Copper Traders Are Bullish – Here’s Why

Technical Outlook

#BONDS (JUN) 03/22/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Near-term
resistance for bonds is at 115.12 and then again at 115.23, while swing support
hits at 114.24 and below there at 114.15. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The daily
stochastics have crossed over down which is a bearish indication. Daily
stochastics turning lower from overbought levels is bearish and will tend to
reinforce a downside break especially if near-term support is penetrated. The
next downside target is 114.15.

T-NOTES(JUN) Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 115.11. The market’s close
below the pivot swing number is a mildly negative setup. The major trend is down
with the cross over back below the 40-day moving average. Near-term resistance
for the T-Notes is at 115.28 and then again at 116.01, while swing support hits
at 115.17 and below there at 115.11. The market’s short-term trend is negative
as the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

3/19/2004

After the mid week rally the stock market was a
little overbought and unsure about what the weekend political situation would
bring. With an economic report void next week the stock market might decide to
return to the range seen early in the week but with an onslaught of earnings
reports due out it would seem that the market will have something to take the
attention away from the negatives of soaring energy prices and unsettling
geopolitical concerns. With the passing of expiration maneuvering one might now
expect ranges to narrow and volume to decline.

Technical Outlook

#S&P500 (JUN) 03/22/04: The market is in a
bearish position with the close below the 2nd swing support number. Underlying
support comes in at 1099.45 and 1095.23, with overhead resistance at 1114.95 and
1126.23. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The daily stochastic’s gave a bearish indicator with a
crossover down. The next downside objective is now at 1095.23.

S&P E-Mini (JUN): The outside day down is
somewhat negative. The market could take on a defensive posture with the daily
closing price reversal down. A bearish signal was triggered on a crossover down
in the daily stochastics. The next downside objective is 1091.31. The close
below the 1st swing support could weigh on the market. Near-term resistance for
the S&P Mini is at 1117.63 and then again at 1132.81, while swing support hits
at 1096.88 and below there at 1091.31. A positive signal for trend short-term
was given on a close over the 9-bar moving average.

NASDAQ (JUN) The outside day down and close below
the previous day’s low is a negative signal. The downside closing price reversal
on the daily chart is somewhat negative. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The close
below the 2nd swing support number puts the market on the defensive. The market
should run into resistance at 1415.00 and above there at 1437.00 with support at
1385.00 and 1377.00. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 1377.0.

MINI DOW (JUN) The outside day down and close
below the previous day’s low is a negative signal. The downside closing price
reversal on the daily chart is somewhat negative. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10241 and above there at 10371 with support
at 10065 and 10019. Daily stochastics are showing positive momentum from
oversold levels which should reinforce a move higher if near-term resistance is
taken out. The next upside target is 10371. The swing indicator gave a
moderately negative reading with the close below the 1st support number.

 

CURRENCY MARKET RECAP

3/19/2004

For the Dollar to bounce back without the benefit
of a scheduled US economy report suggests that the interest in the short side
isn’t that committed. With the US economic report slate nearly empty for the
coming sessions the political realm might end up driving prices. Apparently some
players were buying the Dollar Friday in anticipation of a weekend capture of
Al-Qaeda in Pakistan and that type of sentiment might be unjustified. We do
think that some economists are set to revise their April 2nd payroll readings
higher because of the claims readings hitting a 3 year low and that could be
prompting some short Dollar players to cover.

Technical Outlook

#CURRENCIES 03/22/04: YEN (JUN): The moving
average crossover up (9 above 18) indicates a possible developing short-term
uptrend. It is a slightly negative indicator that the close was lower than the
pivot swing number. Swing resistance is targeted at 94.09 and above there at
94.25, with the yen finding support around 93.70 and below there at 93.47.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 94.25. The 9-day RSI over
70 indicates the market is approaching overbought levels.

EURO (JUN): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2377. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2157, with overhead resistance at 1.2377. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The major trend is down with the cross over back below the
40-day moving average. The gap down on the day session chart is bearish with
more selling pressure possible today.

