Buy The Rumor, Sell The News On Wheat?

BOND MARKET RECAP

1/13/2004

The Treasury market was locked in tight range but seemed to prefer the upside following what we think was another muted to weak US report released from the Richmond Fed. With the US stock market showing more liquidation interest it might be easier for concerns on the recovery to expand their presence. In other words, seeing persistent selling in the stock market might make the trade feel a little more negative toward the economy. The economic reports due out Wednesday probably won’t offer up much impact on prices because they are inflation and trade numbers and are not classic growth type readings.

Technical Outlook

BONDS (MAR) 1/14/2004: The outside day up is somewhat positive. The daily closing price reversal up is a positive indicator that could support higher prices. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 112.25 and then again at 113.02, while swing support hits at 111.18 and below there at 110.20. 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 113.02. The market is approaching overbought levels with an RSI over 70.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.09. 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 115.02 and then again at 115.09, while swing support hits at 114.05 and below there at 113.15. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. With a reading over 70, the 9-day RSI is approaching overbought levels.

STOCK INDICES RECAP

1/13/2004

Finally the stock market showed some signs of more intense selling pressure and given the persistent disappointment in US numbers it was only a matter of time before traders decided to bank some profits. The market might also have been slightly disappointed by comments from the Chairman of the Federal Reserve, as they didn’t seem to reconfirm a solid growth situation. In fact, the Fed Chairman said that an improvement in jobs would come overtime and that would seem to delay the recovery beyond the current time frame. Fortunately the stock market wasn’t significantly overbought and isn’t being presented with some anxiety issue or prices might have fallen more aggressively.

Technical Outlook

S&P500 (MAR) 1/14/2004: The market setup is somewhat negative with the close under the 1st swing support. Underlying support comes in at 1114.05 and 1106.68, with overhead resistance at 1128.55 and 1135.68. The close above the 9-day moving average is a positive short-term indicator for trend. 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 1106.68.

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. 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 1105.88. The swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for the S&P Mini is at 1129.00 and then again at 1136.88, while swing support hits at 1113.50 and below there at 1105.88. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (MAR) A positive signal for trend short-term was given on a close over the 9-bar moving average. The close below the 1st swing support could weigh on the market. The market should run into resistance at 1544.25 and above there at 1559.88 with support at 1513.75 and 1498.88. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1498.88.

CURRENCY MARKET RECAP

1/13/2004

The Dollar Index failed to climb above the critical 86.00 level, which might have been a significant technical development for some in the trade. Certainly seeing the US stock market falter could foster confidence in the short side of the Dollar. Furthermore, it would seem that German forecasters remained positive on the recovery in the Euro zone and once again suggested that the rising Euro wasn’t going to turn the Euro zone away from near term growth. The MOF in Japan were noted sellers of US Treasuries in an effort to support the Dollar in the action Tuesday afternoon.

Technical Outlook

YEN (MAR): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Swing resistance is targeted at 94.47 and above there at 94.61, with the yen finding support around 94.16 and below there at 93.99. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 93.99.

EURO (MAR): Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 1.2650. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2650, with overhead resistance at 1.2808. The close above the 9-day moving average is a positive 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

1/13/2004

With the Dollar market flirting with an upside breakout on the charts and that seemed to prompt some profit taking in gold and silver. With a massive small spec and fund long in place in both gold and silver any violation of chart support could be taken seriously. US economic numbers continued to be soft and the Chairman of the Fed didn’t really offer up much in the way of near term change in the job situation and that should leave the Dollar in a down trend.

Technical Outlook

SILVER (MAR): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 655.0 and below there at 649.0 with resistance likely at 659.4 and 664.5. 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 659.4. The market is approaching overbought levels with an RSI over 70.

GOLD (APR): Support for gold today comes in near 421.53, while resistance is pegged at 429.73. 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 target is now at 421.53. The market setup is somewhat negative with the close under the 1st swing support. The close above the 9-day moving average is a positive short-term indicator for trend.

COPPER MARKET RECAP

1/13/2004

After a massive early run copper prices fell back but still managed to close higher on the session. The market seemed to run hard in the early going on fresh Chinese buying stories but then fell back after some traders worried that a strike resolution might catch them in at lofty price levels. Supporting copper from a fundamental perspective were suggestions from the ICSG that the world posted a 360,000 tons deficit in January through October compared to a 22,000-ton surplus in the prior year. There could be a labor decision overnight so traders should expect ongoing volatility in prices.

