Bull Camp Backing Away?

Technical Outlook

BONDS (MAR) 02/05/04: The downside closing price reversal on the daily chart is somewhat negative. The close equal to the pivot swing number is a neutral directional indicator. Near-term resistance for bonds is at 112.24 and then again at 113.18, while swing support hits at 110.11 and below there at 108.24. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 108.24.

T-NOTES(MAR) The daily closing price reversal down puts the market on the defensive. 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 113.06. The market’s close below the pivot swing number is a mildly negative setup. 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 113.31 and then again at 114.09, while swing support hits at 113.14 and below there at 113.06. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/4/2004

For most of the last two weeks the stock market has been very impressive in its ability to put on a bullish face. However, the stock market saw a very supportive set of US readings Wednesday and showed almost no response to the data. In other words, it would seem like the bull camp is backing away even if the headlines foster renewed buying interest. The trade might also be backing away from the potential volatility of the monthly payroll report and the upcoming G7 meeting. The ISM Non manufacturing Business Index reading was the highest ever and that should have sparked a buying wave if the market was bullishly postured.

Technical Outlook

S&P500 (MAR) 02/05/04: The market is in a bearish position with the close below the 2nd swing support number. Underlying support comes in at 1119.55 and 1116.63, with overhead resistance at 1128.85 and 1135.23. 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 1116.63.

S&P E-Mini (MAR): The key reversal down puts the market on the defensive. 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 1114.13. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Near-term resistance for the S&P Mini is at 1129.25 and then again at 1137.13, while swing support hits at 1117.75 and below there at 1114.13. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. The market should run into resistance at 1473.50 and above there at 1489.75 with support at 1451.50 and 1445.75. The 9-day RSI under 30 indicates the market is approaching oversold levels. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1445.8. The close under the 40-day moving average indicates the longer-term trend could be turning down.

MINI DOW (MAR) The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. The market should run into resistance at 10484 and above there at 10539 with support at 10395 and 10361. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10361. The swing indicator gave a moderately negative reading with the close below the 1st support number. Short-term indicators on the defensive. Consider selling an intraday bounce.

CURRENCY MARKET RECAP

2/4/2004

It would appear that few traders are willing to step forward and take a position in the Dollar ahead of the coming G7. Even after US economic numbers came in hotter than expected the Dollar showed little interest in rising and that shows a lack of conviction. With the meeting looming one should expect to see commentary surface and in turn drive the currencies out of the recent consolidation pattern. The US numbers simply discourage aggressive selling of the Dollar but if the G7 doesn’t stand up and threaten to stop the Dollar slide, the US numbers don’t look to be strong enough to deter a wave down in the Dollar.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A new contract high was made on the rally. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 95.13 and above there at 95.25, with the yen finding support around 94.82 and below there at 94.63. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.25.

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 1.2584. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2448, with overhead resistance at 1.2584. 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

2/4/2004

The gold market surprised the trade with mostly favorable action even after US economic information was supportive to the Dollar. The Dollar however, did not really make a clear cut move and some gold shorts might have decided to exit positions rather than hold in the face of the coming G7 meeting. We have to think that silver was benefited by the strong ISM Non manufacturing reading and by the better than expected Factory Orders reading. It is even possible that the gold market was lifted by the better than expected economic readings if those readings could have provided support to the Dollar.

Technical Outlook

SILVER (MAR): With the close higher than the pivot swing number, the market is in a slightly bullish posture. Initial support for silver is at 609.1 and below there at 602.3 with resistance likely at 614.9 and 620.6. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 602.3. The daily closing price reversal up is positive.

GOLD (APR): Support for gold today comes in near 398.88, while resistance is pegged at 403.48. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 403.48. It is a mildly bullish indicator that the market closed over the pivot swing number. The market’s short-term trend is negative as the close remains below the 9-day moving average.

COPPER MARKET RECAP

2/4/2004

Copper prices remained firm for most of the session, as the overnight supply outage news combined with news of additional labor problems to fuel prices to another new high. We have to think that copper was cheered by the much better than expected US economic readings especially after the recent numbers had begun to cast a shadow on the US recovery. It would seem that copper is intent to mount breakneck gains but in looking forward prices might become extremely volatile once they reach 120 and are confronted with the ultra critical US payroll report.

