Energy At New Contract Highs

Technical Outlook

#BONDS (JUN) 05/10/04: 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. The close below the 2nd
swing support number puts the market on the defensive. Near-term resistance for
bonds is at 105.20 and then again at 107.10, while swing support hits at 103.07
and below there at 102.16. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
102.16. The 9-day RSI under 20 suggests the market is extremely oversold.

T-NOTES(JUN) The outside day down is a negative
signal. The daily closing price reversal down puts the market on the defensive.
Daily stochastics are trending lower, but have declined into oversold territory.
The next downside objective is now at 106.21. The market is in a bearish
position with the close below the 2nd swing support number. Near-term resistance
for the T-Notes is at 109.19 and then again at 111.06, while swing support hits
at 107.11 and below there at 106.21. The market’s short-term trend is negative
as the close remains below the 9-day moving average. With a reading under 20,
the 9-day RSI indicates the market is extremely oversold.

 

STOCK INDICES RECAP

5/7/2004

The stock market can’t seem to get any news that
is accepted as favorable as the trade continues to factor in a series of
unrelenting rate hikes. Some in the market suggested that buyers weren’t stirred
into action because of the residual impact of the deficit comments from the Fed
Chairman on Thursday, while others suggested that fear of weekend terrorism
incidents kept investors on the sidelines. The US continues to dredge up
undermining political issues and with the Democrats calling for the Secretary of
Defense to resign it would seem that the flap over the Iraqi prisoner abuse is
going to have a shelf life. Soaring energy prices another element that is
keeping investors on the sidelines.

Technical Outlook

#S&P500 (JUN) 05/10/04: The market is in a
bearish position with the close below the 2nd swing support number. Underlying
support comes in at 1084.60 and 1078.90, with overhead resistance at 1106.40 and
1122.50. 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 1078.90.

S&P E-Mini (JUN): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 1078.00. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support.
Near-term resistance for the S&P Mini is at 1106.50 and then again at 1123.00,
while swing support hits at 1084.00 and below there at 1078.00. A negative
signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (JUN) The downside closing price reversal
on the daily chart is somewhat negative. The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The market should run into resistance at 1419.75 and above there
at 1441.88 with support at 1390.25 and 1382.88. Short-term indicators on the
defensive. Consider selling an intraday bounce. Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 1382.9.

MINI DOW (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10171 and above there at 10311 with support
at 9982 and 9933. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 9933. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The 9-day RSI
under 30 indicates the market is approaching oversold levels.

 

CURRENCY MARKET RECAP

5/7/2004

The Dollar finally got is due, as the US payroll
numbers are stellar and those against the Dollar had to give in and accept that
the US economy is stronger than the Euro zone and more likely to hike interest
rates sooner. The British Pound managed to discount some of the Dollar power but
the numbers from the US were so strong that it could take time before the
currency markets settle down. The fact that Germany posted extremely weak
numbers Friday morning before the US numbers simply puts the Euro in a sustained
funk.

Technical Outlook

#CURRENCIES 05/10/04: YEN (JUN): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The gap lower price action on the day session chart is a
bearish indicator for trend. The close below the 2nd swing support number puts
the market on the defensive. Swing resistance is targeted at 90.19 and above
there at 91.60, with the yen finding support around 88.18 and below there at
87.58. The close under the 40-day moving average indicates the longer-term trend
could be turning down. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 87.58. The 9-day RSI under 30
indicates the market is approaching oversold levels.

EURO (JUN): The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 1.1673.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.1673, with overhead resistance
at 1.2205. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The major trend is down with the cross over back below
the 40-day moving average. The gap down on the day session chart is bearish with
more selling pressure possible today.

 

PRECIOUS METALS RECAP

5/7/2004

Both gold and silver saw technical stop loss
selling, fund liquidation and fundamental position liquidation. Not only is the
weak Dollar theme going away from the bulls but the level of macro economic
uncertainty is also declining. With so many of the fundamental themes going away
and nothing to replace the bull argument its not surprising that prices continue
to fall. Even if one adjusts the COT spec and fund long for the action following
the report mark-off date it is clear that the market remains long and vulnerable
to even more stop loss selling.

