Energy Complex Falls Through Critical Support…
BOND MARKET RECAP
3/30/2005
March Bonds finished up 0-16 at 110-22, 0-03 off
the high and 0-19 up from the low.
March 10 Yr Treasury Notes finished up 0-075 at
108-240, 0-010 off the high and 0-090 up from the low.
The Treasury market extended the short
covering track into the opening Wednesday but could have given up the gains in
the wake of sharp equity price gains and significant declines in energy prices.
The Treasuries could have spiked higher following the unrevised 4th quarter GDP
reading but the fact that the GDP deflator also increased again, countervailed
the potential bullish impact of the old base number. In the end we understand
the potential for more short covering but the downside breakout in energy prices
might serve to embolden some bears into the coming monthly inventory report.
Technical Outlook
BONDS (JUN) 03/31/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. Market positioning is positive with the close
over the 1st swing resistance. The next upside objective is 111-10. The next
area of resistance is around 111-03 and 111-10, while 1st support hits today at
110-13 and below there at 109-29.
TNOTES (JUN) 03/31/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. A positive setup occurred with the close over
the 1st swing resistance. The near-term upside target is at 109-025. The next
area of resistance is around 108-315 and 109-025, while 1st support hits today
at 108-205 and below there at 108-120.
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STOCK INDICES RECAP
3/30/2005
March S&P finished up 15.5 at 1185.4, 0.3 off the
high and 13.9 up from the low.
March S&P E-Mini closed up 15.5 at 1185.5. This
was 16.5 up from the low and 0.25 off the high.
March Dow closed up 121 at 10558. This was 121 up
from the low and 10 off the high.
The equity market was simply pulled from the
grasp of the bear camp by the notable decline in energy prices. With the crude
oil market falling to the lowest level since early March and at times Wednesday
was sitting $5.20 below the March highs we can understand the shift in sentiment
in the marketplace. While the US GDP report was un-revised the reading of 3.8%
isn’t disappointing it was simply not as favorable as anticipated. In other
words, the macro economic view was improved but a large component of that
improved view sits right with the daily direction of crude oil.
Technical Outlook
S&P 500 (JUN) 03/31/2005: The crossover up in the
daily stochastics is a bullish signal. Daily momentum studies are on the rise
from low levels and should accelerate a move higher on a push through the 1st
swing resistance. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. Market positioning is positive with the
close over the 1st swing resistance. The near-term upside target is at 1196.25.
Consider buying pull-backs since daily studies are bullish. The next area of
resistance is around 1192.59 and 1196.25, while 1st support hits today at
1178.40 and below there at 1167.85.
SP EMINI (JUN) 03/31/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The major trend has turned down with the cross
over back below the 18-day moving average. Market positioning is positive with
the close over the 1st swing resistance. The next upside objective is 1198.18.
Short-term indicators suggest buying pullbacks today. The next area of
resistance is around 1193.87 and 1198.18, while 1st support hits today at
1177.13 and below there at 1164.69.
NASDAQ (JUN) 03/31/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The
near-term upside target is at 1516.75. Consider buying pull-backs since daily
studies are bullish. The next area of resistance is around 1510.50 and 1516.75,
while 1st support hits today at 1487.50 and below there at 1470.75.
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CURRENCY MARKET RECAP
3/30/2005
March US Dollar finished down 5 at 8425, 5 off
the high and 28 up from the low.
March Euro finished up 0.09 at 129.59, 0.51 off
the high and 0.04 up from the low.
March Euro Dollar closed up 0.005 at 96.46. This
was 0.01 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.41 at 82.24.
This was 0.13 up from the low and 0.42 off the high.
March British Pound finished up 0.47 at 187.31,
0.42 off the high and 0.13 up from the low.
March Swiss closed up 0.26 at 83.85. This was
0.03 up from the low and 0.4 off the high.
March Japanese Yen closed down 0.06 at 93.55.
This was 0.02 up from the low and 0.32 off the high.
The Dollar was lucky to have drifted through the
early action Wednesday without seeing aggressive selling. In our opinion, the
failure to raise the US GDP to +4.0% could have resulted in a failure below the
critical 84.00 level in the June Dollar but with the US equity market recovering
and oil prices falling aggressively the outlook toward the US economy and the
prospect of US Inflation is a significant underpin for the Dollar. The Canadian
Dollar seemed to come under the most aggressive liquidation and surprisingly
that break came after a series of price increases were documented Canadian raw
materials and Industrial components.
