Bonds Break Out Of Range!
BOND MARKET RECAP
2/27/2004
March bonds pushed through resistance levels to close sharply higher garnering support from a weak Dollar and unimpressive economic news. While the 4thQtr GDP was stronger than expected, the market seemed to focus on the weak reading for the U of M consumer sentiment and Chicago Purchasing Managers Index. Even a surprisingly large jump in the Chicago PMI Employment index failed to rattle the bulls. All focus seems to be on the Dollar, which appeared to be losing its upward momentum in Friday’s trade. A sagging Dollar would likely encourage more BOJ intervention, which has translated into substantial US treasury purchases. With only minor reports out until next Friday’s employment survey, March bonds should easily make a run at 114 if the dollar stays on a sideways to down path.
Technical Outlook
BONDS (MAR) 03/01/04: 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. Near-term resistance for bonds is at 114.19 and then again at 114.29, while swing support hits at 113.14 and below there at 112.19. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 114.29.
T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.27. 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 115.22 and then again at 115.27, while swing support hits at 115.05 and below there at 114.26. The market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
2/27/2004
The economic numbers were good enough to keep sentiment fairly positive in the stock market. The 4th qtr GDP was stronger than expected and the consumer sentiment number was not as weak as expected which empowered the bulls. However, profit taking trimmed gains by the close and puts the March S&P back in a position to see stair-step gains next week. The market failed to close over 1150, which would of given it a leg up on the technical side. However, with a light economic report schedule until Friday’s employment number, the market will likely to be driven by technical indicators. Since stocks have managed to gain in the face of both a weaker and stronger dollar, it appears that currency movements may be having less impact on price direction right now.
Technical Outlook
S&P500 (MAR) 03/01/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Underlying support comes in at 1139.70 and 1134.50, with overhead resistance at 1150.90 and 1156.90. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 1134.50.
S&P E-Mini (MAR): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1134.25. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1151.00 and then again at 1157.25, while swing support hits at 1139.50 and below there at 1134.25. A negative signal for trend short-term was given on a close under the 9-bar moving average.
NASDAQ (MAR) The downside closing price reversal on the daily chart is somewhat negative. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The market should run into resistance at 1485.75 and above there at 1499.13 with support at 1459.25 and 1446.13. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1446.1.
MINI DOW (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market should run into resistance at 10634 and above there at 10688 with support at 10539 and 10498. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10498. With the close higher than the pivot swing number, the market is in a slightly bullish posture.
CURRENCY MARKET RECAP
2/27/2004
The dollar closed lower and seemed to be losing its upward momentum as the economic reports were uninspiring and traders may have not wanted to push the dollar ahead of the weekend meeting between German Chancellor Schroeder and President Bush. With the inflation numbers in the Euro-zone dropping to 1.6% in February, there has been more talk that the ECB will cut rates next week. Lower Euro-zone rates would support the dollar on a narrowing interest rate differential basis. However, with several Euro-zone government leaders calling for a rate cut we doubt the ECB will cut rates since they would not want to look like they caved in to political pressure. Given that the currency markets have seen a decent correction, no European rate cut is the type of news that could send the Dollar sinking and the Euro soaring.
Technical Outlook
YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 91.77 and above there at 91.93, with the yen finding support around 91.47 and below there at 91.33. The close under the 40-day moving average indicates the longer-term trend could be turning down. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 91.33.
EURO (MAR): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.2367. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2367, with overhead resistance at 1.2571. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.
PRECIOUS METALS RECAP
2/27/2004
With the Dollar sagging, April gold managed to close higher Friday as the economic reports left the market with the feeling 1st quarter growth has likely slowed from the 4th. April gold was able to hold above key support at $390 this week, but will need a close back over $400 to improve sentiment. Euro-zone inflation numbers came in below expectations which is fueling ideas that the ECB has enough economic cause to cut rates and would not necessarily be seen caving in to political pressure. However, a rate cut at the march 4th ECB meeting is a long shot and without a cut the Euro currency could make a comeback late next week and could provide a catalyst for higher gold prices.
