Amazing Follow Through In The Dollar
BOND MARKET RECAP
3/22/2005
March Bonds finished down 0-26 at 109-24, 1-18
off the high and 0-05 up from the low.
March 10 Yr Treasury Notes finished down 0-195 at
108-135, 1-025 off the high and 0-045 up from the low.
The Treasury market initially rallied off
the FOMC meeting result but then prices sagged aggressive and forged a
significant downside breakout. The only problem with the expectation for a major
continuation of the downside is that the recent economic numbers have been soft
and the Treasury market came into the meeting today with a massive short spec
position. However, one might suggest that the steep late slide in energy prices
gave the Treasury bond market an added push down, as sharply lower energy prices
could take some of the drag off the US economy.
Technical Outlook
BONDS (JUN) 03/23/2005: 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 outside day down is a negative
signal. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. The next downside objective is now at 108-03. The
market is approaching oversold levels on an RSI reading under 30. The next area
of resistance is around 110-17 and 111-28, while 1st support hits today at
108-21 and below there at 108-03.
TNOTES (JUN) 03/23/2005: A crossover down in the
daily stochastics is a bearish signal. 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 outside day down is somewhat negative. The
close below the 2nd swing support number puts the market on the defensive. The
next downside objective is 107-105. The 9-day RSI under 30 indicates the market
is approaching oversold levels. The next area of resistance is around 108-310
and 109-280, while 1st support hits today at 107-225 and below there at 107-105.
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STOCK INDICES RECAP
3/22/2005
March S&P finished down 12.1 at 1174.2, 19.5 off
the high and 0.7 up from the low.
March S&P E-Mini closed down 12 at 1174.25. This
was 2.25 up from the low and 19.5 off the high.
March Dow closed down 93 at 10488. This was 8 up
from the low and 142 off the high.
The stock market was very fortunate to have
managed gains Tuesday into mid session but it was clear that sharply lower
energy prices was the factor that took the pressure off the stock market and
allowed some bargain hunting buying. In the end, we suspect that the energy
complex slide trumped the potential impact off the FOMC decision but in the end
the net impact off the FOMC seemed to dampen equity prices slightly. In other
words, the stock market didn’t seem to like the dialogue flow from the Fed even
if there was very little new in the Fed Statement. The fact that the Richmond
Fed readings were soft could have been a negative to the market but the late
slide in energy prices diverted the markets attention away from the weak
economic readings.
Technical Outlook
S&P 500 (JUN) 03/23/2005: Momentum studies are
declining, but have fallen to oversold levels. 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. 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 1158.70. The market is approaching oversold
levels on an RSI reading under 30. The next area of resistance is around 1184.30
and 1199.10, while 1st support hits today at 1164.10 and below there at 1158.70.
SP EMINI (JUN) 03/23/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The outside day down is a negative signal. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. The
next downside target is now at 1156.82. With a reading under 30, the 9-day RSI
is approaching oversold levels. The next area of resistance is around 1185.12
and 1200.31, while 1st support hits today at 1163.38 and below there at 1156.82.
NASDAQ (JUN) 03/23/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
setup is somewhat negative with the close under the 1st swing support. The next
downside target is now at 1454.25. The market is approaching oversold levels on
an RSI reading under 30. The next area of resistance is around 1487.50 and
1506.25, while 1st support hits today at 1461.50 and below there at 1454.25.
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CURRENCY MARKET RECAP
3/22/2005
March US Dollar finished up 51 at 8335, 11 off
the high and 74 up from the low.
March Euro finished down 0.89 at 131.14, 1.31 off
the high and 0.14 up from the low.
March Euro Dollar closed down 0.035 at 96.46.
This was 0.01 up from the low and 0.055 off the high.
March Canadian Dollar closed up 0.12 at 82.84.
This was 0.09 up from the low and 0.69 off the high.
March British Pound finished down 1.34 at 187.67,
1.73 off the high and 0.07 up from the low.
March Swiss closed down 0.82 at 84.57. This was
0.12 up from the low and 1.03 off the high.
March Japanese Yen closed down 0.33 at 95.48.
This was 0.1 up from the low and 0.48 off the high.
