Does This Mean A Change In Fed Policy?
BOND MARKET RECAP
5/11/2005
June Bonds finished up 0-09 at 114-29, 0-18 off
the high and 0-11 up from the low.
June 10 Yr Treasury Notes finished up 0-040 at
111-160, 0-110 off the high and 0-070 up from the low.
The Treasury managed to rise toward the
recent consolidation highs in the wake of another improvement in the US Trade
Balance as that could actually lower the international diversification threat
that has limited bonds in the past. Fed comments during the session might have
been taken bullishly, as a Fed member seemed to indicate that the pattern of 25
basis point hikes wasn’t necessarily carved in stone. In other words, the Fed is
possible willing to acknowledge the risk of slowing in the US economy and that
certainly took some resistance off the Treasury market. So far, weakness in oil
prices isn’t markedly improving economic sentiment and that would seem to leave
the bulls in charge of the market.
Technical Outlook
BONDS (JUN) 05/12/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next downside objective
is now at 114-02. The next area of resistance is around 115-13 and 115-29, while
1st support hits today at 114-16 and below there at 114-02.
TNOTES (JUN) 05/12/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market now above the 18-day moving average suggests the longer-term
trend has turned up. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next downside objective is 110-285.
The next area of resistance is around 111-270 and 112-050, while 1st support
hits today at 111-070 and below there at 110-285.
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STOCK INDICES RECAP
5/11/2005
June S&P finished up 6.3 at 1172.5, 1 off the
high and 14.5 up from the low.
June S&P E-Mini closed up 6.25 at 1172.5. This
was 14.5 up from the low and 1 off the high.
June Dow closed up 27 at 10301. This was 121 up
from the low and 14 off the high.
The bull camp has to be impressed with itself
from the action Wednesday. In addition to turning off the selling in the face of
hedge fund credit risk fears the market also discounted recovered aggressively
following an evacuation of the Capitol. Certainly seeing crude oil prices fall
back toward the recent consolidation lows helps to improve sentiment but we
don’t get the sense that the stock market is ready to seriously upgrade its
forward view on the economy unless it is assured that prices will get through at
least a portion of the summer driving season without rising again. It is
certainly likely that the US stock market benefited from the much better than
expected US Trade Balance report as that serves to lower the threat of
investment rotation away from the US.
Technical Outlook
S&P 500 (JUN) 05/12/2005: The cross over and
close above the 40-day moving average indicates the longer-term trend has turned
up. Studies are showing positive momentum but are now in overbought territory,
so some caution is warranted. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The upside closing price reversal
on the daily chart is somewhat bullish. The market setup is supportive for early
gains with the close over the 1st swing resistance. The near-term upside target
is at 1184.62. The next area of resistance is around 1180.25 and 1184.62, while
1st support hits today at 1164.75 and below there at 1153.63.
SP EMINI (JUN) 05/12/2005: The cross over and
close above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are trending higher but have entered
overbought levels. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The upside daily closing price
reversal gives the market a bullish tilt. It is a mildly bullish indicator that
the market closed over the pivot swing number. The near-term upside objective is
at 1184.62. The next area of resistance is around 1180.25 and 1184.62, while 1st
support hits today at 1164.75 and below there at 1153.63.
NASDAQ (JUN) 05/12/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. 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 near-term upside target is at 1484.12. The next area
of resistance is around 1475.25 and 1484.12, while 1st support hits today at
1446.75 and below there at 1427.13.
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CURRENCY MARKET RECAP
5/11/2005
June US Dollar finished up 50 at 8495, 11 off the
high and 75 up from the low.
June Euro finished down 0.73 at 128.1, 0.8 off
the high and 0.21 up from the low.
June Euro Dollar closed unchanged at 96.565. This
was 0.005 up from the low and 0.02 off the high.
June Canadian Dollar closed down 0.7 at 80.18.
This was 0.14 up from the low and 0.47 off the high.
June British Pound finished down 1.17 at 186.78,
1.22 off the high and 0.12 up from the low.
June Swiss closed down 0.36 at 83.06. This was
0.26 up from the low and 0.51 off the high.
June Japanese Yen closed down 0.29 at 94.84. This
was 0.2 up from the low and 0.34 off the high.
A surprisingly better than expected US Trade
Balance number served to lift the Dollar to the highest level since April 15th.
