Copper Impressive — Here’s Why

Technical Outlook

#BONDS (SEP) 7/23/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 108.21 and then again at 108.30, while swing support hits at 107.31
and below there at 107.18. 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 107.18.

T-NOTES(SEP) Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 110.03. It is a mildly bullish indicator that
the market closed over the pivot swing number. Near-term resistance for the
T-Notes is at 110.23 and then again at 110.28, while swing support hits at
110.11 and below there at 110.03. The market’s short-term trend is negative as
the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

7/22/2004

The stock market made another big range down
probe and had the technical capacity to forge a reversal. The bears must have
been a little disappointed by the lack of additional downside action in the wake
of the potential terror scares during the session. News from the Conference
Board that economic activity was waning could also have undermined the stock
market and therefore the market must be heavily oversold and lacking fresh
selling interest. Soaring energy prices were yet another issue that could have
hammered stock prices in the action Thursday.

Technical Outlook

#S&P500 (SEP) 7/23/2004: It is a slightly
negative indicator that the close was under the swing pivot. The upside daily
closing price reversal gives the market a bullish tilt. Underlying support comes
in at 1085.95 and 1076.48, with overhead resistance at 1102.05 and 1108.68. The
close below the 9-day moving average is a negative short-term indicator for
trend. The crossover up in the daily stochastics is a bullish signal. The
near-term upside objective is at 1108.68.

S&P E-Mini (SEP): The daily closing price
reversal up is positive. A bullish signal was given with an upside crossover of
the daily stochastics. The next upside target is 1108.69. It is a slightly
negative indicator that the close was lower than the pivot swing number.
Near-term resistance for the S&P Mini is at 1101.88 and then again at 1108.69,
while swing support hits at 1085.63 and below there at 1076.19. The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative.

NASDAQ (SEP) The daily closing price reversal up
is a positive indicator that could support higher prices. 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. The market
should run into resistance at 1423.25 and above there at 1435.13 with support at
1389.75 and 1368.13. The daily stochastics have crossed over up which is a
bullish indication. The next upside objective is 1435.13.

MINI DOW (MAR) The upside daily closing price
reversal gives the market a bullish tilt. The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10091 and above there at 10144 with support at 9957 and 9876. The
crossover up in the daily stochastics is a bullish signal. The near-term upside
target is at 10144. It is a slightly negative indicator that the close was under
the swing pivot.

 

CURRENCY MARKET RECAP

7/22/2004

The Dollar managed a feeble early attempt to
rally off the much better than expected initial and ongoing claims data but then
began to fade again after the leading indicators declined. We are actually
surprised that two domestic terrorism threats during the session didn’t result
in even more selling of the Dollar. However, the trade seems to be equally
disappointed with Euro zone growth and that means that the Canadian and the
Pound are the leadership markets. Both the BOC and the BOE have recently
suggested that their economies have very little slack and that hints at higher
rates.

Technical Outlook

#CURRENCIES 7/23/2004: YEN (SEP): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The market tilt is slightly negative with the close under the pivot. Swing
resistance is targeted at 91.47 and above there at 91.81, with the yen finding
support around 91.01 and below there at 90.89. The market back below the 40-day
moving average suggests 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 next downside objective is 90.89.

EURO (SEP): 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 1.2189. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.2189, with overhead resistance at 1.2299. 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

7/22/2004

The gold and silver markets seemed to be poised
to bounce off early Dollar weakness Thursday morning but into mid session and
into the pit close, the market faded and closed very weak. The Dollar was mostly
lower for the session and that should have sparked some long interest in the
metals but the trade seemed to lack a direct interest in the Dollar. Considering
the view toward the economy we have to wonder if deflation or concern for broad
based slowing isn’t discouraging gold player as the US and Euro zone both
produced weak numbers in the session Thursday. The day before the gold market
was under pressure because they feared higher interest rates and today after
weak numbers gold breaks and that suggests the market is simply bearish.

Technical Outlook

#P-METALS 7/23/2004: SILVER (SEP): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 637.3 and below there at 633.2 with resistance likely at 645.3
and 648.3. 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 633.2.

