A Sign That Bulls Maintain Control Over Energy

Technical Outlook

BONDS (MAR) 12/16/03: It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 109.15 and then again at 110.01, while swing support hits at 108.11 and below there at 107.25. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 110.01.

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 112.26. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 112.13 and then again at 112.26, while swing support hits at 111.19 and below there at 111.06. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

12/15/2003

The stock market started the session out extremely firm but then failed and went into negative ground around mid session. However, the market righted the ship and forged bounce in the early afternoon trade before liming into the close. While the thought that the Saddam capture should send stock prices sharply higher seems too easy we have to add than many investors are expecting the market to fall on its face after the initial rally and that could be proven wrong by a higher opening Tuesday morning. Things were positive before Saddam was captured and the capture should only make things better.

Technical Outlook

S&P500 (MAR) 12/16/03: The market’s close below the pivot swing number is a mildly negative setup. Underlying support comes in at 1059.30 and 1054.40, with overhead resistance at 1076.30 and 1088.40. 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 1054.40.

S&P E-Mini (MAR): The market made a new contract high on the rally. The market could take on a defensive posture with the daily closing price reversal down. 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 1050.00. The close below the 1st swing support could weigh on the market. Near-term resistance for the S&P Mini is at 1078.75 and then again at 1095.00, while swing support hits at 1056.25 and below there at 1050.00. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (MAR) 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 1429.00 and above there at 1464.50 with support at 1377.00 and 1360.50. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1360.5. The close under the 40-day moving average indicates the longer-term trend could be turning down.

CURRENCY MARKET RECAP

12/15/2003

The Dollar Index started the session out strong as players thought that the developments in Iraq were going to be the factor that turned the Dollar back up. However, we have now seen the Dollar fail in the face of much better-than-expected economic numbers and in the wake of much improved political conditions and that suggests to us that trade issues are causing the downtrend. Therefore, the trend in the Dollar is down with the Canadian Dollar probably the most oversold currency against the Dollar. The BOJ is once again under the gun in preventing the Yen from soaring.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The outside day up and close above the previous day’s high is a positive signal. 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. Swing resistance is targeted at 93.51 and above there at 93.80, with the yen finding support around 92.87 and below there at 92.52. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 92.52.

EURO (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.2364. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2146, with overhead resistance at 1.2364. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels. 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

12/15/2003

A massive range down move was totally rejected in gold and that was certainly caused by a failed rally in the Dollar. Not only did the Dollar fail but the Greenback actually made a new contract low before managing to recover into the close. In conclusion, the Dollar has turned away from the recent strength and could easily resume the downside. Seeing more downside in the Dollar is becoming more important to gold, as anxiety in the Middle East might be mitigating.

Technical Outlook

SILVER (MAR): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 559.7 and below there at 551.9 with resistance likely at 565.1 and 571.7. 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 551.9. The 9-day RSI over 70 indicates the market is approaching overbought levels. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive.

GOLD (FEB): Support for gold today comes in near 402.65, while resistance is pegged at 415.85. 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 402.65. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is positive on a close above the 9-day moving average. The daily closing price reversal down puts the market on the defensive.

COPPER MARKET RECAP

12/15/2003

The copper market showed no sign of backing away from an overbought technical condition and wasn’t in the least put off by the failure of the US stock market to maintain the early Saddam rally. However the copper market is expected to run into some resistance around the even number $1.00 level as that level might cause the Chinese to balk. Highland Valley management officials said they wouldn’t revise a recent offer made to labor and that might prompt more labor issues to enter the markets focus.

ENERGY MARKET RECAP

12/15/2003

The energy complex showed no follow through on the slide Monday morning and in fact managed to close higher. While the products lagged behind the crude it is clear that the bull camp maintains some control over energy prices. In fact, with the changing fate in Iraq and warmer than normal US weather ahead it could have been possible for the crude to slide aggressively. The natural gas market did come under heavy pressure because of the weakness in the complex early and most specifically because the much above normal temperature sweep in the US.

Technical Outlook

CRUDE OIL (FEB): The rally brought the market to a new contract high. It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 32.77 and below there at 32.11, with resistance pegged at 33.72 and 34.01. 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 34.01.

UNLEADED GAS (FEB): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 93.20. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Resistance today is at 93.20, while support should be found around 88.40. 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 (FEB):It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 90.08, with resistance is at 94.68. 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 94.68. The rally brought the market to a new contract high. The daily closing price reversal down puts the market on the defensive.

CORN MARKET RECAP

12/15/2003

A wide range of trade in Corn on Monday and at times it appeared as if prices were set to forge a downside run. However, into the close the corn market managed the highest close since May in the March corn and it would appear that the corn market is attempting to buy some acres from soybeans. Weekly export inspections in the corn market were 36.991 million bushels compared to 37.775 million the prior weekly. Corn plantings in Argentina are running 73% complete as of last week and that is behind schedule because of dry conditions. We suspect that firm basis levels and the export inspections gave the bulls reason to push prices up.

Technical Outlook

CORN (MAR) 12/16/03: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 258 1/2. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 258 1/2 today, with support at 246 1/2. The market’s short-term trend is positive on a close above the 9-day moving average. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

12/15/2003

Soybeans traded on both sides of unchanged Monday and then forged a slightly lower close. The market continues to see slightly negative weather news from Brazil and might also have taken the weekly export inspections report to be disappointing. Inspections came in at 31.916 million bushels compared to 36.22 million bushels last week. The trade is also posturing ahead of the Chinese trade mission expected to be in later this week. The market wants to hold higher price levels but will quickly need confirmation of ongoing demand growth in order to offset bearish South American weather.

