Bullish Surprise In Cattle

Technical Outlook

BONDS (MAR) 1/21/2004: The market tilt is slightly negative with the close under the pivot. Near-term resistance for bonds is at 112.15 and then again at 112.26, while swing support hits at 111.28 and below there at 111.20. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 112.26.

T-NOTES(MAR) 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 113.20. 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 114.12 and then again at 114.19, while swing support hits at 113.28 and below there at 113.20. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/20/2004

The stock market didn’t really extend as one would have expected considering the early action but with the US Dollar sliding aggressively and energy prices soaring there is some macro economic concern being seen. Even more surprising is the fact that the upcoming State of the Union message failed to support stock prices. In conclusion it would appear as if the bull case is deteriorating, especially with weak US housing starts anticipated Wednesday morning.

Technical Outlook

S&P500 (MAR) 1/21/2004: The close over the pivot swing is a somewhat positive setup. The daily closing price reversal down is a negative indicator for prices. Underlying support comes in at 1133.60 and 1129.70, with overhead resistance at 1141.80 and 1146.10. The close above the 9-day moving average is a positive short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside objective is now at 1129.70. The market is becoming somewhat overbought now that the RSI is over 70.

S&P E-Mini (MAR): A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. 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 1129.69. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for the S&P Mini is at 1141.88 and then again at 1146.19, while swing support hits at 1133.63 and below there at 1129.69. 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.

NASDAQ (MAR) The market made a new contract high on the rally. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. The market should run into resistance at 1562.25 and above there at 1570.13 with support at 1544.75 and 1535.13. The market is approaching overbought levels with an RSI over 70. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1570.13.

CURRENCY MARKET RECAP

1/20/2004

The Dollar fell sharply off ECB statements that suggested they would not intervene against the Euro rise. Until the ECB makes a more aggressive statement, the Euro may continue to strengthen. The trade looks to the 86.32 level as a critical pivot point and as of the close Tuesday it would seem that a large portion of the market was prepared to jump back into short Dollar plays. The Pound showed the most significant rise against the Dollar and that is because the trend in the Pound was so entrenched prior to the recent reversal.

Technical Outlook

YEN (MAR): 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 market tilt is slightly negative with the close under the pivot. Swing resistance is targeted at 93.86 and above there at 94.08, with the yen finding support around 93.11 and below there at 92.58. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 92.58.

EURO (MAR): Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 1.2430. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2430, with overhead resistance at 1.2642. The close below the 9-day moving average is a negative short-term indicator for trend. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

1/20/2004

The gold market sprang to life following a rather sharp decline in the Dollar as that reversed the pressure seen last week. In fact, the Dollar slide was severe enough that it appeared as if some fresh buyers jumped into the fray. With silver under performing the rally in gold it would seem that the market is mostly interested in the Forex action and is mostly focused on the gold market. While the Dollar appears to be headed lower it might not be considered to be back into a down trend until it falls back below 86.32.

Technical Outlook

SILVER (MAR): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 626.3 and below there at 620.9 with resistance likely at 634.1 and 638.3. A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 620.9. The market could take on a defensive posture with the daily closing price reversal down.

GOLD (APR): Support for gold today comes in near 408.13, while resistance is pegged at 417.93. Stochastics trending lower at midrange will tend to reinforce a move lower especially if support levels are taken out. The next downside target is now at 408.13. Market positioning is positive with the close over the 1st swing resistance. The close below the 9-day moving average is a negative short-term indicator for trend. The cross over and close above the 40-day moving average is an indication the longer-term trend is up.

COPPER MARKET RECAP

1/20/2004

The copper market could have come under pressure early Tuesday after the market became aware of the labor deal struck at the Highland Valley mine. However, prices were strong mostly because of lower production projections from a major producer and because of new highs in the US stock market and ongoing Chinese buying. With Freeport cutting their copper output slightly for 2003 and suggesting a reduction in their 2004 sales levels the market seemed to be uncertain about where copper concentrate supplies would come from.

ENERGY MARKET RECAP

1/20/2004

Energy prices added to the sharp gains posted last Friday as weekend cold was joined by a slightly colder forecast for the near term. Pricing have returned to levels at or above the levels posted into the Iraq war which suggests that demand is running really hot. In other words, even with Iraq producing 2.5 million barrels (or close to that level soon) prices have returned to war like levels. In short, the energy complex looks to be headed to a bubble with the funds in crude really building a massive long position.

Technical Outlook

CRUDE OIL (MAR): The market rallied to a new contract high. Market positioning is positive with the close over the 1st swing resistance. Support for crude is keyed on 34.45 and below there at 33.87, with resistance pegged at 35.30 and 35.57. The close above the 9-day moving average is a positive short-term indicator for trend. The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 35.57. The market is becoming somewhat overbought now that the RSI is over 70.

