Bonds Get A Lift–Here’s Why
BOND MARKET RECAP
12/13/2004
March Bonds closed up 0-05 at 112-27. This was
0-09 up from the low and 0-13 off the high.
March 10 Yr Treasury Notes finished up 0-005 at
112-305, 0-070 off the high and 0-050 up from the low.
The Treasury market managed a rather
impressive rally Monday and did so in the face of partially bearish retail sales
figures. Some might suggest that a slight rise in business inventories gave the
bonds a lift into mid session but the real culprit behind the rally was more
than likely the increased expectation of intervention in favor of the Dollar.
With the March Dollar Index falling below critical support on the charts, the
intervention threat was certainly raised but with the coming FOMC meeting we
have to think that some buyers were unwilling to chase the market higher.
Technical Outlook
BONDS (MAR) 12/14/2004: Momentum studies are
trending higher but have entered overbought levels. 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 near-term upside target is at 113-19. The next area of resistance
is around 113-08 and 113-19, while 1st support hits today at 112-19 and below
there at 112-08.
TNOTES (MAR) 12/14/2004: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are trending higher but have entered overbought levels. The
market’s short-term trend is positive on the close above the 9-day moving
average. The close over the pivot swing is a somewhat positive setup. The next
upside objective is 112-280. The next area of resistance is around 112-215 and
112-280, while 1st support hits today at 112-080 and below there at 112-005.
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STOCK INDICES RECAP
12/13/2004
March S&P finished up 10.7 at 1202.5, 0.3 off the
high and 10.5 up from the low.
March S&P E-Mini closed up 10.75 at 1202.5. This
was 10.75 up from the low and 0.25 off the high.
March Dow closed up 96 at 10657. This was 92 up
from the low and 3 off the high.
March Dow E-Mini finished up 96 at 10657, 2 off
the high and 93 up from the low.
The stock market managed an impressive run and
did so without that much help from the scheduled numbers. In fact, it was pretty
clear that stock prices were running up off the hope for sustained merger
interest, as the equity market could have been disappointed by the recovery in
energy prices and the non-descript retail sales readings. Surprisingly the stock
market was not adversely impacted by the sharp rise in energy prices or the
decline in the Dollar. Therefore, the market seemed to be able to rally off
mostly internal fundamentals and in the process discounted a series of outside
negatives.
Technical Outlook
S&P 500 (MAR) 12/14/2004: The market made a new
contract high on the rally. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The close
above the 9-day moving average is a positive short-term indicator for trend.
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 upside objective is 1210.75. With a reading over 70, the 9-day RSI is
approaching overbought levels. The next area of resistance is around 1207.90 and
1210.75, while 1st support hits today at 1197.10 and below there at 1189.15.
SP EMINI (MAR) 12/14/2004: A new contract high
was made on the rally. Studies are showing positive momentum but are now in
overbought territory, so some caution is warranted. The market’s close above the
9-day moving average suggests the short-term trend remains positive. 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 near-term
upside objective is at 1211.00. The market is approaching overbought levels with
an RSI over 70. The next area of resistance is around 1208.25 and 1211.00, while
1st support hits today at 1197.25 and below there at 1189.00.
NASDAQ (MAR) 12/14/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. The market has a bullish tilt coming into today’s trade
with the close above the 2nd swing resistance. The near-term upside objective is
at 1642.87. With a reading over 70, the 9-day RSI is approaching overbought
levels. The next area of resistance is around 1638.75 and 1642.87, while 1st
support hits today at 1623.25 and below there at 1611.88.
MINIDOW (MAR) 12/14/2004: The rally brought the
market to a new contract high. The daily stochastics have crossed over up which
is a bullish indication. Momentum studies are rising from mid-range, which could
accelerate a move higher if resistance levels are penetrated. The market’s
short-term trend is positive on the close above the 9-day moving average. The
market’s close above the 2nd swing resistance number is a bullish indication.
The near-term upside target is at 10729. The next area of resistance is around
10705 and 10729, while 1st support hits today at 10611 and below there at 10540.
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CURRENCY MARKET RECAP
12/13/2004
March US Dollar finished down 47 at 8223, 61 off
the high and 4 up from the low.
March Euro finished up 0.88 at 133.34, 0.04 off
the high and 0.68 up from the low.
March Euro Dollar closed down 0.03 at 97.12. This
was 0.02 up from the low and 0.03 off the high.