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 662.8 and below there at 653.4 with resistance likely at 672.6 and 680.3. 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 672.6. The downside closing price reversal on the daily chart is somewhat negative.
GOLD (APR): Support for gold today comes in near 390.23, while resistance is pegged at 402.03. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 390.23. It is a mildly bullish indicator that the market closed over the pivot swing number. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend.
COPPER MARKET RECAP
2/27/2004
May copper closed 80 lower but well off the lows for the day as the market bounced back after early profit taking subsided. A weaker dollar as the session progressed provided a floor under copper prices. Chinese selling over night, disappointing US economic statistics, and heavy notices issued for the March contract contributed to the market’s weakness. However, while copper has seen a tremendous rally, the tight stock situation has not changed and unless the Chinese cut off their buying, price dips are likely to be relatively shallow.
ENERGY MARKET RECAP
2/27/2004
Escalating concerns of tight supplies fueled further gains across the energy sector. A bullish API stocks report this past week, with the refinery operating rate falling sharply suggest pre-spring maintenance at refineries have prevented the start gasoline stocks rebuilding. Therefore, energy prices will be ultra sensitive to any supply glitch. The market discounted reports out of London that shipments of European gasoline was headed to the US and instead garnered support from news of political violence in Venezuela, who is a major provider of gasoline to the US. Although the trader’s position suggests longs should protect positions, the potential for tightening supplies suggest price breaks will be minimal.
Technical Outlook
CRUDE OIL (APR): The rally brought the market to a new contract high. The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 35.80 and below there at 35.28, with resistance pegged at 36.53 and 36.74. 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 36.74. With a reading over 70, the 9-day RSI is approaching overbought levels.
UNLEADED GAS (APR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 114.90. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 114.90, while support should be found around 109.50. A new contract high was made on the rally. The market’s close above the 9-day moving average suggests the short-term trend remains positive.
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 91.26, with resistance is at 96.36. Short-term indicators suggest buying dips today. 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 96.36. The rally brought the market to a new contract high.
CORN MARKET RECAP
2/27/2004
May Corn finished up 1 1/2 at 303 1/2, 1 1/4 off the high and 2 3/4 up from the low. December Corn closed up 1 1/4 at 295 3/4. This was 3 up from the low and 1 1/2 off the high.
May Rice finished up 0.21 at 9.16, 0.14 off the high and 0.27 up from the low.
After a weaker start to the day, May corn recovered to new contract highs as initial concerns over the market’s overbought status gave way to the longer term focus on tight supplies. May corn opened 1 cent lower at 301 with an early range of 300 3/4 to 302 1/4. Higher than expected deliveries and weakness in the soybean complex helped trigger the selling and with speculators thought to be net long a record number of contracts in this afternoon’s Commitment-of-Traders report, there was long liquidation selling early in the session. There were 1093 deliveries against the March contract on first notice day as compared with 0-200 expected and there was no sign of a strong commercial stopper as the deliveries were spread out among many firms. Registrations for delivery jumped to 1144 contracts late Thursday from 44 lots on Wednesday. Basis at the gulf was steady. It did not take long for May corn to recover from its weaker opening and rally back through yesterday’s highs, ultimately moving to a new contract high of 304 3/4.
Technical Outlook
CORN (MAY) 03/01/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 306 3/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 306 3/4 today, with support at 298 3/4. 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 rally brought the market to a new contract high.
SOY COMPLEX RECAP
2/27/2004
May Soybeans finished up 15 at 940, 1 off the high and 26 up from the low. November Soybeans closed up 3 1/4 at 738. This was 15 up from the low and 2 off the high.
May Soymeal closed up 2.6 at 280.8. This was 5.3 up from the low and 1.7 off the high.
May Soybean Oil finished up 0.34 at 34, 0.18 off the high and 0.67 up from the low.