UNLEADED GAS (MAR): Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 99.00. The market has a slightly positive tilt with the close over the swing pivot. Resistance today is at 104.00, while support should be found around 99.00. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (MAR):Market positioning is positive with the close over the 1st swing resistance. Heating oil should encounter support around 96.58, with resistance is at 101.38. Short-term indicators suggest buying pullbacks today. The close above the 9-day moving average is a positive short-term indicator for trend. The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 101.38. The market rallied to a new contract high. Follow through buying looks likely if the market can hold yesterday’s gap on the day session chart.

CORN MARKET RECAP

1/20/2004

May corn closed 3 cents higher and into new contract highs for the 6th session in a row while December corn added 2 1/4 cents. The rally was impressive given the late sell-off in the other grains and soybeans. The USDA announced another sale to unknown destination of 168,000 tons (110,000 on Friday) which helped support the early surge higher. Weekly export inspections came in at 35.4 million bushels as compared with trade expectations at 34-40 million. Cumulative shipments have reached 709.3 million bushels as compared with 583.5 million last year at this time. South Africa officials pegged planting intensions at just 2.56 million hectares which would be the lowest since the 1940’s. Fear of an overbought condition and the sell-off in wheat into the close helped limit the gains.

Technical Outlook

CORN (MAR) 1/21/2004: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 281 3/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 281 3/4 today, with support at 268 3/4. The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. The market rallied to a new contract high.

SOY COMPLEX RECAP

1/20/2004

May soybeans opened 1/2 cent higher on the session but failed to find new buying support and experienced a long liquidation sell-off to close 8 1/4 lower on the day. The market found some early support from a firm cash basis level at the gulf and solid exports. Weekly export inspections came in at 33.8 million bushels as compared with trade expectations at 27-32 million. Cumulative shipments have reached 562.2 million bushels as compared with 534.9 million last year at this time. A lack of news over any possible actions from the FDA on feeding requirements and an extreme overbought condition from the weekend COT reports helped trigger the late sell-off.

Technical Outlook

SOYBEANS (MAR) 01/21/04 The market could take on a defensive posture with the daily closing price reversal down. The close below the 1st swing support could weigh on the market. The next area of resistance is around 834 1/2 and 844 , while 1st support hits today at 821 1/2 and below there at 818 . The market’s close on the 9-day moving average is neutral. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 818 .

MEAL (MAR): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 264.9. The market rallied to a new contract high. First resistance comes in at 262.4, with support at 256.9. The close above the 9-day moving average is a positive short-term indicator for trend. The close over the pivot swing is a somewhat positive setup. The market is becoming somewhat overbought now that the RSI is over 70.

BEAN OIL (MAR): A negative signal for trend short-term was given on a close under the 9-bar moving average. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 28.77. The close below the 2nd swing support number puts the market on the defensive. The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. Daily swing resistance is found at 29.53 and above there at 29.97. Support should be encountered at 28.93 and 28.77.

WHEAT MARKET RECAP

1/20/2004

May and July wheat pushed higher and tested last weeks highs before closing lower on the session. Another close under 4.00 for May wheat after a high well above 4.00 (406 1/2 today) is frustrating action to the bulls. Funds were aggressive buyers to support the market early as hopes for China purchases and the weaker dollar helped support. Dry weather concerns persist but talk of some snow cover today in western Kansas helped turn the weather mixed. Weekly export inspections came in at 25.7 million bushels as compared with trade expectations at 24-29 million. Cumulative shipments have reached 695.2 million bushels as compared with 578.7 million last year at this time. A weaker cash basis and talk of the overbought condition from the COT reports helped add to the late pressure.

Technical Outlook

WHEAT (MAR) 1/21/2004: The market could take on a defensive posture with the daily closing price reversal down. The market has a slightly positive tilt with the close over the swing pivot. Expect near-term support around 390 1/2 and below there at 387 3/4, with resistance levels at 400 and 406 3/4. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 406 3/4.

LIVE CATTLE RECAP

1/20/2004

February cattle ended up the limit with a surge in the cash market as February closed 150 higher to 80.20 but cash markets added another $3.00 to trade at $85.00 which came as a bullish surprise and there was even talk that packers would need pay higher if they wanted more cattle this week. The high placements from the USDA Cattle on Feed report was a factor to limit the gains in the April contract early but bullish cash market fundamentals supported solid gains late. There were 500 unfilled buy orders for the February cattle into the close with synthetic option values showing another 100 point gain above the limit-up price. Boxed-beef cut-out values were up $1.45 to $144.38. Slaughter was just 116,000 head as compared with trade expectations of 121,000-130,000 head. Bull spreading off of the Cattle-on-Feed report news and news that Mexico should allow US imports soon helped support.