Technical Outlook

#P-METALS 05/10/04: SILVER (JUL): The close below
the 2nd swing support number puts the market on the defensive. Initial support
for silver is at 543.5 and below there at 534.5 with resistance likely at 570.8
and 576.5. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. The daily stochastics have crossed over
down which is a bearish indication. The next downside target is 534.5. The 9-day
RSI under 30 indicates the market is approaching oversold levels.

GOLD (JUN): Support for gold today comes in near
368.43, while resistance is pegged at 395.03. The daily stochastic’s gave a
bearish indicator with a crossover down. The next downside objective is now at
368.43. The market is in a bearish position with the close below the 2nd swing
support number. The market’s short-term trend is negative as the close remains
below the 9-day moving average. With a reading under 30, the 9-day RSI is
approaching oversold levels.

 

COPPER MARKET RECAP

5/7/2004

The copper market came under the combination of
higher interest rate inspired selling and ongoing concerns that Chinese demand
for copper is in fact tapering off. Even before the recent extended holiday the
overnight action by China in the copper market was declining and in order to
calm the demand fears the Chinese might have to show up in the market with some
buy orders. In the near term, we think the copper market will continue to be
tied to the direction of the US equity market. Fund liquidation was also a noted
feature in the action Friday but considering the adjusted COT positioning the
copper market should be getting close to a net spec short position.

 

ENERGY MARKET RECAP

5/7/2004

The energy complex seemed to want to price in
some weekend uncertainty and with the recent pattern of terror and the new
problems in Nigeria; prices were justified in forging more gains. With the US
admitting that tensions toward the US are sour in the Middle East it would seem
like calls on OPEC to provide supply to the US will be soundly rejected. The
Press was also suggesting during the action Friday that Iraq would fail to meet
its production targets due to increased security and that is another element
pushing prices higher. The only mitigating force in the market Friday was calls
from the IEA for OPEC to provide more oil, but unless the IEA threatens to
release supplies, OPEC will not respond.

Technical Outlook

#ENERGIES 05/10/04: CRUDE OIL (JUL): The rally
brought the market to a new contract high. With the close over the 1st swing
resistance number, the market is in a moderately positive position. Support for
crude is keyed on 39.46 and below there at 39.13, with resistance pegged at
39.96 and 40.13. 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 40.13. With a reading
over 70, the 9-day RSI is approaching overbought levels.

UNLEADED GAS (JUL): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 129.66. A positive setup occurred with the close over the
1st swing resistance. Resistance today is at 129.66, while support should be
found around 126.26. 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. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

HEATING OIL (JUL): With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Heating oil should encounter support around 99.42, with resistance is at 102.22.
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 102.22. With a reading over 70, the
9-day RSI is approaching overbought levels. The rally brought the market to a
new contract high.

 

CORN MARKET RECAP

5/7/2004

The lower opening was triggered by continued fund
and speculative selling due to near perfect weather forecast into next week and
growing concerns that planted acreage numbers are on the rise. December corn
fell to just 1/2 cent over the April lows before finding some support at 298 and
managing to post an impressive close. The market found some selling pressures
from Sparks Companies forecast for planted acreage to come in near 81.53 million
acres which is up 2.53 million acres from the March USDA planting intentions
report. If yields come in at a record 143 bushels per acre (142.2 last year and
129.3 bushels per acre in 02/03) and we assume usage of 10.5 billion bushels,
the new Sparks planted acreage estimate would leave ending stocks near 955
million bushels which would be relatively low compared with the past 20 years
and compared with just 865 million bushels this season, an 8 year low and the
third lowest in the past 27 years. Deliveries this morning were 110 contracts as
compared with 264 lots yesterday. Support levels for December corn include 297
1/2 and 291 with 303 and 307 1/2 as resistance. Last week’s close was 317 1/4.

Technical Outlook

#CORN (JUL) 05/10/04: 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 302. The market’s close below the
pivot swing number is a mildly negative setup. Market resistance comes in at 318
today, with support at 302. The market’s short-term trend is negative as the
close remains below the 9-day moving average. The upside closing price reversal
on the daily chart is somewhat bullish.