March Canadian Dollar closed down 0.13 at 81.45.
This was 0.41 up from the low and 0.15 off the high.
March British Pound finished up 1.09 at 191.63,
0.04 off the high and 1.15 up from the low.
March Swiss closed up 0.58 at 87.16. This was
0.44 up from the low and 0.03 off the high.
March Japanese Yen closed up 0.45 at 96.14. This
was 0.3 up from the low and 0.11 off the high.
The Dollar started out mostly weak and then
failed as the session progressed. The early economic numbers from the US should
have been supportive to the Dollar but the market didn’t really see the data as
convincing enough to countervail the early selling pressure. In fact, as the
session extended the Dollar failed at a series of technical points on the charts
and that seemed to enhance the resolve of the bear camp. The fact that the
Canadian continues to decline even in the face of US Dollar weakness suggests
that the Canadian is in fact into a major trend change.
Technical Outlook
YEN (MAR) 12/14/2004: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The market’s short-term trend is negative as
the close remains below the 9-day moving average. If yesterday’s gap higher on
the day session chart holds, additional buying could develop this session. It is
a mildly bullish indicator that the market closed over the pivot swing number.
The next downside objective is now at 95.69. The next area of resistance is
around 96.34 and 96.50, while 1st support hits today at 95.94 and below there at
95.69.
EURO (MAR) 12/14/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The close below the 9-day moving average is a negative short-term
indicator for trend. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart. There could be more upside follow
through since the market closed above the 2nd swing resistance. The next
downside objective is 132.46. The next area of resistance is around 133.70 and
133.90, while 1st support hits today at 132.98 and below there at 132.46.
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PRECIOUS METALS RECAP
12/13/2004
February Gold closed up 5 at 440.3. This was 3.8
up from the low and 1.3 off the high.
March Silver finished up 0.087 at 6.83, 0.09 off
the high and 0.085 up from the low.
January Platinum closed up 2.8 at 831.2. This was
2.2 up from the low and 3.8 off the high.
The gold and silver market surprised the trade
with a spark out of the box rise and then added to the gains as the session wore
on. With the Dollar falling below several critical support points on the charts
we can understand the increased interest on the part of the bulls. On the other
hand, with the FOMC meeting looming ahead we are a little surprised that the
metals managed such an impressive rally. However, it did seem as if the gold and
silver gains were in some ways being propagated by gains in the equity market.
Technical Outlook
SILVER (MAR) 12/14/2004: Momentum studies are
declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. A positive setup
occurred with the close over the 1st swing resistance. The next downside
objective is now at 665.7. The 9-day RSI under 30 indicates the market is
approaching oversold levels. The next area of resistance is around 691.8 and
700.6, while 1st support hits today at 674.3 and below there at 665.7.
GOLD (FEB) 12/14/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up. A
negative indicator was given with the downside crossover of the 9 & 18 bar
moving average. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. A negative signal for trend short-term was given
on a close under the 9-bar moving average. The market has a bullish tilt coming
into today’s trade with the close above the 2nd swing resistance. The next
downside objective is 434.6. The next area of resistance is around 442.8 and
444.7, while 1st support hits today at 437.8 and below there at 434.6.
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COPPER MARKET RECAP
12/13/2004
March Copper finished up 2.90 at 135.65, 0.75 off
the high and 1.65 up from the low.
The copper market managed an impressive rally
Monday and did so in the wake of generally negative outside market information.
Copper even managed to rally despite news that Asian premium levels were still
under negotiation and with the threat of a 10% increase in Australian
production. The fact that BHP was apparently standing up against a protest in
Peru could threaten some near term production might have prompted the aggressive
buying spree.
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ENERGY MARKET RECAP
12/13/2004
February Crude Oil closed up 0.47 at 41.83. This
was 0.73 up from the low and 0.42 off the high.
February Heating Oil closed up 3.13 at 126.99.
This was 2.29 up from the low and 1.71 off the high.
February Unleaded Gas finished up 1.49 at 113.38,
1.52 off the high and 1.88 up from the low.
February Natural Gas finished up 0.33 at 7.30,
0.02 off the high and 0.12 up from the low.
January Propane closed down 0.00 at 0.76. This
was equal to the low and equal to the high.
The energy complex seemed to explode in the face
of colder weather forecasts and possibly because the market saw a moderately
oversold reading in the COT report that was released after the close Friday.