The Dollar showed amazing follow through capacity
despite the fact that the Fed action and statements weren’t significantly
different than was expected prior to the announcement. The fact that the market
assumes that the Fed is set to more aggressively battle inflation is being
embraced at the expense of the idea that future rate hikes will be still be
measured. The Dollar would seem to be rising against an ongoing wave of slack US
economic numbers but seeing the crude oil slide aggressively in the last action
Tuesday might have improved the outlook for the US as rising oil prices were
certainly cause for selling of the Dollar on a number of occasions.
Technical Outlook
YEN (JUN) 03/23/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The major trend has turned down with the cross over back below the
18-day moving average. 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 next downside objective is
now at 95.00. The next area of resistance is around 95.77 and 96.15, while 1st
support hits today at 95.19 and below there at 95.00.
EURO (JUN) 03/23/2005: The major trend has turned
down with the cross over back below the 40-day moving average. 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 market is
in a bearish position with the close below the 2nd swing support number. The
next downside target is now at 129.99. The next area of resistance is around
131.86 and 132.88, while 1st support hits today at 130.42 and below there at
129.99.
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PRECIOUS METALS RECAP
3/22/2005
April Gold closed up 0.2 at 431.6. This was 0.8
up from the low and 1.2 off the high.
March Silver finished down 0.034 at 7.078, 0.087
off the high and 0.003 up from the low.
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The metals markets initially avoided additional
downside but when the Dollar ramped up following the FOMC decision a whole fresh
wave of selling unfolded. We also have to think that weak US economic numbers
deflated prices and even after a sharp slide in energy prices neither gold nor
silver showed much of an inclination to bounce. In short, the inflation threat
is reduced, the Dollar seems to have resumed the upside thrust and more and more
gold and silver specs are growing weary of holding longs. Seeing the June Dollar
Index manage a rise above 83.50 could spark even more stop loss selling in gold
in the coming sessions.
Technical Outlook
SILVER (MAY) 03/23/2005: The downside crossover
(9 below 18) of the moving averages suggests a developing short-term downtrend.
Daily stochastics are trending lower but have declined into oversold territory.
The market back below the 18-day moving average suggests the longer-term trend
could be turning down. The market tilt is slightly negative with the close under
the pivot. The next downside objective is now at 701.0. The next area of
resistance is around 712.3 and 718.9, while 1st support hits today at 703.4 and
below there at 701.0.
GOLD (APR) 03/23/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market back
below the 18-day moving average suggests the longer-term trend could be turning
down. The market’s close below the pivot swing number is a mildly negative
setup. The next downside target is now at 429.7. The next area of resistance is
around 432.6 and 433.7, while 1st support hits today at 430.6 and below there at
429.7.
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COPPER MARKET RECAP
3/22/2005
March Copper closed up 0.85 at 149.75. This was
0.25 up from the low and 1.05 off the high.
The copper market continued to waffle within the
consolidation zone but did manage to forge a slightly higher close. We saw early
morning strength in the copper market and that could have come off the recovery
in the US equity market and because of some weakness in the US Dollar. Also
supporting copper prices were ongoing assumptions from various analysts that
copper prices were going to remain firm despite the slackening of the US
economy. Some traders suggested that copper prices might have firm off new from
Russia that their production of Nickel declined moderately in January and
February and that could insinuate less copper production from Russia.
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ENERGY MARKET RECAP
3/22/2005
April Crude Oil closed down 1.43 at 56.03. This
was 0.34 up from the low and 1.55 off the high.
April Heating Oil closed down 2.53 at 152.92.
This was 0.42 up from the low and 2.93 off the high.
April Unleaded Gas finished down 2.13 at 160.42,
2.88 off the high and 0.62 up from the low.
April Natural Gas finished down 0.09 at 7.37,
0.10 off the high and 0.06 up from the low.
April Propane closed unchanged at 0.92. This was
equal to the low and equal to the high.