An improvement in the Trade Balance could discourage rotation away from US
investments. Also supporting the Dollar is the ongoing pattern of weakness in
energy prices. Considering the terrorist threat against Washington DC, Dollar
gains on Wednesday could have been restrained.
Technical Outlook
YEN (JUN) 05/12/2005: The close under the 60-day
moving average indicates the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The major trend has turned down with
the cross over back below the 18-day moving average. The outside day down is a
negative signal. The market setup is somewhat negative with the close under the
1st swing support. The next downside objective is now at 94.34. The next area of
resistance is around 95.10 and 95.41, while 1st support hits today at 94.57 and
below there at 94.34.
EURO (JUN) 05/12/2005: Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness. The next downside target is now at 127.24. The next area of resistance
is around 128.60 and 129.25, while 1st support hits today at 127.60 and below
there at 127.24.
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PRECIOUS METALS RECAP
5/11/2005
June Gold closed unchanged at 427.9. This was 1.9
up from the low and 1.4 off the high.
July Silver finished down 0.02 at 7.095, 0.015
off the high and 0.09 up from the low.
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While flight to quality players hoped for support
off credit threats and terrorism warnings, the direction of the Dollar
dominated. However, the gold market seemed to hold up better than the silver
market for most of the session. In the end, the highest Dollar trade since April
15th probably leaves the path of least resistance in gold pointing downward.
Technical Outlook
SILVER (JUL) 05/12/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend has turned down with the cross over back
below the 18-day moving average. The market’s close below the pivot swing number
is a mildly negative setup. The next upside objective is 718.1. The next area of
resistance is around 714.8 and 718.1, while 1st support hits today at 704.3 and
below there at 697.2.
GOLD (JUN) 05/12/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The major trend has turned down with the cross over back below the
18-day moving average. It is a slightly negative indicator that the close was
under the swing pivot. The next downside objective is now at 424.5. The next
area of resistance is around 429.5 and 431.0, while 1st support hits today at
426.3 and below there at 424.5.
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COPPER MARKET RECAP
5/11/2005
June Copper closed down 0.95 at 146.75. This was
0.75 up from the low and 0.15 off the high.
Technically, the copper market continues to trade
poorly and could be setting up to trigger long-term stop loss selling. US copper
exports declined while imports increased in March and that could take some
supply away from China. In other words, copper is not responding to potentially
bullish information. Furthermore, persistent gains in the Dollar are undermining
the US copper outlook.
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ENERGY MARKET RECAP
5/11/2005
June Crude Oil closed down 1.62 at 50.45. This
was 0.20 up from the low and 1.35 off the high.
June Heating Oil closed down 4.65 at 140.31. This
was 0.31 up from the low and 4.69 off the high.
June Unleaded Gas finished down 2.83 at 148.20,
3.05 off the high and 1.90 up from the low.
June Natural Gas finished down 0.01 at 6.68, 0.07
off the high and 0.08 up from the low.
June Propane closed down 0.01 at 0.82. This was
equal to the low and equal to the high.
The energy market started out weak and then
extended the declines in the wake of mostly bearish weekly inventory stats.
Furthermore, the market was also pressured by news that Chinese energy demand
growth in 2005 is seriously lagging behind the pace established in 2004 and that
was probably a critical component in pushing crude oil prices to $60.00. Finally
energy prices seemed to weaken under the morning pressure in the stock market
and because of the terrorist threat against Washington. Later in the session the
stock market managed to recover and that could serve to provide energy prices
with some support in the coming action. EIA crude stocks rose 2.7 million
barrels and are now 30.3 million barrels above year ago stock levels and 6.2
million barrels above the 13 year average. By contrast, API showed a 6.1 million
barrel fall in crude stocks after reporting a 10.1 million barrel rise the
previous week. EIA crude stocks have risen 12 out of the last 13 weeks and over
the last 4 weeks, crude stocks are up a combined 9.0 million barrels. EIA
gasoline stocks rose 0.2 million barrels and are now 3.6 million barrels above
the 13 year average. Compared to year ago levels, gasoline stocks are at an 11.1
million barrel surplus. The net change in gas stocks over the last 4 weeks has
been a rise of 0.6 million barrels. Gas demand stood at 9.175 million barrels
which is 0.45 above the 5yr average. EIA distillate stocks rose 1.695 million
barrels and stand at 1.7 million barrels above last year.