GOLD (AUG): Support for gold today comes in near
392.30, while resistance is pegged at 399.90. 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 392.30. It is a slightly negative
indicator that the close was under the swing pivot. The close below the 9-day
moving average is a negative short-term indicator for trend. The close below the
40-day moving average is an indication the longer-term trend is down.

 

COPPER MARKET RECAP

7/22/2004

The copper market forged some impressive action
Thursday and might have done so because a private forecast returned the supply
tightness theme to the headlines. With a widely regarded copper forecasting
entity suggesting that deficit conditions will extend into 2005 and they also
suggested that the tightness might be enough to sustain high prices. Apparently
the market was being bid up by commercial buying which seems to suggest that
demand is still running strong. A weaker Dollar also made US copper look more
attractive versus foreign copper and that could added in additional buying
interest.

 

ENERGY MARKET RECAP

7/22/2004

The energy complex vaulted higher in the wake of
favorable natural gas storage figures, ongoing heat in the Midwest and two
separate terrorism threats within the US. A ship bound for a US port was
reported to have a bomb on board around mid session, while early in the session
an Amtrak train was searched for a bomb. The energy complex actually rose in the
face of several comments from OPEC that overall production was set to rise off
increased investment and could rise by as much as 2.5 million to 3 million
barrels per day. The weekly natural gas inventory report showed a minimal
injection of 15 bcf and that reduces the annual surplus to 189 bcf. In other
words, either demand is rising or supply is falling off and that could clean up
what has been a generally weak fundamental condition in natural gas.

Technical Outlook

#ENERGIES 7/23/2004: CRUDE OIL (SEP): Market
positioning is positive with the close over the 1st swing resistance. Support
for crude is keyed on 40.75 and below there at 39.97, with resistance pegged at
41.98 and 42.43. 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 target is now at 39.97.

UNLEADED GAS (SEP): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 121.01. The market setup is supportive for early
gains with the close over the 1st swing resistance. Resistance today is at
128.01, while support should be found around 121.01. A negative signal for trend
short-term was given on a close under the 9-bar moving average.

HEATING OIL (SEP): There could be more upside
follow through since the market closed above the 2nd swing resistance. Heating
oil should encounter support around 107.14, with resistance is at 116.34. 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
target is now at 107.14.

 

CORN MARKET RECAP

7/22/2004

December corn closed lower for the 6th session in
a row and the contract has only closed higher in 3 of the past 18 sessions. The
market is down 58 1/4 cents during this 18 session meltdown. The early break
established a new contract low for the market as the weather has been ideal
during the pollination period and traders are talking of higher and higher yield
forecasts with talk of the potential for an 11 billion bushel crop as compared
with the preliminary crop estimate from the last USDA supply/demand report of a
10.635 billion bushel crop. The market also sees an increase in producer selling
of old crop corn as producers become more confident in new crop yields. Weekly
export sales came in at 675,900 tons as compared with trade expectations of
400,000-700,000 tons. Old crop sales were 357,400 tons as compared with 174,200
tons necessary each week to reach the USDA projection. Cumulative sales have
reached 97.6% of the USDA forecast for the season as compared with 96.3% on
average for this time of the year. The December 2003 futures made a contract low
on July 25th last year. The next support for December corn comes in at 227 1/2
and then psychological support at 225 with resistance at 233 1/2 and 239 1/4.

Technical Outlook

#CORN (DEC) 7/23/2004: Momentum studies are still
bearish, but are now at oversold levels and will tend to support reversal action
if it occurs. The next downside target is now at 222 2/4. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness.
Market resistance comes in at 236 today, with support at 222 2/4. The close
below the 9-day moving average is a negative short-term indicator for trend.
Selling may soon dry up since the RSI is under 20 indicating the market is
extremely oversold. The market broke to a new contract low.

 

SOY COMPLEX RECAP

7/22/2004

November soybeans led the market lower early in
the session but weaker old crop prices helped to attract increased commercial
selling in August soybeans and there seemed to be a lack of new buying support
after psychological support gave way at 7.00. August soybeans are down $2.12/bu
in just 12 trading sessions. The lack of a weather threat continues to pressure
the market and has fueled more speculative selling pressures on ideas that the
crop is on track for record yields. Weekly export sales came in at 119,600 tons
as compared with trade expectations of 0-50,000 tons. Old crop sales were
111,600 tons as compared with 21,100 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 99.4% of the USDA forecast for the
season as compared with 102.2% on average for this time of the year. Weekly
sales for meal were 48,100 tons vs. trade expectations of 0-25,000 tons. Old
crop sales were 25,100 tons as compared with 10,900 tons necessary each week to
reach the USDA projection. Cumulative sales have reached 96.8% of the USDA
forecast for the season as compared with 91.8% on average for this time of the
year. November soybean resistance moves down to 610 and 623 with 590 and 586 as
next downside support.