 

PRECIOUS METALS RECAP

3/19/2004

The gold and silver markets pulsed up
aggressively Friday morning, corrected, went negative and then managed a bounce
into the close. The silver market leaves the week’s action with the largest spec
long in modern times while the gold market spec and fund long remains well below
its record levels. The week brought plenty of fresh bullish fodder for gold and
silver and that partially rationalizes the breakneck gains of the week. However,
the Dollar action was not indicative of a downtrend pattern and that could
undermine the bull camp in gold next week.

Technical Outlook

#P-METALS 03/22/04: SILVER (MAY): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 740.3 and below there at 724.2 with resistance
likely at 759.4 and 772.3. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 759.4. The 9-day RSI over 70 indicates the market is
approaching overbought levels. A new contract high was made on the rally.

GOLD (APR): Support for gold today comes in near
407.53, while resistance is pegged at 416.53. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
416.53. It is a mildly bullish indicator that the market closed over the pivot
swing number. The market’s short-term trend is positive on a close above the
9-day moving average.

 

COPPER MARKET RECAP

3/19/2004

The copper market continues to grind back toward
the contract highs despite weak action in world equity markets. However, the
persistent strength in gold and silver seems to be providing copper with another
element of support. In other words copper is getting both industrial and
precious metals type interest. We suspect that the current pace of decline in
physical stocks is going to get even more headlines next week when the London
exchange stocks fall below 200,000 tons. If the economy doesn’t undermine the
bulls they look to retain control over prices.

 

ENERGY MARKET RECAP

3/19/2004

The energy complex seems to be suffering from
stale fundamental news track and partially from an overbought technical
condition. However, it would not seem like anything is going to change quickly
with respect to inventories but with US weather expected to be warm in the
coming week we suspect that demand will abate and the pendulum might shift
toward the bear camp in the near term. The natural gas market might be the most
vulnerable given the weather forecast and that the fact that natural gas prices
have posted some aggressive gains off the March lows.

Technical Outlook

#ENERGIES 03/22/04: CRUDE OIL (MAY): It is a
mildly bullish indicator that the market closed over the pivot swing number.
Support for crude is keyed on 37.37 and below there at 37.09, with resistance
pegged at 37.87 and 38.09. The market’s short-term trend is positive on a close
above the 9-day moving average. Momentum studies are trending higher, but have
entered overbought levels. The near-term upside objective is at 38.09.

UNLEADED GAS (MAY): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 116.21. With the close higher than the pivot swing number,
the market is in a slightly bullish posture. Resistance today is at 116.21,
while support should be found around 113.21. The market’s close above the 9-day
moving average suggests the short-term trend remains positive.

HEATING OIL (MAY): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 90.69, with resistance is at 95.29. The market’s short-term trend
is positive on a close above the 9-day moving average. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 95.29. The daily closing price reversal down puts the market on
the defensive.

 

CORN MARKET RECAP

3/19/2004

The weak close after hitting new contract highs
leaves the market vulnerable to some additional technical selling but the market
avoided a reversal day with some buying support late. Strong gains in soybeans
helped support the move to new highs but there was a lack of new buying interest
from speculators and when soybeans pushed lower into the close, corn followed.
Traders expect the Commitment-of-Traders report, released this afternoon, to
show a record net long position. The market seems to be attempting to
consolidated recent strong gains with light trade activity early today. Some
light speculative long liquidation selling is providing pressure to futures but
strength in soybeans and ideas that demand remains strong for US corn helped
support. In addition, the USDA announced daily sales of US corn of 110,000 tons
to unknown destination. South Korea bought 52,500 tonnes of optional origin corn
for feed. A prominent forecaster (Sparks) pegged US corn planted acreage for
2004 at 80.25 million acres as compared with 78.7 million last year and 80.5
million as the preliminary USDA forecast used at the outlook conference in
February.

Technical Outlook

#CORN (MAY) 03/22/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 317. It is a mildly bullish indicator that the market closed
over the pivot swing number. Market resistance comes in at 317 today, with
support at 307. 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. The rally brought the market to a new contract high.

