Commercials And Hedgers Pulled Into Energy Markets Friday–Here’s What That May Mean

BOND MARKET RECAP

4/1/2005

March Bonds finished up 0-13 at 111-25, 0-26 off
the high and 1-00 up from the low.

March 10 Yr Treasury Notes finished up 0-085 at
109-170, 0-150 off the high and 0-220 up from the low.

The Treasury market posted a wild session
Friday in the wake of a surprise non farm payroll tally of only 110,000. With
the non farm payrolls coming in less than half of the expected the only offset
to a massive bullish reaction was the fact that the unemployment rate declined.
It would seem that ongoing inflation concerns dampened the bullish reaction in
Treasuries but with US stock prices falling sharply and crude oil prices
exploding back toward the old highs there would certainly seem to be
justification to fret over the economy’s ability to continue growing.

Technical Outlook

BONDS (JUN) 04/04/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend could be turning up with the
close back above the 18-day moving average. Market positioning is positive with
the close over the 1st swing resistance. The next upside objective is 113-18.
The next area of resistance is around 112-24 and 113-18, while 1st support hits
today at 110-31 and below there at 109-31.

TNOTES (JUN) 04/04/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
close over the pivot swing is a somewhat positive setup. The near-term upside
target is at 110-225. The next area of resistance is around 110-045 and 110-225,
while 1st support hits today at 108-300 and below there at 108-090.

 

STOCK INDICES RECAP

4/1/2005

March S&P finished down 6.2 at 1177.7, 15.8 off
the high and 5.2 up from the low.

March S&P E-Mini closed down 6.25 at 1177.75.
This was 5.25 up from the low and 15.75 off the high.

March Dow closed down 89 at 10431. This was 36 up
from the low and 154 off the high.

The stock market acted as if the soft payrolls
reading was unimportant, at least for an hour or so. However, once energy prices
got on a roll and concern for the economy as a whole escalated the sellers
seemed to come out in force. In fact, considering the massive rise in gasoline
prices it would seem to be logical to fear a further tailing off of US growth in
the months ahead. So far, the Us government and the US oil sector is oblivious
to the need for some alternative supply and as a result market forces might have
to step up and kill off demand and that won’t be a good thing for US stocks.

Technical Outlook

S&P 500 (JUN) 04/04/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The outside day down is a
negative signal. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The near-term upside target is at
1201.34. The next area of resistance is around 1188.19 and 1201.34, while 1st
support hits today at 1167.20 and below there at 1159.35.

SP EMINI (JUN) 04/04/2005: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The major trend has turned down with the cross
over back below the 18-day moving average. A negative signal was given by the
outside day down. There could be some early pressure today given the market’s
negative setup with the close below the 2nd swing support. The next upside
target is 1201.37. The next area of resistance is around 1188.25 and 1201.37,
while 1st support hits today at 1167.25 and below there at 1159.38.

NASDAQ (JUN) 04/04/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The outside day down and close
below the previous day’s low is a negative signal. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
next upside target is 1515.87. The next area of resistance is around 1495.75 and
1515.87, while 1st support hits today at 1464.25 and below there at 1452.88.

 

CURRENCY MARKET RECAP

4/1/2005

March US Dollar finished up 35 at 8440, 25 off
the high and 90 up from the low.

March Euro finished down 0.52 at 129.3, 1.45 off
the high and 0.37 up from the low.

March Euro Dollar closed up 0.035 at 96.52. This
was 0.03 up from the low and 0.01 off the high.

March Canadian Dollar closed down 0.41 at 82.28.
This was 0.16 up from the low and 0.67 off the high.

March British Pound finished down 0.8 at 187.46,
1.64 off the high and 0.51 up from the low.

March Swiss closed down 0.49 at 83.46. This was
0.31 up from the low and 1.04 off the high.

March Japanese Yen closed down 0.35 at 93.48.
This was 0.18 up from the low and 0.72 off the high.