ENERGY MARKET RECAP

1/13/2004

The energy complex decided to bank some profits after Iraq suggested that they would bring 2.3 to 2.5 million barrels of daily production to the table in 2004. A number of OPEC members continued to suggest that there is no evidence to suggest that a supply glut will build into the second quarter but that if prices show any weakness they will quickly slash production. In other words, OPEC intends to manage prices and will cut production because of flat price declines or Dollar adjusted price declines!

Technical Outlook

CRUDE OIL (MAR): The market rallied to a new contract high. The daily closing price reversal down is a negative indicator for prices. It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 33.64 and below there at 33.42, with resistance pegged at 34.39 and 34.92. 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 34.92.

UNLEADED GAS (MAR): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 103.34. The close below the 1st swing support could weigh on the market. Resistance today is at 103.34, while support should be found around 97.84. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (MAR):The market setup is somewhat negative with the close under the 1st swing support. Heating oil should encounter support around 94.93, with resistance is at 100.33. 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 100.33. The market rallied to a new contract high. The daily closing price reversal down is a negative indicator for prices.

CORN MARKET RECAP

1/13/2004

The market pushed sharply higher and into new contract highs supported by active fund and commercial buying led by a jump in December corn. The need for a sharp rise in corn acreage helped support the December corn as increasing demand on the corn balance sheet for next year and the fact that a record yield and a record crop this season was not enough to avoid the second tightest stocks/usage estimate in 29 years helped support the new crop buying. With high natural gas prices and nearby soybeans near $8.50, the task of “buying corn acres” this year could be difficult. The lack of coverage for end users in the US and the ability of the market to absorb significant producer selling added to the positive tone. A reversal to the downside in Wheat after bullish fundamental news was seen as a limiting factor.

Technical Outlook

CORN (MAR) 1/14/2004: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 273 1/2. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 273 1/2 today, with support at 262 . 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

1/13/2004

The soybean market rallied sharply led by aggressive fund buying in meal as speculative buying emerged shortly after the steady opening. Oil was the leader yesterday and meal today but the USDA projected consumption above production for both products in this weeks supply/demand report. Dryness and warmer weather in Argentina this week is expected to cause some stress to the crops in some areas by late in the weekend and traders will need to see good rains in the forecast for late in the weekend or early next week or end user buying is likely to turn sharply higher. There is little in the way of technical resistance on the monthly charts until 903 1/2 with the market coming close to upside objective for May soybeans at 855 1/2.

Technical Outlook

SOYBEANS (MAR) 01/14/04 The market made a new contract high on the rally. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next area of resistance is around 852 and 863 3/4, while 1st support hits today at 825 1/2 and below there at 810 3/4. The market’s close on the 9-day moving average is neutral. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 863 3/4. The market is approaching overbought levels with an RSI over 70.

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 266.7. The market rallied to a new contract high. First resistance comes in at 261.8, with support at 249.1. The close above the 9-day moving average is a positive short-term indicator for trend. There could be more upside follow through since the market closed above the 2nd swing resistance. The market is becoming somewhat overbought now that the RSI is over 70.

BEAN OIL (MAR): 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 30.73. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market made a new contract high on the rally. Daily swing resistance is found at 30.53 and above there at 30.73. Support should be encountered at 29.96 and 29.59. The market is approaching overbought levels with an RSI over 70.

WHEAT MARKET RECAP

1/13/2004

The wheat market opened sharply higher on news of a surprise purchase of US wheat from China but there was a technical failure above 4.00 (again) and long liquidation selling pulled the market 7 cents lower on the session before finding some support. The USDA announced that China bought 1.04 million tons of US wheat with 300,000 tons for old crop and the rest for the 2004/2005 season. The market fell sharply into mid-session with some “buy the rumor, sell the fact” selling after the China news. However, the market was well supported on news of the China buying team coming to town by mid-February and from weather news. Taiwan is tendering for 85,800 tons of US wheat on Wednesday. Warm and dry weather in the plains is melting snow cover in some areas and drying out soils in others. Focus on weather is still the driest areas in western Kansas.

Technical Outlook

WHEAT (MAR) 1/14/2004: 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. Expect near-term support around 384 1/2 and below there at 380 , with resistance levels at 399 1/2 and 410 . A negative signal for trend short-term was given on a close under the 9-bar moving average. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 410 .

LIVE CATTLE RECAP

1/13/2004

The cattle market found support from more interest from packers in the cash market and ideas that cash might trade more actively by the afternoon. Packer bids emerged at $74.00 with offers at $78.00 after trades of mostly $75.00 last week at this time. In addition, the market found support from solid gains in the boxed-beef market for the third session in a row. Boxed-beef cut-out values for 600-750 pounds were up $3.01 to $135.33 as compared with $133.61 last week at this time. A recovery in feeder cattle futures and news that Oklahoma City’s auction brought in cash trade at $2.00-$5.00 higher added to the more positive tone.

