Energy Market Faces Major Decision

Technical Outlook

#BONDS (JUN) 4/14/2004: There could be some early
pressure today given the market’s negative setup with the close below the second
swing support. Near-term resistance for bonds is at 109.08 and then again at
110.09, while swing support hits at 107.24 and below there at 107.09. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The next downside objective is 107.09. More downside action may
be limited by the RSI under 20 putting the market in extremely oversold
territory.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 110.27. 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 112.00 and then
again at 112.22, while swing support hits at 111.03 and below there at 110.27.
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.

 

STOCK INDICES RECAP

4/13/2004

After starting off sharply higher, the stock
market made what appeared to be a double top and then faded aggressively. We
suspect that disconcerting earnings and concern for the Presidential press
conference sparked the profit-taking. In other words, the stock market doesn’t
want to hear about the need for more troops being sent and more money being
spent in Iraq. The market also doesn’t want to hear about intelligence failures
and the problem with soaring gasoline prices. In other words, things were really
bullish around 9:00 to 10:00 AM and many wondered if prices were too high or if
a buy-the-rumor, sell-the-fact condition was in place.

Technical Outlook

#S&P500 (JUN) 4/14/2004: The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. The
outside day down gives the market a bearish tilt. The daily closing price
reversal down is a negative indicator for prices. Underlying support comes in at
1116.80 and 1110.65, with overhead resistance at 1138.80 and 1154.65. The close
below the 9-day moving average is a negative short-term indicator for trend. The
close below the 40-day moving average is an indication the longer-term trend is
down. A crossover down in the daily stochastics is a bearish signal. Momentum
studies trending lower from overbought levels is a bearish indicator and would
tend to reinforce lower price action. The next downside objective is now at
1110.65.

S&P E-Mini (JUN): 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 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
1109.44. The close below the 2nd swing support number puts the market on the
defensive. Near-term resistance for the S&P Mini is at 1140.13 and then again at
1156.94, while swing support hits at 1116.38 and below there at 1109.44. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

NASDAQ (JUN) The outside day down is somewhat
negative. The market could take on a defensive posture with the daily closing
price reversal down. A negative signal for trend short-term was given on a close
under the 9-bar moving average. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. The
market should run into resistance at 1493.00 and above there at 1516.00 with
support at 1459.00 and 1448.00. A bearish signal was triggered on a crossover
down in the daily stochastics. Stochastics turning bearish at overbought levels
will tend to support lower prices if support levels are broken. The next
downside objective is 1448.00.

MINI DOW (MAR) The outside day down gives the
market a bearish tilt. The daily closing price reversal down is a negative
indicator for prices. The close below the 9-day moving average is a negative
short-term indicator for trend. The market should run into resistance at 10465
and above there at 10621 with support at 10246 and 10183. A crossover down in
the daily stochastics is a bearish signal. Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. The next downside target is now at 10183. The close below the 40-day
moving average is an indication the longer-term trend is down. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness.

 

CURRENCY MARKET RECAP

4/13/2004

The Dollar probed up to some extremely
significant technical points in the action Tuesday but still needs to prove to
the world that the US economy is capable of leading the world recovery. In fact,
with the ongoing concern of terrorism and soaring budget and trade deficits, the
Dollar has to outperform expectations just to keep prices in an up trend. The
fact that the US military is getting bogged down in Iraq and may have to send
more troops probably held the Dollar back against strong macro economic desires
to buy the Dollar. In order to make long-term down trends in the Dollar shift
up, the Dollar might have to regain 90.80 on the weekly charts.

Technical Outlook

#CURRENCIES 4/14/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. Swing resistance is targeted at 94.38 and
above there at 94.93, with the yen finding support around 93.45 and below there
at 93.07. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The next downside objective is 93.07.

EURO (JUN): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 1.1849. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1849, with overhead resistance at 1.1995. The
close below the 9-day moving average is a negative short-term indicator for
trend. The close below the 40-day moving average is an indication the
longer-term trend is down. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.

 

PRECIOUS METALS RECAP

4/13/2004

The record small spec and fund position in gold
and the large fund and spec position in the silver contributed to the slide in
prices Tuesday. However, the fact that macro economic anxiety is declining at
the same time that the Dollar is breaking out to the upside means that a number
of selling pressures are hitting the metals at the same time. Right now, the
metals markets need a fresh theme because the anxiety and flight to quality
issues are no longer carrying the market. Maybe the inflation issue can begin to
temper the selling interest with the CPI report to be released on Wednesday
morning.