Technical Outlook
CRUDE OIL (JUN) 05/12/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend has turned down with the cross
over back below the 18-day moving average. The market is in a bearish position
with the close below the 2nd swing support number. The near-term upside target
is at 52.28. The next area of resistance is around 51.22 and 52.28, while 1st
support hits today at 49.68 and below there at 49.19.
UNLEADED (JUN) 05/12/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The major trend has turned down
with the cross over back below the 18-day moving average. The close below the
1st swing support could weigh on the market. The next upside objective is
153.43. The next area of resistance is around 150.67 and 153.43, while 1st
support hits today at 145.73 and below there at 143.54.
HEATING OIL (JUN) 05/12/2005: Momentum studies
are declining, but have fallen to oversold levels. The major trend has turned
down with the cross over back below the 18-day moving average. The market setup
is somewhat negative with the close under the 1st swing support. The next
downside target is now at 136.41. The next area of resistance is around 142.81
and 146.40, while 1st support hits today at 137.81 and below there at 136.41.
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CORN MARKET RECAP
5/11/2005
July Corn finished down 1 3/4 at 206 1/2,
3/4 off the high and 3/4 up from the low. December Corn closed down 1 1/2 at 224
1/4. This was 3/4 up from the low and 1/2 off the high.
Expectations for another increase in old crop
ending stocks, rain in the Midwest forecast and positioning ahead of the USDA
reports for the morning helped trigger the weaker trade early in the session.
Weakness in the wheat market kept the corn tone negative into the close with
funds noted sellers of near 1000 contracts into the mid-session. For the USDA
supply/demand report in the morning traders are looking for 2005/2006 ending
stocks near 2.222 billion bushels (range 2.030-2.416) as compared with old crop
ending stocks pegged at 2.215 billion bushels in last months report. Traders are
also looking for another 25-50 million bushel decline in old crop usage and for
old crop ending stocks (2004/2005) to jump to near 2.260 billion bushels from
2.215 billion last month. Taiwan bought 60,000 tonnes of optional origin corn
overnight and other export news is quiet. For the weekly export sales report,
released before the opening, traders are looking for 725,000-975,000 tonnes as
compared with 623,600 tonnes last week. Support for July corn comes in at 205
1/2 and 204 1/2 with resistance at 207 1/2 and 209 1/2.
Technical Outlook
CORN (JUL) 05/12/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. The gap lower on the
day session chart is bearish and puts the market on the defensive. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next downside target is 205. The next area of resistance is
around 207 1/4 and 208, while 1st support hits today at 205 3/4 and below there
at 205.
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SOY COMPLEX RECAP
5/11/2005
July Soybeans finished down 1 at 633, 5 off the
high and 5 up from the low. November Soybeans closed down 1 1/2 at 627 1/2. This
was 4 1/2 up from the low and 3 off the high.
July Soymeal closed up 1.1 at 194.6. This was 3.4
up from the low and 0.3 off the high.
July Soybean Oil finished down 0.2 at 23.06, 0.19
off the high and 0.08 up from the low.
Rains across Iowa and northern Illinois overnight
and some rain in the forecast for the eastern cornbelt for the next few days
helped trigger the long liquidation selling early in the session. Positioning
ahead of the USDA reports for released Thursday morning helped provide some
underlying support. Traders are looking for another revision lower in old crop
ending stocks to near 358 million bushels from 375 million projected last month.
New crop ending stocks are expected to come in near 368 million bushels for the
first look at the new crop season. There were 584 soybean deliveries this
morning with a strong stopper taking 346. There were oil deliveries for the
first time against the May contract this morning at 290 contracts which helped
pressure the oil along with a sharp break in palm oil futures overnight. For the
weekly export sales report, released before the opening, traders are looking for
soybean sales at 175,000-425,000 tonnes as compared with 355,800 tonnes last
week. Meal sales are expected near 50,000-75,000 tonnes and oil sales near
2,000-6,000 tonnes. July soybean support comes in at 628 with 636 and 644 as
resistance.
Technical Outlook
BEANS (JUL) 05/12/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The market’s close below the pivot
swing number is a mildly negative setup. The near-term upside objective is at
643. The next area of resistance is around 638 and 643, while 1st support hits
today at 628 and below there at 623.
MEAL (JUL) 05/12/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market now above the 18-day moving average suggests the longer-term
trend has turned up. The daily closing price reversal up on the daily chart is
somewhat positive. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The next downside objective is now at 190.2.
The next area of resistance is around 196.4 and 197.5, while 1st support hits
today at 192.8 and below there at 190.2.
