All Eyes On The Fed
BOND MARKET RECAP
5/2/2005
June Bonds finished up 0-01 at 114-28, 0-07 off
the high and 0-14 up from the low.
June 10 Yr Treasury Notes finished up 0-025 at
111-160, 0-030 off the high and 0-075 up from the low.
The Treasury market traded close to
unchanged for most of the session despite the fact that US economic numbers were
generally considered to be weak. The ISM manufacturing report fell for the 5th
straight month in a row and left some analysts suggesting that the soft spot was
starting to entrench. However, a minor rise in US construction spending and
early attempts to bounce in the stock market as well as the coming FOMC meeting
discouraged players from getting long Treasuries so close to the last two weeks
highs. Late in the session energy prices rebounded and that seemed to produce
some light buying in bonds and notes.
Technical Outlook
BONDS (JUN) 05/03/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The cross over and close above the 18-day moving average is
an indication the longer-term trend has turned positive. The daily closing price
reversal up is a positive indicator that could support higher prices. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside objective is 114-06. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 115-09 and
115-17, while 1st support hits today at 114-20 and below there at 114-06.
TNOTES (JUN) 05/03/2005: A crossover down in the
daily stochastics is a bearish signal. Momentum studies are trending lower from
high levels which should accelerate a move lower on a break below the 1st swing
support. The major trend could be turning up with the close back above the
18-day moving average. The upside closing price reversal on the daily chart is
somewhat bullish. The close over the pivot swing is a somewhat positive setup.
The next downside target is now at 111-045. The next area of resistance is
around 111-220 and 111-260, while 1st support hits today at 111-115 and below
there at 111-045.
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STOCK INDICES RECAP
5/2/2005
June S&P finished up 5.4 at 1163.9, 0.6 off the
high and 8.2 up from the low.
June S&P E-Mini closed up 6 at 1164.5. This was 9
up from the low and equal to the high.
June Dow closed up 61 at 10258. This was 70 up
from the low and 5 off the high.
The stock market appeared to be bullish poised
early in the session but could also mount a fleeting rally off the AIG
developments and the initial weakness in energy prices. However, the US economic
news was partially deflating of the bull case and energy prices mounted a strong
mid day charge higher and that spooked the bull camp in stocks. In fact, some
bulls suggested that they were enticed to bank so profits ahead of the upcoming
FOMC meeting, as most think the Fed will go ahead on a hike rates, despite the
growing evidence of slowing. Some in the trade were hopeful early that the Fed
might hint at a pause in the rate hike pattern but right now that would seem to
be a long shot.
Technical Outlook
S&P 500 (JUN) 05/03/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside target is at 1170.64. The next area of resistance is around
1167.99 and 1170.64, while 1st support hits today at 1159.20 and below there at
1153.05.
SP EMINI (JUN) 05/03/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend could be turning up with the
close back above the 18-day moving average. The market has a slightly positive
tilt with the close over the swing pivot. The next upside target is 1170.75. The
next area of resistance is around 1168.00 and 1170.75, while 1st support hits
today at 1159.00 and below there at 1152.75.
NASDAQ (JUN) 05/03/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The close below the 18-day moving
average is an indication the longer-term trend has turned down. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside objective is at 1442.00. The next area of resistance is
around 1435.00 and 1442.00, while 1st support hits today at 1420.00 and below
there at 1412.00.
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CURRENCY MARKET RECAP
5/2/2005
June US Dollar finished up 3 at 8445, 18 off the
high and 3 up from the low.
June Euro finished down 0.02 at 128.77, 0.11 off
the high and 0.27 up from the low.
June Euro Dollar closed unchanged at 96.575. This
was equal to the low and 0.015 off the high.
June Canadian Dollar closed up 0.25 at 79.73.
This was 0.32 up from the low and 0.11 off the high.
June British Pound finished down 1.21 at 189.09,
0.8 off the high and 0.19 up from the low.
June Swiss closed down 0.11 at 83.74. This was
0.26 up from the low and 0.05 off the high.
June Japanese Yen closed down 0.11 at 95.58. This
was 0.29 up from the low and 0.02 off the high.