 

SOY COMPLEX RECAP

3/19/2004

A workers’ strike at the main port in Brazil
which started Friday morning is not expected to last too long but has traders
nervous over the orderly flow of soybeans out of Brazil and onto the world
market. The protest managed to cause near 95% work stoppage and there were
reports that truck lines waiting to unload soybeans or corn had grown to near 37
miles long from 31 miles on Thursday. This helped to support active and volatile
trade. Commercial buying was noted early in the trading session in the nearby
May soybean contract while light speculative selling, thought to be
profit-taking, helped limit the upside. Traders remain concerned about the size
of the Brazil crop and with harvest activity expected to be more active early
next week (after scattered rains this weekend), traders hope to get a better
feel for the size of the crop. Recent estimates seemed to be centered around
52-56 million tons as compared with 59.5 million tons as the current USDA
forecast and 52.5 million tons last year. Brail officials announced that the
next official government estimate will be released on April 23rd. A prominent
forecaster (Sparks) pegged US soybean planted acreage for 2004 at 74.53 million
acres as compared with 73.4 million last year and 74.5 million as the
preliminary USDA forecast used at the outlook conference in February. Meal basis
was a bit weaker on slow trade with May Soybean meal approaching the highest May
price in history at 321.50 in 1973. All-time highs for meal were achieved in
June of 1973 with futures hitting $451.00.

Technical Outlook

#SOYBEANS (MAY) 03/22/04: A new contract high was
made on the rally. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The next area of resistance is around 1034 and
1044 1/4, while 1st support hits today at 1013 1/2 and below there at 1003 1/4.
The market’s close above the 9-day moving average suggests the short-term trend
remains positive. Studies are showing positive momentum, but are now in
overbought territory so some caution is warranted. The next upside target is
1044 1/4. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

MEAL (MAY): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 323.1.
The rally brought the market to a new contract high. First resistance comes in
at 318.1, with support at 310.4. The market’s short-term trend is positive on a
close above the 9-day moving average. It is a mildly bullish indicator that the
market closed over the pivot swing number. With a reading over 70, the 9-day RSI
is approaching overbought levels.

BEAN OIL (MAY): The moving average crossover up
(9 above 18) indicates a possible developing short-term uptrend. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The next upside target is 34.62. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The downside closing price
reversal on the daily chart is somewhat negative. Daily swing resistance is
found at 34.37 and above there at 34.62. Support should be encountered at 33.85
and 33.58.

 

WHEAT MARKET RECAP

3/19/2004

Improving prospects for some rains next week in
the plains and long liquidation selling helped to pressure the market. The
speculative buying surge of the past several days slowed shortly after the
opening and the market pushed lower on the session led by long liquidation
selling from speculators on thoughts of an overbought condition. In addition,
the long range forecast models from the National Weather Service (6-10 and 8-14
day) shifted to a wet outlook as compared with a “below normal” precipitation
forecast for the past several days. Export news overnight was slow. South Korea
bought 40,000 tons of feedwheat from Australia. A prominent forecaster (Sparks)
pegged US spring wheat planted acreage for 2004 at 13.395 million acres as
compared with 13.787 planted in 2003. The lack of weather problems early this
year or in the winter for Europe has traders looking for a sharp rise in wheat
and grain production in Europe and Eastern Europe after poor winter and summer
weather last year triggered the low production. Funds were noted sellers into
the mid-session of near 1500 contracts.

Technical Outlook

#WHEAT (MAY) 03/22/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 388 and below there at 385, with resistance levels at 397
1/2 and 404. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Positive momentum studies in the neutral zone
will tend to reinforce higher price action. The next upside target is 404.

 

LIVE CATTLE RECAP

3/19/2004

The market pushed sharply lower ahead of the
Cattle-on-Feed report which is to be released at 2:00 PM cst. Fears of
increasing supplies in the weeks just ahead and what looks to be a long road to
exports to Asia helped to pressure. With weak packer profit margins, the jump in
slaughter this week was seen as a bearish supply development. Boxed-beef cut-out
values were down 27 cents to $143.94 as compared with $142.83 last week at this
time. After the close, Cattle on Feed supplies for March 1st came at 104% of
last year versus expectations near 103.8% (range 103-105), February Placements
were 98% versus 96.2% expected (range 90.6-102.6) and February Marketings were
98% versus 98.6% expected (range 95.9-100.5).

