Copper At New Highs–Here’s Why
BOND MARKET RECAP
4/11/2005
June Bonds finished up 0-16 at 111-27, 0-11 off
the high and 0-14 up from the low.
June 10 Yr Treasury Notes finished up 0-090 at
109-200, 0-040 off the high and 0-095 up from the low.
While we suspected that the path of least
resistance in the Treasury market was pointing upward we were surprised by the
magnitude of the gains. However, considering the massive existing short small
spec and fund positioning in Notes and Bonds, it is not entirely surprising that
a short covering wave of buying surfaced. One might remember that scheduled US
economic information on Monday was much stronger than expected and even that
failed to discourage aggressive buying. Some traders thought that intervention
buying speculation was at work, while others even suggested that maybe the Fed
would be inclined to back off from the aggressive tightening talk, which was the
line of reasoning floated in a national publication on Monday morning.
Technical Outlook
BONDS (JUN) 04/12/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Rising stochastics at overbought levels warrant some caution for bulls. The
major trend could be turning up with the close back above the 18-day moving
average. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. The next upside target is 112-21. The next area
of resistance is around 112-12 and 112-21, while 1st support hits today at
111-20 and below there at 111-04.
TNOTES (JUN) 04/12/2005: The major trend could be
turning up with the close back above the 40-day moving average. Momentum studies
are trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average is an indication the longer-term trend has
turned positive. There could be more upside follow through since the market
closed above the 2nd swing resistance. The near-term upside objective is at
110-015. The next area of resistance is around 109-295 and 110-015, while 1st
support hits today at 109-160 and below there at 109-060.
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STOCK INDICES RECAP
4/11/2005
June S&P finished up 0.4 at 1184, 3.1 off the
high and 2.8 up from the low.
June S&P E-Mini closed unchanged at 1183.5. This
was 2.25 up from the low and 3.75 off the high.
June Dow closed down 12 at 10463. This was 8 up
from the low and 35 off the high.
While lower energy prices helped the stock market
start the week out on a positive note it was apparent by mid session Monday that
some uncertainty was creeping back into the equation. We suspect that concern
over the coming US Trade Deficit figures and the prospect of disinvestment away
from the US in the wake of the trade figures kept many buyers on the sidelines.
The bulls might have been a little disappointed in the action of the stock
market on Monday considering that crude oil prices were down nearly $1.00 at
times and the Kansas City Fed manufacturing Index posted an impressive rise.
Technical Outlook
S&P 500 (JUN) 04/12/2005: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The major trend could be turning up with
the close back above the 18-day moving average. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside target
is at 1189.97. The next area of resistance is around 1186.95 and 1189.97, while
1st support hits today at 1181.05 and below there at 1178.18.
SP EMINI (JUN) 04/12/2005: A positive indicator
was given with the upside crossover of the 9 & 18 bar moving average.
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. It is a slightly negative indicator that the close was under the swing
pivot. The near-term upside objective is at 1189.87. The next area of resistance
is around 1186.50 and 1189.87, while 1st support hits today at 1180.50 and below
there at 1177.88.
NASDAQ (JUN) 04/12/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend has turned down with the cross over back below
the 18-day moving average. The market tilt is slightly negative with the close
under the pivot. The near-term upside target is at 1504.75. The next area of
resistance is around 1494.50 and 1504.75, while 1st support hits today at
1478.50 and below there at 1472.75.
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CURRENCY MARKET RECAP
4/11/2005
June US Dollar finished down 29 at 8412, 39 off
the high and 10 up from the low.
June Euro finished up 0.57 at 130.03, 0.2 off the
high and 0.39 up from the low.
June Euro Dollar closed down 0.005 at 96.51. This
was 0.005 up from the low and 0.005 off the high.
June Canadian Dollar closed down 0.49 at 81.03.
This was 0.11 up from the low and 0.53 off the high.
June British Pound finished up 0.62 at 188.52,
0.26 off the high and 0.3 up from the low.
June Swiss closed up 0.39 at 84.19. This was 0.31
up from the low and 0.17 off the high.
June Japanese Yen closed up 0.5 at 93.33. This
was 0.2 up from the low and 0.07 off the high.