Technical Outlook
YEN (JUN) 03/31/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The daily closing price reversal down
puts the market on the defensive. The market tilt is slightly negative with the
close under the pivot. The next downside target is 93.29. The 9-day RSI under 30
indicates the market is approaching oversold levels. The next area of resistance
is around 93.71 and 93.96, while 1st support hits today at 93.38 and below there
at 93.29.
EURO (JUN) 03/31/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The close over the pivot swing is a somewhat positive setup. The next
downside objective is 129.16. The next area of resistance is around 129.86 and
130.25, while 1st support hits today at 129.32 and below there at 129.16.
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PRECIOUS METALS RECAP
3/30/2005
April Gold closed up 0.9 at 426.9. This was 0.9
up from the low and 1.1 off the high.
March Silver finished up 0.165 at 7.147, 0.023
off the high and 0.162 up from the low.
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Once again the gold market under performed the
silver market but some might suggest that a moderate gain in the wake of an
unchanged Dollar is a victory in of itself. We do think that the vastly improved
macro economic tilt (prompted by the rise in equities and decline in energy
prices) gave silver the impetus to rally and the gold simply followed in its
footsteps. With the sharp explosion in silver prices it is clear that silver is
attempting to play off the same fundamentals that have been driving the platinum
and copper markets. In order to see physical demand increase and inflation
threats to rise it probably takes a strong growing economy and the reaction in
metals prices Wednesday highlights the correlation between metals and the
economy.
Technical Outlook
SILVER (MAY) 03/31/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up. A
bullish signal was given with an upside crossover of the daily stochastics.
Rising from oversold levels, daily momentum studies would support higher prices,
especially on a close above resistance. 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 near-term
upside target is at 729.7. The next area of resistance is around 724.0 and
729.7, while 1st support hits today at 705.5 and below there at 692.8.
GOLD (APR) 03/31/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
There could be more upside follow through since the market closed above the 2nd
swing resistance. The next downside target is now at 425.0. The next area of
resistance is around 427.9 and 428.9, while 1st support hits today at 425.9 and
below there at 425.0.
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COPPER MARKET RECAP
3/30/2005
March Copper closed up 2.15 at 149.20. This was
2.40 up from the low and 0.10 off the high.
The copper market was lifted by ongoing
speculative interest off the prospect of ongoing Chinese demand for copper. We
also think that copper prices were cheered on by the sharp rise in equity prices
and the significant setback in energy prices. We also detected a broad based
renewed interest in all the metals but the industrial metals component seems to
be in stronger position than the precious metals. Prior to the opening a large
brokerage firm raised its price projections for copper into the middle of the
year and that combined with the improved macro economic outlook probably served
to propel most of the gains on Wednesday.
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ENERGY MARKET RECAP
3/30/2005
April Crude Oil closed down 0.24 at 53.99. This
was 1.49 up from the low and 0.21 off the high.
April Heating Oil closed up 4.64 at 156.42. This
was 6.82 up from the low and 0.18 off the high.
April Unleaded Gas finished up 2.34 at 161.65,
0.25 off the high and 5.65 up from the low.
April Natural Gas finished up 0.06 at 7.46, 0.02
off the high and 0.13 up from the low.
April Propane closed down 0.02 at 0.85. This was
equal to the low and equal to the high.
The energy complex fell through a series of
critical support levels on the charts following the weekly inventory readings.
The weekly inventory readings showed an extension of the pattern of builds in
crude oil stocks but the market apparently decided to discount the fact that
product stocks increased. We suspect that the upcoming mild weather period
combined with the news that OPEC didn’t think that the market needed extra oil
caused the speculative bubble to burst and forced a large collection of funds
out of long positions. Recently the net fund long in crude was in excess of
100,000 contracts and therefore the propensity for stop loss selling was quite
significant.
Technical Outlook
CRUDE OIL (MAY) 03/31/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The market’s close below the pivot swing
number is a mildly negative setup. The next downside objective is 51.97. The
next area of resistance is around 54.84 and 55.37, while 1st support hits today
at 53.14 and below there at 51.97.
