

LIVE CATTLE RECAP

2/13/2004

April cattle closed 12 higher on the session but down 47 points on the week. Rumors that Mexico may soon begin to import US beef helped pull the market up off of the lows. In addition, the sharp rise in cash markets on the week helped to support the market as well. Early estimates for the February 1st on-feed supply came in at 104-107.2% from last year and helped pressure the market early in the session and so did concerns that the poultry ban will remain in effect. Slaughter for the week came in at 609,000 head as compared with 601,000 the previous week and 619,000 head the previous year. Boxed-beef cut-out values were up $.96 to $126.25 as compared with $128.47 last week at this time.

Technical Outlook

CATTLE (APR) 02/17/04: Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 73.80. It is a slightly negative indicator that the close was lower than the pivot swing number. Support should be encountered at 71.95 and below there at 71.05. Market resistance is at 73.32 and then again at 73.80. The daily closing price reversal up is positive. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

2/13/2004

April hogs closed 32 higher on the session and up 85 from the lows as the positive near-term cash fundamental news was enough to offset fears that pork will need to compete with the extra beef and poultry on the domestic market as long as export bans remain in tact. Commercial and speculative short-covering was noted on the floor as the market recovered some of the week’s losses. April hogs closed 215 lower on the week. The February contract expired at 64.17 which left the April contract at a significant premium and helped to support short-covering. The CME 2-day Lean Index was up 75 cents to $63.25 as compared with $57.96 at the end of January. Slaughter for the week came in at 1.954 million head as compared with 1.922 million last week and 1.912 million last year.

Technical Outlook

HOGS (APR) 02/17/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 59.25 and 59.65 today, while support is around 58.15 and then 57.45. The upside closing price reversal on the daily chart is somewhat bullish. 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 57.45.

COCOA MARKET RECAP

2/13/2004

The cocoa market mounted a slight rally Friday but failed to hold those gains on the day. The Ivory Coast arrival rate of 780,000 tons could be considered negative to cocoa prices but with the threat of smuggling no one can really know for sure. The fact that December US cocoa imports increased by 104% compared to November and were also up by 118% from last year seems to provide a slight bullish lift to cocoa prices.

Technical Outlook

COCOA (MAY)02/17/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1571 and above there at 1591 with support at 1518 and 1485. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1590.75.

COFFEE MARKET RECAP

2/13/2004

July coffee closed 115 lower on the session and up 240 on the week. Weakness in London and concerns that the Commitment-of-Traders report would show an overbought condition helped to trigger some light long liquidation selling. In addition, some origin selling was noted. Coffee exports from Mexico, Central America, Colombia, Peru and Dominican Republic in January were 2.192 million bags from 2.07 last year. For the first 4 months of the year exports have reached 7.638 million bags, up .8% from last year. However, the sharp drop in Brazil exports has provided support.

Technical Outlook

COFFEE (MAY)2/17/04 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. 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 79.00.The Coffee contract should run into resistance at 77.45 and above there at 79.00 with support at 75.3 and 74.70. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

2/13/2004

After the reversal on Thursday, the nearby March contract gapped higher on Friday and managed to close higher on the week. The weekly reversal from a contract low is many times a powerful signal that a near-term low in place. The trade remains extremely negative regarding the fundamental set-up which can add to the bullish technical reaction to the weekly reversal. The reversal may attract some end user buyers in the cash market who have been waiting for a sign of a low or a better freight price in order to book sugar. Egypt is tendering on Saturday for sugar and Middle East buyers have drawn-down stocks recently and could pull the trigger as well.

Technical Outlook

SUGAR (MAY) 02/17/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 5.80, with support found at 5.54. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 5.80. With a reading under 30, the 9-day RSI is approaching oversold levels.

COTTON MARKET RECAP

2/13/2004

May cotton closed 48 lower on the session and down 319 points on the week as the buying support from the surge in export sales on the week was short-lived and long liquidation selling was seen as the Thursday bounce encountered resistance at the low end of the old trading range. More rains in Texas for the weekend and fears that both China and the US will be seeing a surge in production for the coming season helped pressure. The Cotlook A Index was up .80 to 74.00 which left the Index unchanged on the week this week and down just 15 points last week. As a result, the break in the New York markets this week will make US cotton even more competitive on the world market than was the case last week when sales were 717,300 bales.

Technical Outlook

COTTON (MAY) 02/17/04: 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. Next resistance area comes in at 68.80 and then again at 69.59, while support is targeted at 67.57 and 67.13. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 67.13. ORANGE JUICE (MAR)2/17/04 The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 61.60 and above there at 62.15 with support at 60.55 and 60.05. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 62.15.