The Dollar seemed to be lucky Friday morning as
the non farm payroll numbers could have been very damaging to the Dollar but
apparently subsequent US numbers recreated an inflation threat and that is
really the main focus of the currency markets. It is also possible that the
slack economic numbers released outside of the US prior to the US payroll report
diffused the negative impact of the US readings. In the end, the Dollar might
have avoided selling but the bull camp in the Dollar certainly isn’t out of the
woods yet. One thing is for sure and that is, inflation is on the minds of many
and with another $2.00 gain in crude oil prices and a 6.5 cent gain in unleaded
gas there is certainly inflation afoot.

Technical Outlook

YEN (JUN) 04/04/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The major trend has turned down with the cross over back below the
18-day moving average. The swing indicator gave a moderately negative reading
with the close below the 1st support number. The next downside target is 92.72.
The 9-day RSI under 30 indicates the market is approaching oversold levels. The
next area of resistance is around 93.93 and 94.51, while 1st support hits today
at 93.03 and below there at 92.72.

EURO (JUN) 04/04/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. A negative signal was given by the outside day down. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. The next downside target is 127.75. The next area of resistance is around
130.21 and 131.39, while 1st support hits today at 128.39 and below there at
127.75.

 

PRECIOUS METALS RECAP

4/1/2005

April Gold closed down 2.8 at 425.9. This was 1.4
up from the low and 2.6 off the high.

March Silver finished down 0.18 at 7, 0.15 off
the high and 0.045 up from the low.

 

The Gold market saw the worst of both worlds on
Friday US economic numbers were soft (conjuring up concern for physical demand)
and at the same time the Dollar rejected a sharply lower early move to push
another layer of spec longs out of gold. While the inflation theme seemed to be
driving the Dollar higher inflation is certainly not providing support to the
gold market. With most of the metals precious and industrial weak on the day it
was clear that sloppy macros are capable of pressuring prices and that high oil
prices are not yet rekindling the 70’s style interest in the precious metals.

Technical Outlook

SILVER (MAY) 04/04/2005: The close below the
60-day moving average is an indication the longer-term trend has turned down.
Daily stochastics are showing positive momentum from oversold levels, which
should reinforce a move higher if near term resistance is taken out. The market
back below the 18-day moving average suggests the longer-term trend could be
turning down. The gap down on the day session chart is bearish with more selling
pressure possible today. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The near-term upside target is at
722.1. The next area of resistance is around 709.8 and 722.1, while 1st support
hits today at 690.3 and below there at 683.2.

GOLD (APR) 04/04/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. The next downside target is now at 422.2. The next area of resistance
is around 427.9 and 430.2, while 1st support hits today at 423.9 and below there
at 422.2.

 

COPPER MARKET RECAP

4/1/2005

March Copper closed down 1.80 at 148.45. This was
1.35 up from the low and 1.15 off the high.

The copper market continues to get supportive
information from the supply front as Shanghai copper stocks mounted another
significant weekly decline but with the demand outlook called into question by
the weaker than expected US Non farm payroll report and the sharp rise in energy
prices we can understand some buyers stepping back from copper. China on the
other hand is supposedly picking up all the manufacturing business but it also
has to import oil and burn a lot of oil and therefore, the Chinese economy might
be in for trouble because of energy prices and that would certainly temper
copper consumption. Lastly we suspect that the sharp recovery in the Dollar
added to the liquidation tilt in copper, which might have reached a moderately
overbought level around the highs Thursday.

 

ENERGY MARKET RECAP

4/1/2005

April Crude Oil closed up 1.87 at 57.27. This was
2.12 up from the low and 0.43 off the high.

April Heating Oil closed up 4.77 at 166.38. This
was 5.58 up from the low and 1.12 off the high.

April Unleaded Gas finished up 6.79 at 173.10,
0.50 off the high and 7.40 up from the low.

April Natural Gas finished up 0.10 at 7.75, 0.10
off the high and 0.13 up from the low.

April Propane closed up 0.04 at 0.91. This was
0.01 up from the low and equal to the high.