Technical Outlook

#CATTLE (APR) 03/22/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 77.45. The swing indicator gave a moderately negative reading with the
close below the 1st support number. Short-term indicators on the defensive.
Consider selling an intraday bounce. Support should be encountered at 78.10 and
below there at 77.45. Market resistance is at 80.05 and then again at 81.35. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

 

LEAN HOGS RECAP

3/19/2004

The hog market pushed sharply higher with June
hogs and May bellies moving into new contract highs with June hogs making new
highs in for the 4th session in a row. Some profit-taking selling helped to
pressure the market but expectations for solid export news ahead, especially to
Asia, helped to support. The US Monthly Cold Storage report, released after the
close, showed belly stocks at 57.035 million pounds, below the low end of
expectations at 58.5-61.0 million pounds as compared with 63.1 million last
month. Cash hogs were steady and weaker pork cut-out values on Thursday
afternoon helped to limit the buying support.

Technical Outlook

#HOGS (APR) 03/22/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 66.90 and 67.22 today, while support is around 65.77 and then 64.97.
The rally brought the market to a new contract high. The market’s short-term
trend is positive on a close above the 9-day moving average. Momentum studies
are trending higher, but have entered overbought levels. The near-term upside
objective is at 67.22. With a reading over 70, the 9-day RSI is approaching
overbought levels.

 

COCOA MARKET RECAP

3/19/2004

The cocoa market slipped lower partly because the
action this week disappointed the bull camp and with crop fundamentals extremely
quiet we doubt that the market is going to see concentrated buying and selling
efforts. There was some talk that cocoa might have some up front tightness but
with the crop recently flowing to the market we would be surprised with an
aggressive squeeze play. The currency markets seem to be changing directions
almost daily and that has to be confusing the arbitrage trade in the cocoa
market.

Technical Outlook

COCOA (MAY) 03/22/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1452 and above there at 1463 with support at 1430 and 1419. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 1462.50.

 

COFFEE MARKET RECAP

3/19/2004

July coffee closed 65 higher on the session but
finished almost 100 points off the high of the day. Some players are wondering
if the potential strikes in Brazil will serve to boost coffee prices but with
coffee prices apparently in an up trend pattern already we doubt that the bull
case is completely dependant on a strike to see higher prices. With reports of
Roaster buying in London Friday morning it is clear that industry players are
willing to pay up for coffee 14 cents above the November lows! The trade could
have weakened off reports that Latin American Arabica exports rose by 5.6% in
February but the trade seems to be focused on long term fundamentals.

Technical Outlook

COFFEE (MAY) 3/22/04 The market has a slightly
positive tilt with the close over the swing pivot. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
objective is now at 74.30. The Coffee contract should run into resistance at
78.05 and above there at 79.10 with support at 75.65 and 74.30. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

3/19/2004

May sugar close 4 lower on the session and 8
points higher on the week. A solid rally in London failed to provide much
support in the US market as traders see New York in an overbought condition and
there was some light long liquidation selling ahead of the COT report, released
Friday afternoon. Traders expect India to export just 400,000 tons of white
sugar this year as compared 1.7 million tons last year. The country has already
exported 300,000 tons. China imports for the first two months of this year
totaled 62,018 tons, up 50.4% from last years pace.

Technical Outlook

#SUGAR (MAY) 03/22/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.85, with support found at 6.69. The market’s short-term trend is
positive on a close above the 9-day moving average. The daily stochastic’s gave
a bearish indicator with a crossover down. Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The next downside objective is now at 6.69. With a reading over
70, the 9-day RSI is approaching overbought levels.

 

COTTON MARKET RECAP

3/19/2004

July Cotton closed 1 higher on the session and up
308 points on the week. The market traded both sides of unchanged as the market
consolidated the strong gains on the week. With a 7-day island bottom formation
on the charts and a weekly reversal to the upside, the technical set-up is
positive. A recovery in the dollar and weakness in the stock market helped limit
the buying support on the session. Traders are now on a China watch to see is
the export activity will continue. Sparks pegged cotton planted acreage for 2004
at 14.1 million acres as compared with 13.48 million last year. The Cotlook A
Index was up 90 cents to 72.85.

Technical Outlook

#COTTON (MAY) 03/22/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. Next resistance area comes in at 68.50 and then again at 69.00,
while support is targeted at 67.35 and 66.70. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next upside target
is 69.00.