 

SOY COMPLEX RECAP

5/7/2004

July soybeans closed near 17 cents higher on the
week. The forecast for good rains across the Midwest triggered more long
liquidation selling from speculators early in the session with fund traders’
active sellers. A jump in the basis at the gulf and from Midwest processors
helped to trigger the strong gains for old crop. Rumors that the Food and Drug
Administration could soon tighten rules on feeding meat and bone meal helped
support a sweeping reversal and surge higher in meal. November soybeans had an
early break to 757 on the weather news but managed to hold support at the 40-day
moving average (757) and pushed back to an early high of 764. The market found
some support from Sparks Companies forecast for planted acreage to come in near
74.47 million acres which is down 940,000 acres from the March USDA planting
intentions report. Deliveries for soybeans came in at 41 lots this morning with
no deliveries for May oil or meal. If yields come in at 40 bushels per acre
(33.4 last year and 38 bushels per acre in 02/03) and we assume usage of 2.86
billion bushels, the new Sparks planted acreage estimate would leave ending
stocks near 176 million bushels which would be relatively low compared with the
past 20 years and compared with just 115 million bushels this season, a 27 year
low. July soybean support levels come in at 1017 1/4 and 1012 with resistance at
1035 and 1052 1/2.

Technical Outlook

#SOYBEANS (JUL) 05/10/04: The outside day up and
close above the previous day’s high is a positive signal. The daily closing
price reversal up is positive. 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. The next area of resistance is around 1054
1/2 and 1067 3/4, while 1st support hits today at 1008 1/2 and below there at
975 3/4. 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 1067 3/4.

MEAL (JUL): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 340.8.
The outside day up is a positive signal. The upside closing price reversal on
the daily chart is somewhat bullish. First resistance comes in at 334.0, with
support at 318.0. The market’s short-term trend is positive on a close above the
9-day moving average. The market’s close above the 2nd swing resistance number
is a bullish indication.

BEAN OIL (JUL): 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 31.81. 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. The outside day up and close above
the previous day’s high is a positive signal. The daily closing price reversal
up is positive. Daily swing resistance is found at 33.96 and above there at
34.37. Support should be encountered at 32.68 and 31.81. The cross over and
close above the 40-day moving average indicates the longer-term trend has turned
up.

 

WHEAT MARKET RECAP

5/7/2004

July wheat closed 13 cents higher on the week.
Weakness in the other grains and follow-through technical selling from
yesterday’s weak close helped to pressure the market early. The weather news is
seen as mixed as the continued hot and dry weather for a few more days is seen
as causing crop conditions to deteriorate in the plains but the forecast for
rains in the plains for the middle of next week could help to ease fears that
the deterioration will continue. Rumors that China is lining up vessels to move
wheat from the US to China which is already on the books has provided some hopes
that more buying could come soon. Stressful conditions during the jointing and
heading stage could hurt yields. The Kansas crop was 28% heading as of Sunday
and temperatures hit 100 degrees in Hays Kansas yesterday. Stats Canada pegged
all-wheat stocks for March 31st at 13.671 million tons (up 22% from last year)
as compared with trade estimates at 13-16 million tons. Recent rains have helped
improve the outlook for the new crop in Canada. For the USDA Crop Production
report on Wednesday, a Reuters poll showed an average trade estimate for winter
wheat at 1.556 billion bushels (range 1.510-1.665) as compared with last years
crop at 1.707. For all wheat production, the average trade estimate was 2.106
billion bushels (range 2.055-2.252) as compared with last years crop at 2.337
billion bushels. Deliveries this morning were 36 lots. July wheat support comes
in at 400 1/2 and 397 1/2 with resistance at 407 1/2 and 409 1/2.

Technical Outlook

#WHEAT (JUL) 05/10/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 399 1/2 and below there at 395 3/4, with resistance levels
at 406 1/2 and 409 3/4. The moving average crossover up (9 above 18) indicates a
possible developing short-term uptrend. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. The next upside target is 409
3/4.

 

LIVE CATTLE RECAP

5/7/2004

June cattle closed 80 lower on the session but up
397 points on the week. The market found early selling pressured from
follow-through technical selling from the sweeping reversal on Thursday. Futures
found support from soaring Hog and belly markets and from the discount of
futures to the cash market. Beef production for the week was 501.5 million
pounds, up 3.8% from last week but down 4.1% from last year. Year-to-date
production is down 9.4% from last year. Boxed-beef cut-out values were down 1
cent at mid-session to $159.53 as compared with $157.93 last week at this time.