Adding to the upside were signs that some OPEC members had already begun to
reduce production. In other words, OPEC producers were already cutting back
production into the beginning of December even though the OPEC meeting didn’t
take place until the 10th. Apparently the Saudis were already cutting oil
supplies and that is expected to prompt other producers to do the same. The
market was also supported by increased violence in Iraq and news that Russian
oil production expansion would probably slow in 2005.
Technical Outlook
CRUDE OIL (FEB) 12/14/2004: Momentum studies are
declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
downside objective is now at 40.61. The next area of resistance is around 42.40
and 42.90, while 1st support hits today at 41.26 and below there at 40.61.
UNLEADED (FEB) 12/14/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next downside objective is 109.89. The next area of resistance is around 115.08
and 116.69, while 1st support hits today at 111.68 and below there at 109.89.
HEATING OIL (FEB) 12/14/2004: Daily stochastics
are trending lower but have declined into oversold territory. The market’s
short-term trend is positive on the close above the 9-day moving average. The
market has a slightly positive tilt with the close over the swing pivot. The
next downside objective is now at 122.85. The next area of resistance is around
128.99 and 130.84, while 1st support hits today at 124.99 and below there at
122.85.
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CORN MARKET RECAP
12/13/2004
March Corn finished up 3 1/2 at 204 3/4,
3/4 off the high and 1 3/4 up from the low. May Corn closed up 3 1/2 at 212 1/2.
This was 2 up from the low and 1/4 off the high.
The highest close since December 6th combined
with a record speculative short position leaves the market vulnerable to
short-covering ahead. The weekend Commitment-of-Traders report with options
showed the net short position of the fund trader had reached a new historic high
and that the combined net short position of the large and small trader had also
reached a record high as of December 7th. This has helped to provide active
short-covering from speculators after a higher opening and no follow-through to
the downside from Friday’s contract lows. Weekly export inspections, released
this morning, came in at 38.87 million bushels as compared with trade
expectations of 35-40 million bushels. Cumulative shipments have reached 25.9%
of the forecast for the season as compared with 28.5% on average for this time
of the year. While weekend export news is slow, Israel is tendering to buy
32,000 tons of corn from the US or the Black Sea region. There were 102
contracts delivered against the December contract. Interior basis levels remain
firm with talk of a lack of producer selling. Support for March Corn comes in at
203 1/2 and 201 3/4 with resistance at 205 1/2 and 207 3/4.
Technical Outlook
CORN (MAR) 12/14/2004: The daily stochastics have
crossed over up which is a bullish indication. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close above
resistance. The market’s short-term trend is positive on the close above the
9-day moving average. The market setup is supportive for early gains with the
close over the 1st swing resistance. The next upside target is 207. Short-term
indicators suggest buying dips today. The next area of resistance is around 206
and 207, while 1st support hits today at 203 1/2 and below there at 202.
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SOY COMPLEX RECAP
12/13/2004
January Soybeans finished up 13 3/4 at 546 3/4, 5
1/4 off the high and 6 1/4 up from the low. March Soybeans closed up 13 at 546.
This was 6 1/2 up from the low and 3 1/2 off the high.
January Soymeal closed up 5.5 at 166.0. This was
4.0 up from the low and 1.0 off the high.
January Soybean Oil finished up 0.18 at 20.08,
0.25 off the high and 0.05 up from the low.
The USDA confirmed recent rumors of China buying
with an announcement this morning that China bought 135,000 tons of US soybeans.
The bullish technical action is clashing with a hefty net short position of
speculators to support active short-covering. As of December 7th, the COT report
with options showed speculators net short over 41,000 contracts. Weekly export
inspections, released this morning, came in at 25.67 million bushels as compared
with trade expectations of 27-34 million bushels. Cumulative shipments have
reached 42.4% of the forecast for the season as compared with 39.9% on average
for this time of the year. Strong cash markets continue to provide support to
the market as producer selling remains light and talk of a slowdown in the crush
pace is supporting meal. Weather looks dry in Brazil until later next week when
more rains are anticipated to keep the crops in good shape. Heavy rains last
week in Argentina helped to benefit crop conditions. For the NOPA crush report
on Tuesday, traders look for crush near 145-150 million bushels as compared with
148.1 million bushels crushed in October. Support for March soybeans comes in at
544 and 538 with resistance at 547 1/2 and 557.