May soybeans bounced back from a weaker open and managed to trade to new contract highs at 941 by the end of the day, as the market pushed aside concerns over short term factors and resumed focus on long term supply tightness. May soybeans opened 8 cents lower at 917 and established an early range of 914-920 1/2 as higher than expected deliveries, easing weather in South America overnight and concerns with the overbought condition of the market helped trigger the long liquidation selling. Deliveries were 236 contracts for soybeans on first notice day and until late rumors yesterday, traders had expected no deliveries for March soybeans. Registrations jumped to 331 lots on Thursday from 96 on Wednesday. Some rain for the dry areas of Argentina and southern Brazil in the forecast for the weekend and end-of-the-month long liquidation selling added to the bearish tone early in the session. Census crush for January was reported at 145.95 million bushels as compared with trade expectations for 143 million which provided some underlying support. Meal deliveries were 446 contracts as compared with 0-200 expected which helped pressure meal to an opening of $2.20 lower. However, the market found some support from the end of January meal stocks release from the Census Bureau at 325,496 tons which was below trade estimates near 340,000. Oil was lower early from January stocks release of 1.917 billion pounds as compared with trade expectations of near 1.8 billion pounds.
Technical Outlook
SOYBEANS (MAY) 03/01/04: A new contract high was made on the rally. A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 951 and 959 1/2, while 1st support hits today at 924 and below there at 905 1/2. 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 959 1/2. The 9-day RSI over 70 indicates the market is approaching overbought levels.
MEAL (MAY): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 287.2. The rally brought the market to a new contract high. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 284.9, with support at 277.9. The market’s short-term trend is positive on a close above the 9-day moving average. With the close over the 1st swing resistance number, the market is in a moderately positive position. With a reading over 70, the 9-day RSI is approaching overbought levels.
BEAN OIL (MAY): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 34.74. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 34.46 and above there at 34.74. Support should be encountered at 33.61 and 33.04. The 9-day RSI over 70 indicates the market is approaching overbought levels.
WHEAT MARKET RECAP
2/27/2004
May Wheat finished down 5 at 391 1/4, 3 1/4 off the high and 3 1/4 up from the low. July Wheat closed down 3 1/2 at 392 1/2. This was 3 1/2 up from the low and 2 1/2 off the high.
July Oats closed up 3 1/2 at 165. This was 3 1/2 up from the low and equal to the high.
May wheat opened 1 3/4 lower at 394 1/2 and eventually traded to a low of 388 by the end of the session to its lowest level since Feb 24th. Heavy deliveries of 1770 contracts against the March contract on first notice day and weakness in the other grains helped trigger the initial selling, but the market found little support from subsequent rallies in the corn and soy markets. Traders were looking for deliveries near 500-1500 contracts. In addition, end-of-the-month long liquidation selling and ideas that the COT report after the close could show a hefty net long position of the speculator added to the negative tone. Basis at the gulf was steady this morning. Registrations for delivery late on Thursday jumped to 2514 contracts from 1960 on Wednesday. Rain in the forecast for the plains in the weekend and another system in the forecast for the middle of next week added to the bearish tone.
Technical Outlook
WHEAT (MAY) 03/01/04: The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 387 1/2 and below there at 384 1/2, with resistance levels at 394 and 397 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The close under the 40-day moving average indicates the longer-term trend could be turning down. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 397 1/2.
LIVE CATTLE RECAP
2/27/2004
April cattle closed lower today for the first time in over a week after the market failed to push through a key resistance level dating back to mid January. Cattle prices had rallied on stronger cash beef markets, lower slaughter rates and optimism that exports programs would resume soon, but the market’s failure to move through the Jan 21st, post mad cow high of 77.70 after three attempts this week probably encouraged some end of week liquidation. Today’s estimated slaughter came in below expectations at 103,000 head versus guesses ranging from 114,000 to 120,000. Saturday’s slaughter is estimated at 17,000 versus guesses ranging from 4,000-15,000 head. Total slaughter on the week is estimated at 585,000 head versus 598,000 last week and 633,000 a year ago. At noon, boxed beef cutout values were up $1.97 at $135.44. Cash cattle markets were quiet today after trading $3.00 higher earlier this week.
Technical Outlook
CATTLE (APR) 03/01/04: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 77.75. It is a slightly negative indicator that the close was lower than the pivot swing number. Support should be encountered at 76.45 and below there at 76.15. Market resistance is at 77.25 and then again at 77.75. 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. The 9-day RSI over 70 indicates the market is approaching overbought levels.
