Dollar Springboards On News

Technical Outlook

BONDS (MAR) 01/20/04: The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 113.09 and then again at 114.07, while swing support hits at 111.27 and below there at 111.11. 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 114.07. The 9-day RSI over 70 indicates the market is approaching overbought levels.

T-NOTES(MAR) The daily closing price reversal down puts the market on the defensive. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is 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 114.24 and then again at 115.11, while swing support hits at 113.28 and below there at 113.19. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/16/2004

Positive earnings reports, particularly from GE and a surprising jump in Jan consumer sentiment reading combined with a strong dollar and weak bond market propelled the March S&P to new higher ground Friday. With GM so goes the country so the company’s positive earnings report gave rise to expectation that next weeks corporate report cards will beat expectations. If U of M’s preliminary Jan report on consumer sentiment is accurate, then fears that the consumer is tapped out begin to fade and suggests consumer spending could be a big contributor to 1st qtr growth. Although over extended, the market shows no signs of topping which puts March S&P on track to test contract highs.

Technical Outlook

S&P500 (MAR) 01/20/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Underlying support comes in at 1134.90 and 1130.05, with overhead resistance at 1141.70 and 1143.65. 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 1143.65. 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. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1144.13. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1142.25 and then again at 1144.13, while swing support hits at 1135.25 and below there at 1130.13. 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 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. The market should run into resistance at 1561.50 and above there at 1566.75 with support at 1544.50 and 1532.75. The 9-day RSI over 70 indicates the market is approaching overbought levels. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1566.8.

CURRENCY MARKET RECAP

1/16/2004

The dollar springboarded higher Friday on news that net foreign purchases of US assets rose sharply in November up nearly $60 billion from October. The surprisingly strong U of M preliminary Consumer Confidence reading for January, the strongest since Nov 2000, also gave the Dollar a boost along with good corporate earnings reports and solid gains in stocks. The Euro fell hard as recent rumblings by Euro-zone officials has increased speculation that the European Central Bank may cut rates at the Feb G7 meeting Feb 6th-7th. Next support for Mar Euro comes in at 1.2320. The Yen looks to have made a key reversal on Friday with first retracement support off the Nov – Jan range back at 92.97. With the Dollar momentum on the upswing, the Bank of Japan could step up intervention efforts since they would not be fighting the trend.

Technical Outlook

YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. 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 close below the 2nd swing support number puts the market on the defensive. Swing resistance is targeted at 94.26 and above there at 94.94, with the yen finding support around 93.25 and below there at 92.92. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 92.92.

EURO (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 1.2223. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2223, with overhead resistance at 1.2547. The market’s short-term trend is negative as the close remains below the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/16/2004

Gold closed weaker as the dollar continued to gain upward momentum. News that Net foreign purchases of US assets saw a huge jump in November took some of the shine off the gold market. Heavy losses in the Euro currency also weighed on gold as there is increasing speculation that the European Central Bank will cut rates next month to slow the Euro currency’s rise. Funds continue to liquidate their heavy build up of net long positions, which keeps the market vulnerable to further weakness.

Technical Outlook

SILVER (MAR): A positive setup occurred with the close over the 1st swing resistance. Initial support for silver is at 626.0 and below there at 616.0 with resistance likely at 631.4 and 640.0. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 616.0.

GOLD (APR): Support for gold today comes in near 402.70, while resistance is pegged at 414.70. 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 402.70. The market’s close below the pivot swing number is a mildly negative setup. The market’s short-term trend is negative as the close remains below the 9-day moving average.

COPPER MARKET RECAP

1/16/2004

March copper was able to close firmer despite a surge in the dollar and on-going negotiations between workers and management at a major US copper mine. Copper was able to garner support from continued declines in LME stocks, a sharp jump in Jan consumer sentiment and strength in the US stock market. Despite the higher close, March copper remains range bound with a close back over 110 needed for an upside break out of the triangle formation.