The energy complex showed some minor weakness
Tuesday in the wake of comments from a former Saudi Oil Minister that OPEC
needed to do something about high oil prices. We would have expected comments
from the Venezuelan Oil Minister to have prompted a rally Tuesday as he
suggested that there had not been any OPEC movement on any extra oil beyond the
original 500,000 barrel per day production ceiling increase. The White House
continues to solicit for movement on the Energy Bill but that would seem to
offer up only psychological reasons for topping. With the sharp slide in energy
prices late Tuesday it would seem that the corrective tilt is gathering momentum
and is probably because of the lack of fresh bullish developments and partly
because of the overbought fund position in crude oil.
Technical Outlook
CRUDE OIL (MAY) 03/23/2005: 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 market now above the 18-day moving average suggests the
longer-term trend has turned up. The defensive setup, with the close under the
2nd swing support, could cause some early weakness. The next downside target is
54.45. The next area of resistance is around 56.97 and 58.22, while 1st support
hits today at 55.09 and below there at 54.45.
UNLEADED (MAY) 03/23/2005: The daily stochastics
have crossed over down which is a bearish indication. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
next downside target is 157.49. The next area of resistance is around 162.16 and
164.48, while 1st support hits today at 158.67 and below there at 157.49.
HEATING OIL (MAY) 03/23/2005: 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 cross over and
close above the 18-day moving average is an indication the longer-term trend has
turned positive. The close below the 2nd swing support number puts the market on
the defensive. The next downside target is 150.20. The next area of resistance
is around 154.59 and 156.89, while 1st support hits today at 151.25 and below
there at 150.20.
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CORN MARKET RECAP
3/22/2005
May Corn finished down 1/2 at 214, 2 1/4
off the high and 1/4 up from the low. December Corn closed down 1 at 237 1/2.
This was 1/2 up from the low and 2 1/2 off the high.
Hedge fund selling began to slow during the
morning session as market action was choppy and within Monday’s wide range. The
weak close, however, suggests the market is vulnerable to more fund selling if
the dollar were to ignite again. Rumors that Brazil may shift to being a corn
importer this year provided some underlying support. There seems to be growing
speculation that dry conditions in Brazil may lead to the county importing as
much as 5 million tones of corn this year. Last year Brazil exported 1 million
tones of corn. Conad, a Brazil government agency, left the 2004/05 corn
production forecast unchanged at 39.03 million tones. Taiwan bought 56,000
tonnes of US corn overnight in the tender for US or Argentina corn and South
Korea bought 52,500 tonnes of US corn. Midwest corn basis bids were reported
steady to firm. Resistance for May corn moves down to 217 1/2 with support at
212 3/4 and 209 1/2.
Technical Outlook
CORN (MAY) 03/23/2005: 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. The
market tilt is slightly negative with the close under the pivot. The next
downside target is 212. The next area of resistance is around 215 1/4 and 217,
while 1st support hits today at 212 3/4 and below there at 212.
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SOY COMPLEX RECAP
3/22/2005
May Soybeans finished up 3/4 at 627 1/4, 7 1/4
off the high and 3/4 up from the low. November Soybeans closed up 1 3/4 at 607
3/4. This was 3/4 up from the low and 5 1/4 off the high.
May Soymeal closed down 0.1 at 187.2. This was
0.2 up from the low and 2.8 off the high.
May Soybean Oil finished up 0.03 at 22.58, 0.18
off the high and 0.05 up from the low.
While closing higher on the session, the close
was below the opening and near the lows of the day which leaves futures
vulnerable to long liquidation selling. A lack of significant macro economic
factors to influence fund traders and a firm tone in the cash market helped
support the market early in the session. Ideas that yesterday’s sell-off was a
bit to overdone helped to support some light speculative buying. May soybeans
fell 66 3/4 cents off of last weeks highs before finding support at 625
yesterday. The market continues to find support from ideas that US soybeans from
the Pacific Northwest are still competitive with Brazil soybeans to China. The
slowdown in producer selling after the recent break helped support a firm cash
basis in the country today. Forecasts for hefty rains across the Midwest into
early April could help pressure November soybeans for fear of slowing corn
preparation work. News of a second case of Asian rust found in Florida might
provide some underlying support to the new crop soybeans. Resistance for May
soybeans comes in at 631 1/2 and 646 with 619 as next support.