Technical Outlook

#P-METALS 4/14/2004: SILVER (MAY): There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Initial support for silver is at 720.3 and below there at
702.9 with resistance likely at 757.3 and 769.8. A negative signal for trend
short-term was given on a close under the 9-bar moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 702.9.

GOLD (JUN): Support for gold today comes in near
398.20, while resistance is pegged at 420.60. Stochastics trending lower at
midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 398.20. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. The
close below the 9-day moving average is a negative short-term indicator for
trend. The close below the 40-day moving average is an indication the
longer-term trend is down. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.

 

COPPER MARKET RECAP

4/13/2004

The copper market opened weak and stayed weak
even after US economic numbers came in better than expected. However, with the
US stock market falling down the improved macro economic condition was really
fully accepted. A number of traders suggested that the soaring value of the
Dollar was making US copper seem unattractive versus London and that added to
the liquidation tilt. Within the Richmond Fed numbers Tuesday, were some very
impressive growth numbers from the manufacturing sector and one would think that
would have supported copper.

 

ENERGY MARKET RECAP

4/13/2004

The energy complex seemed to be taking profits
ahead of the weekly US inventory reports. With the energy complex seeing a build
in 2 of the last three weeks and the refinery rate in the lower range of
readings for the last year, it would seem that the market is about to make a
major decision. In a negative development for oil it should be noted that a
sharply rising Dollar could raise OPEC revenues enough that they could afford to
see lower flat prices for crude and in effect maintain their profit margin. In
short the coming inventory readings could be the most important readings of the
year.

Technical Outlook

#ENERGIES 4/14/2004: CRUDE OIL (JUN): The market
setup is somewhat negative with the close under the 1st swing support. Support
for crude is keyed on 36.40 and below there at 36.15, with resistance pegged at
36.96 and 37.27. The close above the 9-day moving average is a positive
short-term indicator for trend. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The near-term
upside target is at 37.27.

UNLEADED GAS (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
117.21. The close below the 1st swing support could weigh on the market.
Resistance today is at 117.21, while support should be found around 113.41. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.

HEATING OIL (JUN): The market setup is somewhat
negative with the close under the 1st swing support. Heating oil should
encounter support around 91.14, with resistance is at 93.94. The close above the
9-day moving average is a positive short-term indicator for trend. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The near-term upside target is at 93.94.

 

CORN MARKET RECAP

4/13/2004

December corn closed 27 1/2 cents off of
Thursday’s high as there is a massive shift in the fund trader mentality. A
shift to the planting season and concerns with the overbought condition of the
market helped to keep a steady flow of fund selling in the corn pit. Funds were
noted sellers of at least 8000 contracts late in the session. The good weather
for fieldwork has encouraged a long liquidation surge in corn as a few more days
of dry weather might push plantings even further ahead of a normal pace. As of
April 11th, producers had planted 6% of the intended corn acres as compared with
5% last year and the 14-year average of 4% for this time of the year. A lack of
new export business news overnight and weakness in the wheat market are factors
which may have helped boost more long liquidation selling from funds today. In
the Commitment-of-Traders report with options, large traders were holding a net
long position of 168,819 contracts as of April 6th.

Technical Outlook

#CORN (MAY) 4/14/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 305 2/4. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 321 2/4 today, with support at 305 2/4. The close below
the 9-day moving average is a negative short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.

 

SOY COMPLEX RECAP

4/13/2004

November soybeans closed sharply down and to the
lowest level since March 10th due to favorable weather but old crop closed
higher on a slow-down in speculative long liquidation. The market continued to
push lower from long liquidation selling on follow-through technical selling
early but the selling slowed shortly after the open and the market bounced on
the perception of a short-term oversold condition. Good weather for fieldwork in
the US and active harvest in South America has added to the bearish tone of the
past several sessions. Basis levels were steady/firm in the US as producer
selling is slow but there is a lack of short-term demand for export. Talk that
the export pipeline in South America for soybean products is filling up helped
to add to the bearish tone. The 40-day moving average might offer some
short-term support at 968 today with resistance at 10.01. The oil market is
finding support from higher palm futures overnight while meal is slightly higher
from a lack of long liquidation selling which has been persistence over the past
week until the selling dried up this morning. For the NOPA monthly crush report
on Wednesday morning traders are looking for March crush in the 127-129 million
bushel level as compared with 124.2 million bushels in February and 138.1
million bushels in March of 2003.