ENERGY MARKET RECAP

2/4/2004

The weekly API readings were mostly negative to prices as crude and gasoline stocks rose sharply. However, distillate stocks declined sharply because of the recent cold and that could keep the bears honest. The EIA information was initially judged to be incorrect and therefore the second set of weekly inventory readings were delayed until mid session. The EIA suggested that that crude, gas and distillate stocks rose slightly and that tempers the mostly bearish readings from the API. Weather is expected to remain cold well into next week and with the favorable US economic readings Wednesday the bull camp has to be concerned about pressing the short side of the market.

Technical Outlook

CRUDE OIL (MAR): The market is in a bearish position with the close below the 2nd swing support number. Support for crude is keyed on 32.35 and below there at 31.90, with resistance pegged at 33.85 and 34.90. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. The daily stochastic’s gave a bearish indicator with a crossover down. The next downside objective is now at 31.90.

UNLEADED GAS (MAR): The daily stochastics have crossed over down which is a bearish indication. The next downside target is 94.91. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 103.11, while support should be found around 94.91. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (MAR):The market is in a bearish position with the close below the 2nd swing support number. Heating oil should encounter support around 85.26, with resistance is at 94.26. 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 85.26.

CORN MARKET RECAP

2/4/2004

Corn closed moderately lower up front and barely weaker in new crop. The corn market failed to act as peppy as the Soybeans Wednesday and with CIF basis levels weakening it would seem that the sentiment is undermined. In fact, the chart setup in corn is pretty negative compared to soybeans and with the recent COT report showing moderately overbought conditions one has to be watchful of chart point failures. Export sales expectations for corn are 650,000 to 850,000 metric tons compared to 775,400 metric tons last year which would mean that export expectations are slightly supportive even if the technical setup is suspect.

Technical Outlook

CORN (MAR) 02/05/04: 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 265 1/2. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Market resistance comes in at 276 1/2 today, with support at 265 1/2. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily studies pointing down suggests selling minor rallies.

SOY COMPLEX RECAP

2/4/2004

The soybean market finished slightly higher for the session but failed to hold the majority of the early action. The market was lifted by cash market strength and with the Illinois River frozen movement slowed that gave legs to the cash strength. An International BSE panel recommended a ban on the use of swine poultry and other mammalian protein from feed and that could bolster meal prospects. Weather issues in South America don’t seem to be precarious enough to rekindle the bull case in beans, so the bull camp needs to see containment of bird flu as that is their biggest concern. Export sales expectations for soybeans are 100,000 to 250,000 metric tons compared to 498,300 metric tons last week.

Technical Outlook

SOYBEANS (MAR) 02/05/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 811 and 817 1/2, while 1st support hits today at 800 and below there at 795 1/2. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 795 1/2.

MEAL (MAR): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 244.3. First resistance comes in at 248.7, with support at 245.4. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (MAR): 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 30.25. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 30.03 and above there at 30.25. Support should be encountered at 29.69 and 29.57.

WHEAT MARKET RECAP

2/4/2004

A big range down in wheat seems to undermine the bull case. The snow in Kansas is reportedly recharging the soil or creating the potential for a recharge. After the drought in Europe last year the EU started selling those stocks and that simply added to the negative tone in the marketplace. In short there is more than enough negativeness to go around. Export sales expectations for wheat are 250,000 to 600,000 metric tons compared to 580,600 last week.

Technical Outlook

WHEAT (MAR) 02/05/04: It is a slightly negative indicator that the close was lower than the pivot swing number. Look for near-term support at 372 1/2 and below there at 370 1/2, with resistance levels at 379 1/4 and 384 . The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 370 1/2.

LIVE CATTLE RECAP

2/4/2004

Cattle closed limit down with comments from the mad cow panel representatives set-up by the USDA helping to drive the market lower. Five International experts on mad cow were providing recommendations to the USDA and various comments from the members helped the market loose confidence in the possibility of US exports soon and also raised concerns over more cattle infected in the US herd. Talk of a “high probability” of more mad cow cases in the American herd and statements that there could be a new mad cow case found per month helped driver the market lower. There was little in the way new buyers under the market once the broke began. Boxed-beef cut-out values were down $2.03 to $131.36 as compared with $140.76. In spite of the forecast for the storm in the plains, cash cattle bids fell to $74-$75, down $5-$6 from last week. Slaughter came in at 124,000 head, the low end of trade expectations.