Technical Outlook
BEANS (MAY) 03/23/2005: 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. It is a slightly negative indicator that the close was under the swing
pivot. The next downside target is 621. The next area of resistance is around
631 1/4 and 636 3/4, while 1st support hits today at 623 1/4 and below there at
621.
MEAL (MAY) 03/23/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend has turned down with the cross over back below the 18-day
moving average. The market tilt is slightly negative with the close under the
pivot. The next downside target is now at 184.9. The next area of resistance is
around 188.7 and 190.8, while 1st support hits today at 185.7 and below there at
184.9.
BEANOIL (MAY) 03/23/2005: 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. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next downside objective is now at 22.39.
The next area of resistance is around 22.69 and 22.84, while 1st support hits
today at 22.47 and below there at 22.39.
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WHEAT MARKET RECAP
3/22/2005
May Wheat finished up 2 at 344 1/2, 3 1/2 off the high and 2
1/2 up from the low. July Wheat closed up 2 1/2 at 353 3/4. This was 3 1/4 up
from the low and 2 1/4 off the high.
Wheat showed some independent strength from the
other grains today with solid export news and growing production concerns in a
few key producing areas. Wheat recovered somewhat this morning from yesterday’s
sharp declines, consolidating within yesterday’s wide trading range. Reports of
120,000 metric tons of wheat being sold by US exporters to an unknown
destination provided support, as did concerns that recent unseasonable rains in
India may have damaged the wheat crop there. European traders are also showing
some concerns with the dry weather in France and weekly crop conditions
deteriorated in Kansas. News that Syria sold 50,000 tonnes of wheat to Egypt
helped temper the support. Recent dollar strength contributed to the fund
selling of commodities, including wheat, last Friday and yesterday. Today the
dollar is off slightly, and fund selling has abated. May wheat resistance comes
in at 354 with 341 1/4 as next support.
Technical Outlook
WHEAT (MAY) 03/23/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The major trend has turned down with the cross over back
below the 18-day moving average. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next downside target is 338
3/4. The next area of resistance is around 347 1/2 and 350 3/4, while 1st
support hits today at 341 1/2 and below there at 338 3/4.
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LIVE CATTLE RECAP
3/22/2005
April Live Cattle finished down 0.22 at 87.62,
0.07 off the high and 0.47 up from the low.
March Feeder Cattle closed up 0.30 at 106.32.
This was 0.22 up from the low and 0.07 off the high.
June cattle closed slightly higher with an inside
trading session but a similar range to yesterday. A lack of news regarding the
Canadian border helped provide some underlying support. The uncertain supply
factors could be forcing the pipeline to contract and with an empty pipeline and
a big discount of futures to cash, the market appears significantly under-valued
if the market will not have Canadian supply during the strong retail demand
period of April and May. Boxed-beef cut-out values at mid-session were down $.43
to $154.75 as compared with $154.75 last week. Slaughter came in at 118,000 head
as compared with trade expectations at 115,000-119,000 head.
Technical Outlook
CATTLE (APR) 03/23/2005: 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. The market tilt is slightly negative with the close under the
pivot. The next downside target is 87.000. The next area of resistance is around
87.900 and 88.070, while 1st support hits today at 87.370 and below there at
87.000.
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LEAN HOGS RECAP
3/22/2005
April Lean Hogs finished down 0.47 at 70.57, 0.50
off the high and 0.32 up from the low.
March Pork Bellies closed up 2.45 at 92.95. This
was 1.95 up from the low and 0.05 off the high.
The hog market pushed moderately lower on the
session with too much supply uncertainty even though demand factors appear
strong. The monthly Cold storage report this afternoon, the weekly weight data
tomorrow and the USDA quarterly Hogs and Pigs report on Thursday are all
potential negative supply factors which helped trigger long liquidation selling.
In addition, traders are nervous that Canadian cattle could be available to the
market any day now. For the Monthly Cold Storage Report, released this
afternoon, belly stocks are expected to come in near 69.6-72.5 million pounds
for the end of February as compared with 63.5 million pounds at the end of
January and 57.1 million pounds last year. Slaughter came in at 391,000 head as
compared with trade expectations at 377,000-390,000 head. The 2-day lean index
for the period ending March 18th came in at 68.95, down.38 on the session and
down from 73.06 one week previous.