Technical Outlook

#SOYBEANS (NOV) 07/23/04 The close below the 1st
swing support could weigh on the market. The next area of resistance is around
606 and 623 3/4, while 1st support hits today at 581 2/4 and below there at 574
3/4. A negative signal for trend short-term was given on a close under the 9-bar
moving average. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 574 3/4. The
market is approaching over sold levels on an RSI reading under 30.

MEAL (DEC): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 176.2. First resistance comes in at
187.8, with support at 179.0. The close below the 9-day moving average is a
negative short-term indicator for trend. The market setup is somewhat negative
with the close under the 1st swing support. Some caution in pressing the
downside is warranted with the RSI under 30.

BEAN OIL (DEC): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 21.68. The swing indicator gave a
moderately negative reading with the close below the 1st support number. Daily
swing resistance is found at 22.44 and above there at 22.86. Support should be
encountered at 21.85 and 21.68. Short-term indicators on the defensive. Consider
selling an intraday bounce.

 

WHEAT MARKET RECAP

7/22/2004

News that Egypt bought 120,000 tons of wheat from
France and none from the US in their overnight tender which was the second in
the past two days helped to keep a lid on the early bounce as solid weekly
export sales numbers and talk of the oversold condition of the market helped
support. In addition, there was some disappointment in news that South Korea
passed on the overnight tender for US wheat. Japan bought 85,000 tons of wheat
at their weekly tender, 45,000 of the total from the US. Weekly export sales
came in at 428,000 tons as compared with trade expectations of 200,000-400,000
tons and 388,000 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 33% of the USDA forecast for the season as
compared with 20.9% on average for this time of the year. China was a noted
buyer of 5500 tons and shipped out 126,500 tons for the week. While the
cumulative sales pace is strong for wheat, traders fear increased competition in
the months ahead from Europe and former Soviet Union countries. Indonesia bought
50,000 tons of black Sea milling wheat which is another example of increased
competition for wheat. The next chart support for September wheat comes in at
314 1/2 with 325 1/2 and 329 as resistance.

Technical Outlook

#WHEAT (DEC) 7/23/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 334 and below there at 333, with resistance levels at 338 and 340 2/4. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. Daily stochastics declining into oversold territory suggest the selling
may be drying up soon. The next downside objective is 333. The market is
approaching over sold levels on an RSI reading under 30.

 

LIVE CATTLE RECAP

7/22/2004

The cattle market surged higher led by active
speculative and fund buying on hopes of renewed trade with Japan soon. Higher
cash markets, expectations for higher beef prices ahead and indications or
rumors that the US and Japan are close to a deal in which Japan will not insist
that all cattle need to be tested for mad cow helped support a limit-up move in
October futures. A USDA statement following two days of talks in Tokyo said that
the two governments had concluded a report that will serve as a basis for
discussion to establish terms to resume beef trade. A USDA spokeswoman today
said that she could not yet confirm reports that Japan intends to stop testing
young and newborn cattle for mad cow disease. Traders view this action, if true,
as an indication that Japan is prepared to no longer insist that “all” beef
entering from the US does not need to come from tested cattle. Beef prices were
lower at mid-session but this could not slow the buying as cash cattle traded at
$85.00 this week, up $2.00-$3.00 from last week. Boxed beef cut-out values were
down $.53 to $136.81 at noon as compared with $140.79 last week at this time.

Technical Outlook

#CATTLE (AUG) 7/23/2004: 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 89.57. The market
has a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Support should be encountered at 86.97 and below there at 85.57.
Market resistance is at 88.97 and then again at 89.57. If yesterday’s gap higher
on the day session chart holds, additional buying could develop this session. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. The market now above the 40-day moving average suggests the longer-term
trend is up.