UNLEADED (MAY) 03/31/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. A positive signal was
given by the outside day up. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next downside
target is 154.40. The next area of resistance is around 164.60 and 166.20, while
1st support hits today at 158.70 and below there at 154.40.
HEATING OIL (MAY) 03/31/2005: Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. The outside
day up is a positive signal. The market has a bullish tilt coming into today’s
trade with the close above the 2nd swing resistance. The next downside target is
147.76. The next area of resistance is around 159.92 and 161.76, while 1st
support hits today at 152.92 and below there at 147.76.
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CORN MARKET RECAP
3/30/2005
May Corn finished down 1/2 at 212 1/2, 2
off the high and 1/4 up from the low. December Corn closed down 1/4 at 234 1/4.
This was 1/4 up from the low and 2 off the high.
The market inched higher in quiet trade but
failed to see the same buying enthusiasm ahead of the USDA reports as is seen in
the soybean pit. Cash basis is steady at the gulf and steady to higher in the
country on slow producer selling. Export news is very quiet except for news
(from the USDA attaché) that Mexico imports for the coming year could jump
500,000 tonnes to 5.9 million tonnes. For the reports for release before the
opening on Thursday morning traders are looking for a jump of near 1.5 million
acres from last year and for stocks for March 1st to come in near 6.72 billion
bushels as compared with 5.271 billion last year. For the weekly export sales
report, released before the opening, traders are looking for corn sales near
650,000-850,000 tons as compared with 880,100 tons last week. May corn support
comes in at 211 1/4 with 217 1/2 and 220 as next resistance.
Technical Outlook
CORN (MAY) 03/31/2005: The close under the 40-day
moving average indicates the longer-term trend could be turning down. Daily
stochastics are trending lower but have declined into oversold territory. 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 lower than the
pivot swing number. The next downside target is now at 210 3/4. The next area of
resistance is around 213 1/2 and 215, while 1st support hits today at 211 1/2
and below there at 210 3/4.
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SOY COMPLEX RECAP
3/30/2005
May Soybeans finished up 17 at 641, 3 off the
high and 15 up from the low. November Soybeans closed up 13 3/4 at 611 1/4. This
was 12 1/4 up from the low and 1 1/4 off the high.
May Soymeal closed up 5.4 at 192.0. This was 4.5
up from the low and 0.5 off the high.
May Soybean Oil finished up 0.61 at 23.48, 0.37
off the high and 0.6 up from the low.
Light fund buying helped support the early surge
to the highest level since March 21st as a lack of commercial sellers helped
support the big price jump on low volume. Country cash basis bids are firm with
a noticeable decline in producer selling after the break of the past few weeks.
Gulf basis levels were lower due to weak near-term export demand but exporters
noted that the US is still competitive to Asia from the Pacific Northwest for
April and May shipment soybeans due to ocean freight. Positioning ahead of the
key USDA reports for release before the opening tomorrow helped keep the trade
choppy yesterday but buyers are more active today. Increasing rain in the
forecast for later this week for southern Brazil is thought to be too late to
help the crop much but should slow harvest progress. For the planted acreage
report on Thursday morning, traders are looking for soybean planted acreage near
73.37 million acres (range 72.1-74.5) as compared with 75.2 million last year.
For the grain stocks report, March 1st stocks are expected to come in near 1.425
billion bushels (range 1.405-1.454) as compared with 906 million bushels last
year. For the weekly export sales report, released before the opening, traders
are looking for soybean sales near 400,000-600,000 tons, meal sales near
75,000-125,000 tons and oil sales from 0 to 5,000 tons. Short-term support for
May soybeans comes in at 628 with 643 1/2 and 652 3/4 as resistance.
Technical Outlook
BEANS (MAY) 03/31/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. There could be more upside follow
through since the market closed above the 2nd swing resistance. The next
downside target is now at 620. The next area of resistance is around 650 and
656, while 1st support hits today at 632 and below there at 620.
MEAL (MAY) 03/31/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The cross over
and close above the 18-day moving average indicates the longer-term trend has
turned up. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The next downside objective is now at
186.0. The next area of resistance is around 194.5 and 196.0, while 1st support
hits today at 189.5 and below there at 186.0.