Technical Outlook
BEANS (JAN) 12/14/2004: The crossover up in the
daily stochastics is a bullish signal. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. The market’s close above the
9-day moving average suggests the short-term trend remains positive. Follow
through buying looks likely if the market can hold yesterday’s gap on the day
session chart. There could be more upside follow through since the market closed
above the 2nd swing resistance. The near-term upside objective is at 558. The
next area of resistance is around 552 1/2 and 558, while 1st support hits today
at 541 and below there at 535.
MEAL (JAN) 12/14/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. The near-term upside target is at 167.9. The
next area of resistance is around 166.8 and 167.9, while 1st support hits today
at 163.0 and below there at 160.2.
BEANOIL (JAN) 12/14/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s short-term trend is negative as the close
remains below the 9-day moving average. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
downside target is 19.69. The next area of resistance is around 20.29 and 20.58,
while 1st support hits today at 19.85 and below there at 19.69.
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WHEAT MARKET RECAP
12/13/2004
March Wheat finished up 2 1/2 at 299, 3 1/2 off the high and 1
1/2 up from the low. May Wheat closed up 2 1/4 at 305 3/4. This was 3/4 up from
the low and 3 3/4 off the high.
Strength in the other grains, improved export
news and short-covering helped to support the wheat market but futures managed
to stay inside of Friday’s range. The weekend Commitment-of-Traders report with
options showed the net short position of the fund trader had reached a new
historic high and that the combined net short position of the large and small
trader had also reached a record high as of December 7th. A triple bottom at the
contract lows added to the positive technical developments for the market and
supported additional short-covering as well. Egypt bought 60,000 tons of US
wheat on the weekend and 120,000 tons of French wheat. Flooding rains in parts
of Australia have delayed harvest and could cause some quality damage. Weekly
export inspections, released this morning, came in at 13.67 million bushels as
compared with trade expectations of 15-22 million bushels. Cumulative shipments
have reached 59.3% of the forecast for the season as compared with 56.8% on
average for this time of the year. There were 50 contracts delivered against
December wheat this morning. Support for March wheat comes in at 298 and 297
with 303 and 307 as resistance.
Technical Outlook
WHEAT (MAR) 12/14/2004: The daily stochastics
gave a bullish indicator with a crossover up. The stochastic indicator is rising
from oversold levels, which is bullish and should support higher prices. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The market has a slightly positive tilt with the close over the
swing pivot. The next upside target is 304 1/2. The next area of resistance is
around 301 1/2 and 304 1/2, while 1st support hits today at 296 1/2 and below
there at 294 1/2.
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LIVE CATTLE RECAP
12/13/2004
February Live Cattle closed up 0.85 at 87.45.
This was 1.00 up from the low and 0.05 off the high.
January Feeder Cattle finished up 0.52 at 101.10,
0.52 off the high and 0.40 up from the low.
February cattle opened lower but found trade
house buying support and closed moderately higher on the session and closed near
the highs of the day. Expectations for low placements for Friday’s
Cattle-on-Feed report and ideas that last weeks break was overdone helped to
support. Boxed-beef cut-out values at mid-session were down $.67 to $141.50 as
compared with 147.78 last week at this time. Slaughter came in at 128,000 head
as compared with trade expectations at 119,000-126,000. The higher than expected
slaughter points to stronger than expected packer demand this week and could
help support the cash market tone if beef prices stabilize.
Technical Outlook
CATTLE (FEB) 12/14/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 9-day moving average is a negative short-term
indicator for trend. There could be more upside follow through since the market
closed above the 2nd swing resistance. The next downside target is 86.170. The
next area of resistance is around 87.970 and 88.250, while 1st support hits
today at 86.950 and below there at 86.170.
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LEAN HOGS RECAP
12/13/2004
February Lean Hogs closed up 0.57 at 72.17. This
was 0.42 up from the low and 0.65 off the high.
February Pork Bellies finished up 1.52 at 98.10,
0.60 off the high and 1.10 up from the low.
February hogs closed moderately higher on the
session supported by the stiff discount of futures to cash and ideas that the
recent break may have already priced-in the recent collapse in ham prices.