There would seem to be little to keep the price
of oil down as the market seemed to overreact to the wild projection of $105 but
it would seem that the specs are not done with the market and are now concerned
about a summer gasoline debacle. Even in the face of slackening economic
readings the oil sector is simply capable of holding onto a very optimistic
demand outlook and therefore oil prices might have to continue rising until
something fundamentally happens to supply or demand. Apparently the upside
action Friday pulled in commercial buyers and hedgers, which in a sense could
lock up a large portion of the available supply.

Technical Outlook

CRUDE OIL (MAY) 04/04/2005: The daily stochastics
have crossed over up which is a bullish indication. Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The major trend
could be turning up with the close back above the 18-day moving average. 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 target is 59.39. The next area of resistance is around 58.54 and 59.39,
while 1st support hits today at 56.00 and below there at 54.30.

UNLEADED (MAY) 04/04/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
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 179.27. With a reading
over 70, the 9-day RSI is approaching overbought levels. The next area of
resistance is around 177.05 and 179.27, while 1st support hits today at 169.15
and below there at 163.48.

HEATING OIL (MAY) 04/04/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day moving average. There could be more upside follow through since the
market closed above the 2nd swing resistance. The next upside objective is
171.96. The market is approaching overbought levels with an RSI over 70. The
next area of resistance is around 169.73 and 171.96, while 1st support hits
today at 163.03 and below there at 158.57.

 

CORN MARKET RECAP

4/1/2005

May Corn finished down 1/4 at 212 3/4, 1
off the high and 3 3/4 up from the low. December Corn closed up 2 1/4 at 237.
This was 4 up from the low and 1 1/2 off the high.

Funds were noted sellers of near 5000 contracts
into the mid-session which helped drive the market lower but a strong recovery
in new crop corn supported the late bounce for the nearby May contract. May corn
closed 2 1/4 cents higher on the week. A lack of new interest from fund traders
and fears of weaker demand ahead helped to trigger more long liquidation selling
in corn led by the nearby contract. The higher than expected grain stocks number
yesterday showed corn demand in the past quarter was down 44 million bushels
from expectations and this news along with a hefty ending stocks forecast
pressured old crop corn. South Korea bought 52,500 tonnes of optional origin
corn overnight. The rain in the forecast for next week and the following week
has some traders nervous that planting delays for corn producers, high energy
prices and recent strong gains in November soybeans relative to December corn
could cause planted acreage for corn to drop even lower than yesterdays USDA
forecast. May corn resistance comes in at 213 1/4 with 207 1/2 and 205 as next
support.

Technical Outlook

CORN (MAY) 04/04/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside target is 207 1/2. The next area of resistance is around 215 and 216
3/4, while 1st support hits today at 210 1/2 and below there at 207 1/2.

 

SOY COMPLEX RECAP

4/1/2005

May Soybeans finished down 13 1/2 at 614, 16 off
the high and 4 up from the low. November Soybeans closed down 5 1/4 at 600 1/4.
This was 6 1/4 up from the low and 11 1/4 off the high.

May Soymeal closed down 3.2 at 183.8. This was
1.8 up from the low and 3.7 off the high.

May Soybean Oil finished down 0.22 at 22.68, 0.39
off the high and 0.28 up from the low.

Traders expected a higher opening but there was a
lack of new interest from the speculator and the trade is nervous that China may
have overbooked for May needs and new buying could slow over the near-term. In
addition, fund traders were sellers across a wide spectrum of commodity markets
with some concerns that higher energy prices might slow the world economy.
Traders expected significant follow-through buying from fund traders yesterday
but a lack of new buying interest late led to a long liquidation sell-off. Focus
on what the funds will do next has helped push the market around in volatile
trade over the past several weeks and there is talk today that funds may lighten
up on long positions over the near-term. May soybeans closed at 14 3/4 cents
lower on the week with May meal down $4.60 and May oil down 27 points for the
week. Some producer selling of soybeans was noted on the rally yesterday. The
rain in the forecast for next week and the following week has some traders
nervous that planting delays for corn producers, high energy prices and recent
strong gains in November soybeans relative to December corn could cause planted
acreage for soybeans to increase above yesterdays USDA forecast. May soybean
resistance comes in at 625 1/2 with support at 609 and 595 3/4.

