Copper On Fire…Catches Traders By Surprise

Technical Outlook

BONDS (JUN) 3/12/2004: 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 116.14 and then again at 116.30, while swing support hits at 115.01 and below there at 114.04. 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 116.30. The market is approaching overbought levels with an RSI over 70.

T-NOTES(JUN) The outside day up is a positive signal. The rally brought the market to a new contract high. The upside closing price reversal on the daily chart is somewhat bullish. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 117.03. 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 116.24 and then again at 117.03, while swing support hits at 115.27 and below there at 115.08. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels.

STOCK INDICES RECAP

3/11/2004

The stock market action was impressive Thursday regardless of ongoing negative psychology and the failure into the close. The fact that stocks managed to gain in the face of the Madrid bombing suggests that the market isn’t as vulnerable as many expected it to be. Certainly slightly favorable US economic numbers and some favorable dialogue from Greenspan provided the market with an initial lift but it would not appear as if long volume was committed volume and the fundamental look forward isn’t that bright. Therefore, the initial bounce Thursday might have been a corrective move that primes the pump for even more losses.

Technical Outlook

S&P500 (JUN) 3/12/2004: The market setup is somewhat negative with the close under the 1st swing support. Underlying support comes in at 1093.45 and 1087.63, with overhead resistance at 1115.15 and 1131.03. The downside crossover of the 9 & 18 bar moving average is a negative signal. Momentum studies are still bearish, but are now at oversold levels and will tend to support reversal action if it occurs. The next downside objective is now at 1087.63. Some caution in pressing the downside is warranted with the RSI under 30.

S&P E-Mini (JUN): Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1087.25. 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 1115.25 and then again at 1131.25, while swing support hits at 1093.25 and below there at 1087.25. The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. The 9-day RSI under 30 indicates the market is approaching oversold levels.

NASDAQ (JUN) 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. The market should run into resistance at 1420.00 and above there at 1440.25 with support at 1391.00 and 1382.25. The market is approaching over sold levels on an RSI reading under 30. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1382.25.

MINI DOW (MAR) The close below the 9-day moving average is a negative short-term indicator for trend. The market should run into resistance at 10208 and above there at 10359 with support at 9997 and 9937. 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 9937. The market setup is somewhat negative with the close under the 1st swing support. Selling may soon dry up since the RSI is under 20 indicating the market is extremely oversold.

CURRENCY MARKET RECAP

3/11/2004

The US Dollar behaved very poorly Thursday, as the Madrid bombing could have been a major support for the Dollar. We also think that the higher US equity market and decent US economic numbers should have supported the Dollar but instead it failed to hold a breakout up and failed with a close back into the old range. It is also surprising that the Euro didn’t take a bigger hit off the Madrid situation and that later in the session when the Dollar weakened the Euro didn’t really capitalize on the situation. In conclusion the Yen seems to have the strongest spec following and maybe the least amount of fundamental baggage.

Technical Outlook

YEN (JUN): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market could take on a defensive posture with the daily closing price reversal down. The close equal to the pivot swing number is a neutral directional indicator. Swing resistance is targeted at 90.68 and above there at 90.98, with the yen finding support around 90.18 and below there at 89.98. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. The next upside objective is 90.98.

EURO (JUN): Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 1.2368. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2174, with overhead resistance at 1.2368. The close above the 9-day moving average is a positive short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

3/11/2004

The gold market managed to reject weakness but that reversal came mostly off the failure in the Dollar. The London PM gold fix managed to close above the AM fix in sign that some bulls are willing to pickup values even on moderate weakness. The platinum market came under heavy selling as that market was recently excessively overbought and becoming a little concerned about global demand. Silver managed to trade on both sides of unchanged and still mostly lacks a clear trend signal.

Technical Outlook

SILVER (MAY): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 712.8 and below there at 705.7 with resistance likely at 720.0 and 725.8. 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 720.0. The market is approaching overbought levels with an RSI over 70.

