Beware Of These Surprises In Crude

Technical Outlook

BONDS (MAR) 02/10/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 112.24 and then again at 112.29, while swing support hits at 112.08 and below there at 111.29. 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 112.29.

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 114.17. It is a mildly bullish indicator that the market closed over the pivot swing number. 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 114.14 and then again at 114.17, while swing support hits at 114.04 and below there at 113.28. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/9/2004

The stock market continued to put a happy face on current conditions with positive opening action Monday. However, the stock market saw additional supportive information from the regularly scheduled economic readings and might have had fears calmed regarding the bird flu situation in the US. A brokerage firm released a home building sector survey that showed a pretty favorable start to 2004 and many suspect that might be enough to foster continued optimism toward the general market. The Kansas City Fed Manufacturing Index showed a really impressive rise and that ended up being a headline type focal point Monday.

Technical Outlook

S&P500 (MAR) 02/10/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Underlying support comes in at 1137.00 and 1134.60, with overhead resistance at 1142.80 and 1146.20. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 1146.20.

S&P E-Mini (MAR): The market made a new contract high on the rally. Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 1140.75. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1140.50 and then again at 1140.75, while swing support hits at 1140.00 and below there at 1139.75. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (MAR) The downside closing price reversal on the daily chart is somewhat negative. The market’s close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market should run into resistance at 1500.75 and above there at 1509.38 with support at 1487.25 and 1482.38. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1509.4.

MINI DOW (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market should run into resistance at 10602 and above there at 10633 with support at 10541 and 10511. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 10633. With the close higher than the pivot swing number, the market is in a slightly bullish posture.

CURRENCY MARKET RECAP

2/9/2004

The Dollar started the session out significantly weak, mounted a mid day bounce and then seemed to weaken into the afternoon trade. US economic numbers were strong enough to discourage aggressive selling but probably not strong enough to alter the down trend pattern. It would seem that a deal might have been cut at the G7 with the US possibly agreeing to help control the pace of declines in the Dollar but in turn the way might have been cleared for the Dollar to continue declining but at a slower pace. Concerning information from Canadian officials suggest that recent data from Canada was a little weaker than expected and that makes it difficult for the Canadian Dollar to shake off recent weakness.

Technical Outlook

YEN (MAR): 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. Swing resistance is targeted at 94.86 and above there at 94.98, with the yen finding support around 94.56 and below there at 94.38. The daily stochastics have crossed over down which is a bearish indication. Daily stochastics turning lower from overbought levels is bearish and will tend to reinforce a downside break especially if near-term support is penetrated. The next downside target is 94.38.

EURO (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 1.2760. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2596, with overhead resistance at 1.2760. The market’s short-term trend is positive on a close above the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

2/9/2004

The gold market managed to stay positive on the session because of the early weakness in the US Dollar. However, later in the session the Dollar recovered and the gold market only pulled off the highs of the day instead of falling back into negative ground. Randgold showed a production decline for 2003 and that seemed to provide the gold market with a measure of support under prices. It would seem that fund interest in and out of silver is becoming quite aggressive and that means the prospect of increased volatility in silver prices is quite high.

Technical Outlook

SILVER (MAY): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 636.3 and below there at 625.2 with resistance likely at 642.8 and 652.3. 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 642.8.

GOLD (APR): Support for gold today comes in near 404.65, while resistance is pegged at 409.45. 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 409.45. 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.

COPPER MARKET RECAP

2/9/2004

The copper market gapped higher, held higher ground but then drifted back off the highs of the session. US economic information was very supportive for the copper demand outlook as Fed manufacturing readings were much stronger and wholesale trade data was indicative of an ongoing US recovery. While one labor dispute was solved, another seemed to have had talks break down. The market is certainly beginning to reach a moderately overbought condition but that hasn’t stopped copper in the recent past from posting more gains.

