Energy Market Discounts Negative Supply News

Technical Outlook

#BONDS (JUN) 04/08/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Near-term
resistance for bonds is at 110.25 and then again at 111.07, while swing support
hits at 110.03 and below there at 109.27. 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 109.27. The 9-day RSI under 30 indicates the market is approaching
oversold levels.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 112.18. It is a mildly bullish indicator that the market closed over the
pivot swing number. Near-term resistance for the T-Notes is at 113.03 and then
again at 113.10, while swing support hits at 112.23 and below there at 112.18.
The market’s short-term trend is negative as the close remains below the 9-day
moving average.

 

STOCK INDICES RECAP

4/7/2004

The stock market opened weak, managed a slight
bounce and then softened toward mid session. It would clear from the early
action that the geopolitical situation in Iraq was undermining investor
sentiment and with gold prices rising sharply many traders were concerned about
inflation. The Treasury market was certainly not concerned with inflation as it
managed a strong mid session rally. It would not seem like the stock market is
getting a bullish benefit from the early earnings flow!

Technical Outlook

#S&P500 (JUN) 04/08/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Underlying support comes in at 1137.75 and 1133.13, with overhead resistance at
1146.25 and 1150.13. 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 1150.13.

S&P E-Mini (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1151.50. The market tilt is slightly negative with the close under the pivot.
Near-term resistance for the S&P Mini is at 1147.00 and then again at 1151.50,
while swing support hits at 1137.50 and below there at 1132.50. A positive
signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (JUN) 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. It is a slightly negative indicator that the
close was lower than the pivot swing number. The market should run into
resistance at 1498.00 and above there at 1505.50 with support at 1480.00 and
1469.50. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 1505.5.

MINI DOW (JUN) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10532 and above there at 10575 with support at 10445 and
10401. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 10575. It is a
slightly negative indicator that the close was lower than the pivot swing
number.

 

CURRENCY MARKET RECAP

4/7/2004

The Dollar fell through a couple critical support
levels on the charts Wednesday and at the same time saw the situation in Iraq
worsen. With the political pressure heaped on the Dollar and the macro economic
case suspect its not surprising that the Dollar fell under the weight of all the
unrelated developments. The biggest benefactor of the Dollar weakness Wednesday
was the Euro, followed closely by the Swiss, which is a chance of pace. The Yen
rallied against the Dollar but not as much as many would have expected given the
recent action in the Yen.

Technical Outlook

#CURRENCIES 04/08/04: YEN (JUN): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. A positive setup occurred with the close over the 1st swing
resistance. Swing resistance is targeted at 95.55 and above there at 95.89, with
the yen finding support around 94.81 and below there at 94.41. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 94.41.

EURO (JUN): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 1.2253. The
market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2021, with overhead resistance
at 1.2253. The market’s short-term trend is positive on a close above 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

4/7/2004

While many traders might suggest that the gold
market rose Wednesday off the weak Dollar action we would not be surprised if
gold managed some gains off inflation buying. With energy prices soaring and the
CRB exploding it is not far fetched to think that inflation was pulling in some
buyers. However, the Dollar is certainly making enough noise to provide a strong
lift to gold prices but the fact that silver didn’t rally as aggressively does
appear to downplay the inflation theme. It is clear that gold prices made most
of the upside moves in the US action because the London gold fix managed to post
a lower peg.

Technical Outlook

#P-METALS 04/08/04: SILVER (MAY): It is a
slightly negative indicator that the close was lower than the pivot swing
number. Initial support for silver is at 808.5 and below there at 797.3 with
resistance likely at 820.4 and 829.5. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. 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 797.3. 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 (JUN): Support for gold today comes in near
416.15, while resistance is pegged at 429.35. 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 416.15. The market’s close above the 2nd swing
resistance number is a bullish indication. The market’s short-term trend is
positive on a close above the 9-day moving average.

 

COPPER MARKET RECAP

4/7/2004

The copper market moved close to violating
several key support levels on the charts Wednesday. With the US equity market
weak and the macro economic outlook deteriorating we are not surprised that
prices faded as they did. However, it is a little damaging to the copper outlook
for the market to be down in the face of weaker Dollar action and down in the
face of sharp gains in precious metals. In other words, after seeing some
correlation between precious metals and copper it would appear that copper has
settled back into an industrial metal market. The International Copper Study
Group pegged the copper deficit at 72,000 metric tons in January and while that
is a bullish absolute number that figure might be a little below recent market
expectations.

 

ENERGY MARKET RECAP

4/7/2004

The energy complex slammed the door on the
pattern of stock rebuilding with a decline in the API/DOE stocks. While one week
doesn’t clearly end the trend of rebuilding the market was certainly willing to
take the news that way. The market managed to discount news that North Sea
Oseberg loadings had increased by 16% for May delivery and that is certainly a
negative supply development. Heavy fighting in Iraq resulted in 12 US soldiers
being killed and that is another element that lends support to energy prices.