Technical Outlook

CATTLE (APR) 02/05/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 70.12. The close below the 2nd swing support number puts the market on the defensive. Support should be encountered at 70.55 and below there at 70.12. Market resistance is at 72.22 and then again at 73.47. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The 9-day RSI under 30 indicates the market is approaching oversold levels.

LEAN HOGS RECAP

2/4/2004

After a gap higher opening, April hogs closed 47 lower on the session and down 107 from the opening. Poor weather in the mid-west and forecasts for more of the same into next week helped support the higher opening with cash hogs coming in $1.50 higher on the day. Cash is called higher again tomorrow with 5-7 inches of snow in the forecast for central Iowa. The move to limit-down in cattle and fears that the extended period of poor weather will eventually cause an increase in producer marketings of heavier weight hogs “when” the weather breaks helped pressure the market. Weekly average weights for Iowa/Minn for the week ending January 31st came in at 264.2 pounds as compared with 264.4 the previous week and 263 pounds last year at this time. The CME 2-day lean index was up for the period ending February 2nd came in at $58.28, up $.32 on the day and up from $55.97 on January 23rd. Slaughter came in at 381,000 head which was below trade expectations (380-386K) for the second day in a row.

Technical Outlook

HOGS (APR) 02/05/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 59.52 and 60.42 today, while support is around 58.22 and then 57.82. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 57.82.

COCOA MARKET RECAP

2/4/2004

After an attempt to follow through to the upside the cocoa market lost its bullish track and fell swiftly off the high of the day. Apparently the market detected signs of origin selling and that was more than enough to undermine thinly veiled bullish sentiment. It would seem that the March (soon to deliver) contract was able to maintain long interest despite the slide in the May contract. Therefore, the trade continues to wonder about a possible squeeze.

Technical Outlook

COCOA (MAR)02/05/04 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 1600 and above there at 1626 with support at 1563 and 1552. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1625.75.

COFFEE MARKET RECAP

2/4/2004

May coffee closed 195 lower on the session and moved to the lowest level since January 20th on a continued long liquidation trend from speculators. Roaster buying was seen as active but the buying failed to overcome active selling from fund traders who own a record high net long position according to the most recent traders report. CSCE exchange stocks were down 4000 bags to 4.422 million bags with 36,670 bags. Key support for the May coffee comes in at 73.40.

Technical Outlook

COFFEE (MAR)2/5/04 The gap lower price action on the day session chart is a bearish indicator for trend. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 70.30.The Coffee contract should run into resistance at 73.80 and above there at 75.10 with support at 71.4 and 70.30. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/4/2004

March sugar closed 7 lower on the session. With the market closing near 15 month lows, and small speculators net long nearly 17,000 contracts as of January 27th; the market seems poised to break-out to the downside. With only 15 trading days left before the March contract expires, open interest is still 131,494 contracts. Since the start of the year, open interest is up 53,000 contracts or so as both buyers and sellers have increased their opinion. As a result, we would not believe that the market is going to remain in the recent tight trading range. The path of least resistance looks to be down. A move lower could attract increased coverage from end users who are waiting for cheaper prices in order to book coverage as the lower price will help the buyer absorb the record high freight rates. Producer selling, mainly from Brazil, should continue to emerge on minor rallies while further weakness is likely to attract long liquidation selling from the small speculator.

Technical Outlook

SUGAR (MAR) 02/05/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 5.81, with support found at 5.59. 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 5.59. Daily studies pointing down suggests selling minor rallies.

COTTON MARKET RECAP

2/4/2004

May cotton ended up 44 points on the session with traders expecting improving export sales news for the morning and increased buying from China. Trade house and speculative buying helped support with plenty of talk that the market has just tested the low end of the recent trading range so export news should pick-up. For the weekly export sales report, released before the opening, traders are looking for sales of near 200,000-500,000 bales as compared with 72,700 bales last week. For shipments, traders are looking for 250,000-300,000 bales as compared with last weeks shipments of just 192,200 bales. Shipments need to average over 300,000 bales per week to reach the current USDA projection.

Technical Outlook

COTTON (MAR) 02/05/04: 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. Next resistance area comes in at 69.85 and then again at 70.48, while support is targeted at 68.65 and 68.08. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 68.08. ORANGE JUICE (MAR)2/5/04 The daily closing price reversal up is positive. The market has a slightly positive tilt with the close over the swing pivot. Orange Juice should run into resistance at 62.30 and above there at 62.75 with support at 61.10 and 60.35. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 60.35.