ENERGY MARKET RECAP

1/16/2004

The energy complex rebounded sharply from Thursday’s sell-off nearly recouping all losses Friday on concerns over heating oil supplies amid arctic cold weather in the Northeast. The market is pricing in a big draw in heating oil supplies in the next stock report to reflect the cold snap in the Northeast. Position adjustments ahead of the long weekend also supported prices. Adding to the market’s firm tone were concerns that as much as 1 million barrels per day of capacity could be removed after US refiners retool plants to process gasoline with lower sulphur content to comply with new clean air laws this quarter. With the weather forecast calling for temperatures in the Northeast to warm up to the 30’s next week, the strength in energy prices off of higher demand could fade next week.

Technical Outlook

CRUDE OIL (MAR): With the close over the 1st swing resistance number, the market is in a moderately positive position. Support for crude is keyed on 33.20 and below there at 32.10, with resistance pegged at 34.80 and 35.30. The market’s short-term trend is positive on a close above the 9-day moving average. 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 32.10.

UNLEADED GAS (MAR): 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 93.06. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 104.06, while support should be found around 93.06. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):With the close over the 1st swing resistance number, the market is in a moderately positive position. Heating oil should encounter support around 91.21, with resistance is at 99.21. The market’s short-term trend is positive on a close above 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 91.21.

CORN MARKET RECAP

1/16/2004

Corn closed strong across the board today, led by the May contract which managed another move to new contract highs. While the market continues to garner strength off the bullish USDA reports earlier this week, that support was bolstered today by a private forecasting concern’s bullish estimate for planted acreage for the upcoming 2004/2005 crop. That report called for acreage of 79.005 million acres to be planted this spring, higher than last year’s 78.8 million but below general expectations of 80 million. Also supportive were reports early today that 110,000 tons of US corn was sold to unknown destinations. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

CORN (MAR) 01/20/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 278 1/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 278 1/4 today, with support at 264 1/4. 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

1/16/2004

May soybeans manage to close stronger today and to shrug off the disappointing market action of the past two days. The market opened weaker as it continued to adjust to concerns about a weakening cash basis and recent reports of avian flu in southeast Asia that have led to concerns over demand. Yesterday’s switching of some export sales to China from old crop to new crop also deflated some of the euphoria stemming from the USDA reports earlier in the week. Ideas that large speculator interest might be peaking also added pressure the holiday weekend approached. However, the stronger close will lend support to the bulls’ hopes that the recent setback was only a mild correction. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

SOYBEANS (MAR) 01/20/04: The daily closing price reversal up is positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 842 1/2 and 847 1/4, while 1st support hits today at 829 and below there at 820 1/4. 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 820 1/4. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 264.0. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 261.7, with support at 255.3. 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 (MAR): 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 29.30. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 29.78 and above there at 29.94. Support should be encountered at 29.46 and 29.30.

WHEAT MARKET RECAP

1/16/2004

May wheat recovered after a lower opening and closed above yesterday’s high, forming a technically bullish outside reversal pattern today. Funds reportedly bought 6000 lots and there were more unconfirmed reports that China was buying more U.S. wheat. Concerns over dryness in the western plains continues to underpin the market, as do growing expectations for more export business to China when a trade delegation visits the U.S. in early February. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

WHEAT (MAR) 01/20/04: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. Short-term indicators suggest buying dips today. A positive setup occurred with the close over the 1st swing resistance. Look for near-term support at 388 1/2 and below there at 376 3/4, with resistance levels at 407 and 413 3/4. 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. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 413 3/4.

LIVE CATTLE RECAP

1/16/2004

Feb live cattle closed stronger today after trading in a wide range that took the market lower on the day early in the session. Limits were expanded to 300 points today after closing limit-up the two previous sessions. Cash live cattle markets were quiet today, but expectations are building for $2 higher next week after the gains in beef prices this week. Slaughter came in at 118,000 head versus expectations of 122,000-130,000. This afternoon’s cattle on feed report was considered bearish, especially for the deferred contracts. The number of Cattle on feed as of Jan 1 was 106% of last year versus expectations of 105.6% (Range 104.9-107); Placements during December were 110% versus 105% expected (range 98-109.7; and Marketings during December were 97% of versus 95.7% expected (range 92-98.8). The substantially higher placements number means heavier than expected supplies out ahead, hence the report would be considered bearish for the deferreds. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