BEANOIL (MAY) 03/31/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The cross over and close above the 18-day
moving average indicates the longer-term trend has turned up. There could be
more upside follow through since the market closed above the 2nd swing
resistance. The near-term upside objective is at 24.39. The next area of
resistance is around 23.96 and 24.39, while 1st support hits today at 23.00 and
below there at 22.46.
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WHEAT MARKET RECAP
3/30/2005
May Wheat finished down 1 at 333 1/2, 4 1/4 off the high and 1
1/2 up from the low. July Wheat closed down 1 at 342 1/2. This was 2 up from the
low and 3 1/2 off the high.
The market recovered part of the late losses
yesterday with a short-covering bounce this morning but there was not much in
the way of follow-through buying after the higher opening. Weakness in
Minneapolis and Kansas City helped limit the buying support. Some short-covering
was noted ahead of the USDA planted acreage and grain stocks reports for the
release ahead of the opening. US export news is slow but Turkey sold 45,000
tonnes of durum wheat overnight and there is plenty of confusion regarding trade
between Iraq and Australia. Iraq suspended a contract to buy 1 million tonnes of
Australia wheat after Australian officials made remarks suggesting that Iraq was
overcharged. Australia officials, however, indicate that the wheat is still
being unloaded at Iraq ports. For the planted acreage report, traders are
looking for spring wheat planted acreage near 13.7 million acres (range
13.4-14.4) as compared with 13.76 million last year. Winter wheat planted
acreage is expected to be down 1.75 million acres from last year. For the grain
stocks report, March 1st stocks are expected to come in near 993 million bushels
(range 973-1.04) as compared with 1.021 billion bushels last year. For the
weekly export sales report, released before the opening, traders are looking for
wheat sales near 375,000-575,000 tons as compared with 365,100 tons last week.
May wheat support comes in at 331 with resistance at 341.
Technical Outlook
WHEAT (MAY) 03/31/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Daily
stochastics are trending lower but have declined into oversold territory. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. It is a slightly negative indicator that the close was under the
swing pivot. The next downside target is now at 328 1/2. The next area of
resistance is around 336 1/4 and 339 3/4, while 1st support hits today at 330
3/4 and below there at 328 1/2.
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LIVE CATTLE RECAP
3/30/2005
April Live Cattle finished down 0.35 at 89.75,
1.25 off the high and 0.30 up from the low.
May Feeder Cattle closed down 0.65 at 104.85.
This was 0.45 up from the low and 1.60 off the high.
June cattle closed sharply lower with a wide
range and an outs-de trading session. The sweeping reversal could attract some
additional technical selling early on Thursday. News of bird flu in Mexico may
have spooked longs into liquidation and a lack of direction in the cash market
and a lack of progress with Japan on trade may be other factors to trigger long
liquidation. Packer bids for cash cattle in the southern plains improved to
$90.00 today with offers up at $94-$95. Boxed-beef cut-out values at mid-session
were up $.98 to $151.20 as compared with $150.95 last week. Slaughter came in at
115,000 head as compared with trade expectations at 114,000-118,000 head and
109,000 last year. The sweeping key reversal for August cattle from a new
contract high is a bearish technical development.
Technical Outlook
CATTLE (APR) 03/31/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market now above the 18-day moving average
suggests the longer-term trend has turned up. A negative signal was given by the
outside day down. The swing indicator gave a moderately negative reading with
the close below the 1st support number. The near-term upside objective is at
91.520. The next area of resistance is around 90.500 and 91.520, while 1st
support hits today at 89.000 and below there at 88.450.
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LEAN HOGS RECAP
3/30/2005
April Lean Hogs finished down 0.57 at 68.70, 0.35
off the high and 0.50 up from the low.
May Pork Bellies closed down 1.45 at 96.20. This
was 0.15 up from the low and 1.80 off the high.
June hogs pushed slightly lower in choppy trade
with a weak tone in the cash market pressuring the nearby futures and weakness
in cattle adding to the bearish tone. Meat markets were under some psychological
pressure with news of bird flu in northern Mexico. If bird flu hits the US,
traders are nervous that poultry exports would be impacted and the excess meat
supply domestically could pressure prices. The jump in slaughter and weights at
the same time could also keep pork production high over the near-term. Weekly
average weights for Iowa/Minnesota for the week ending March 26th came in at
267.8 pounds from 267.2 pounds last week and 265.2 pounds last year. Slaughter
came in at 399,000 head as compared with trade expectations at 390,000-400,000
head. The 2-day lean index for the period ending March 28th came in at 67.33,
down.39 on the session and down from 68.51 one week previous.
