Copper Tumbles: Is Gold Next?

Technical Outlook

BONDS (DEC) 11/21/2003: The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 111.22 and then again at 112.05, while swing support hits at 110.12 and below there at 109.17. 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 112.05. Daily studies suggest buying dips today.

T-NOTES(DEC) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 114.21. 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 114.10 and then again at 114.21, while swing support hits at 113.12 and below there at 112.26. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

11/20/2003

The stock market tried to trade positive Thursday and managed to respect the recent lows. However, the trade was certainly a little disappointed with the weakness in the Philly Fed numbers especially with the massive decline in the employment and new orders readings. The fact that new terrorist incidents are getting into the headlines on a daily basis has certainly pushed some investors away from the market. Typically the run up into the Thanksgiving holiday is a positive time frame for stocks but the market seems to be having trouble getting long interest to follow long interest. For a change the Fed seems to be more upbeat on the US economy than the marketplace!

Technical Outlook

S&P500 (DEC) 11/21/2003: The market setup is somewhat negative with the close under the 1st swing support. The outside day down gives the market a bearish tilt. The daily closing price reversal down is a negative indicator for prices. Underlying support comes in at 1024.85 and 1020.83, with overhead resistance at 1039.55 and 1050.23. 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. 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 1020.83. Short-term indicators on the defensive. Consider selling an intraday bounce.

S&P E-Mini (DEC): A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1020.06. The swing indicator gave a moderately negative reading with the close below the 1st support number. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Near-term resistance for the S&P Mini is at 1039.63 and then again at 1050.56, while swing support hits at 1024.38 and below there at 1020.06. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

NASDAQ (DEC) The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average. The close below the 1st swing support could weigh on the market. The market should run into resistance at 1379.25 and above there at 1404.63 with support at 1344.75 and 1335.63. Bearish daily studies indicate selling minor rallies this session. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 1335.63.

CURRENCY MARKET RECAP

11/20/2003

The Dollar managed to hold above fresh contract lows despite macro economic news that could have justified a slide to new contract lows. However, it would not appear as if anything has shifted in the outlook toward the Dollar and the trade showed almost no desire to buy the Dollar even with the outlook for the US economy was judged to be strong. With the Philly Fed numbers showing very weak readings it is possible that doubt on the US recovery returns and pushes the Dollar down into new low ground. After a series of intervention efforts this week, we have to wonder if the BOJ is going to step up and stop the Yen on a rally after the Japanese managed to post an expanding monthly trade surplus.

Technical Outlook

YEN (DEC): 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. Swing resistance is targeted at 92.11 and above there at 92.32, with the yen finding support around 91.73 and below there at 91.56. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 91.56.

EURO (DEC): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.2001. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1823, with overhead resistance at 1.2001. The close above the 9-day moving average is a positive short-term indicator for trend. Follow-through selling is indicated by the key reversal down. The market rallied to a new contract high. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

11/20/2003

The gold market was sloppy Thursday despite a generally weak US Dollar and ongoing international uncertainty. The market seems to be lacking a concentrated focus and with the copper market falling so aggressively some traders are wondering if the same thing can happen to gold. We think that copper prices were being supporting heavily by Chinese buying and that is not really the case in the gold market. Considering the recent rally in gold it would seem that week ending long liquidation could unfold in the event that gold falls below chart support in the action Friday.

Technical Outlook

SILVER (MAR): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 522.9 and below there at 519.0 with resistance likely at 531.1 and 533.9. A positive signal for trend short-term was given on a close over the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 519.0.

GOLD (FEB): Support for gold today comes in near 389.78, while resistance is pegged at 400.78. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 400.78. It is a slightly negative indicator that the close was under the swing pivot. The close above the 9-day moving average is a positive short-term indicator for trend.

COPPER MARKET RECAP

11/20/2003

Another massive decline in copper prices was seen and was probably the result of capital and margin liquidation. The fact, that the Chinese didn’t surface and buy copper as the price fell really discourages the bull camp and probably forced a number of weak handed longs from position. It is possible that the selling continues until the trade can actually confirm that the Chinese stepped back into to secure fresh physical supplies. In retrospect, it is not surprising that the price break in copper came right into the revelation that the US and China were having trade issues.

ENERGY MARKET RECAP

11/20/2003

The energy complex exhibited profit-taking action Thursday and may find it difficult to hold all of the recent gains without some fresh bullish news. In a surprise development natural gas showed a draw in the weekly inventory numbers and that could in effect signal an end to the injection season. However, standing against significant downside follow through were reports from OPEC that they expect China to be a major portion of new energy demand growth next year. We also think that the sharp rise in terrorism incidents is an issue that keeps a number of sellers at bay in the energy complex.