Technical Outlook

#SOYBEANS (MAY) 04/14/04 The daily closing price
reversal up is a positive indicator that could support higher prices. The market
tilt is slightly negative with the close under the pivot. The next area of
resistance is around 979 and 985 3/4, while 1st support hits today at 964 and
below there at 955 3/4. A negative signal for trend short-term was given on a
close under the 9-bar moving average. Daily stochastics declining into oversold
territory suggest the selling may be drying up soon. The next downside objective
is 955 3/4.

MEAL (MAY): Momentum studies are still bearish,
but are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 306.5. The upside daily closing price
reversal gives the market a bullish tilt. First resistance comes in at 312.1,
with support at 308.6. The close below the 9-day moving average is a negative
short-term indicator for trend. It is a slightly negative indicator that the
close was under the swing pivot.

BEAN OIL (MAY): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 30.86. A positive setup occurred with
the close over the 1st swing resistance. The daily closing price reversal up is
a positive indicator that could support higher prices. Daily swing resistance is
found at 31.77 and above there at 31.98. Support should be encountered at 31.21
and 30.86.

 

WHEAT MARKET RECAP

4/13/2004

July wheat pushed sharply lower and to the lowest
level since March 22nd with funds noted sellers of near 5000 contracts late in
the session. Active fund and speculative long liquidation selling drove the
market to the lowest level since March 19th as the anticipation of improving
crop conditions ahead and concerns that the US will be less competition on the
world market this summer seen as triggering factors for the sell-off. Crop
conditions for the winter wheat crop for the week ending April 11th were
unchanged at 48% good to excellent which is down from 51% last year at this
time. Kansas crop conditions fell to 38% good to excellent from 43% last week.
However, traders believe that the weekend rains in Kansas will be enough to see
crop conditions improve for the coming week. However, agronomists are concerned
that many fields in the southern growing areas may have taken on some freeze
damage in fields which have reached the jointing stage but it will take several
days to receive feedback on potential damage. Spring wheat planting progress
reached 16% complete as of Sunday as compared with 8% last year and 9% as the
14-year average for this time of the year. South Korea is tendering for 43,300
tons of US wheat and Tunisia announced a tender for 50,000 tons of soft wheat
from optional origin. The 40-day moving average for May wheat comes in at 393
which might act as near-term support with 401 as resistance.

Technical Outlook

#WHEAT (MAY) 4/14/2004: The gap lower on the day
session chart is bearish and puts the market on the defensive. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Expect near-term support around 387 and below there at
383 3/4, with resistance levels at 399 and 407 3/4. A negative signal for trend
short-term was given on a close under the 9-bar moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 383 3/4.

 

LIVE CATTLE RECAP

4/13/2004

The lower close after a contract high could
attract some profit-taking selling over the near-term for June cattle, however,
the stiff discount to the cash market may help to support. Early strength was
supported by solid gains in the beef market and expectations for higher trade in
the cash market this week. Boxed-beef cut-out values for choice (600-750 lbs)
were up $2.40 to $161.26 as compared with $148.08 last week at this time.
Slaughter came in at 129,000 head as compared with expectations at
115,000-128,000 head.

Technical Outlook

#CATTLE (JUN) 4/14/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
80.00. The market has a slightly positive tilt with the close over the swing
pivot. Support should be encountered at 78.12 and below there at 77.77. Market
resistance is at 79.22 and then again at 80.00. The market made a new contract
high on the rally. The market could take on a defensive posture with the daily
closing price reversal down. A 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.

 

LEAN HOGS RECAP

4/13/2004

The market collapsed to close limit-down as the
stiff premium of futures to the cash market, weakness in the pork market and
expectations for ample near-term supplies helped to trigger some long
liquidation selling. Bellies were also limit down with weakness in the cash
market and expectations that cash will loose another $2.00 over the near-term
helped to trigger the long liquidation selling. Profit-taking after the run to
contract highs yesterday for the summer hog months and a need to see strong
demand to rationalize the stiff premium helped to trigger some of the long
liquidation selling.

Technical Outlook

#HOGS (JUN) 4/14/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Resistance levels comes in at 74.90 and 76.47 today, while support is around
72.77 and then 72.22. The close below the 9-day moving average is a negative
short-term indicator for trend. A crossover down in the daily stochastics is a
bearish signal. Momentum studies trending lower from overbought levels is a
bearish indicator and would tend to reinforce lower price action. The next
downside target is now at 72.22.