CATTLE (APR) 01/20/04: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 77.35. A positive setup occurred with the close over the 1st swing resistance. Consider buying pull-backs since daily studies are bullish. Support should be encountered at 75.25 and below there at 74.05. Market resistance is at 76.90 and then again at 77.35. The daily closing price reversal up is positive. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

1/16/2004

April lean hogs made a technical breakout today with a gap higher opening and a move their highest price level since December 3rd. A surge in pork cutout values on Thursday night (up $1.23 to 58.31) was the key bullish force. Strong cash markets and higher packer profit margins added to the bullish tone. The gap higher opening helped scare shorts out of the market. Keep in mind that both large and small speculators came into the week net short futures. The Commitments of Traders reports, to be released this afternoon, should indicate the extent of the net spec short position. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

HOGS (APR) 01/20/04: The market’s close above the 2nd swing resistance number is a bullish indication. Resistance levels comes in at 58.52 and 58.85 today, while support is around 57.62 and then 57.05. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 58.85.

COCOA MARKET RECAP

1/16/2004

March cocoa closed slightly weaker after failing to hold an early rally off indication that world cocoa demand is on the rise. The strength in the US dollar was cited as a factor contributing to the market’s weakness. The fourth quarter European cocoa grind rose 6.67% vs year ago which may not have been too surprising since the German grind also showed strong gains. Origin sales from the Ivory Coast continue to cap any attempts to rally. Reports that arrivals at the Ivory Coast have increased since the recent higher price action in cocoa is also a negative as slow arrival rates had been a supportive factor for the market. The outside day down is bearish and short-term technical indicators have turned negative which suggest more weakness next week.

Technical Outlook

COCOA (MAR)01/20/04 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 1620 and above there at 1651 with support at 1574 and 1559. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1651.00.

COFFEE MARKET RECAP

1/16/2004

May coffee closed sharply higher today and came close to taking out the Jan 12th high of 73.00. The market is anticipating declining sales out of Vietnam and continued slow shipments out of Brazil. Central American deliveries have been delayed due to late harvest. This does not necessarily mean a lower crop but has provided some short term support to the cash market. The market has a bullish technical setup, with a head and shoulders bottom projecting a 76.85 objective in the May contract. London was strong to start the session and fund buying helped push the New York market higher today. The New York market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

COFFEE (MAR)1/20/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 72.70.The Coffee contract should run into resistance at 72.10 and above there at 72.70 with support at 70.25 and 69.00. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/16/2004

March sugar took out the December lows by a few ticks today, but the market ran out of sellers and managed to turn around and close higher on the day. Heavy supplies out of Brazil continue to weigh on this market. With potential China buying seen as its “last hope”, reports of avian flu China and the potential problems it could cause to the economy there helped push the market lower during the second half of the week. A strong technical divergence lends some feint hope that this market is in the process of bottoming out, but today’s action attests to the danger of counting on one too soon. The New York sugar market will be closed Monday, Jan 19th in observance of Martin Luther King Day.

Technical Outlook

SUGAR (MAR) 01/20/04: The upside closing price reversal on the daily chart is somewhat bullish. It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 5.92, with support found at 5.58. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 5.92.

COTTON MARKET RECAP

1/16/2004

May cotton closed slightly higher today in quiet trade after yesterday’s strong upside reversal. A private forecaster pegged planted acreage for the upcoming (2004/2005) crop year at 14.54 million acres, which is up 1.04 million from a year ago. An improving world economy and expectations that China will be returning to the US market soon are primary supportive factors but developing concerns about China’s economy if the avain flu were to spread could hurt the market. China buying activity could be light early next week as many buyers will be out for the Lunar New Years holidays. Yesterday’s outside day up suggested solid buying under the market and put the next upside target at 76 cents for the March contract. The market will be closed Monday Jan 19th in observance of Martin Luther King Day.

Technical Outlook

COTTON (MAR) 01/20/04: 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 75.25 and then again at 75.70, while support is targeted at 74.20 and 73.60. 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 73.60. ORANGE JUICE (MAR)1/20/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 66.70 and above there at 66.90 with support at 66.15 and 65.80. The market’s short-term trend is positive on a close above the 9-day moving average. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 66.9.