A Surprising Development In Treasuries
BOND MARKET RECAP
9/25/03
Another new high for the move leaves the Treasury
market poised for short covering and fresh buying. With a number of critical
technical areas violated on the upside it is possible that the funds got a fresh
buy signal. The fact that bonds rallied directly in the face of potentially
negative economic readings and certainly bearish Fed statements is a real
surprising development. Some traders suggested that the buying was the result of
central bank buying resulting from intervention in the currency markets.
However, in the end seeing a decline in initial claims and ongoing claims really
should have hit at the heart of the jobless recovery theme but apparently
Treasuries are marching to a new tune.
Technical Outlook
BONDS (DEC) 9/26/2003: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 110.30 and then again at 111.08, while swing support hits at 109.27
and below there at 109.02. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Rising stochastics at overbought levels
warrant some caution for bulls. The next upside objective is 111.08. The market
is approaching overbought levels with an RSI over 70.
T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
113.25. 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
113.17 and then again at 113.25, while swing support hits at 112.28 and below
there at 112.14. 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.
STOCK INDICES RECAP
9/25/03
The stock market sagged early, rebounded off
favorable US numbers and Fed dialogue and then faded in the afternoon action.
Apparently the market is still a little big concerned about soaring energy
prices, a surging trade deficit and perhaps the end of quarter next week. In any
regard, the stock market is showing its preference for the bear case and is very
easily falling back into the negative posture. During the session the stock
market was upset by surging gold prices as that hints at investment competition
and possibly financial anxiety.
Technical Outlook
S&P500 (DEC) 9/26/2003: It is a slightly negative
indicator that the close was under the swing pivot. Underlying support comes in
at 989.10 and 984.90, with overhead resistance at 1005.90 and 1018.50. The
downside crossover of the 9 & 18 bar moving average is a negative signal. The
close below the 40-day moving average is an indication the longer-term trend is
down. Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The next downside objective is now
at 984.90.
S&P E-Mini (DEC): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 984.56. It is a slightly negative indicator that the close was lower
than the pivot swing number. Near-term resistance for the S&P Mini is at 1006.38
and then again at 1019.06, while swing support hits at 989.13 and below there at
984.56. The moving average crossover down (9 below 18) indicates a possible
developing short-term downtrend.
NASDAQ (DEC) A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market tilt
is slightly negative with the close under the pivot. The market should run into
resistance at 1340.00 and above there at 1369.50 with support at 1300.00 and
1289.50. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The next downside objective is 1289.50.
CURRENCY MARKET
RECAP
9/25/03
The Dollar was simply saved by the scheduled
reports. In fact, if it weren’t for the favorable US numbers and the prospect of
Bank of Japan intervention the bears were certainly poised to hammer on the
Dollar Thursday morning. Even the stock market staged a surprise rally that
seemed to bail out the Dollar. However, the US stock market gave up the gains in
the early afternoon and that shows a disjointed sentiment is in place. Since the
Swiss showed the most consistent gains on the day it is possible that it could
become a leadership market as the Swiss might be seen as an alternative to
overpriced gold plays.
Technical Outlook
YEN (DEC): A positive signal for trend short-term
was given on a close over the 9-bar moving average. The close below the 1st
swing support could weigh on the market. Swing resistance is targeted at 89.80
and above there at 90.20, with the yen finding support around 89.16 and below
there at 88.92. Rising stochastics at overbought levels warrant some caution for
bulls. The next upside objective is 90.20. The market is approaching overbought
levels with an RSI over 70.
EURO (DEC): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.1542. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.1394, with overhead resistance at 1.1542. The close above
the 9-day moving average is a positive short-term indicator for trend. The
market is becoming somewhat overbought now that the RSI is over 70. More selling
pressure is likely given yesterday’s gap lower price action on the day session
chart.
PRECIOUS METALS
RECAP
9/25/03
The gold market might have temporarily exhausted
itself, with the sharp probe up Thursday. It is also a good bet that the much
better than expected US economic numbers and comments from the US Fed about
robust growth in the 3rd and 4th quarters caused gold to fail. The string good
economic numbers righted the stock market and that in turn helped pull the
Dollar away from another major down day. In other words, a number of chain
reactions took place Thursday most of which were negative toward gold prices.