The Dollar continued to slide despite the fact
that some players expect the Fed to save the day on Tuesday afternoon with calls
for even high US interest rates. However, we also suspect that many traders
expect the Dollar to extend sharply lower on Tuesday morning in the wake of the
next US trade deficit reading. While the wild fluctuations in oil prices can
push around monthly trade figures we suspect that the US stands a good chance of
posting yet another record deficit reading and that should keep the pressure on
the Greenback. Most surprisingly the Canadian Dollar continued to fail on the
charts, even in the face of a weak US Dollar and that would seem to point at
more significant gains in the Canadian in the event that the US Dollar recovers
into the Fed meeting on Tuesday.
Technical Outlook
YEN (JUN) 04/12/2005: 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. Follow
through buying looks likely if the market can hold yesterday’s gap on the day
session chart. There could be more upside follow through since the market closed
above the 2nd swing resistance. The near-term upside target is at 93.56. The
next area of resistance is around 93.46 and 93.56, while 1st support hits today
at 93.20 and below there at 93.03.
EURO (JUN) 04/12/2005: 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. Follow through buying looks likely if
the market can hold yesterday’s gap on the day session chart. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The next upside objective is 130.57. The next area of resistance is around
130.32 and 130.57, while 1st support hits today at 129.74 and below there at
129.40.
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PRECIOUS METALS RECAP
4/11/2005
April Gold closed up 1.7 at 428.6. This was 0.1
up from the low and 1.2 off the high.
May Silver finished up 0.09 at 7.255, 0.045 off
the high and 0.025 up from the low.
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The gold and silver markets continued to receive
outside support off the sagging Dollar and with the uncertainty of the US Trade
Deficit report looming on Tuesday morning it would not be surprising to see a
return of flight to quality buying to gold. In our opinion, gold really hasn’t
seen much in the way of flight to quality buying since late February. The silver
market continued to outperform gold as if the improvement in the macro economic
outlook (mostly due to lower oil prices) seemed to lift both silver and copper
prices. In any regard, some buyers of gold might be prompted into action
specifically because the potential slide in the Dollar and not because they
expect an anxiety event.
Technical Outlook
SILVER (MAY) 04/12/2005: 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 indicates the longer-term trend has turned up. If yesterday’s gap
higher on the day session chart holds, additional buying could develop this
session. With the close over the 1st swing resistance number, the market is in a
moderately positive position. The near-term upside objective is at 733.0. The
next area of resistance is around 729.0 and 733.0, while 1st support hits today
at 722.1 and below there at 719.1.
GOLD (APR) 04/12/2005: 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 close below the 18-day moving average is
an indication the longer-term trend has turned down. If yesterday’s gap higher
on the day session chart holds, additional buying could develop this session.
The market setup is supportive for early gains with the close over the 1st swing
resistance. The near-term upside objective is at 430.1. Short-term indicators
suggest buying pullbacks today. The next area of resistance is around 429.2 and
430.1, while 1st support hits today at 428.0 and below there at 427.6.
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COPPER MARKET RECAP
4/11/2005
May Copper closed up 1.75 at 152.50. This was
0.80 up from the low and 0.25 off the high.
The copper market soared to another round of
contract highs Monday in the wake of bullish demand dialogue, a weak US Dollar,
sagging energy prices and periodically supportive equity market action.
Apparently a private forecasting Group predicted that Chinese copper demand
would continue to grow at a 10% rate due to ongoing infrastructure activity and
that combined with rumors that China might take delivery on 10,000 tons of
copper against the April contract certainly fostered fresh buying interest on
Monday morning. The trade did note a topping prediction from a major wire house
but apparently the influence of Chinese demand overcame longer term bearish
potentials.
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ENERGY MARKET RECAP
4/11/2005
May Crude Oil closed up 0.39 at 53.71. This was
1.61 up from the low and 0.09 off the high.
May Heating Oil closed down 1.01 at 148.71. This
was 3.21 up from the low and 0.29 off the high.
May Unleaded Gas finished up 1.32 at 154.98, 0.27
off the high and 4.48 up from the low.
May Natural Gas finished up 0.07 at 7.31, 0.01
off the high and 0.14 up from the low.
May Propane closed down 0.01 at 0.84. This was
equal to the low and equal to the high.