ENERGY MARKET RECAP

2/9/2004

The fact that OPEC openly admitted to seeing a 3 million barrel per day production surplus in the second quarter increased the prospects of a production cut in the coming OPEC meeting. While OPEC denies having grounds to cut production they do seem to be caught up in the pre-meeting hype. Slightly warmer US temps and simple technical balancing probably caused the corrective action. Because the unleaded market was holding a relatively more expensive price structure than crude we understand the liquidation pressure. However, a large break right into the OPEC meeting could bring forth a surprise, beware!

Technical Outlook

CRUDE OIL (APR): It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 31.27 and below there at 30.93, with resistance pegged at 31.72 and 31.83. 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 30.93.

UNLEADED GAS (APR): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 98.96. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Resistance today is at 103.30, while support should be found around 98.96. The daily closing price reversal up is positive. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (APR):With the close over the 1st swing resistance number, the market is in a moderately positive position. Heating oil should encounter support around 80.42, with resistance is at 82.68. 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 80.42. The upside closing price reversal on the daily chart is somewhat bullish.

CORN MARKET RECAP

2/9/2004

Shortly before the opening Monday the corn market saw some supportive information from a 110,000 metric ton sale of corn to an unknown destination. The weekly export inspections showed a slightly disappointing reading of 32.89 million bushels when one compares the figures to the prior week of 38.6 million bushels. However, the market seemed to be supported by the expectation that the USDA would end up tightening the ending stocks because of slightly higher demand projections. It is also clear that the negative impact of the US bird flu issue mitigated during the session Monday.

Technical Outlook

CORN (MAY) 02/10/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 298 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 298 today, with support at 277 1/2. 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 outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

2/9/2004

The trade moved to quickly discount the negative meal ramifications of the bird flu situation in the US but the most significant support to the market was the idea that the trade was expecting the USDA report on Tuesday to show a slight increase in demand and minor tightening in ending stock readings. However, the majority of the strength in the soybean market seemed to come directly from the soybean oil market which many think is going to be extremely tight in the coming months. Reports of extremely heavy rains in Brazil might lower quality and delay harvest, which helps the bull camp. The market might have been slightly disappointed by less than stellar weekly export inspections for soybeans, which came in at 16.5 million bushels compared to 28.5 in the prior week.

Technical Outlook

SOYBEANS (MAY) 02/10/04: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 862 1/2 and 870 1/4, while 1st support hits today at 835 and below there at 815 1/4. 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 870 1/4. Short-term indicators suggest buying dips today.

MEAL (MAY): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 262.2. First resistance comes in at 259.8, with support at 252.0. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (MAY): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 32.11. 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. Daily swing resistance is found at 31.90 and above there at 32.11. Support should be encountered at 31.03 and 30.37. The 9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

2/9/2004

While the front month wheat contracts were strong the back months stayed weak. Recent precipitation in the US undermined the bullish incentive that is spinning out of corn and soybeans. Reports of hedge selling and weakness from the European wheat market seemed to keep the US wheat market from rising with corn and soybeans. In fact, the European trade is reporting soft demand and the decline in the Dollar is hardly offsetting higher freight costs to ship wheat into Europe. Weekly export inspections for wheat showed 21.1 million bushels versus 20.7 in the prior week and that was a little limiting.

Technical Outlook

WHEAT (MAY) 02/10/04: 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. Look for near-term support at 385 and below there at 378 3/4, with resistance levels at 393 3/4 and 396 1/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 396 1/4.

LIVE CATTLE RECAP

2/9/2004

April cattle closed 42 higher on the session but only after a solid recovery from limit-down early in the session. Fears that beef prices would have to compete with increasing supplies of poultry due to the ban on US poultry from the bird flu situation helped pressure the market early. However, ideas that the Asian countries will soon ease their ban on US poultry soon if the Delaware situation is contained helped support. Russia, for example, banned imports of US poultry but only from Delaware and other countries may follow-suite soon. In addition, traders expect the beef market to bottom soon. Boxed-beef cut-out values were mixed at mid-session with choice (600-750 lbs) down 32 cents to $127.44 as compared with $136.05 last week at this time. Slaughter came in at 111,000 head as compared with trade expectations at 110,000-125,000 head. The low end slaughter might suggest weak pacer demand for slaughter.