Technical Outlook

CRUDE OIL (JAN): It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 31.36 and below there at 31.03, with resistance pegged at 32.36 and 33.03. The close above the 9-day moving average is a positive short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. 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 31.03.

UNLEADED GAS (JAN): A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 84.70. The close below the 1st swing support could weigh on the market. Resistance today is at 91.30, while support should be found around 84.70. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (JAN): The market setup is somewhat negative with the close under the 1st swing support. Heating oil should encounter support around 85.41, with resistance is at 92.01. The close above the 9-day moving average is a positive short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. 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 85.41.

CORN MARKET RECAP

11/20/2003

March corn closed 3 1/2 cents higher but had to recoil for a moderately weak interday day. In fact, March corn managed to forge a new low for the move but then reversed direction. Therefore, the Press suggested that the action in corn was generally motivated by technical considerations. Weekly export sales came in at 917,100 tonnes, as compared with 681,100 tonnes necessary each week to reach the USDA projection and trade expectations at 750,000-950,000 tonnes. Cumulative sales have reached 40.3% of the forecast for the season as compared with 35.6% on average for this time of the year. In the end sales were good but maybe not good enough to overcome Chinese trade concerns.

Technical Outlook

CORN (MAR) 11/21/2003: 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 235 1/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 244 3/4 today, with support at 235 1/4. The close below the 9-day moving average is a negative short-term indicator for trend. The upside daily closing price reversal gives the market a bullish tilt.

SOY COMPLEX RECAP

11/20/2003

January soybeans closed 10 1/2 higher on the session after two-sided trade early in the session. Like corn, soybeans also forged a new low for the move but manage to close higher which seemed to reduce some of the bearish sentiment in the market place. Weekly export sales came in at 714,100 tonnes, as compared with 151,900 tonnes that is necessary each week to reach the USDA projection. The sales came on trade expectations of 800,000-1.0 million tonnes. Cumulative sales have reached 73.8% of the forecast for the season as compared with 48.9% on average for this time of the year. In the end the recovery action didn’t seem to carry as much volume as past recovery bounces. The bears made sure to highlight the fact that China was the biggest buyer in the most recent export readings.

Technical Outlook

SOYBEANS (JAN) 11/21/03 The daily closing price reversal up is a positive indicator that could support higher prices. The market has a slightly positive tilt with the close over the swing pivot. The next area of resistance is around 766 1/2 and 770 1/2, while 1st support hits today at 752 and below there at 741 1/2. A negative signal for trend short-term was given on a close under 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 741 1/2.

MEAL (JAN): 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 226.8. The upside daily closing price reversal gives the market a bullish tilt. First resistance comes in at 233.6, with support at 229.6. The close below the 9-day moving average is a negative short-term indicator for trend. It is a slightly negative indicator that the close was under the swing pivot.

BEAN OIL (JAN): 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 27.45. A positive setup occurred with the close over the 1st swing resistance. Daily swing resistance is found at 27.25 and above there at 27.45. Support should be encountered at 26.53 and 26.01. Short-term indicators suggest buying dips today.

WHEAT MARKET RECAP

11/20/2003

March wheat closed 8 3/4 cents higher on the session with the market recovering some of the steep losses on the week. Positive export sales news and news that Egypt and others are active buyers of US wheat helped alleviate fears that China might not buy wheat from the US in protest of the textile import quotas. Weekly export sales came in at 1.095 million tonnes as compared with 383,800 tonnes necessary each week to reach the USDA projection and trade expectations at 500,000-700,000 tonnes. Cumulative sales have reached 62.5% of the forecast for the season as compared with 57.7% on average for this time of the year. The report included sales to unknown destination of 527,400 tonnes. Chinese officials indicating that they were planning tariffs on some US commodity imports helped keep traders uneasy over too much of a reaction to the solid demand numbers in wheat.

Technical Outlook

WHEAT (MAR) 11/21/2003: The market has a slightly positive tilt with the close over the swing pivot. Expect near-term support around 380 1/2 and below there at 373 , with resistance levels at 391 and 394 . A negative signal for trend short-term was given on a close under 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 373 .

LIVE CATTLE RECAP

11/20/2003

Cattle closed sharply higher on the session and got back much of the losses from Wednesday as packer bids improved to $97.00 and gave trader a little more confidence that cash would not collapse this week. Slaughter came in at 129,000 head which was above expectations and brought slaughter for the week to 483,000 head as compared with 466,000 last week and 507,000 head last week at this time. Boxed-beef cut-out values at mid-session were down 33 cents to $166.01 as compared with $167.59 last week at this time.