The silver market might be a little more vulnerable than the gold market as the
recent dialogue on a squeeze might have pulled in some weak handed specs and
therefore the trade is watching support at $5.18.
Technical Outlook
SILVER (DEC): The close below the 1st swing
support could weigh on the market. Initial support for silver is at 513.0 and
below there at 507.7 with resistance likely at 528.1 and 531.5. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
A bearish signal was triggered on a crossover down in the daily stochastics. The
next downside objective is 507.7. Bearish daily studies indicate selling minor
rallies this session. The key reversal down puts the market on the defensive.
The outside day down is somewhat negative. 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.
GOLD (DEC): Support for gold today comes in near
378.23, while resistance is pegged at 397.63. A crossover down in the daily
stochastics is a bearish signal. Momentum studies trending lower from overbought
levels is a bearish indicator and would tend to reinforce lower price action.
The next downside target is now at 378.23. The market setup is somewhat negative
with the close under the 1st swing support. The close above the 9-day moving
average is a positive short-term indicator for trend. The market rallied to a
new contract high. The daily closing price reversal down is a negative indicator
for prices.
COPPER MARKET RECAP
9/25/03
A big range down in copper was flatly rejected
and that is certainly because the macro economic outlook came in pretty negative
and was shifted around 180 degrees by the scheduled economic reports and because
of favorable US Fed dialogue. The market also saw rumors of labor problems and
once the market failed to roll over down early some shorts were trapped and
forced to buy. It will be very important to copper to see which direction
Chinese copper stocks headed over the last week because the bull camp is being
restrained by fears that the Chinese government is going to throw some supply
back onto the market to quell a concentrate shortage.
ENERGY MARKET RECAP
9/25/03
We are not sure if the residual from the OPEC
decision, or reports of political problems in Venezuela. Apparently troops fired
tear gas on fired oil workers as the government was evicting the workers from
subsidized housing. The energy complex could have weakened off the news that
Mexico plans to see 2004 exports of 2 million barrels per day and that will be a
1.5 billion windfall in 2003 alone. The combination of OPEC production cuts and
the mere hint of problems in Venezuela is more than enough to give the bulls
control.
Technical Outlook
CRUDE OIL (NOV): The close over the pivot swing
is a somewhat positive setup. Support for crude is keyed on 28.07 and below
there at 27.91, with resistance pegged at 28.52 and 28.81. The close above the
9-day moving average is a positive short-term indicator for trend. Momentum
studies are rising from mid-range which could accelerate a move higher if
resistance levels are penetrated. The near-term upside target is at 28.81.
UNLEADED GAS (NOV): 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 79.48. The market has a slightly
positive tilt with the close over the swing pivot. Resistance today is at 79.48,
while support should be found around 77.48. A positive signal for trend
short-term was given on a close over the 9-bar moving average.
HEATING OIL (NOV): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 73.96, with resistance is at 76.36. The close above the 9-day
moving average is a positive short-term indicator for trend. Stochastics are
rising from over sold levels which is bullish and should support higher prices.
The near-term upside target is at 76.36.
CORN MARKET RECAP
9/25/03
Higher than expected export sales gave an early
boost to corn prices, but the upside seems to be limited by early reports of
good US yields. Dec corn is finding solid resistance around 228 1/2 to 230 area.
Export sales came in strong at 1,377,500 compared to expectation of between
800,000 to 1,000,000 tons. Continued weakness in the dollar may help sales stay
strong for next week. Rainfall in the Midwest may cause some harvest delays. On
China corn exports this year are expected to hit a record level.
Technical Outlook
CORN (DEC) 9/26/2003: The crossover up in the
daily stochastics is a bullish signal. The near-term upside target is at 230 .
There could be more upside follow through since the market closed above the 2nd
swing resistance. Market resistance comes in at 230 today, with support at 223 .
The close above the 9-day moving average is a positive short-term indicator for
trend.