The energy complex seemed to come under
additional pressure on Monday morning in the wake of comments from the Libyan
Oil Minister who suggested that oil prices would crash as a result of any
additional production increases. According to Press reports floated Monday
morning, OPEC is rumored to be poised to set a maximum oil price band around
$50.00, which could mean that prices are set for at least an addition $1.30 per
barrel decline. We suspect that the market continues to factor the potential
spring rebuilding and unless there is a fresh supply threat or some really
strong demand projections, we suspect that the path of least resistance will
remain down.
Technical Outlook
CRUDE OIL (MAY) 04/12/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The upside daily closing price reversal gives
the market a bullish tilt. The close over the pivot swing is a somewhat positive
setup. The next downside objective is 51.63. The next area of resistance is
around 54.55 and 55.03, while 1st support hits today at 52.86 and below there at
51.63.
UNLEADED (MAY) 04/12/2005: 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 daily closing
price reversal up is a positive indicator that could support higher prices. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. The next downside objective is now at 149.18. The next area of
resistance is around 157.35 and 158.67, while 1st support hits today at 152.61
and below there at 149.18.
HEATING OIL (MAY) 04/12/2005: 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 market tilt is slightly negative with the close under the
pivot. The next downside target is 144.48. The next area of resistance is around
150.45 and 151.47, while 1st support hits today at 146.96 and below there at
144.48.
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CORN MARKET RECAP
4/11/2005
May Corn finished up 1 3/4 at 205 3/4, 1/4
off the high and 2 3/4 up from the low. December Corn closed up 1 1/4 at 230
3/4. This was 2 1/2 up from the low and 1/4 off the high.
The lower opening and higher close is a positive
technical development from an extreme oversold condition. The market bounced off
of the early lows due to ideas that futures were too oversold and talk of rains
in the next few days across the Midwest. Slow buying from Japan due to GMO
concerns along with bearish demand news from last weeks USDA reports for
exports, feed usage and ethanol usage helped limit the buying support. For the
weekly export inspections, corn exports hit 26.2 million bushels from trade
expectations of 28-33 million bushels. Cumulative shipments hit 51.3% of the
forecast for the season as compared with 58.8% on average for this time of the
year. Exports need to average 46.7 million bushels per week to reach the
projection. Israel set a tender to buy 36,000 tonnes of US corn and Taiwan is
tendering for 20,000 tonnes of US corn. The weekend COT report with options
showed the small speculator net short position in corn had hit a new record
level at 98,811 contracts as of April 4th which leaves the market vulnerable to
short-covering if resistance levels are violated. Support for May corn comes in
near 203 3/4 and 201 3/4 with resistance at 207 and 208 3/4.
Technical Outlook
CORN (MAY) 04/12/2005: The daily stochastics gave
a bullish indicator with a crossover up. The stochastics indicators are rising
from oversold levels, which is bullish and should support higher prices. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. A positive setup occurred with the close over the 1st swing
resistance. The near-term upside objective is at 208. The next area of
resistance is around 207 1/4 and 208, while 1st support hits today at 204 1/4
and below there at 202 1/4.
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SOY COMPLEX RECAP
4/11/2005
May Soybeans finished up 4 3/4 at 616 3/4, 3/4
off the high and 14 3/4 up from the low. November Soybeans closed up 6 at 612
1/2. This was 13 up from the low and 1/2 off the high.
May Soymeal closed up 2 at 187.5. This was 5.0 up
from the low and 0.3 off the high.
May Soybean Oil finished up 0.13 at 22.4, 0.1 off
the high and 0.33 up from the low.
Short-term demand concerns from China along with
continued long liquidation selling from funds helped pressure the market early
in the session. However, the oversold technical condition of the market and the
lack of new selling interest on the move to the lowest level since February 25th
helped to support. Keep in mind, the small speculator was holding a hefty net
short position in Fridays COT report. The advancing harvest in Brazil and a good
set-up for the US crop ahead added to the bearish tone. Talk that China has
overbooked beans for March delivery and that China buyers have switched 5-6
cargoes of US and Brazil soybean cargoes to Argentina added to the bearish
demand tone. Favorable harvest weather in Brazil with the exception of some
rains in the southern growing areas was also seen as a bearish force. The
weekend Commitment-of-Traders report with options showed that fund traders are
in a long liquidation mode and as of April 5th, large traders were still net
long over 29,000 contracts for soybeans, near 14,000 contracts for meal and near
18,000 contracts for oil. However, small specs were holding a net short of
nearly 50,000 contracts and short-covering supported the bounce into the close.