Technical Outlook

#CATTLE (JUN) 05/10/04: 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
83.50. It is a slightly negative indicator that the close was lower than the
pivot swing number. Support should be encountered at 83.87 and below there at
83.50. Market resistance is at 84.87 and then again at 85.55. The market’s close
above the 9-day moving average suggests the short-term trend remains positive.
The 9-day RSI over 70 indicates the market is approaching overbought levels.

 

LEAN HOGS RECAP

5/7/2004

June hogs closed 75 higher on the session and 20
higher on the week. The surge in pork cut-out values, reported on Thursday
afternoon, helped support ideas that packer profit margins have recovered and
that cash hogs could have a firm tone for next week. Traders had earlier
believed that cash markets could push lower next week due to poor margins. Cash
hogs came in steady at Peoria. The surge to new all-time highs in bellies added
to the positive tone. Hog slaughter for the week was 1.84 million head, down
3.8% from last week and down 1% from last year. The 2-day lean index for the
period ending May 5th came in at 75.28, up 92 cents from the previous session
and up $5.90 in the past week.

Technical Outlook

#HOGS (JUN) 05/10/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 74.95 and 75.57 today, while support is around 73.57 and then 72.82.
The upside closing price reversal on the daily chart is somewhat bullish. 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 75.57.

 

COCOA MARKET RECAP

5/7/2004

The cocoa market might get some support from
political developments in Nigeria but at the same time the US cocoa market is
expected to be held down by the sharply rising US Dollar. It is clear that Ivory
Coast port declarations are documenting an adequate supply situation and that
should leave the bears in charge of prices. Those that are forced to buy cocoa
just don’t see a reason to pay up and that should also leave control in the
hands of the bear camp.

Technical Outlook

COCOA (JUL) 05/10/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1368 and above there at 1380 with support at 1345 and 1334. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1334.25.

 

COFFEE MARKET RECAP

5/7/2004

July coffee pushed sharply lower during the
action but did manage to reject the majority of the losses. The market seems to
be aware of a vulnerable spec position and with weather favoring the bear camp
it would seem like the downtrend pattern since the January highs remains in
vogue. Brazil did note a 20.9% decline in April Green coffee exports when
compared to last year but the market wasn’t interested in backward looking data.
With total April Brazilian exports totally 1.48 million bags the market is still
well supplied.

Technical Outlook

COFFEE (JUN) 5/10/04 The close below the 1st
swing support could weigh on the market. 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 71.65. The Coffee
contract should run into resistance at 70.90 and above there at 71.65 with
support at 69.35 and 68.55. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

5/7/2004

July sugar closed 19 lower on the session and
down 36 points on the week. The market opened at yesterday’s highs but failed to
find new buyers. Cash dealers are a bit nervous that other suppliers may try to
sell sugar on the world market before new crop Brazil becomes available and this
could add selling pressure on cash prices. Italy producers have finished
planting their beet crop with expectations for sugar output for the coming
season at 1.2 million tons from 900,000 tons last year.

Technical Outlook

#SUGAR (JUL) 05/10/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Swing resistance comes in at 6.86, with support found at 6.42. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The major trend is down with the cross over back below the 40-day
moving average. Daily stochastics are trending lower, but have declined into
oversold territory. The next downside objective is now at 6.42. Daily studies
pointing down suggests selling minor rallies.

 

COTTON MARKET RECAP

5/7/2004

The cotton market is beginning to put in an
impressive reversal and given the overtly bearish sentiment in place for most of
this year a change in sentiment might have sparked considerable technical short
covering. Reports of aggressive fund buying might have combined with talk that
cotton acres were going to soybeans but other suggest that the vast improvement
in the US economy might actually spark improved clothing demand down the road.
Keep in mind that China doesn’t buy cotton just for their own use; they buy
cotton to make into products that they sell to the US! If the rumors are true
that the market is finding a home for excess US domestic supplies that really
gives the cotton market a stronger fundamental look.

Technical Outlook

#COTTON (JUL) 05/10/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. 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. Next
resistance area comes in at 65.83 and then again at 66.36, while support is
targeted at 63.68 and 62.06. 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 66.36. The gap upmove on the day session chart is a bullish indicator
for trend.