SOY COMPLEX RECAP
9/25/03
Nov beans were pushed to a new high early in the
session, but gains were trimmed by profit taking. Higher than expected export
sales, a weak dollar and on-going reports of low harvest numbers in Iowa &
Minnesota all contributed to the higher price action. Export sales for beans
came in at 752,700 tons compared to estimates between 650,000 to 850,000 tons
and vs 589,300 tons last week. China & Japan were big buyers. The market looks
to be running in to some profit taking, but funds at only 119,048 net contracts
long as Sept 16th is still well below the 139,869 net long position on July
22nd. Initial support for Nov beans is at 650 and for Jan beans at 740 to 737
3/4.
Technical Outlook
SOYBEANS (NOV) 09/26/03 The market made a new
contract high on the rally. The market has a slightly positive tilt with the
close over the swing pivot. The next area of resistance is around 659 1/2 and
665 , while 1st support hits today at 651 and below there at 648 . The market’s
close on the 9-day moving average is neutral. Rising stochastics at overbought
levels warrant some caution for bulls. The next upside objective is 665 . The
market is approaching overbought levels with an RSI over 70.
MEAL (DEC): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 197.6. First resistance comes in at 196.8,
with support at 194.4. The close above the 9-day moving average is a positive
short-term indicator for trend. Market positioning is positive with the close
over the 1st swing resistance. The market is becoming somewhat overbought now
that the RSI is over 70.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. 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 23.42. The swing indicator gave a
moderately negative reading with the close below the 1st support number. Daily
swing resistance is found at 24.02 and above there at 24.38. Support should be
encountered at 23.54 and 23.42. The market is approaching overbought levels with
an RSI over 70.
WHEAT MARKET RECAP
9/25/03
Strong export sales boosted Dec wheat prices
Thursday with futures closing above resistance at 360. The market is in a good
technical position and should close the gap from earlier this month at 367 1/2.
Export sales came in at 770,200 tons compared to estimates between 650,000 to
850,000 tons. Strength in the soybean market spilled over into wheat. Higher
European wheat prices and a weaker US dollar were also bullish. The
International Grain Council lowered world wheat production by 1 million tons and
lowered consumption by 3 million tons (lower feed use in Europe) to raise
2003/04 world ending stocks by 2 million tons to 132 million tons vs last year’s
estimate of 161 million tons.
Technical Outlook
WHEAT (DEC) 9/26/2003: Daily studies suggest
buying dips today. The market setup is supportive for early gains with the close
over the 1st swing resistance. Expect near-term support around 356 and below
there at 350 1/2, with resistance levels at 365 and 368 1/2. A positive signal
for trend short-term was given on a close over the 9-bar moving average.
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 368 1/2.
LIVE CATTLE RECAP
9/25/03
December cattle saw follow through weakness after
Wednesday’s key reversal action from all time highs. Profit taking was evident
as the funds still hold a relatively high net long position in cattle. Weakening
packer profit margins and lower boxed-beef prices added to futures pressure.
Support for Dec cattle comes in around 83.40.
Technical Outlook
CATTLE (DEC) 9/26/2003: 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 85.35. The market
tilt is slightly negative with the close under the pivot. Support should be
encountered at 83.87 and below there at 83.35. Market resistance is at 84.87 and
then again at 85.35. A positive signal for trend short-term was given on a close
over the 9-bar moving average.
LEAN HOGS RECAP
9/25/03
Dec hogs rebounded from Wednesday’s weak close on
concerns that hogs in Denmark may have swine fever, but early gains were trimmed
by the close. Denmark is a major source of some pork products to the US, so
prices are getting a boost on speculation that supply could be curtailed from
Denmark. However, trading remains choppy and volatile. The discount of Oct
futures to cash lean hog index is also supportive. Position adjusting ahead of
the Quarterly Hog & Pig report out Friday is also adding to the volatility in
the market. Roll over activity into the Dec contract was also a featured. Cash
hogs were generally weak at most locations. Dec hogs have resistance at 58 then
58.65.
Technical Outlook
HOGS (DEC) 9/26/2003: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 57.77 and
58.57 today, while support is around 56.42 and then 55.87. The close below the
9-day moving average is a negative short-term indicator for trend. Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The next downside target is now at 55.87.