Technical Outlook

#ENERGIES 04/08/04: CRUDE OIL (MAY): The major
trend could be turning up with the close back above the 40-day moving average.
The market’s close above the 2nd swing resistance number is a bullish
indication. Support for crude is keyed on 35.20 and below there at 33.99, with
resistance pegged at 37.11 and 37.81. 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 37.81.

UNLEADED GAS (MAY): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 104.78. 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. Resistance today is at 116.38, while support should be found around
104.78. 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.

HEATING OIL (MAY): The market’s close above the
2nd swing resistance number is a bullish indication. Heating oil should
encounter support around 84.72, with resistance is at 95.32. 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 from mid-range which should
support a move higher if resistance levels are penetrated. The near-term upside
objective is at 95.32.

 

CORN MARKET RECAP

4/7/2004

4/7/2004 December corn managed a new contract
high close today in advance of tomorrow morning’s USDA Supply/Demand report,
which is expected to show deceases in US ending stocks. The December contract
appeared to be leading the market up, as the outlook for smaller than expected
planted acreage has increased the commercial buying interest in the market. For
the USDA Supply/Demand report for release before the opening tomorrow, traders
are looking for a decline of 10-50 million bushels in the ending stocks forecast
due to increased usage for ethanol production and for feed usage. Traders look
for ending stocks near 875 million bushels from 901 million last month. South
Korea is tendering for 105,000 tons of optional origin corn and Taiwan is
tendering for 42,000-56,000 tons of US corn. The lack of export moves by China
to South Korea and other Asian customers has brought about talk that China may
need to import some corn in the 2nd half of 2004, which added to the bullish
enthusiasm for the corn market. Ideas that futures are overbought going into the
report was seen as a limiting factor.

Technical Outlook

#CORN (MAY) 04/08/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 334 1/2. The market’s close above the 2nd swing resistance
number is a bullish indication. Market resistance comes in at 334 1/2 today,
with support at 325 1/2. 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.

 

SOY COMPLEX RECAP

4/7/2004

4/7/2004 November soybeans gapped higher on the
opening this morning and closed at their highest level since March 23rd. The
market derived strength today from expectations for tight supplies in the US
this summer and concerns over declining crop estimates from Brazil and
Argentina. For tomorrow morning’s USDA Supply/Demand report, traders are looking
for ending stocks to remain unchanged at 125 million bushels as the “extra”
stocks found in the quarterly report are expected to be reflected in higher
crush usage. In addition, traders are looking Brazil production to come in near
56-56.5 million tons as compared with 59.5 million tons last month. However,
estimates recently from Brazil analysts have come in as low as 50.5 million
tons. Argentina production is expected to come in near 35.5 million tons as
compared with 36.5 million tons last month. Similar to the Brazil expectations,
estimates have come in as low as 32 million tons but traders believe that the
USDA will be conservative in lowering these estimates. In addition, the market
found some support from news that 120,000 tons of US soybeans for the 04/05
marketing year were sold to an unknown destination.

Technical Outlook

#SOYBEANS (MAY) 04/08/04: With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
next area of resistance is around 1023 and 1032 1/2, while 1st support hits
today at 1009 and below there at 1004 1/2. The moving average crossover down (9
below 18) indicates a possible developing short-term downtrend. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The next downside target is 1004 1/2.

MEAL (MAY): 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 319.7. First resistance comes in at 326.9,
with support at 322.1. The market’s short-term trend is positive on a close
above the 9-day moving average. With the close over the 1st swing resistance
number, the market is in a moderately positive position.

BEAN OIL (MAY): 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 32.41. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Daily swing resistance is found at
32.84 and above there at 33.09. Support should be encountered at 32.50 and
32.41.

 

WHEAT MARKET RECAP

4/7/2004

4/7/2004 July wheat closed strong in advance of
tomorrow morning’s USDA report, which is expected to show further declines in
wheat ending stocks. For tomorrow morning’s USDA Supply/Demand, traders are
looking for the USDA to increase feed usage by 10-20 million bushels and expect
the increase in usage to cause ending stocks to drop a similar amount from the
544 million bushels that was reported in the March Supply/Demand report. Dry
weather in the western sections of the plains provided some underlying support,
but this clashed with good weather for other areas. Cold weather in the forecast
for Sunday and Monday night is also a potential threat to the condition of the
crop and traders are watching this closely. Iraq has issued a tender for 200,000
tons of wheat and US companies have been invited to submit offers for the first
time since UN sanctions were placed in 1990.

Technical Outlook

#WHEAT (MAY) 04/08/04: The downside closing price
reversal on the daily chart is somewhat negative. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. Look for
near-term support at 411 and below there at 407 3/4, with resistance levels at
418 1/2 and 422 3/4. 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 407
3/4.