For the weekly export inspections report, soybean exports hit 11.36 million
bushels from trade expectations of 12-17 million bushels. Cumulative shipments
hit 89.1% of the forecast for the season as compared with 82.1% on average for
this time of the year. May soybean support comes in at 611 and 602 with 628 and
636 1/4 as next resistance.
Technical Outlook
BEANS (MAY) 04/12/2005: The daily stochastics
have crossed over up which is a bullish indication. The stochastics indicators
are rising from oversold levels, which is bullish and should support higher
prices. The close under the 18-day moving average indicates the longer-term
trend could be turning down. The daily closing price reversal up on the daily
chart is somewhat positive. The market has a slightly positive tilt with the
close over the swing pivot. The near-term upside target is at 628 3/4. The next
area of resistance is around 624 1/2 and 628 3/4, while 1st support hits today
at 609 and below there at 597 3/4.
MEAL (MAY) 04/12/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The upside daily closing price reversal
gives the market a bullish tilt. Market positioning is positive with the close
over the 1st swing resistance. The near-term upside target is at 191.6. Consider
buying pull-backs since daily studies are bullish. The next area of resistance
is around 190.1 and 191.6, while 1st support hits today at 184.9 and below there
at 181.1.
BEANOIL (MAY) 04/12/2005: 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 upside daily
closing price reversal gives the market a bullish tilt. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
objective is now at 21.92. The next area of resistance is around 22.61 and
22.77, while 1st support hits today at 22.19 and below there at 21.92.
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WHEAT MARKET RECAP
4/11/2005
May Wheat finished up 3 1/2 at 313 1/2, 1/2 off the high and 4
3/4 up from the low. July Wheat closed up 3 1/2 at 323 1/2. This was 6 up from
the low and 1/2 off the high.
Ideas for routine exports help to support the
early trade but weakness in the other grains, good weather for the plains and a
lack of crop concerns from main world producers has kept the supply outlook
bearish. Rains in China were seen as beneficial to the crop and recent rains in
Europe have eased drought concerns as well. For the weekly export inspections,
wheat exports hit 17.6 million bushels from trade expectations of 14-19 million
bushels. Cumulative shipments hit 89.4% of the forecast for the season as
compared with 85.5% on average for this time of the year. Exports need to
average 13.5 million bushels per week to reach the projection. A lack of new
selling interest when the market pushed lower on the day and significant
short-covering late in the day helped support the bounce into the close. May
wheat resistance comes in at 315 and 320 with 312 as support.
Technical Outlook
WHEAT (MAY) 04/12/2005: The daily stochastics
gave a bullish indicator with a crossover up. 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. The market has a slightly positive tilt with
the close over the swing pivot. The next upside objective is 317 1/2. The next
area of resistance is around 316 and 317 1/2, while 1st support hits today at
311 and below there at 307 1/4.
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LIVE CATTLE RECAP
4/11/2005
April Live Cattle finished down 0.25 at 88.02,
0.47 off the high and 0.15 up from the low.
May Feeder Cattle closed up 0.17 at 104.97. This
was 0.37 up from the low and 0.27 off the high.
June cattle closed slightly lower on the session
today as the market awaited some direction from the cash markets.
Quickly-melting snow in Kansas left feedlots there muddy, but windy conditions
are expected to dry them in short order. Cash cattle in the plains were offered
at 92-94, but there were no bids after trading at 90-91 last week. Boxed beef
cutout values at mid-session were up 68 cents on the day to $154.86 as compared
with $153.54 a week ago.
Technical Outlook
CATTLE (APR) 04/12/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. The close under the 18-day moving average indicates
the longer-term trend could be turning down. The market’s close below the pivot
swing number is a mildly negative setup. The next downside target is now at
87.500. The next area of resistance is around 88.320 and 88.720, while 1st
support hits today at 87.720 and below there at 87.500.
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LEAN HOGS RECAP
4/11/2005
April Lean Hogs finished up 0.75 at 68.97, 0.05
off the high and 0.75 up from the low.
May Pork Bellies closed down 1.92 at 91.87. This
was 0.47 up from the low and 1.77 off the high.