Technical Outlook

BEANS (MAY) 04/04/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down. It
is a slightly negative indicator that the close was lower than the pivot swing
number. The next downside objective is 597. The next area of resistance is
around 624 and 637, while 1st support hits today at 604 and below there at 597.

MEAL (MAY) 04/04/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The market’s close below the pivot swing
number is a mildly negative setup. The next downside target is now at 178.8. The
next area of resistance is around 186.5 and 189.7, while 1st support hits today
at 181.1 and below there at 178.8.

BEANOIL (MAY) 04/04/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The market tilt
is slightly negative with the close under the pivot. The next downside objective
is 22.04. The next area of resistance is around 23.01 and 23.37, while 1st
support hits today at 22.35 and below there at 22.04.

 

WHEAT MARKET RECAP

4/1/2005

May Wheat finished down 8 1/2 at 322 1/2, 7 1/2 off the high
and 3 up from the low. July Wheat closed down 8 at 333. This was 4 up from the
low and 6 off the high.

May wheat closed 16 cents lower on the week. Good
weather in the forecast and fears that fund traders will continue to dump longs
helped to drive the wheat market sharply lower today with May wheat moving to
the lowest level since February 23rd. Follow-through technical selling after
yesterday’s sweeping hook reversal added to the bearish tone. Traders had hoped
that the low subsidy payment and low weekly export total from the EU might
provide some support today but fund selling overwhelmed the market. Weather
looks favorable to winter wheat crop conditions with more rain in the forecast
into early next week which added to the bearish tone. May wheat resistance comes
in at 323 1/4 and 327 1/2 with 318 3/4 and 309 1/2 as next support.

Technical Outlook

WHEAT (MAY) 04/04/2005: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Momentum studies are declining, but have fallen to oversold levels. The close
under the 18-day moving average indicates the longer-term trend could be turning
down. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The next downside target is 313 1/4. The next area
of resistance is around 327 3/4 and 334, while 1st support hits today at 317 1/4
and below there at 313 1/4.

 

LIVE CATTLE RECAP

4/1/2005

April Live Cattle finished down 0.10 at 89.72,
0.27 off the high and 1.02 up from the low.

May Feeder Cattle closed up 0.90 at 105.85. This
was 1.15 up from the low and 0.35 off the high.

June cattle closed 17 higher on the session and
87 points up from the lows of the day as higher beef prices and strength in the
hog market helped to offset active long liquidation selling early in the
session. The market managed to gain 55 points on the week as cash cattle in the
panhandle traded $2.00 higher on the week to $92. Boxed-beef cut-out values at
mid-session were up $.47 to $152.72 as compared with $149.01 last week.
Slaughter for today came in at 107,000 head from trade estimates of
108,000-116,000 head and Saturday slaughter was 14,000 head vs. 7,000-12,000
expected.

Technical Outlook

CATTLE (APR) 04/04/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market now above the 18-day moving average
suggests the longer-term trend has turned up. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside
objective is at 90.820. The next area of resistance is around 90.350 and 90.820,
while 1st support hits today at 89.070 and below there at 88.250.

 

LEAN HOGS RECAP

4/1/2005

April Lean Hogs finished up 1.45 at 70.15, 0.27
off the high and 0.90 up from the low.

May Pork Bellies closed up 0.67 at 96.92. This
was 1.02 up from the low and 0.37 off the high.

The hog market surged higher led by aggressive
fund buying on a session when most commodity markets were under selling pressure
from liquidation selling from fund traders. Ideas that pork demand will remain
strong and that exports will remain strong helped offset supply concerns to
support. Slaughter for Friday came in at 383,000 head from trade estimates of
390,000-396,000 head and Saturday slaughter was 114,000 head vs. 110,000-120,000
expected. The 2-day lean index for the period ending March 30th came in at
67.03, up.01 on the session and down from 68.15 one week previous. The close
above 80.40 for June hogs is a bullish technical development and leaves 83.97 as
next upside swing objective.