The Dollar waffled around unchanged throughout
the session and surprisingly managed to avoid selling in the wake of a patently
soft ISM manufacturing report. While the ISM was the 5th straight month of
declines, the Dollar might have found support off the minimal rise in the US
Construction spending report and possibly because of the upcoming FOMC meeting.
It is also possible that the early weakness in energy prices and strength in US
equity prices supported the Dollar. Traders also thought that the Chinese
current threat was going to be less of an issue during the partial Asian
holidays.
Technical Outlook
YEN (JUN) 05/03/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. It is a
slightly negative indicator that the close was under the swing pivot. The next
upside objective is 95.82. The next area of resistance is around 95.73 and
95.82, while 1st support hits today at 95.43 and below there at 95.21.
EURO (JUN) 05/03/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close under the 18-day moving average indicates the longer-term trend could
be turning down. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next downside objective is 128.35. The next
area of resistance is around 128.96 and 129.11, while 1st support hits today at
128.58 and below there at 128.35.
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PRECIOUS METALS RECAP
5/2/2005
June Gold closed down 5.6 at 430.5. This was 1 up
from the low and 4 off the high.
July Silver finished down 0.065 at 6.875, 0.115
off the high and 0.065 up from the low.
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After the surprising gains last Friday, the
aggressive washout in gold on Monday morning certainly undermines the gold
trade. Even more surprising is the fact that gold fell back sharply, without
seeing much direction from the Dollar. We also think that soft US economic
numbers rekindled fears of deflation and with a number of markets hindered or
closed for holiday we suspect that the prospect of Asian buying is reduced for
at least the next few sessions. All in all the metals really need to see
stronger global growth prospects just to avoid more technical selling.
Technical Outlook
SILVER (JUL) 05/03/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Momentum
studies are still bearish but are now at oversold levels and will tend to
support reversal action if it occurs. The market back below the 18-day moving
average suggests the longer-term trend could be turning down. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next downside objective is now at 670.8. The next area of
resistance is around 696.5 and 706.8, while 1st support hits today at 678.5 and
below there at 670.8.
GOLD (JUN) 05/03/2005: The major trend has turned
down with the cross over back below the 60-day moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The major trend has turned down with the cross over back below the
18-day moving average. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
downside target is 426.3. The next area of resistance is around 433.0 and 436.2,
while 1st support hits today at 428.0 and below there at 426.3.
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COPPER MARKET RECAP
5/2/2005
June Copper closed down 0.40 at 147.50. This was
1.30 up from the low and equal to the high.
With both the London and Chinese markets closed
Monday, US copper trading was slow and choppy, with prices still confined to a
trading range. A stronger Dollar and a weaker than expected ISM Manufacturing
Index report were both negative factors. The Fed’s rate decision may have more
influence on copper’s price direction for the balance of the week.
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ENERGY MARKET RECAP
5/2/2005
June Crude Oil closed up 1.20 at 50.92. This was
1.75 up from the low and 0.07 off the high.
June Heating Oil closed up 3.73 at 146.32. This
was 4.82 up from the low and 0.58 off the high.
June Unleaded Gas finished up 1.84 at 151.45,
0.45 off the high and 4.55 up from the low.
June Natural Gas finished up 0.11 at 6.70, 0.03
off the high and 0.15 up from the low.
June Propane closed down 0.03 at 0.80. This was
equal to the low and equal to the high.
The energy complex started out weak but then
forged an afternoon recovery off what appeared to be pure speculative bargain
hunting. In a negative note Kuwait suggested that they were moving to increase
their capacity to 2.7 million barrels per day compared to their current 2.5
million barrel per output. However, Kuwait said that they were moving toward
higher capacity but would not simply push that supply onto the market. In
another negative note OPEC suggest that current overproduction was about 2
million barrels per day and the IEA suggested that they were working toward
greater efficiency both of which seem to favor the bear camp. However, because
the market failed to see a specific supply disruption we are not convinced that
the big capital wash has run its course.
Technical Outlook
CRUDE OIL (JUN) 05/03/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The daily closing price reversal up on
the daily chart is somewhat positive. Market positioning is positive with the
close over the 1st swing resistance. The next downside objective is now at
48.68. The next area of resistance is around 51.83 and 52.32, while 1st support
hits today at 50.01 and below there at 48.68.