June hogs were able to close firmer after
recovering from early weakness off fund sales. A firmer tone to the cash market
helped to support the recovery in futures prices. The CME 2-day Lean Hog index
stood at 68.18 cents per pound, up.10 cents for April 7th. Actual hog slaughter
for April 11trh came out at 389,000 head vs estimates between 385,000 and
395,000 and compared to 390,000 one week ago and 277,000 head a year ago. So
far, June hogs have been able to hold support at 76 on the price break this
month. Technical indicators are showing the market has become over sold.
Technical Outlook
HOGS (APR) 04/12/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close under
the 18-day moving average indicates the longer-term trend could be turning down.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. The near-term upside objective is at 69.600. The
next area of resistance is around 69.370 and 69.600, while 1st support hits
today at 68.600 and below there at 68.020.
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COCOA MARKET RECAP
4/11/2005
May Cocoa finished down 25 at 1540, 32 off the
high and 4 up from the low.
While cocoa generally waffled within the range
forged last week, the close was negative and news that Ivory Coast mid crop was
going to be good certainly added to the bearish sentiment. While some might
point to weaker Dollar as a supportive development we doubt that the commercial
trade needs additional coverage considering that many commercials were
reportedly pulled into fresh long plays on the March 28th through April 1st
run-up in prices. News that mid crop production at the Ivory Coast might exceed
expectations should really dampen the ability to rally especially when one
considers the recent tempering of political tensions at the Ivory Coast.
Technical Outlook
COCOA (MAY) 04/12/2005: 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 market back below the 18-day moving
average suggests the longer-term trend could be turning down. The daily closing
price reversal down is a negative indicator for prices. The market setup is
somewhat negative with the close under the 1st swing support. The near-term
upside objective is at 1583. The next area of resistance is around 1558 and
1583, while 1st support hits today at 1522 and below there at 1511.
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COFFEE MARKET RECAP
4/11/2005
May Coffee closed down 3.35 at 113.50. This was
0.20 up from the low and 3.10 off the high.
July coffee fell for the fourth consecutive
trading session pressured by fund selling in both NY and London. The COT report
with options showed funds were still net long over 37,000 as of April 5th which
made the market vulnerable to a profit taking break. Weather in Brazil’s main
coffee growing region is forecasted to be hot and dry for most of this week and
there is some concern over tree stress. The next rain event is this coming
weekend. March coffee exports from Uganda fell 17% compared to last year due
partly to a small crop.
Technical Outlook
COFFEE (MAY) 04/12/2005: 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 lower than the pivot swing
number. The next downside target is now at 110.95. The market is approaching
oversold levels on an RSI reading under 30. The next area of resistance is
around 115.10 and 117.50, while 1st support hits today at 111.85 and below there
at 110.95.
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SUGAR MARKET RECAP
4/11/2005
May Sugar closed down 0.13 at 8.35. This was 0.02
up from the low and 0.21 off the high.
As in other soft commodity markets, sugar prices
continued to break sharply Monday pressured by speculative selling. July sugar
fell to the lowest prices since last November. The trade looks to becoming more
divided on the outlook for sugar with a production deficit for 2004/05 expected
(but less than previously thought) and a return to a surplus in 2005/06.
Non-traditional sugar buyers remain on the sideline and a lack of cash market
activity looks to have turned the near-term outlook negative, but the 8.40 level
basis the July contract will be critical for the market to hold.
Technical Outlook
SUGAR (MAY) 04/12/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. 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. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The next downside target is now at 8.17. The next
area of resistance is around 8.46 and 8.62, while 1st support hits today at 8.24
and below there at 8.17.
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COTTON MARKET RECAP
4/11/2005
May Cotton finished up 0.06 at 53.27, 0.43 off
the high and 0.62 up from the low.
July cotton prices traded lower Monday pressured
by speculative selling which was prevalent in several soft commodity markets. As
of April 5th, the funds still held a large net long position in cotton which was
less than 6,000 contracts below the record net long position level. News that
China’s March clothing exports were up nearly 16% seemed to have little positive
impact, as demand for US cotton from China has not been as robust this season as
it was last season. Close in support for July cotton is at 54.50 with resistance
at 55.15.
Technical Outlook
COTTON (MAY) 04/12/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. The next upside target is 54.27.
The next area of resistance is around 53.79 and 54.27, while 1st support hits
today at 52.75 and below there at 52.18.