GOLD (APR): Support for gold today comes in near 395.88, while resistance is pegged at 404.48. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 404.48. The close over the pivot swing is a somewhat positive setup. The close above the 9-day moving average is a positive short-term indicator for trend. The upside daily closing price reversal gives the market a bullish tilt.

COPPER MARKET RECAP

3/11/2004

The copper market caught on fire again as the funds were apparently hungry for long positions regardless of the soaring price structure. What is surprising that the market came in firm and mostly discounted the Madrid bombing and totally rejected news that Codelco production in 2003 rose by 2.3%. Some traders might suggest that US economic numbers were decent and that the US stock market was provided a lift for a change. With the beginning of a copper Conference it is possible that the bullish tilt of the market place will whip up additional follow through buying especially since the gain Thursday caught some players by surprise.

ENERGY MARKET RECAP

3/11/2004

The unleaded market exploded and in the process managed to drag the crude and heating oil market higher. Apparently the long interest surfaced early in the London energy markets, prices faded off the Madrid news but then came on strong into the US mid session. The trade evidently saw the break yesterday as a major buying opportunity and with the Saudis posting reductions in term volumes the trade might be pricing the coming production cut. We also have to wonder if the renewed attacks inside Iraq were cause for concern as the market had recently priced in a full resumption of the Kirkuk oil flow.

Technical Outlook

CRUDE OIL (MAY): 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. Support for crude is keyed on 35.78 and below there at 35.27, with resistance pegged at 36.50 and 36.71. 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 35.27.

UNLEADED GAS (MAY): Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 107.04. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Resistance today is at 113.44, while support should be found around 107.04. 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.

HEATING OIL (MAY):Market positioning is positive with the close over the 1st swing resistance. Heating oil should encounter support around 86.85, with resistance is at 90.05. 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 86.85.

CORN MARKET RECAP

3/11/2004

The market managed to hold onto some of the gains but the weak close for the second session in a row leaves the recent buyers vulnerable to long liquidation pressures. Funds were noted buyers of near 3000 contracts. Weekly export sales came in at 573,600 tons as compared with trade expectations at 600,000-800,000 tons. The best buyers were Japan (245,700) and Egypt (113,000). In order to reach the USDA projection for the season, weekly sales need to average 677,100 tons. Cumulative sales have reached 65.7% of the USDA forecast for the season as compared with 64.1% on average for this time of the year. On top of the weekly sales news, the USDA announced that 165,000 tons of US corn was sold to unknown destination. This, along with the strong gains in soybeans supported the solid gains into mid-session but the buying slowed late. A strong stopper took 393 of the 395 deliveries this morning which was also seen as supportive. Shipments of 160,200 tons to South Korea in the weekly sales report was seen as a positive sign that China is backing away from the export market.

Technical Outlook

CORN (MAY) 3/12/2004: 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 295 1/4. It is a slightly negative indicator that the close was under the swing pivot. Market resistance comes in at 304 1/4 today, with support at 295 1/4. The close above the 9-day moving average is a positive short-term indicator for trend.

SOY COMPLEX RECAP

3/11/2004

The market closed sharply higher with an inside trading session for May soybeans. Weekly export sales for soybeans came in at 267,900 tons as compared with trade expectations at -75,000-200,000. The best buyers were Japan (237,200) and Mexico (21,600). China canceled 3800 tons on the week but shipped 161,200 tons. China still has 170,000 tons of 03/04 soybeans on the books but unshipped out of total purchases of 8.1 million tons. For old crop soybeans, sales were 264,300 tons as compared with 46,800 tons necessary each week to reach the USDA projection. Cumulative sales have reached 95% of the USDA forecast for the season as compared with 84.4% on average for this time of the year. Meal sales were 95,600 tons as compared with 23,900 tons necessary each week to reach the USDA projection. Cumulative sales have reached 81.3% of the USDA forecast for the season as compared with 67.5% on average for this time of the year. Oil sales came in at 4800 tons vs. 7000 per week to reach the USDA projection. Soybean basis at the gulf firmed after the weak price action yesterday and there were still deliveries of 260 contracts this morning. On top of the weekly sales news, the USDA announced that 123,832 tons of US meal was sold to Canada. The soybean market has now managed to post wild action in each session of the week, which is usually indicative of a major decision process!