COCOA MARKET RECAP
9/25/03
Maybe the cocoa market got a little ahead of
itself with the initial rally Thursday as prices gapped higher and then gave
back most of the gap up action. Supposedly, Ivory Coast officials move to close
off roads from rebel controlled areas in the North in an effort to prevent
attacks and violence from workers who recently resigned. The market also saw
signs that the Cameroon crop saw some poor conditions in its mid crop and more
than likely will see a slight decline in the main crop because of overly sunny
conditions. If the tensions continue to surface hedgers will simply garb any
supply available to capture as much of the main crop as possible in case the
country is locked down later.
Technical Outlook
COCOA (DEC)09/26/03 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1689 and above there at 1725 with support at 1637 and 1621.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 1724.50.
COFFEE MARKET RECAP
9/25/03
Firmer London prices, option position related
buying and on-going concerns with the Brazilian crop kept coffee futures well
bid early in the session, but profit taking pressured the market by the close.
While some rain is expected to hit the key growing regions in Brazil late in the
weekend, conditions are expected to turn dry again early next week which will
keep the market on edge regarding the development of the crop. Brazilian
producers are trying to hold off selling any more coffee hoping for higher
prices. Therefore, a close above 66 cents in the Dec contract puts next
resistance around 67.
Technical Outlook
COFFEE (DEC)9/26/03 The downside closing price
reversal on the daily chart is somewhat negative. The market tilt is slightly
negative with the close under the pivot. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 63.80.The
Coffee contract should run into resistance at 65.85 and above there at 66.80
with support at 64.35 and 63.80. The market’s short-term trend is positive on a
close above the 9-day moving average.
SUGAR MARKET RECAP
9/25/03
March sugar traded in a choppy sideways action,
but the over burden of supply and slack demand suggest another test of the 6
cent level can not be ruled out. Roll over activity has been the featured trade
ahead of the Oct contract’s expiration. The market was under some pressure from
weaker London markets. The news out today was not enough to push March sugar out
of Wednesday’s price range. Poor weather conditions are expected to
significantly reduce Italy’s sugar beet production this year. The EU sold 83,000
tonnes of white sugar at Thursday’s sale. Ukrainian refiners processed 1.449
million tonnes of beet compared with 747,890 tonnes last year at this time.
Russia is expected to refine 1.8 mln tonnes of sugar from domestic beets vs 1.6
mil tones last year. Russia imports the bulk of its sugar for refinement and has
so far failed to set a tariff rate quota for next year. If a new quota is not
approved by January, 2004 then the current low tariff stays in effect, which
could lead to higher Russian sugar imports.
Technical Outlook
SUGAR (MAR) 9/26/2003: The market setup is
somewhat negative with the close under the 1st swing support. Swing resistance
comes in at 6.32, with support found at 6.02. The close below the 9-day moving
average is a negative short-term indicator for trend. Momentum studies are
rising from mid-range which could accelerate a move higher if resistance levels
are penetrated. The near-term upside target is at 6.32.
COTTON MARKET RECAP
9/25/03
A negative technical set-up and weak export sales
pressured Dec cotton on Thursday. The sharp rise in cotton prices, despite the
drop in the Dollar has begun to impact foreign demand for US cotton. Total
export sales came in at only 47,700 bales compared to estimates ranging between
50,000 to 100,000 bales. The National Cotton Council’s domestic mill use data
for August will be released Friday with expectations for a seasonally adjusted
annual rate near 6 million bales due to weak domestic demand vs 7.05 million in
July. While the reversal action on Wednesday suggests Dec cotton could see more
of a price setback, the bullish fundamentals could also prevent an extensive
break. Cotton Outlook, a private UK based company, widened its world
supply/demand deficit for 2003/04 cotton 1.406 million tons, a drop of 441,000
tons from their previous estimate.
Technical Outlook
COTTON (DEC) 9/26/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 66.45 and then again at 66.72, while support is targeted at 65.88
and 65.58. Stochastics turning bearish at overbought levels will tend to support
lower prices if support levels are broken. The next downside objective is 65.58.