Technical Outlook

CATTLE (APR) 1/14/2004: Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 75.60. The market tilt is slightly negative with the close under the pivot. Support should be encountered at 73.97 and below there at 73.47. Market resistance is at 75.02 and then again at 75.60. A positive signal for trend short-term was given on a close over the 9-bar moving average.

LEAN HOGS RECAP

1/13/2004

The hog market recovery some of Monday’s losses with help from a recovery in the cattle market, a lack of a premium of futures to the cash market and hopes that the weekly slaughter pace will slow into mid-February. The oversold condition of the market basis traditional technical indicators and a lack of follow-through speculative selling helped the market push higher on the session. In the last COT report, both large and small traders were holding a hefty net short position which is another indication of the oversold condition. Traders are looking for the weekly cold storage report, released this afternoon, to show an in-movement of 2.2-3.0 million pounds as compared with 2.538 million moving into cold storage last week and 2.234 million last year.

Technical Outlook

HOGS (APR) 1/14/2004: It is a slightly negative indicator that the close was under the swing pivot. Resistance levels comes in at 56.15 and 56.52 today, while support is around 55.55 and then 55.32. The close below the 9-day moving average is a negative short-term indicator for trend. 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 55.32.

COCOA MARKET RECAP

1/13/2004

The cocoa market posted a big range but finished below the prior close. A moderately large cocoa warehouse build could have been a negative but the market is still being generally supported by disease concerns at the Ivory Coast. The trade continues to report ongoing origin selling which is a pressure to prices but to be expected at this stage of the main crop harvest. Unless the disease issue gets more Press soon it would not seem to be a critical issue.

Technical Outlook

COCOA (MAR)01/14/04 The downside closing price reversal on the daily chart is somewhat negative. The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1671 and above there at 1707 with support at 1612 and 1589. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1707.25.

COFFEE MARKET RECAP

1/13/2004

The market gave back some of the recent gains with moderate losses on the session in choppy, two-sided trade. Ideas that the market is overbought after the recent sharp gains and some light commercial selling (thought to be Brazil and Vietnam) helped to slow the rally in New York and in London. Speculative long liquidation selling after the 800 point surge off of the January 5th lows added to the negative tone on the session. The sharp rise in open interest since late last year is a sign that funds may be building a net long position. For the US Green Coffee monthly stocks report (for end of December) due on Thursday afternoon, traders are looking for stocks in the 5.370-5.828 range as compared with 5.678 million bags at the end of November.

Technical Outlook

COFFEE (MAR)1/14/04 The market tilt is slightly negative with the close under the pivot. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 72.55.The Coffee contract should run into resistance at 71.15 and above there at 72.55 with support at 68.7 and 67.65. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/13/2004

For the second session in a row, the market recovered from early steep losses to close slightly higher on the session. The oversold condition of the market and an uptick in the cash market activity helped provide support. The jump in open interest in the past two weeks is likely an indication that commercial buyers and commercial sellers are not priced and that cash activity is likely to increase. Russian and Middle Eastern buyers have been inactive recently and traders hope to see some buying soon. In addition, Indonesia and possibly China are expected to book sugar soon. Trade house and producer selling emerged to limit the upside activity but speculative buying was active on the break. More talk of potential buying from China helped provide underlying support.

Technical Outlook

SUGAR (MAR) 1/14/2004: The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 6.09, with support found at 5.81. The close above the 9-day moving average is a positive short-term indicator for trend. Stochastics are rising from over sold levels which is bullish and should support higher prices. The near-term upside target is at 6.09.

COTTON MARKET RECAP

1/13/2004

The cotton market inched higher in quiet trade as there has been a lack of market-moving news in the past week in spite of the World and US Supply/demand reports from Monday. With very few changes in the USDA data, it will take solid new activity from commercials to provide movement or else the overbought condition of the market could result in a long liquidation sell-off. Traders await new of any new buying from China which would likely spark another round of buying and a resumption of the uptrend.

Technical Outlook

COTTON (MAR) 1/14/2004: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. Next resistance area comes in at 74.61 and then again at 74.81, while support is targeted at 74.01 and 73.61. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 73.61. ORANGE JUICE (MAR)1/14/04 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 64.45 and above there at 65.10 with support at 63.60 and 63.40. 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 63.4.