UNLEADED (JUN) 05/03/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal up is a
positive indicator that could support higher prices. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
objective is 145.43. The next area of resistance is around 153.95 and 155.42,
while 1st support hits today at 148.95 and below there at 145.43.
HEATING OIL (JUN) 05/03/2005: The cross over and
close above the 60-day moving average is an indication the longer-term trend has
turned positive. Negative momentum studies in the neutral zone will tend to
reinforce lower price action. The major trend has turned down with the cross
over back below the 18-day moving average. A positive setup occurred with the
close over the 1st swing resistance. The next downside target is now at 139.86.
The next area of resistance is around 149.02 and 150.66, while 1st support hits
today at 143.62 and below there at 139.86.
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CORN MARKET RECAP
5/2/2005
July Corn finished down 4 1/2 at 209, 1 1/2
off the high and 1/2 up from the low. December Corn closed down 4 1/4 at 226
1/2. This was 1/4 up from the low and 1 1/4 off the high.
The market managed to take out the February lows
early in the session but there was a lack of follow-through selling which helped
futures bounce. However, the weak close in spite of the strong recovery in
soybeans is a negative factor. The weather looks perfect for accelerating
planting progress this week and traders look for planting progress for tonight’s
weekly crop progress report to come in near 40-45% complete as of Sunday. Heavy
deliveries and strong US dollar added to the bearish tone with deliveries on the
second notice day today at a hefty 1,111 contracts. Private exporters reported a
sale of 120,000 tonnes of US corn to unknown destination. Weekly export
inspections came in at 36.1 million bushels as compared with trade expectations
at 25-30 million bushels. Cumulative shipments have reached just 56.4% of the
USDA projection for the season as compared with 63.9% as the 5-year average for
this time of the year. Support for July corn comes in at 209 and then 205 1/2
with resistance at 211 1/4 and 212 1/2.
Technical Outlook
CORN (JUL) 05/03/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. 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. The
next downside objective is now at 207 1/4. The next area of resistance is around
210 and 211 1/4, while 1st support hits today at 208 and below there at 207 1/4.
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SOY COMPLEX RECAP
5/2/2005
July Soybeans finished up 1 at 627 1/4, 3/4 off
the high and 11 1/4 up from the low. November Soybeans closed up 1 at 622. This
was 10 up from the low and 1 off the high.
July Soymeal closed up 0.5 at 194.0. This was 4.2
up from the low and 0.2 off the high.
July Soybean Oil finished down 0.12 at 22.54,
0.01 off the high and 0.16 up from the low.
With excellent weather to start the planting
season for soybeans, weakness in wheat and a jump in the US dollar, the market
experienced significant long liquidation selling early in the session with July
soybeans moving to the lowest level since April 18th. A lack of much fund
selling after the lower opening helped trigger the bounce off of the early lows
and the higher close and close which was up 11 1/4 cents off of the lows could
attract more technical buying on Tuesday. Talk of potential aphid problems in
the northern Midwest due to a mild winter helped support the bounce. Deliveries
were posted at 1181 contracts again this morning which helped pressure the
nearby contract. A lack of deliveries for oil or meal, however, provided some
cushion on the break for oil but July meal experienced active long liquidation
selling early. There is less talk of a currency re-evaluation in China which was
a factor on Friday and this added to the negative tone this morning. Traders are
looking for the weekly crop progress report for release this afternoon to show
planting progress reaching 4-8% complete. Weekly export inspections came in at
16.15 million bushels as compared with trade expectations at 11-16 million
bushels. Cumulative shipments have reached 94.1% of the USDA projection for the
season as compared with 85% as the 5-year average for this time of the year. The
614 3/4 level for November soybeans is critical support and a close below this
level could sour the technical picture. July soybean support comes in at 622 1/4
and 617 with 631 1/2 and 635 3/4 as resistance.
