Dollar Shrugs Off Today’s Great News — What This Means

Technical Outlook

BONDS (MAR) 01/05/04: The close below the 2nd swing support number puts the market on the defensive. Near-term resistance for bonds is at 108.26 and then again at 109.30, while swing support hits at 107.00 and below there at 106.10. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close under the 40-day moving average indicates the longer-term trend could be turning down. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 106.10.

T-NOTES(MAR) Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 110.11. The market is in a bearish position with the close below the 2nd swing support number. 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 111.30 and then again at 112.21, while swing support hits at 110.25 and below there at 110.11. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

1/2/2004

The US stock market started 2004 out strong with a surprisingly firm opening. Some might suggest that the stock market response to the much stronger than expected economic information was a little disappointing but in the end one can hardly make out a significant improvement in the ISM report to be a negative for stocks! It should also be noted that the US and North Korea might be taking steps to warm relations with the US sending some experts (not official experts) to visit North Korean nuclear facilities. In another positive for the US economy, the USDA officially claimed that the mad cow appears to have come from Canada. It is still unclear if the mad cow situation was a negative to the US economy and if in fact the threat is declining.

Technical Outlook

S&P500 (MAR) 01/05/04: The market’s close below the pivot swing number is a mildly negative setup. The daily closing price reversal down puts the market on the defensive. Underlying support comes in at 1101.65 and 1095.33, with overhead resistance at 1116.15 and 1124.33. 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 1095.33. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract high on the rally. 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. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1095.38. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1116.25 and then again at 1124.38, while swing support hits at 1101.75 and below there at 1095.38. 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.

NASDAQ (MAR) A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. The market’s close above the 9-day moving average suggests the short-term trend remains positive. It is a slightly negative indicator that the close was lower than the pivot swing number. The market should run into resistance at 1478.00 and above there at 1492.00 with support at 1455.00 and 1446.00. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1492.0.

CURRENCY MARKET RECAP

1/2/2004

The Dollar had plenty of fundamental reasons to bounce off its early lows Friday morning but couldn’t muster and fresh long interest. In fact, despite seeing the strongest ISM new orders Index monthly gain since July of 1950 the Dollar showed that is doesn’t care how strong the US recovery might be. The Dollar even saw a possible improvement in US/North Korean tensions and failed to show the slightest size of rejecting the selling interest. In conclusion, it would not seem like an ultra strong US economic recovery is being factored into daily FOREX action and therefore the downtrend in the Dollar continues until someone in the G7 makes a major policy change decision.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 93.87 and above there at 93.95, with the yen finding support around 93.64 and below there at 93.49. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 93.95. Short-term indicators suggest buying dips today.

EURO (MAR): 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 1.2514. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2514, with overhead resistance at 1.2630. 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 gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/2/2004

Market closed for holiday.

Technical Outlook

SILVER (MAR): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 592.3 and below there at 588.9 with resistance likely at 598.2 and 600.8. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 588.9. The 9-day RSI over 70 indicates the market is approaching overbought levels. The downside closing price reversal on the daily chart is somewhat negative.

GOLD (FEB): Support for gold today comes in near 412.88, while resistance is pegged at 419.88. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 419.88. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 daily closing price reversal down puts the market on the defensive.

COPPER MARKET RECAP

1/2/2004

Market closed for holiday.

ENERGY MARKET RECAP

1/2/2004

Market closed for holiday.

Technical Outlook

CRUDE OIL (MAR): The daily closing price reversal down puts the market on the defensive. The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 31.86 and below there at 31.48, with resistance pegged at 32.71 and 33.18. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 31.48.

UNLEADED GAS (MAR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 95.55. The swing indicator gave a moderately negative reading with the close below the 1st support number. Resistance today is at 95.55, while support should be found around 91.75. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):The market’s close below the 1st swing support number suggests a moderately negative setup for today. Heating oil should encounter support around 88.53, with resistance is at 92.53. Daily studies pointing down suggests selling minor rallies. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 88.53.

CORN MARKET RECAP

1/2/2004

The corn market experienced wave after wave of solid buying Friday in a session that many expected to be quiet. The fact that China came in for a US wheat purchase has many traders thinking that the talk of Chinese exports is growing more likely. We also have to think that the tightening of the wheat balance sheet lends to a tightening of the world course grains situation and that in turn supports corn prices. It is possible that technical stop loss buying boost corn as the new crop December made a significant technical breakout up. Weekly export sales came in at 758,300 tons as compared with 659,600 tons necessary each week to reach the USDA projection. As a result, cumulative export sales have reached 51.8% of the USDA forecast for the season as compared with 46.3% as normal for this time of the year.