 

LIVE CATTLE RECAP

4/7/2004

June cattle closed down 70 ticks and 105 ticks
off the highs, while August cattle closed down 52 ticks and 70 off the highs.
While June cattle was hit by some profit taking on a lack of follow through
buying above 77, market direction remains positive as long as beef and cash
cattle prices continue to firm. Wednesday’s box-beef cut-out values for choice
(600-750 lbs) rose $3.47 from Tuesday on tightening supply after beef plants
last week announced reduced production. Rising beef prices have greatly improved
packer profit margins. In the US Plains, cash cattle traded $86, up $2 from last
week’s sales. Cattle slaughter should begin to increase now that packers have
profitable margins.

Technical Outlook

#CATTLE (JUN) 04/08/04: Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 77.55. The swing indicator gave a
moderately negative reading with the close below the 1st support number. Support
should be encountered at 75.45 and below there at 75.05. Market resistance is at
76.70 and then again at 77.55. The downside closing price reversal on the daily
chart is somewhat negative. The moving average crossover up (9 above 18)
indicates a possible developing short-term uptrend.

 

LEAN HOGS RECAP

4/7/2004

June hogs closed 82 ticks lower as the market was
hit by profit taking as prices failed to see any follow through after Tuesday’s
sharp rally. The approach of the Easter holiday has softened demand for pork and
built up supplies. Cash hogs traded steady to $1.00 lower with the 2-day lean
index down .82 at 65.25. Cash hog prices may not improve until mid next week
since packers seem to be well supplied and some plants are planning to be closed
on Monday for the Easter holiday.

Technical Outlook

#HOGS (JUN) 04/08/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 74.25 and 75.05 today, while support is around
73.15 and then 72.85. 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 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 72.85.

 

COCOA MARKET RECAP

4/7/2004

The cocoa market flashed downward despite news
that the German 1st quarter grind leaped up by 23.9%. Apparently the market saw
a heavy flow of small spec liquidation as if many fresh longs decided to bail
out after prices fell through $1,417. While seeing the demand improve in Germany
doesn’t mean that world demand is set to rise the improvement should at least
serve to mitigate some of the larger surplus forecasts. Some traders suggested
that higher demand is merely an offset to recent expectations of expanding
African production!

Technical Outlook

COCOA (MAY) 04/08/04 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 1424 and above there at 1448
with support at 1377 and 1354. Momentum studies are declining, but have fallen
to oversold levels. The next downside target is 1353.75.

 

COFFEE MARKET RECAP

4/7/2004

July coffee managed a slightly impressive close
but remained below the recent highs. The London market report light spec buying
but the US session showed very little in the way of concentrated sentiment. The
market continues to see a steady flow of origin selling and that has been able
to outweigh the minor amount of spec buying interest present on a daily basis.
Roaster buying is thought to be on the decline and that might make it difficult
for coffee prices to mange more gains without a fresh fundamental theme.

Technical Outlook

COFFEE (MAY) 4/8/04 The market has a slightly
positive tilt with the close over the swing pivot. The daily stochastics have
crossed over up which is a bullish indication. The near-term upside objective is
at 74.60. The Coffee contract should run into resistance at 74.00 and above
there at 74.60 with support at 72.6 and 71.80. The market’s short-term trend is
positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

4/7/2004

May sugar closed 23 ticks higher and 8 ticks off
the high. May sugar gapped higher on speculative buying as prices are being
supported by more activity in the physical market with purchases from Indonesia,
Russia, China, Syria and India expected soon. The May contract encountered
resistance at the 6.75 level, but with the newest forecast by a European
brokerage firm calling for a world sugar deficit of around 3.4 million tonnes
for the 2004/05 season, the market may have made a major low last week.

Technical Outlook

#SUGAR (MAY) 04/08/04: The gap upmove on the day
session chart is a bullish indicator for trend. The market’s close above the 2nd
swing resistance number is a bullish indication. Swing resistance comes in at
6.91, with support found at 6.35. 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 6.91.

 

COTTON MARKET RECAP

4/7/2004

The cotton market managed to move above most of
the recent consolidation zone with a higher close Wednesday. With the market
anticipating USDA report on Thursday some traders suggest that the gains were
simply short covering and balancing moves. The trade will continue to focus on
the prospects of demand as supply is for the time being is being held mostly
constant. With recent export sales figures somewhat soft there are expectations
that the cotton market will get some negative readings from export sales
Thursday morning.

Technical Outlook

#COTTON (MAY) 04/08/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
It is a slightly negative indicator that the close was lower than the pivot
swing number. Next resistance area comes in at 62.13 and then again at 62.67,
while support is targeted at 61.23 and 60.87. Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 60.87. The
downside closing price reversal on the daily chart is somewhat negative.