Technical Outlook
BEANS (JUL) 05/03/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close under the 18-day moving average indicates the longer-term trend could
be turning down. The daily closing price reversal up on the daily chart is
somewhat positive. The market tilt is slightly negative with the close under the
pivot. The next downside target is 612 3/4. The next area of resistance is
around 633 1/4 and 636 1/2, while 1st support hits today at 621 1/4 and below
there at 612 3/4.
MEAL (JUL) 05/03/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend could be turning up with the close back above the 18-day
moving average. The upside closing price reversal on the daily chart is somewhat
bullish. The close over the pivot swing is a somewhat positive setup. The next
downside target is now at 188.6. The next area of resistance is around 196.2 and
197.4, while 1st support hits today at 191.8 and below there at 188.6.
BEANOIL (JUL) 05/03/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close under the 18-day moving average indicates the longer-term
trend could be turning down. It is a slightly negative indicator that the close
was under the swing pivot. The next downside objective is now at 22.34. The next
area of resistance is around 22.62 and 22.67, while 1st support hits today at
22.46 and below there at 22.34.
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WHEAT MARKET RECAP
5/2/2005
July Wheat finished down 2 3/4 at 323 1/4, 1 1/4 off the high
and 3 1/4 up from the low. December Wheat closed down 3 1/4 at 340 1/2. This was
2 1/2 up from the low and 2 off the high.
Ideas that most of the hard red winter wheat crop
in the plains was not far enough advanced to trigger significant crop damage
from the cold weather over the weekend help pressure the market early.
Increasing deliveries against the May contract and a stronger dollar added to
the bearish tone. Deliveries came in at 493 contracts this morning as compared
with 273 lots on Friday. New export news is slow with Japan canceling their
weekly tender and Israel tendering for 22,000 tonnes of feedwheat. The close
back above the opening is slightly supportive after psychological support at the
320 level managed to hold. The trade expects a flow of supply news this week
from the Kansas Wheat Quality Council Annual Tour of the hard red winter wheat
crop. While cold weather could have nipped some fields which were advanced,
traders believe the moisture in the southern plains will be beneficial to crop
conditions in the region. Weekly export inspections came in at 22.7 million
bushels as compared with trade expectations at 13-18 million bushels. Cumulative
shipments have reached 95.5% of the USDA projection for the season as compared
with 91.1% as the 5-year average for this time of the year. July wheat support
comes in at 322 1/2 with resistance at 329.
Technical Outlook
WHEAT (JUL) 05/03/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. The gap lower price action on the day session chart
is a bearish indicator for trend. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next upside target is 327 1/4.
The next area of resistance is around 325 1/2 and 327 1/4, while 1st support
hits today at 321 and below there at 318 1/4.
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LIVE CATTLE RECAP
5/2/2005
June Live Cattle finished down 0.67 at 84.95,
1.10 off the high and 0.05 up from the low.
May Feeder Cattle closed down 0.15 at 108.52.
This was 0.25 up from the low and 0.35 off the high.
The cattle market collapsed to close sharply
lower led by active long liquidation selling from large traders. Ideas that the
cash and beef markets have reached near-term peaks and that wholesale demand
will decline once Memorial Day bookings are complete helped to pressure. Boxed
beef cutout values at mid session were up $0.31 to $163.75 as compared with
$159.84 one week ago. Slaughter came in at 114,000 head as compared with trade
expectations of 107,000-124,000 head.
Technical Outlook
CATTLE (JUN) 05/03/2005: 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 close below the 18-day moving average is an indication the
longer-term trend has turned down. A negative signal was given by the outside
day down. The close below the 2nd swing support number puts the market on the
defensive. The next downside target is now at 84.070. The next area of
resistance is around 85.520 and 86.350, while 1st support hits today at 84.400
and below there at 84.070.
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LEAN HOGS RECAP
5/2/2005
June Lean Hogs finished down 0.02 at 77.42, 0.50
off the high and 0.15 up from the low.
May Pork Bellies closed down 0.97 at 82.15. This
was 0.10 up from the low and 2.00 off the high.