BEANOIL (JUL) 05/12/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside target
is at 23.35. The next area of resistance is around 23.19 and 23.35, while 1st
support hits today at 22.93 and below there at 22.82.
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WHEAT MARKET RECAP
5/11/2005
July Wheat finished down 7 3/4 at 313 3/4, 6 off the high and
1/2 up from the low. December Wheat closed down 7 at 332 3/4. This was 1/4 up
from the low and 5 3/4 off the high.
Traders indicate that there is about a 30% chance
of rain in some off the drier areas of western Kansas and Oklahoma over the next
few days but that areas which do not receive rain could be in for a 1-2 week
period of warmer and drier weather ahead. Crop conditions are already
deteriorating rapidly in the past few weeks and this could continue without a
widespread rain event in the next few days. South Korea bought 21,500 tonnes of
US wheat overnight and other export news is quiet. Traders are bracing for a big
world production forecast for tomorrow mornings USDA reports. Traders also look
for higher US production with an average estimate for winter wheat near 1.556
billion bushels as compared with 1.499 billion last year. Soft red winter wheat
is expected to be near 306 million bushels from 380 million last year due to
lower planted acreage. For the weekly export sales report, released before the
opening, traders are looking for 225,000-375,000 tonnes as compared with 400,600
tonnes last week. July wheat support comes in at 312 1/2 and 311 with 318 1/2
and 322 3/4 as resistance.
Technical Outlook
WHEAT (JUL) 05/12/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next downside objective is now at 308 3/4. The next area of
resistance is around 317 and 321 1/2, while 1st support hits today at 310 1/2
and below there at 308 3/4.
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LIVE CATTLE RECAP
5/11/2005
June Live Cattle finished up 0.35 at 86.45, 0.22
off the high and 0.47 up from the low.
May Feeder Cattle closed up 0.22 at 111.57. This
was 0.57 up from the low and 0.02 off the high.
June cattle closed higher for the third session
in a row finding support from a positive technical outlook, hopes of a more
stable beef and cash market into next week and new highs in Feeder Cattle. A
lack of trade in the cash market combined with the stiff discount of June to the
cash market helped support light short-covering. Cash cattle in the panhandle
were bid at $87 with offers at $91.00. Boxed-beef cut-out values were down $1.07
at mid session today to $155.54 as compared with $163.12 one week ago. Slaughter
came in at 118,000 head as compared with trade expectations of 120,000-126,000
head. Slaughter for the week has reached 356,000 head as compared with 364,000
last week and 388,000 last year.
Technical Outlook
CATTLE (JUN) 05/12/2005: The crossover up in the
daily stochastics is a bullish signal. Momentum studies are rising from
mid-range, which could accelerate a move higher if resistance levels are
penetrated. The major trend could be turning up with the close back above the
18-day moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside target is 87.070. The
next area of resistance is around 86.770 and 87.070, while 1st support hits
today at 86.120 and below there at 85.700.
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LEAN HOGS RECAP
5/11/2005
June Lean Hogs finished up 0.92 at 76.22, 1.07
off the high and 0.97 up from the low.
May Pork Bellies closed up 1.65 at 82.42. This
was 2.17 up from the low and 0.25 off the high.
June hogs closed 92 points higher on the session
with active speculative buying and small speculator short-covering helping to
support. June touched limit-up before the buying slowed. Talk of a turn higher
in the cash market into next week due to tight supplies and improving packer
margins helped support. Weekly average weights for Iowa/Minnesota for the week
ending May 7th came in at 267.9 pounds as compared with 267.1 pounds the
previous week and 263.9 pounds last year at this time. The CME 2-Day lean Index
for the period ending May 9th came in at 78.35 which was up.35 from the previous
session and up from 73.47 the previous week. Slaughter came in at 375,000 head
as compared with trade expectations of 369,000-380,000 head. Slaughter for the
week has reached 1.065 million head as compared with 1.119 million last week and
1.098 million last year.
Technical Outlook
HOGS (JUN) 05/12/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market back
below the 18-day moving average suggests the longer-term trend could be turning
down. The market’s close above the 2nd swing resistance number is a bullish
indication. The next downside target is 74.220. The next area of resistance is
around 77.250 and 78.270, while 1st support hits today at 75.220 and below there
at 74.220.
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COCOA MARKET RECAP
5/11/2005
July Cocoa finished down 6 at 1491, 18 off the
high and 1 up from the low.