Technical Outlook

CATTLE (APR) 02/10/04: The daily stochastics have crossed over up which is a bullish indication. The next upside target is 75.20. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 72.47 and below there at 71.00. Market resistance is at 74.57 and then again at 75.20. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

2/9/2004

February hogs managed a new contract high early in the session before closing just 40 higher on the session, down 67 points from the highs. April hogs closed unchanged and also closed below the opening and 70 points off of the highs. The action is sometimes indicative of a near-term top and could attract some profit-taking from the longs on Tuesday. Ideas that pork exports will remain strong helped support the early surge but ideas that US poultry exports will resume soon and that the weather looks more conducive to increased producer marketings this week added to the bearish tone seen late in the session. Cash markets are called steady to higher for tomorrow due to surge in pork cut-out values which helped improve packer profit margins. Slaughter was 387,000 head as compared with trade expectations of 370,000 to 382,000 head and the higher slaughter indicates strong packer demand. The CME 2-day lean index for the period ending February 6th was up 86 cents to $60.75, up from $57.96 on January 30th.

Technical Outlook

HOGS (APR) 02/10/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 61.40 and 62.02 today, while support is around 60.30 and then 59.82. 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 62.02. With a reading over 70, the 9-day RSI is approaching overbought levels.

COCOA MARKET RECAP

2/9/2004

The cocoa slid lower in the recent trading range as the speculative bubble from last week was deflated. With the funds and small spec accounts dumping positions and the commercial trade showing some interest in picking up supplies on the break we doubt that prices are primed for a sustained downward thrust. Since the last COT report showed a minimal net spec long position the additional declines since the last COT report was measured probably has the small traders net short!

Technical Outlook

COCOA (MAY)02/10/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1535 and above there at 1565 with support at 1490 and 1475. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1474.75.

COFFEE MARKET RECAP

2/9/2004

The coffee market seems to be in a weak posture and with the residual of the record open interest pattern one should not discount the potential for more selling as the March contracts go off the board. Reports that Brazilian January green coffee exports declined by 26% (versus last year) should have been slightly supportive but the market really isn’t primed to accept bullish stories due to the technical damage seen since the January high. Extremely heavy rains in Brazil might begin to provide support to coffee prices in the coming sessions but only if the wet pattern continues.

Technical Outlook

COFFEE (MAY)2/10/04 The market tilt is slightly negative with the close under the pivot. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 72.20.The Coffee contract should run into resistance at 74.60 and above there at 75.40 with support at 73 and 72.20. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/9/2004

The sugar market failed in the action Monday but did manage to hold above critical chart support. With the recent COT report still showing a moderately long small spec positioning the violation of chart support is not something to take lightly. With London sugar noting trade buying on the weakness Monday, we suspect that the market has a chance of respecting support in the coming sessions. With the funds already short a moderate amount it would seem unlikely that the market would roll over down without some fresh catalyst.

Technical Outlook

SUGAR (MAY) 02/10/04: The market is in a bearish position with the close below the 2nd swing support number. Swing resistance comes in at 5.80, with support found at 5.58. 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 5.58. With a reading under 30, the 9-day RSI is approaching oversold levels.

COTTON MARKET RECAP

2/9/2004

Cotton prices seem to remain on the rocks, with near term chart support pegged at 67.50 and the market concerned about even more small spec stop loss selling ahead. The market apparently faded off the idea that the USDA report on Cotton Tuesday might show some negative figures. In fact, with the last COT report showing an overly long fund and small spec positioning one can’t discount chart failures and the upcoming USDA report.

Technical Outlook

COTTON (MAY) 02/10/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. 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. Next resistance area comes in at 70.96 and then again at 71.85, while support is targeted at 69.59 and 69.11. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 69.11. ORANGE JUICE (MAR)2/10/04 The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 64.05 and above there at 64.90 with support at 62.65 and 62.10. The market’s short-term trend is positive on a close above the 9-day moving average. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 64.9.