June hogs closed slightly lower in quiet
two-sided trade staying in an inside trading session. Other contracts finished
higher supported by strength in the cash market and ideas that the uptrend could
continue for May. Peoria hogs were up $1.50 this morning which helped provide
support. The CME 2-Day lean Index for the period ending April 28th came in at
71.45 which was up 56 cents from the previous session and up from 70.02 last
week at this time. Slaughter came in at 375,000 head as compared with trade
expectations of 380,000-385,000 head. The premium of futures to the cash market
may have been a limiting factor for June hogs and weakness in cattle was also
seen as negative.
Technical Outlook
HOGS (JUN) 05/03/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The market’s close below the pivot
swing number is a mildly negative setup. The near-term upside target is at
78.150. The next area of resistance is around 77.720 and 78.150, while 1st
support hits today at 77.100 and below there at 76.870.
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COCOA MARKET RECAP
5/2/2005
July Cocoa finished up 11 at 1503, 17 off the
high and 20 up from the low.
With the London market closed, arbitrage selling
subsided and cocoa futures were able to drift higher in a quiet trade. The
strength in the Dollar was a limiting factor, but with the market in a declining
trend for most of April, prices had become somewhat oversold. The upside will be
limited by resistance in the july contract at $1,537 and the market may not be
able to make a solid push above this level unless some supply concerns
re-emerge.
Technical Outlook
COCOA (JUL) 05/03/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The major trend has turned down
with the cross over back below the 18-day moving average. The daily closing
price reversal up on the daily chart is somewhat positive. The market has a
slightly positive tilt with the close over the swing pivot. The near-term upside
target is at 1539. The next area of resistance is around 1521 and 1539, while
1st support hits today at 1485 and below there at 1466.
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COFFEE MARKET RECAP
5/2/2005
July Coffee closed down 4.40 at 123.55. This was
1.55 up from the low and 5.70 off the high.
Fund selling continued to pressure the coffee
market, but light roaster buying slowed the price decline. July coffee found
support at the 122 level, but the weak close and with London likely to play
catch-up on Tuesday, the market is likely to come under additional selling
pressure this week. A.618 retracement of the April rally is back at 121.25 for
July coffee. The local Brazil weather forecaster is calling for a colder than
normal temperatures for this week, but no damaging frost is expected.
Technical Outlook
COFFEE (JUL) 05/03/2005: The close below the
60-day moving average is an indication the longer-term trend has turned down.
The daily stochastics have crossed over down which is a bearish indication.
Momentum studies trending lower at mid-range should accelerate a move lower if
support levels are taken out. The major trend could be turning up with the close
back above the 18-day moving average. The market is in a bearish position with
the close below the 2nd swing support number. The next downside target is
117.35. The next area of resistance is around 127.15 and 131.80, while 1st
support hits today at 119.95 and below there at 117.35.
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SUGAR MARKET RECAP
5/2/2005
July Sugar closed up 0.02 at 8.68. This was 0.06
up from the low and 0.02 off the high.
July sugar closed slightly firmer, but trade
action was slow due to the holiday in London. Funds were noted buyers while
producer selling limited gains. Cash business has been quiet and sources at
major sugar trade houses are saying that cash business from China and India may
not happen until later in the month. Weather is expected to be dry in Brazil’s
sugar areas for the next two week which will facilitate harvest.
Technical Outlook
SUGAR (JUL) 05/03/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The major trend could be turning up with the close
back above the 18-day moving average. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The near-term upside target
is at 8.75. The next area of resistance is around 8.71 and 8.75, while 1st
support hits today at 8.64 and below there at 8.59.
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COTTON MARKET RECAP
5/2/2005
July Cotton finished down 0.47 at 56.58, 0.90 off
the high and 0.68 up from the low.
July cotton closed lower Monday although the
contract still remains in a tight trading range. Cotton futures have been
consolidating at recent highs on expectations that China will be importing a
large amount of cotton soon. However, these sales failed to materialize in the
last two export sales report and the market’s upside momentum may begin to fade
soon unless some positive cash news is revealed. Solid resistance for the July
contract comes in between 58.00 and 58.10. with key support between 56.00 and
55.50.
Technical Outlook
COTTON (JUL) 05/03/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The downside closing price reversal on the
daily chart is somewhat negative. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The near-term upside
target is at 58.21. The next area of resistance is around 57.37 and 58.21, while
1st support hits today at 55.79 and below there at 55.06.
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