The cocoa market surprised some in the trade with
another upside technical breakout. However, the cocoa market did benefit from
news that US cocoa imports increase sharply in the month of March. Even more
surprising is the fact that the market managed to rise despite the presence of
original selling. We also think that some shorts were exiting ahead of an
upcoming Ivory Coast disarmament meeting and in that same light there might have
been some fresh buying in anticipation of tensions in the meetings. Even more
surprising is the fact that the cocoa market managed to rally in the face of a
sharply higher US Dollar.
Technical Outlook
COCOA (JUL) 05/12/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend has turned down with the cross over back below
the 18-day moving average. The outside day down is a negative signal. The close
below the 1st swing support could weigh on the market. The next upside objective
is 1514. The next area of resistance is around 1500 and 1514, while 1st support
hits today at 1482 and below there at 1477.
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COFFEE MARKET RECAP
5/11/2005
July Coffee closed up 3.15 at 124.75. This was
4.55 up from the low and 0.65 off the high.
July coffee closed sharply higher on the session
as the early weakness and test of last weeks lows failed to find new selling
interest. The outside day up may attract additional buying this week and a close
over 124.50 on Friday would represent a higher close for the week. The rally
came in spite of weakness in the CRB Index as the lack of new selling interest
seems to be based on the bullish longer-term fundamental set-up for the coffee
market. Producer selling was noted to be slow in Central American countries and
in Brazil but rains in Vietnam have triggered an increase in producer selling.
Lower production from Mexico helped support. Exchange coffee warehouse stocks,
released after the close, were up for the second day in a row showing an
increase of 3,128 bags to 4.511 million bags with 27,167 bags pending review.
Technical Outlook
COFFEE (JUL) 05/12/2005: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Stochastics trending lower at midrange will tend to reinforce a move
lower especially if support levels are taken out. The close under the 18-day
moving average indicates the longer-term trend could be turning down. The
outside day up and close above the previous day’s high is a positive signal. The
market’s close above the 2nd swing resistance number is a bullish indication.
The next downside target is 118.60. The next area of resistance is around 127.35
and 128.95, while 1st support hits today at 122.20 and below there at 118.60.
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SUGAR MARKET RECAP
5/11/2005
July Sugar closed up 0.10 at 8.49. This was 0.14
up from the low and equal to the high.
July sugar closed 10 higher on the session and
back up to the highest level since May 4th as cash market activity picked up on
the recent break and speculative buying seems to be on the rise. News that
Indonesia bought 50,000 tonnes of raw sugar and talk of active buying from
Russia helped support. Russia appears to be lining up plenty of imports for the
month of May. On top of the active Russian purchases, there was talk that China
is beginning to import a little more sugar with traders expecting at least
500,000 tonnes. Positive news from the International Sugar Organization this
week along with more optimistic views from trade houses after the annual sugar
dinner added to the more positive tone.
Technical Outlook
SUGAR (JUL) 05/12/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market now
above the 18-day moving average suggests the longer-term trend has turned up. A
positive setup occurred with the close over the 1st swing resistance. The next
downside objective is now at 8.32. The next area of resistance is around 8.56
and 8.59, while 1st support hits today at 8.42 and below there at 8.32.
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COTTON MARKET RECAP
5/11/2005
July Cotton finished up 0.87 at 56.80, 0.10 off
the high and 1.45 up from the low.
July cotton closed moderately higher for the 4th
session in a row as a drop in certified stocks, expectations for continued
strong demand from China and positioning ahead of the USDA weekly export sales
report and the USDA Supply/demand reports for release before the opening helped
trigger more speculative buying. China issued import quotas for 700,000 tonnes
and which might help spark increased import activity just ahead. The quotas came
on top of 894,000 tonnes issued in January and traders believe that another
300,000 tonnes will be issued later this year. For the weekly export sales
report, traders are looking for cotton sales near 200,000-300,000 bales as
compared with 1.03 million bales last week. Export shipments are expected near
300,000-400,000 bales.
Technical Outlook
COTTON (JUL) 05/12/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Momentum
studies are trending higher from mid-range, which should support a move higher
if resistance levels are penetrated. The market now above the 18-day moving
average suggests the longer-term trend has turned up. The market’s close above
the 2nd swing resistance number is a bullish indication. The near-term upside
objective is at 58.01. The next area of resistance is around 57.57 and 58.01,
while 1st support hits today at 56.03 and below there at 54.92.