Technical Outlook

CORN (MAR) 01/05/04: 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 262 1/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 262 1/4 today, with support at 243 1/4. The market’s short-term trend is positive on a close above the 9-day moving average. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

SOY COMPLEX RECAP

1/2/2004

While soybeans managed an upside breakout to a fresh contract high the market had trouble holding all of the gains. It is pretty clear that the bullishness was initially sparked by the surprise Chinese purchase of US wheat and with Chinese showing up aggressively in export sales it is clear that the demand trend is still in place. With the technical action many traders think that the funds extended their long positions and since the COT report won’t be released until after the close Monday the overbought condition of the market is temporarily downplayed. Weekly export sales in soybeans came in at 545,300 compared to a mere 74,000 metric tons needed to reach the USDA target.

Technical Outlook

SOYBEANS (MAR) 01/05/04: 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 804 1/2 and 812 1/4, while 1st support hits today at 791 1/2 and below there at 786 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 812 1/4.

MEAL (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 250.5. First resistance comes in at 248.0, with support at 243.4. 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.

BEAN OIL (MAR): 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 28.21. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 28.05 and above there at 28.21. Support should be encountered at 27.77 and 27.65.

WHEAT MARKET RECAP

1/2/2004

The wheat market pushed sharply higher on Friday finding support from positive export sales news, the weak dollar and continued indications of strong demand from China. When China was buying from Australia and Canada, the market saw the news as “lost exports” but with the China buying delegation planning a trip to the US, trade and fund buying was significant on the first trading session of the year. Before the opening, the USDA announced that 105,000 tons of US wheat which was sold to unknown destination was switched over to China as the destination. Dry soils in the western winter wheat region and uncertain supply from China for the coming year added to the positive tone. Weekly export sales came in at 443,200 tons as compared with 307,400 tons necessary each week to reach the USDA projection. As a result, cumulative export sales have reached 76.8% of the USDA forecast for the season as compared with 66.6% as normal for this time of the year.

Technical Outlook

WHEAT (MAR) 01/05/04: The gap upmove on the day session chart is a bullish indicator for trend. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. Look for near-term support at 392 1/2 and below there at 373 1/4, with resistance levels at 419 and 426 1/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 426 1/4.

LIVE CATTLE RECAP

1/2/2004

Cattle tried to rally to fill one of the gaps left this week but the early buying fizzled out and there was plenty of new speculative selling to drive the market lower towards the close. However, a late surge in hogs and some additional short-covering supported the bounce into the close. February futures are now down more than 1800 points in just 6 trading sessions which is down almost 20%. Long liquidation from speculators and continued producer selling (hedging) kept the market in a steep downtrend. Boxed-beef cut-out values were down $1.62 to $139.76 as compared with $151.08 last week at this time. The USDA announced that a third farm in Washington State is under quarantine.

Technical Outlook

CATTLE (FEB) 01/05/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 71.47. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 72.62 and below there at 71.47. Market resistance is at 74.97 and then again at 76.17. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The 9-day RSI under 20 suggests the market is extremely oversold.

LEAN HOGS RECAP

1/2/2004

Hogs closed sharply higher on the session and up sharply on the week after an initial surge higher in prices pushed February futures to near limit-up early in the session. Sharply higher cash hogs helped support the rally as traders believe the USDA numbers from earlier in the week are a more accurate picture of the supply situation and that while the numbers were slightly higher than trade expectation, the larger supply did not come as a significant surprise. In addition, the fact that pork prices were able to rally in the past week during a period of hefty production could be an indication of improving consumer demand for pork in the wake of the mad cow discovery. Positive packer profit margins encouraged the hefty slaughter for the week and the ability of packers to “pay-up” in the cash market.

Technical Outlook

HOGS (FEB) 01/05/04: The market’s close above the 2nd swing resistance number is a bullish indication. Resistance levels comes in at 56.15 and 56.50 today, while support is around 54.72 and then 53.65. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. 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. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 56.50.

COCOA MARKET RECAP

1/2/2004

Market closed for holiday.

Technical Outlook

COCOA (MAR)01/05/04 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. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1544 and above there at 1579 with support at 1487 and 1465. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1464.75.

COFFEE MARKET RECAP

1/2/2004

Market Closed for Holiday.

Technical Outlook

COFFEE (MAR)1/5/04 The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. 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 66.45.The Coffee contract should run into resistance at 65.95 and above there at 66.45 with support at 64 and 62.55. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/2/2004

Market Closed for Holiday.

Technical Outlook

SUGAR (MAR) 01/05/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 5.82, with support found at 5.58. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 5.58. With a reading under 20, the 9-day RSI indicates the market is extremely oversold.

COTTON MARKET RECAP

1/2/2004

Market Closed for Holiday.

Technical Outlook

COTTON (MAR) 01/05/04: The market’s close above the 9-day moving average suggests the short-term trend remains positive. Short-term indicators suggest buying dips today. A positive setup occurred with the close over the 1st swing resistance. Next resistance area comes in at 75.55 and then again at 75.80, while support is targeted at 74.60 and 73.90. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 75.80. ORANGE JUICE (MAR)1/5/04 The gap lower price action on the day session chart is a bearish indicator for trend. The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 64.40 and above there at 64.60 with support at 63.80 and 63.40. The 9-day RSI under 20 suggests the market is extremely oversold. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 63.4.