Technical Outlook
HOGS (APR) 03/31/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next downside objective is now at 67.820. With
a reading under 30, the 9-day RSI is approaching oversold levels. The next area
of resistance is around 69.100 and 69.500, while 1st support hits today at
68.270 and below there at 67.820.
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COCOA MARKET RECAP
3/30/2005
May Cocoa finished down 2 at 1579, 8 off the high
and 8 up from the low.
The cocoa market didn’t seem to have the resolve
or the speculative buying power to add to the prior session’s gain and with a
minor decline in the Dollar we suspect that arbitrage interest was helping to
support cocoa prices. With most of the soft commodity market soft or choppy it
doesn’t appear as if the funds are poised to pump money into the long side and
that could leave cocoa caught within a tight trading range. Apparently weak
price action in London early in the session started the market out on a weak
footing and there wasn’t anything significant to alter that tilt during the US
session.
Technical Outlook
COCOA (MAY) 03/31/2005: 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. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next downside objective is now at 1563. With a reading under 30, the 9-day RSI
is approaching oversold levels. The next area of resistance is around 1587 and
1595, while 1st support hits today at 1571 and below there at 1563.
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COFFEE MARKET RECAP
3/30/2005
May Coffee closed up 2.95 at 125.00. This was
3.20 up from the low and 2.00 off the high.
The coffee market flashed higher following
several days of minor upside action. In other words, even after some short
covering the market found the incentive to extend and possibly get above some
critical technical levels on the charts. Apparently the funds were back in a
buying mood on Wednesday but it would seem to be a little premature to begin
pushing prices around off the potential for frost in Brazil. Therefore,
speculative interest continue to feed prices higher off the ongoing idea that
supply would continue to tighten into next year.
Technical Outlook
COFFEE (MAY) 03/31/2005: The major trend could be
turning up with the close back above the 40-day moving average. Daily
stochastics are trending lower but have declined into oversold territory. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The next downside objective is 119.50. The
next area of resistance is around 127.60 and 129.90, while 1st support hits
today at 122.45 and below there at 119.50.
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SUGAR MARKET RECAP
3/30/2005
May Sugar closed up 0.03 at 8.55. This was 0.06
up from the low and 0.04 off the high.
May sugar closed 3 points higher on the session
after hitting the lowest level since September 21st on the opening. A recovery
in London and ideas that the cash market activity is picking up enough to
support helped trigger some short-covering after the early weakness. Ideas that
the market is oversold after falling 80 points off of the March 14th highs
helped to trigger the recovery bounce. In addition, hopes of new buying from
Russia and India over the near-term added to the more positive tone.
Technical Outlook
SUGAR (MAY) 03/31/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 18-day moving average is an indication
the longer-term trend has turned down. The daily closing price reversal up on
the daily chart is somewhat positive. The market’s close below the pivot swing
number is a mildly negative setup. The next downside target is 8.45. The 9-day
RSI under 30 indicates the market is approaching oversold levels. The next area
of resistance is around 8.60 and 8.64, while 1st support hits today at 8.50 and
below there at 8.45.
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COTTON MARKET RECAP
3/30/2005
May Cotton finished down 0.20 at 53.38, 0.20 off
the high and 0.53 up from the low.
Long liquidation selling and follow-through
technical selling from Tuesday’s reversal helped to pressure the cotton market
ahead of the USDA prospective plantings report for release before the opening.
For the weekly export sales report, released before the opening, traders are
looking for cotton sales near 150,000-250,000 bales as compared with 207,100
bales last week. For the plantings report, the average trade estimate came in
near 14 million acres as compared with 13.76 million last year with many trade
estimates above 14.1 million.
Technical Outlook
COTTON (MAY) 03/31/2005: 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 market tilt is slightly negative with the close under the pivot. The next
upside objective is 54.02. The next area of resistance is around 53.74 and
54.02, while 1st support hits today at 53.02 and below there at 52.57.