Technical Outlook

CATTLE (APR) 1/21/2004: Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 78.30. The market setup is supportive for early gains with the close over the 1st swing resistance. Daily studies suggest buying dips today. Support should be encountered at 76.45 and below there at 75.40. Market resistance is at 77.90 and then again at 78.30. A positive signal for trend short-term was given on a close over the 9-bar moving average.

LEAN HOGS RECAP

1/20/2004

April hogs closed slightly higher on the session with February hogs up 52 on the day finding support from news of cash markets up $1.00 to start the week. Concerns that packer demand will be quenched by later this week and cash weakness might develop helped limit the gains but strong action in cattle helped support. While cash market fundaments including packer profit margins and a steady uptrend in pork cut-out values of the past week has provided underlying support, traders are nervous that the market may become saturated with too much pork due to the weekly hog slaughters coming in near 2 million head. Slaughter came in at 391,000 head (low end of estimates) with 370,000 head reported for Monday.

Technical Outlook

HOGS (APR) 1/21/2004: The close over the pivot swing is a somewhat positive setup. Resistance levels comes in at 58.55 and 58.85 today, while support is around 57.77 and then 57.30. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 58.85.

COCOA MARKET RECAP

1/20/2004

A massive range in cocoa Tuesday left the market with a negative tilt. After some spec buying in London the US cocoa market seemed to be unable to hold the positive posture and selling overwhelmed the trade. We suspect that more origin selling jumped in on the market as the harvest flow has to be accelerating slightly. In the near term, the bear camp would seem to have some amount of control over prices.

Technical Outlook

COCOA (MAR)01/21/04 The outside day down and close below the previous day’s low is a negative signal. 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 1629 and above there at 1685 with support at 1549 and 1525. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1524.50.

COFFEE MARKET RECAP

1/20/2004

May coffee closed sharply higher and to the highest level since February 12th with active fund and speculative buying helping to drive futures sharply higher. The rally stalled just short of the September highs and just short of the head-and-shoulders bottom formation objective of 76.85. Funds were noted buyers of near 7000 contracts on the session with more producer selling noted on the rally. Talk that Folgers might raise their price was seen as a limiting factor for an extended rally. CSCE exchange stocks were up 4390 bags to 4.375 million with 82,638 bags pending review. Firm cash differentials provided support while rains in Brazil this week should keep the crop condition favorable.

Technical Outlook

COFFEE (MAR)1/21/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The 9-day RSI over 70 indicates the market is approaching overbought levels. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 77.70.The Coffee contract should run into resistance at 76.70 and above there at 77.70 with support at 72.8 and 69.90. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/20/2004

The market failed to see much follow-through selling today after the reversal from Friday and futures managed to close slightly higher on the session. While the longer-term fundamentals remain bearish with a massive crop and hefty stocks in Brazil, the short-term jump in cash inquires was enough to see slow selling from speculators and light trade house buying to support. Hopes that China, Indonesia and Russia will emerge as more active buyers into the spring has provided some support. China import demand is uncertain with a crop near 9.0-9.5 million tons and usage at near 11 million tons. Traders believe imports will be between 600,000 to 1.3 million tons for now. Russian demand has also been slow to develop this year as the local beet crop was larger than expected. Syria bought 26,000 tons of raw sugar.

Technical Outlook

SUGAR (MAR) 1/21/2004: The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 5.90, with support found at 5.70. The upside crossover of the 9 & 18 bar moving average is a positive signal. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 5.90.

COTTON MARKET RECAP

1/20/2004

May cotton closed moderately higher and to the highest level since January 6th with a late surge of fund buying helping to support. Early weakness was triggered by overbought market concerns and a lack of new news over China buying. The China State Statistical Bureau indicated a 2003 harvest of 4.87 million tonnes, down .9% from last year in spite of a jump in plantings of near 20%. This comes in at 22.3 million bales which is in-line with the USDA forecast of 22 million bales. Many traders believe that crop was lower than 21 million bales. Buying was limited by improving crop conditions in Australia after good rains recently and a little more cotton available from West Africa than had been expected.

Technical Outlook

COTTON (MAR) 1/21/2004: A positive signal for trend short-term was given on a close over the 9-bar moving average. Daily studies suggest buying dips today. The market setup is supportive for early gains with the close over the 1st swing resistance. Next resistance area comes in at 76.25 and then again at 76.75, while support is targeted at 74.30 and 72.85. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 76.75. The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. ORANGE JUICE (MAR)1/21/04 The downside closing price reversal on the daily chart is somewhat negative. The close below the 1st swing support could weigh on the market. Orange Juice should run into resistance at 66.40 and above there at 66.95 with support at 65.60 and 65.35. 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 66.95.