Technical Outlook

HOGS (APR) 04/04/2005: The daily stochastics have
crossed over up which is a bullish indication. Daily stochastics are showing
positive momentum from oversold levels, which should reinforce a move higher if
near term resistance is taken out. The close below the 18-day moving average is
an indication the longer-term trend has turned down. 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 upside objective is 71.150. The next area of resistance is
around 70.720 and 71.150, while 1st support hits today at 69.570 and below there
at 68.820.

 

COCOA MARKET RECAP

4/1/2005

May Cocoa finished down 42 at 1571, 98 off the
high and 13 up from the low.

The cocoa market seemed to be hit with a massive
liquidation effort and that selling might have been part of a big fund
liquidation that spread across a number of markets. In fact, it is a little
surprising that cocoa didn’t find support off the prospect of violence into the
coming weekend Peace talks. Supposedly there were rumors flying about a number
of funds dumping commodity holdings over the last two days or rumors of AIG
dumping fund holdings but with the Dollar higher and July cocoa running below a
number of chart support levels we are not surprised that a major failure took
place.

Technical Outlook

COCOA (MAY) 04/04/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The outside day down is somewhat negative. The close below the 2nd
swing support number puts the market on the defensive. The next downside
objective is now at 1482. The next area of resistance is around 1626 and 1703,
while 1st support hits today at 1516 and below there at 1482.

 

COFFEE MARKET RECAP

4/1/2005

May Coffee closed down 2.45 at 123.95. This was
1.35 up from the low and 4.85 off the high.

The coffee market also appeared to fall victim to
the broad based rumors concerning commodity fund liquidation. While the funds
need to periodically bank profits after amassing significant long holdings we
see no reason why the funds would be leaving the market permanently as some
injured bulls would like to suggest. From the fundamental front the coffee
market did see some slightly negative information from central America as at
least two producers documented an increase in export figures.

Technical Outlook

COFFEE (MAY) 04/04/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Daily stochastics are trending lower but have declined into oversold territory.
The major trend has turned down with the cross over back below the 18-day moving
average. The outside day down is somewhat negative. The market setup is somewhat
negative with the close under the 1st swing support. The next downside objective
is 118.65. The next area of resistance is around 127.05 and 131.00, while 1st
support hits today at 120.90 and below there at 118.65.

 

SUGAR MARKET RECAP

4/1/2005

May Sugar closed down 0.18 at 8.52. This was 0.01
up from the low and 0.26 off the high.

A move from higher to lower in London, a higher
US dollar and across the board selling from funds helped pressure the market
with May sugar closing 18 lower on the session and near the low end of a 27
point range. May sugar closed 15 lower on the week. Producer selling was noted
and helped drag the market off of the early highs. Brazil officials indicated
that March sugar exports totaled 1.34 million tonnes, up 4.6% from last year.
Brazil’s harvest is expected to begin in the weeks just ahead with trade
expectations for another record high crop.

Technical Outlook

SUGAR (MAY) 04/04/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. A negative signal was given by the
outside day down. The close below the 2nd swing support number puts the market
on the defensive. The next downside objective is now at 8.32. The next area of
resistance is around 8.65 and 8.85, while 1st support hits today at 8.39 and
below there at 8.32.

 

COTTON MARKET RECAP

4/1/2005

May Cotton finished down 0.23 at 52.80, 0.55 off
the high and 2.25 up from the low.

After the initial collapse, cotton managed to
recover late in the session with May cotton closing 23 lower on the session but
up 225 from the session lows. Fund selling was active early and there was a lack
of trade house support but commercial and trade house buying emerged and the
market bounced to close near the highs and May cotton managed to close 121
higher on the week. Slower than expected export sales pace and some concerns
that high energy prices might slow the China economy helped to pressure the
market early. A jump in the dollar was also seen as a bearish development.
Cumulative cotton export sales have reached just 88.6% of the USDA forecast for
the season as compared with 96% as the 5-year average for this time of the year.

Technical Outlook

COTTON (MAY) 04/04/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend could be turning up with the
close back above the 18-day moving average. The market’s close below the pivot
swing number is a mildly negative setup. The near-term upside objective is at
55.17. The next area of resistance is around 54.20 and 55.17, while 1st support
hits today at 51.40 and below there at 49.58.