Technical Outlook

SOYBEANS (MAY) 03/12/04 The market setup is supportive for early gains with the close over the 1st swing resistance. The next area of resistance is around 954 1/2 and 963 3/4, while 1st support hits today at 933 and below there at 920 3/4. The market’s close on the 9-day moving average is neutral. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 920 3/4.

MEAL (MAY): 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 281.2. First resistance comes in at 288.9, with support at 284.4. The close above the 9-day moving average is a positive short-term indicator for trend. Market positioning is positive with the close over the 1st swing resistance.

BEAN OIL (MAY): A positive signal for trend short-term was given on a close over the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 32.25. A positive setup occurred with the close over the 1st swing resistance. Daily swing resistance is found at 33.61 and above there at 33.91. Support should be encountered at 32.78 and 32.25.

WHEAT MARKET RECAP

3/11/2004

July Wheat moved to a new low for the year as the early support from the solid export sales news failed to provide lasting support. The market found early support from solid export sales news this morning. Weekly export sales came in at 617,200 tons as compared with trade expectations at 300,000-600,000 tons. The best buyers were Japan (107,100), Egypt (91,000) and Philippines (68,000). For old crop, sales were 589,900 tons as compared with 268,800 tons necessary each week to reach the USDA projection. Cumulative sales have reached 89.2% of the USDA forecast for the season as compared with 81.9% on average for this time of the year. If the shipment pace picks up, the USDA could increase exports in next months USDA report. Traders were disappointed over the lack of a change in the export forecast yesterday in spite of the surge in sales to China and others. At their weekly tender, Japan bought 125,000 tons of wheat; 45,000 from the US. There were 9 deliveries against the March contract. The central plains are expected to receive good rains this weekend, which has helped to limit the buying support from the positive demand news. Weather in the central plains is becoming more important and with the market remaining very weak it isn’t insignificant that the bears might begin to encounter periodic threats. A Canadian Wheat Board representative indicated that once China draws down their wheat stocks over the next 18 months, China is likely to import a total average of 15 million tons per year.

Technical Outlook

WHEAT (MAY) 3/12/2004: The market tilt is slightly negative with the close under the pivot. Expect near-term support around 357 and below there at 355 , with resistance levels at 365 and 370 1/2. 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 355 . The market is approaching over sold levels on an RSI reading under 30.

LIVE CATTLE RECAP

3/11/2004

April cattle closed 60 lower on the session as there was no follow-through buying on the move above yesterday’s highs. Traders are a bit fearful of the overbought condition of the market and the eventual impact on prices when Canadian cattle are allowed into the US and when feedlot supplies in the US become more plentiful. Boxed-beef cut-out values were down 61 cents to $143.50 which was also seen as a potential sign that prices may have moved too far too fast. Slaughter for the week has reached 488,000 head as compared with 485,000 last week and 514,000 head last year.

Technical Outlook

CATTLE (APR) 3/12/2004: Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 82.75. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 81.42 and below there at 81.15. Market resistance is at 82.22 and then again at 82.75. The market could take on a defensive posture with the daily closing price reversal down. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

LEAN HOGS RECAP

3/11/2004

The market soared to new contract highs as continued hopes of strong exports and positive gains in pork prices this week helped support another active day of fund buying. April hogs gapped into new contract highs and came within 20 points of a new high for the year for nearby futures. Talk of improving profit margins for the packer and the discount of futures to the cash market helped support. Bellies were also higher with May up 102 points to 98.35, the highest since the March 2nd reversal date. Slaughter for the week has reached 1.483 million head as compared with 1.544 million last week and 1.513 million last year.