Technical Outlook
HOGS (APR) 03/23/2005: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
The market’s close below the pivot swing number is a mildly negative setup. The
next downside objective is now at 69.800. The next area of resistance is around
70.970 and 71.420, while 1st support hits today at 70.170 and below there at
69.800.
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COCOA MARKET RECAP
3/22/2005
May Cocoa finished down 2 at 1731, 17 off the
high and 8 up from the low.
The cocoa market remained extremely quiet in the
action Tuesday and considering the magnitude of the recent slide in price it is
possible that the cocoa market is simply catching its breath. We suspect that
the lack of violence concerns at the Ivory Coast gives the bear camp a little
more confidence than they could muster last week. The market is possibly
re-evaluating the threat to physical supply as there isn’t exactly that much
actual supply moving around the Ivory Coast at this time of the year. Reports of
an Ivory Coast meningitis outbreak could actually serve to quell the potential
for violence but more than likely there won’t be much of an impact on cocoa
prices.
Technical Outlook
COCOA (MAY) 03/23/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market back
below the 18-day moving average suggests the longer-term trend could be turning
down. The market’s close below the pivot swing number is a mildly negative
setup. The next downside target is 1709. The next area of resistance is around
1743 and 1758, while 1st support hits today at 1719 and below there at 1709.
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COFFEE MARKET RECAP
3/22/2005
May Coffee closed up 0.70 at 131.35. This was
1.85 up from the low and 0.45 off the high.
The coffee inched higher in quiet trade as the
early break managed to hold Monday’s lows and the fund selling of the past few
sessions subsided. London slipped to negative ground late in the session. Rains
in the dry areas of Brazil and a threat of lower commodity exposure from index
funds helped to support. While the market fundamentals remain supportive, the
market is extremely overbought basis traditional technical indicators. An
example of the overbought nature of the market shows with the May coffee closing
at 1380 points above the 50-day moving average (117.55).
Technical Outlook
COFFEE (MAY) 03/23/2005: Negative momentum
studies in the neutral zone will 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. It is a mildly bullish indicator that the market
closed over the pivot swing number. The next downside target is 128.75. The next
area of resistance is around 132.50 and 133.30, while 1st support hits today at
130.25 and below there at 128.75.
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SUGAR MARKET RECAP
3/22/2005
May Sugar closed down 0.01 at 8.75. This was 0.07
up from the low and 0.10 off the high.
May sugar closed 1 tick lower on the session
after a 17 point range. Fund and speculative long liquidation selling helped to
pressure the market to below the December lows but trade house and commercial
buyers were active on the break which provided support. Rumors that China may
have bought near 100,000 tonnes and talk that Russia bought near 100,000 tonnes
of sugar at the end of last week helped provide support. Rains in Brazil have
helped to relieve drought fears which were developing in parts of the
center-south region.
Technical Outlook
SUGAR (MAY) 03/23/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The major trend has turned down with the cross over back
below the 18-day moving average. It is a slightly negative indicator that the
close was lower than the pivot swing number. The next downside target is 8.59.
The next area of resistance is around 8.83 and 8.92, while 1st support hits
today at 8.67 and below there at 8.59.
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COTTON MARKET RECAP
3/22/2005
May Cotton finished up 1.26 at 51.38, 0.32 off
the high and 1.13 up from the low.
The cotton market opened unchanged on the session
and found solid support from renewed speculative buying. Talk of strong world
demand for a robust economy for the 2005/2006 season, high energy prices and
lower planted acreage for key producing areas continues to provide support. Open
interest is off nearly 8000 contracts on the corrective break and traders
believe that the break may have helped correct the overbought condition of the
market and may have attracted increased interest in buying US cotton. Less fears
of a slow-down in the China economy added to the positive tone.
Technical Outlook
COTTON (MAY) 03/23/2005: 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. 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. The next downside objective is 49.73. The next area of
resistance is around 52.10 and 52.62, while 1st support hits today at 50.66 and
below there at 49.73.