Technical Outlook

SOYBEANS (JAN) 12/16/03: It is a slightly negative indicator that the close was lower than the pivot swing number. The next area of resistance is around 779 1/2 and 786 1/4, while 1st support hits today at 766 and below there at 759 1/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 786 1/4.

MEAL (JAN): 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 235.9. The daily closing price reversal down puts the market on the defensive. First resistance comes in at 233.2, with support at 228.1. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (JAN): 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 28.91. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 28.73 and above there at 28.91. Support should be encountered at 28.35 and 28.15.

WHEAT MARKET RECAP

12/15/2003

The wheat market closed moderately lower finding more long liquidation selling from news of slow exports and more snow into the plains this week and maybe next. The improving new crop moisture situation and long liquidation selling from fund traders seemed to be the key bearish forces. Weekly export inspections came in at just 11.4 million bushels as compared with 15-18 million expected. Cumulative sales have reached 592.9 million bushels this season as compared with 494.4 million bushels last year at this time. Funds were noted sellers of near 3000 contracts and talk of competition from Australia and the slow export pace helped pressure.

Technical Outlook

WHEAT (MAR) 12/16/03: Short-term indicators on the defensive. Consider selling an intraday bounce. The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 381 and below there at 376 , with resistance levels at 392 and 398 . 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. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 376 .

LIVE CATTLE RECAP

12/15/2003

The market closed sharply higher on the session with February cattle up 135 points on the session but remaining inside of Friday’s range. Expectations for more snow for tonight in the plains with cold and winding weather helped provide support but a lack of new selling interest from the speculator after the lower opening was the real trigger for the bounce. Daily cattle slaughter came in at 115,000 head as compared with 110,000-122,000 expected. Talk of a lower showlist in Nebraska and higher beef prices helped support. Boxed-beef cut-out values were up $1.09 at mid-session to $158.37.

Technical Outlook

CATTLE (FEB) 12/16/03: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 87.65. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 89.02 and below there at 87.65. Market resistance is at 90.92 and then again at 91.42. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up.

LEAN HOGS RECAP

12/15/2003

February hogs closed moderately higher with a quiet inside trading session led up by strength in the cattle and a lack of new selling interest from speculators. June and July hogs closed higher after posting a new contract lows so the reversal action was considered supportive. Cash hogs in the country were steady with a positive tone and terminal prices were up $.50 to $2.00 on the session. Hog slaughter came in at 395,000 head as compared with 385,000-395,000 head expected. While this is normally a positive factor to see slaughter above expectations, the recent weakness in hogs has come from the persistently high pork production. The CME 2-day lean index was down 15 cents to 50.15 as compared with 50.05 the previous week.

Technical Outlook

HOGS (FEB) 12/16/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 53.20 and 53.47 today, while support is around 52.40 and then 51.87. 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 51.87.

COCOA MARKET RECAP

12/15/2003

The cocoa market fell back away from the recent consolidation high range and would appear to be in a moderate washout posture. Apparently origin or hedge selling pressure dominated the action Monday and with the technical failure it is possible that more selling will be seen. It is also clear that tensions at the Ivory Coast are not providing enough anxiety to support cocoa prices above $1,700.

Technical Outlook

COCOA (MAR)12/16/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1654 and above there at 1678 with support at 1620 and 1610. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 1609.50.

COFFEE MARKET RECAP

12/15/2003

March coffee closed 330 lower and below key support at 62.70 which turns the short-term technical position bearish and could attract additional selling this week. The gap lower opening was bearish and the market saw the COT report with options as a bit more bearish than expected. Traders had believed that finds were holding a larger net short position so there was an idea that fund short-covering is close to complete. Tighter stocks at Brazil coops failed to provide much support but rains in the key growing areas in Brazil this week should keep the new crop outlook negative. For the monthly US Green Coffee stocks report, stocks were pegged at 5.678 million bags which was down 305,879 bags on the month as compared with trade expectations for a drop of between 75,000 and 400,000 bags. The report is considered slightly bullish with end of October stocks at 5.984 million. Daily exchange stocks were up 1651 bags to 4.374 million with 35,527 bags pending review.

Technical Outlook

COFFEE (MAR)12/16/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 60.05.The Coffee contract should run into resistance at 63.60 and above there at 65.55 with support at 60.85 and 60.05. 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

12/15/2003

The gap lower opening on a Monday combined with a gap below the steep uptrend channel turns the short-term technical picture bearish. This, combined with the overbought condition of the market and still bearish cash fundamental news set the stage for a significant break in Sugar over the near-term. Funds were noted as active sellers through-out the session and the market seems to have left a 7-day consolidation top. In addition, the market is still operating under the negative influence of the December 10th reversal pattern. Fund buying which has provided much of the support in the past 5 weeks was totally absent and cash market deals were only routine.

Technical Outlook

SUGAR (MAR) 12/16/03: 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 6.74, with support found at 6.24. The market’s short-term trend is negative as the close remains below 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 6.24.

COTTON MARKET RECAP

12/15/2003

March cotton closed slightly higher in quiet trade. March was up 26 on the session but closed below the opening which is slightly disappointing. Traders do not know if volatility will pick up or slack off with holiday-type volume already creeping into the daily news. The lack of news is keeping trade slow and while traders look foreword to 2 4-day weekends ahead, traders are not so certain if China buyers will take a vacation or not. If volume is slow, even smaller orders could cause a boost in volatility.

Technical Outlook

COTTON (MAR) 12/16/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Next resistance area comes in at 70.87 and then again at 71.18, while support is targeted at 70.28 and 70.00. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 71.18. ORANGE JUICE (JAN)12/16/03 The sell-off took the market to a new contract low. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Orange Juice should run into resistance at 67.80 and above there at 69.45 with support at 65.40 and 64.65. The 9-day RSI under 30 indicates the market is approaching oversold levels. 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 64.65.