Technical Outlook

HOGS (APR) 3/12/2004: Market positioning is positive with the close over the 1st swing resistance. Resistance levels comes in at 64.05 and 64.35 today, while support is around 63.40 and then 63.05. The market rallied to a new contract high. Short-term indicators suggest buying pullbacks today. 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 64.35.

COCOA MARKET RECAP

3/11/2004

Cocoa prices appeared to mount a short covering bounce but then fell back to mid range. While the market hinted at arbitrage buying we think the market is finally sensing an overbought condition or is actually seeing a possibility of renewed violence. Other sources of potential long interest in the market Thursday were suggestions that the physical supply flow off the main crop was beginning to taper off. With Ivory Coast youth groups calling for protests we suspect that the short fund players will be scaling back positions and that should provide some buying interest.

Technical Outlook

COCOA (MAY)03/12/04 The market has a slightly positive tilt with the close over the swing pivot. Cocoa should run into resistance at 1414 and above there at 1427 with support at 1389 and 1377. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1376.75.

COFFEE MARKET RECAP

3/11/2004

The coffee market jumped 180 points for the July contract as active fund and speculative buying continues to support. The market is finding fundamental support from the slow export pace out of Brazil and hopes that the new crop in Brazil to begin harvest in June will not be too overbearing. Exports from Mexico in February were 226,293 bags, down 2.1% from last year. For Monday’s Monthly US Green Coffee stocks report for the end of February, traders are looking for stocks to come in near 5.324-5.954 million bags as compared with 5.624 million bags at the end of January. This would be a decline of 300,000 bags to an increase of 350,000 bags.

Technical Outlook

COFFEE (MAY)3/12/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 78.60.The Coffee contract should run into resistance at 77.85 and above there at 78.60 with support at 75.1 and 73.10. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average.

SUGAR MARKET RECAP

3/11/2004

The market drove sharply higher led by active fund buying with May sugar moving to the highest level since August of 2003. Buy stocks were hit above the market after the early drive above 648 May and funds were active buyers to support the surge into the close. Trade houses seem to doubt the staying power of the rally due to hefty world stocks. London futures moved to new contract highs which added to the positive tone. Talk of some ethanol movement from Brazil to the US was also seen as a supportive longer-term factor for the market. Low ethanol prices recently and high gasoline prices in the US made US imports profitable recently. Dryness in parts of the Brazil sugar growing regions since November has trigger talk of weakness ahead.

Technical Outlook

SUGAR (MAY) 3/12/2004: There could be more upside follow through since the market closed above the 2nd swing resistance. Swing resistance comes in at 6.96, with support found at 6.22. 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 6.96. The market is becoming somewhat overbought now that the RSI is over 70.

COTTON MARKET RECAP

3/11/2004

The market opened higher and pushed sharply higher on the session finding solid buying support on ideas that strong exports should help pull the cash markets higher over the near-term. Trade houses and speculators were noted as active buyers. The bullish news from the USDA reports and talk of continued strong demand from China in spite of disappointing weekly export sales news added to the bullish posture for the market. In the monthly reports, China imports were adjusted to 8.5 million bales from 7.0 million last month. Weekly export sales came in at 106,700 bales as compared with trade expectations of 130,000-170,000 bales. Old crop sales were 96,200 bales as compared with 83,500 bales necessary each week to reach the USDA projection. Cumulative sales have reached 85.7% of the USDA forecast for the season as compared with 90.5% on average for this time of the year. Shipments came in at 316,400 bales as compared with trade expectations at 300,000-350,000 bales.

Technical Outlook

COTTON (MAY) 3/12/2004: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Next resistance area comes in at 66.78 and then again at 67.47, while support is targeted at 65.08 and 64.07. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 64.07. ORANGE JUICE (MAY)3/12/04 The new contract low and close above the previous day’s high constitutes a key reversal which is a bullish signal. The sell-off took the market to a new contract low. The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 63.35 and above there at 64.15 with support at 61.25 and 59.95. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 59.95.