 

LEAN HOGS RECAP

7/22/2004

After moving to the lowest level since June 25th,
the market turned to close higher on the session. The improved technical action
came in spite of weaker cash markets and sharply lower belly futures as the
discount of futures to cash and sharply higher trade in cattle discouraged the
bears which trigger short-covering. Cash hogs were $.50 lower at Peoria. The CME
2-day lean index for the period ending July 20th came in at 79.09, down .19 from
the previous session and down from 79.49 last week.

Technical Outlook

#HOGS (AUG) 7/23/2004: The close over the pivot
swing is a somewhat positive setup. Resistance levels comes in at 74.62 and
75.10 today, while support is around 73.62 and then 73.10. The upside daily
closing price reversal gives the market a bullish tilt. The close below the
9-day moving average is a negative short-term indicator for trend. Momentum
studies are still bearish, but are now at oversold levels and will tend to
support reversal action if it occurs. The next downside target is now at 73.10.

 

COCOA MARKET RECAP

7/22/2004

The cocoa market exhibited a volatile day’s
action Thursday with an aggressive early downward probe but the market finished
strong. The funds were buying the market on the weakness and we suspect that the
technical action itself is fostering fund buying. However, maybe the market saw
the headline trumpeting an average crop at the Ivory Coast as a reason to bid up
prices as an average crop could mean that a minor annual deficit might be seen.
While some Ivory Coast areas had rains it is probably safe to say that total
rain levels are slightly less conducive to production than the levels seen last
year.

Technical Outlook

COCOA (SEP) 07/23/04 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1665 and above there at 1687 with support at 1580 and 1517. 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 next upside target is 1687.25.

 

COFFEE MARKET RECAP

7/22/2004

The coffee market managed to hold above the
recent low probe but the market doesn’t seem to have a fundamental reason to
turn off the selling. The Press was reporting selling by both the funds and the
speculators and that would seem to leave the down trend pattern pretty much in
vogue with a large portion of the marketplace. The Nybot reported warehouse
stocks to be 5.04 million bags as of July 22 but the main overriding factor
seems to be a lack of threat against the Brazilian crop. With the threat of too
much rain in Brazil becoming less of an issue the bear camp would seem to have
fewer reasons to avoid fresh sales.

Technical Outlook

COFFEE (SEP) 7/23/04 The market tilt is slightly
negative with the close under the pivot. 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 72.55. The Coffee
contract should run into resistance at 72.20 and above there at 72.55 with
support at 71.15 and 70.45. The market’s short-term trend is positive on a close
above the 9-day moving average.

 

SUGAR MARKET RECAP

7/22/2004

Some funds must have decided to liquidate as
prices failed at key technical levels and some traders are growing impatient
with the lack of Russian physical interest. Apparently a London delivery was
headed to Iraq which some might take as a positive sign for demand but given the
extensive overbought condition in sugar the failure on the charts is certainly
cause for long liquidation and aggressive stop loss selling. The last COT report
had the funds and small specs net long close to 150,000 contracts!

Technical Outlook

#SUGAR (OCT) 7/23/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Swing
resistance comes in at 8.17, with support found at 7.83. 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 7.83.

 

COTTON MARKET RECAP

7/22/2004

Disappointing export shipments in the sales
report and a lack of a significant weather threat for the US crop triggered the
lower opening in Cotton and fund selling intensified to drive the market sharply
lower on the session. Weekly export sales came in at 327,500 bales as compared
with trade expectations of 250,000-500,000 bales. Old crop sales were 143,900
bales as compared with -388,800 bales necessary each week to reach the USDA
projection. Cumulative sales have reached 109.1% of the USDA forecast for the
season as compared with 109.1% on average for this time of the year. Shipments,
however, were just 270,100 bales as compared with 300,000-350,000 bales
expected. This is the second week in a row were shipments were well under
expectations.

Technical Outlook

#COTTON (OCT) 7/23/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. There
could be some early pressure today given the market’s negative setup with the
close below the 2nd swing support. Next resistance area comes in at 47.43 and
then again at 47.96, while support is targeted at 46.28 and 45.66. Rising from
over sold levels, daily momentum studies would support higher prices especially
on a close above resistance. The next upside objective is 47.96. The gap lower
on the day session chart is bearish and puts the market on the defensive.