Technical Outlook

CATTLE (FEB) 11/21/2003: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 88.40. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 89.70 and below there at 88.40. Market resistance is at 91.62 and then again at 92.25. 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.

LEAN HOGS RECAP

11/20/2003

December hogs closed moderately higher with an inside trading session but February hogs closed moderately lower on a test of the contract lows at 53.50. Funds were noted sellers in the February contract as the trade continues to pull some of the steep premium out of the market with pork production and slaughter levels remaining above expectations. The 2-day lean index was down 28 to 48.93. The USDA monthly cold storage report, released after the close, showed belly stocks for end of October at 20.99 million pounds as compared with trade expectations at 20.0 million pounds (range 18.2-21.0). Last year stocks were at 10.4 million pounds. The report is considered slightly bearish. Slaughter came in at 394,000 head which brought weekly slaughter to 1.563 million head from 1.551 million last year.

Technical Outlook

HOGS (FEB) 11/21/2003: It is a slightly negative indicator that the close was under the swing pivot. Resistance levels comes in at 54.95 and 55.77 today, while support is around 53.55 and then 52.97. 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 52.97. With a reading under 30, the 9-day RSI is approaching oversold levels.

COCOA MARKET RECAP

11/20/2003

After an early attempt to rally cocoa prices finished moderately below the prior sessions close and in a negative posture. The London market did not see much in the way or origin selling Thursday but it appeared like some hedging managed to impact US cocoa prices into the close. We have to think that origin-selling pressures will continue to surface in the weeks ahead and that the bull camp will have to prove it can find buyers in the face of expanding supply flow from the current harvest. Dow Jones was reporting that Nigerian farmers were seeing profit margins collapse off rising costs and low prices and that might spark some of those growers to hold out for higher prices. Traders should also note that CSCE cocoa stocks leaped by a rather large amount and that could be a negative development.

Technical Outlook

COCOA (MAR)11/21/03 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1562 and above there at 1589 with support at 1519 and 1503. 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 1502.75.

COFFEE MARKET RECAP

11/20/2003

The coffee market failed significantly and into new low ground. The USDA pegged Colombian 03/04 production at 11.8 million bags and Indian production at 4.6 million bags. In other words, the fact that Brazilian production is expected to be down due to the cyclical nature of that crop might be more than offset by increasing production in other regions. Countervailing the downside thrust are reports that Brazilian farmers are so unhappy with prices that they are destroying trees. Another negative issue in the action Thursday came off reports of origin selling and the fact that the downtrend was reconfirmed by the new low move.

Technical Outlook

COFFEE (MAR)11/21/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 58.90.The Coffee contract should run into resistance at 61.70 and above there at 63.30 with support at 59.5 and 58.90. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/20/2003

The outside day down after a sweeping reversal and lower close is a bearish technical development which could slow the fund buying which has been active in the past few weeks due to short-covering and could also spark increased producer selling. Stocks are still high at producing countries and demand remains weak from routine buyers. In fact, the Philippines, who have been net importers each year since 1993, announced plans to export 80,000 tonnes of excess sugar by the end of January. The market opened at the highest level since October 6th before the lower close in a 20 point range.

Technical Outlook

SUGAR (MAR) 11/21/2003: The daily closing price reversal down is a negative indicator for prices. It is a slightly negative indicator that the close was under the swing pivot. Swing resistance comes in at 6.57, with support found at 6.17. 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 6.57.

COTTON MARKET RECAP

11/20/2003

March cotton closed 131 lower on the session but 80 points off of the lows of the day as the market came just 10 points shy of filling the gap left on October 15th. Weekly export sales came in at 527,000 bales as compared with 131,100 bales necessary each week to reach the USDA projection and trade expectations at 200,000-300,000 bales. Cumulative sales have reached 59.1% of the forecast for the season as compared with 63.4% on average for this time of the year. China was the largest buyer at 196,500 bales. However, traders remain nervous over possible retaliation by China for the import quotas on textiles and there is some concern with the global economy during a period of increased terrorist activity such as the bombings in Turkey.

Technical Outlook

COTTON (MAR) 11/21/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. Bearish daily studies indicate selling minor rallies this session. The close below the 1st swing support could weigh on the market. Next resistance area comes in at 76.43 and then again at 77.64, while support is targeted at 74.28 and 73.34. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 73.34.