Peoria live hogs came $2.00 lower in the morning which helped to limit the
buying support. The CME 2-day lean index for the period ending December 9th was
reported at 79.05, down $1.06 on the session and down from 79.89 one week
previous. This leaves February hogs at a discount of nearly 700 points to the
cash market. Slaughter came in at 404,000 head as compared with trade
expectations at 395,000-401,000. The higher than expected slaughter is a
positive force for packer demand but it will be important to see lower average
weights over the near-term to assume that the market is about to shift to a
lower production level for the mid-December to mid-February time frame.
Technical Outlook
HOGS (FEB) 12/14/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 9-day moving average is a negative short-term indicator for
trend. The close over the pivot swing is a somewhat positive setup. The next
downside target is 71.170. The next area of resistance is around 72.700 and
73.300, while 1st support hits today at 71.650 and below there at 71.170.
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COCOA MARKET RECAP
12/13/2004
March Cocoa finished down 13 at 1607, 23 off the
high and 17 up from the low.
The cocoa market continued to slide with a big
range down that was only partially rejected. We also suspect that the small
traders were being forced out with the decline below the chart support levels
early Monday and that extended the downside action. With reports that current
crop conditions at the Ivory Coast have remained conducive to production we have
to think that the trade is finding it easier to discount past dryness. In the
end, with less daily political dialogue flowing from the Ivory Coast it is also
understandable that the small specs are deciding to stop out of positions on
even minor weakness. Apparently a weaker Dollar providing very little support to
cocoa prices, as the Dollar was down hard and cocoa players didn’t note that
much arbitrage buying.
Technical Outlook
COCOA (MAR) 12/14/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close below the 9-day moving average is a negative short-term indicator for
trend. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is 1569. The next
area of resistance is around 1627 and 1648, while 1st support hits today at 1587
and below there at 1569.
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COFFEE MARKET RECAP
12/13/2004
March Coffee closed down 3.40 at 93.90. This was
0.40 up from the low and 1.60 off the high.
Surprisingly the coffee market failed to hold
recent consolidation support even after seeing what many considered a supportive
(low end of the range of expectations) crop estimate late last week. It seem
also seemed like the funds decided to bank some profits or were simply forced
out of the market by several chart support violations. Brazil reported the first
10 days of December exports to be 725,696 bags, which was apparently below the
same tally posted in the beginning of November.
Technical Outlook
COFFEE (MAR) 12/14/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The gap lower on the day session chart is
bearish and puts the market on the defensive. The close below the 2nd swing
support number puts the market on the defensive. The next downside target is now
at 92.25. The next area of resistance is around 94.90 and 96.20, while 1st
support hits today at 92.95 and below there at 92.25.
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SUGAR MARKET RECAP
12/13/2004
March Sugar closed up 0.02 at 8.71. This was 0.09
up from the low and 0.05 off the high.
After some early weakness the sugar market
managed to regain its footing and according to Press reports the gains were
forged on trade buying. In the most recent COT report the sugar market did
manage to reduce its net spec long position but that position continues to be
overextended. Some traders suggested that short covering gains in corn might
have given sugar prices a little lift as the two markets share some indirect
correlation due to the energy market situation. A slight up tick in cash
business was reported Monday and that might also have inspired some light buying
of the futures.
Technical Outlook
SUGAR (MAR) 12/14/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. It is a mildly bullish indicator that the market closed over the
pivot swing number. The next downside target is 8.56. The next area of
resistance is around 8.78 and 8.84, while 1st support hits today at 8.64 and
below there at 8.56.
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COTTON MARKET RECAP
12/13/2004
March Cotton finished up 0.91 at 43.22, 0.03 off
the high and 0.62 up from the low.
Short covering seemed to be the rule of the day
as the most recent USDA report was a big negative. Apparently many in the trade
are thinking that export news is about to improve and that has prompted short
covering and in some cases light speculative buying. A number of traders are
suggesting that the trend remains down until a down trend resistance line is
taken out up at 43.60 on a close basis. Tight supplies in the nearest to
delivery contracts is also thought to be tempering the patently bullish outlook
for cotton and in order to turn sentiment around conclusively.
Technical Outlook
COTTON (MAR) 12/14/2004: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. A positive signal for trend short-term was
given on a close over the 9-bar moving average. With the close over the 1st
swing resistance number, the market is in a moderately positive position. The
next downside objective is now at 42.43. The next area of resistance is around
43.54 and 43.72, while 1st support hits today at 42.90 and below there at 42.43.