 

COCOA MARKET RECAP

4/13/2004

The cocoa market continued in a weak posture with
a minor new low for the move. However, the trade is expecting some grind figures
and that might serve to mitigate the selling interest. However, many traders are
thinking that supply is still plentiful and that increased demand merely
balances the trade. The trade basically discounted expectations of a European
cocoa grind rise of 4% to 11% for the 1st quarter and is also discounting the
anticipated US grind on Friday morning. In other words, the buyers are not
concerned about price risk and are content to allow prices to continue falling.
The ultra strong Dollar also pressured US cocoa prices as London cocoa now looks
much more attractive.

Technical Outlook

COCOA (JUL) 04/14/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1392 and above there at 1406 with support at 1372 and 1366. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1365.50.

 

COFFEE MARKET RECAP

4/13/2004

The coffee market pushed sharply lower on the
session with July futures closing at the lowest level of the year as fund
traders were active sellers. Keep in mind, fund traders holding a net long
position of over 17,000 contracts as of April 6th which leaves the market
vulnerable to long liquidation selling as support levels are violated. The
weakness in London, increasing exchange stocks and talk of a larger crop in
Brazil remain as bearish fundamental factors for the market to absorb. For the
monthly Green Coffee stocks report, traders are looking for US stocks to
increase by 150,000-300,000 bags during March from 5.828 million bags at the end
of February. The report will be released after the close on Thursday. Weakness
in the cash market in Vietnam in spite of recent political unrest in the coffee
belt added to the bearish tone. In addition, traders believe that the Brazil
government may increase their crop estimate due out later this month due to
improving weather for the potentially bumper crop. Cash dealers in Brazil
believe the crop estimate may be up near 40 million bags as compared with their
December estimate of 35.8 million bags but trade houses seem to believe the crop
could be near 42-45 million bags. CSCE exchange stocks for the day were up 7,338
bags to 4.758 million with only 11,393 bags pending review.

Technical Outlook

COFFEE (JUL) 4/14/04 There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. The 9-day RSI under 30 indicates the market is approaching
oversold levels. Momentum studies are declining, but have fallen to oversold
levels. The next downside objective is now at 69.50. The Coffee contract should
run into resistance at 73.05 and above there at 75.00 with support at 70.3 and
69.50. The market’s short-term trend is negative as the close remains below the
9-day moving average.

 

SUGAR MARKET RECAP

4/13/2004

July sugar closed 4 lower on the session but up
13 from the lows of the day as there was a lack of aggressive selling on the
early break. August sugar in London managed a new contract high after the long
weekend and this helped to provide support. Russia is threatening to halt
imports of some white sugar from Belarus with indications that the white sugar
may be coming from imported raw sugar and not domestic beets. Egypt announced a
tender to buy 40,000 tons of raw sugar after canceling an order in February.
Egypt consumes near 2.2 million tons each year and produces about 1.4 million.
Weather conditions remain favorable for another bumper crop in Brazil and the
European beet crop is off to a good start. The USDA attache in Mexico indicated
that sugar production for the 2004/2005 season should be at least 5.4 million
tons and the 2003/2004 was revised upward to 5.51 million tons from 5.229
million last year.

Technical Outlook

#SUGAR (JUL) 4/14/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
7.11, with support found at 6.75. The close above the 9-day moving average is a
positive short-term indicator for trend. Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 7.11.

 

COTTON MARKET RECAP

4/13/2004

Nearby cotton futures closed at the lowest level
since August of 2003 with the market acting as if major commercial players may
be liquidating option or futures positions. Keep in mind, fund traders had
already built a net short position of nearly 10,000 contracts as of April 6th
and small specs had already reduced their net long to just 2800 contracts. Small
specs are likely out of the market by now but the active selling continued. A
lack of commercial demand for deliverable supplies, a focus on the new crop
situation and the lack of a bullish reaction to positive news last week remain
as bearish forces. Good soil conditions in the south, and especially West Texas
and a fast start to the planting season in the west added to the bearish tone.

Technical Outlook

#COTTON (JUL) 4/14/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 60.41 and then again at 61.54, while support is targeted at 58.42
and 57.56. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 57.56. More
downside action may be limited by the RSI under 20 putting the market in
extremely oversold territory.