LEAN HOGS RECAP
2/27/2004
April hogs traded to their highest level in over four months today, just shy of contract highs of 64.40 posted on October 15, 2003. The market closed 0.37 higher at 62.02 after trading to 62.27 and marked its second highest close for the history of the contract. Today’s estimated slaughter came in at 378,000 head, in line with expectations ranging from 375,000 to 390,000. Tomorrow slaughter estimate was 56,000, also in line with expecations, bringing the total for the week to 1,960,000 versus 1,896,000 last week and 1,925,000 a year ago. Cash hog markets were reported $1 to $2 higher for weekend through Monday delivery.
Technical Outlook
HOGS (APR) 03/01/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 62.30 and 62.57 today, while support is around 61.72 and then 61.42. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. 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 62.57.
COCOA MARKET RECAP
2/27/2004
May cocoa finished 11 lower as producer selling developed when the market neared $1,600. The market had little reaction to news reports that a cocoa farmers union planed to withhold exports on March 1st to protest the high cost of a cocoa conference taking place in Abidjan. With the fundamental news flow slow, the market may garner further support from technical signals suggest higher price action. If May cocoa can push past resistance at $1,600, the technical picture improves which would likely attract more fund buying. CSCE Cocoa Warehous Stocks fell 11,118 to 1.524 million bags.
Technical Outlook
COCOA (MAY)03/01/04 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1588 and above there at 1610 with support at 1552 and 1538. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1610.00.
COFFEE MARKET RECAP
2/27/2004
July coffee closed 45 points higher and 485 higher on the week. The market was contained by yesterday’s wide range (75.30-79.75) but stayed in upper half of throughout the day. The market was supported during the session on breaks to 77.50 and 77.80, and at 78.70 July coffee marked its highest close since February 12th. Reports of firmer prices in Colombia, reduced government support and a potentially disappointing second harvest there lent support. Otherwise, improving crop conditions and excellent weather in Brazil coffee growing areas along with rising exchange stocks are negative factors. CSCE stocks were up 8,936 bags to 4.496 million with 101,048 bags pending review.
Technical Outlook
COFFEE (MAY)3/1/04 The market has a slightly positive tilt with the close over the swing pivot. 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 78.10.The Coffee contract should run into resistance at 77.50 and above there at 78.10 with support at 76 and 75.10. The market’s short-term trend is positive on a close above the 9-day moving average.
SUGAR MARKET RECAP
2/27/2004
May sugar closed 10 lower today after reaching its highest level since mid- December, but disappointment that the market failed to push through the December 19th high of 627 may have encouraged some long liquidation. Also, the rolling of shorts from the expiring March contract into the May could have bought in some new selling. Deliveries on the March contract are expected to total 6,574 lots or about 343,000 metric tons, which is down from earlier expectations of 500,000 to 700,000. There are reports that deliveries are being held back on anticipation of sales to China.
Technical Outlook
SUGAR (MAY) 03/01/04: The daily closing price reversal down puts the market on the defensive. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 6.32, with support found at 5.96. 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 6.32.
COTTON MARKET RECAP
2/27/2004
July cotton closed 0.15 higher today at 74.60, up 3.51 on the week and its highest close since January 27th. Earlier in the session the market rallied to 75.50, into the 75.20-75.85 gap area from January 27th and stayed there most of the session before some end of week selling took over into the close. The National Cotton Council reported annualize mill usage for January at 6.49 million bales versus 7.39 million in January. The December number was revised up to 6.67 million from a previous estimate of 6.62 million. There has been talk that China buyers could be more active in the weeks just ahead with rumors that China had issued import permits for 500,000-1.0 million bales, but the recent price surge has raised concerns that they may back off.
Technical Outlook
COTTON (MAY) 03/01/04: 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. Next resistance area comes in at 74.56 and then again at 75.31, while support is targeted at 72.98 and 72.15. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 75.31. ORANGE JUICE (MAY)3/1/04 The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 62.10 and above there at 62.40 with support at 61.65 and 61.50. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 61.5.