Energy Market Shocker!
BOND MARKET RECAP
12/22/2004
March Bonds closed down 0-13 at 112-15. This was
0-05 up from the low and 0-13 off the high.
March 10 Yr Treasury Notes finished down 0-055 at
112-010, 0-070 off the high and 0-030 up from the low.
The Treasury market seemed to fall directly
off the GDP revision but we have to think that the market was just using that
report as an excuse to bank some recently gained long profits. Certainly seeing
a sharp decline in energy prices and a sharp rally in the stock market gave the
bears a little extra confidence and with some currencies falling sharply against
the Dollar we even suspect that intervention longs in the Treasuries decided to
exit and move to the sidelines. Some traders suggested that the combination of
big equity gains and the upward revision in GDP made more players concerned
about the durable goods report on Thursday.
Technical Outlook
BONDS (MAR) 12/23/2004: Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The cross over and close above the 18-day moving average is
an indication the longer-term trend has turned positive. The market setup is
somewhat negative with the close under the 1st swing support. The next downside
objective is now at 111-31. Bearish daily studies indicate selling minor rallies
this session. The next area of resistance is around 112-24 and 113-04, while 1st
support hits today at 112-06 and below there at 111-31.
TNOTES (MAR) 12/23/2004: The market back below
the 60-day moving average suggests the longer-term trend could be turning down.
Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The market now above the 18-day
moving average suggests the longer-term trend has turned up. The market setup is
somewhat negative with the close under the 1st swing support. The next downside
target is 111-245. The next area of resistance is around 112-065 and 112-120,
while 1st support hits today at 111-290 and below there at 111-245.
STOCK INDICES RECAP
12/22/2004
March S&P finished up 2.8 at 1210.8, 3.5 off the
high and 4 up from the low.
March S&P E-Mini closed up 2.5 at 1210.5. This
was 3.75 up from the low and 3.75 off the high.
March Dow closed up 59 at 10822. This was 69 up
from the low and 17 off the high.
March Dow E-Mini finished up 58 at 10821, 18 off
the high and 69 up from the low.
The stock market made an impressive early bid and
in the process the S&P managed to confirm the significant high already posted in
the Dow in the prior session. We suspect that a minor upward revision in the GDP
reading provided the headline help to spark the Santa Claus rally and with the
energy complex also coming under aggressive pressure we suspect that even more
buyers were stirred into action. It seems that the outlook for electronic sales
continues to improve and that also fostered some of the buying.
Technical Outlook
S&P 500 (MAR) 12/23/2004: The rally brought the
market to a new contract high. Studies are showing positive momentum but are now
in overbought territory, so some caution is warranted. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
It is a mildly bullish indicator that the market closed over the pivot swing
number. The near-term upside target is at 1218.17. The next area of resistance
is around 1214.55 and 1218.17, while 1st support hits today at 1207.05 and below
there at 1203.18.
SP EMINI (MAR) 12/23/2004: The market made a new
contract high on the rally. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The major
trend could be turning up with the close back above the 18-day moving average.
The close over the pivot swing is a somewhat positive setup. The near-term
upside target is at 1218.00. The next area of resistance is around 1214.25 and
1218.00, while 1st support hits today at 1206.75 and below there at 1203.00.
NASDAQ (MAR) 12/23/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market now above the 18-day moving average suggests the longer-term trend has
turned up. The market has a slightly positive tilt with the close over the swing
pivot. The next downside target is now at 1600.25. The next area of resistance
is around 1625.50 and 1636.25, while 1st support hits today at 1607.50 and below
there at 1600.25.
MINIDOW (MAR) 12/23/2004: A new contract high was
made on the rally. Momentum studies are trending higher but have entered
overbought levels. The cross over and close above the 18-day moving average is
an indication the longer-term trend has turned positive. A positive setup
occurred with the close over the 1st swing resistance. The near-term upside
objective is at 10894. The market is becoming somewhat overbought now that the
RSI is over 70. The next area of resistance is around 10862 and 10894, while 1st
support hits today at 10776 and below there at 10721.
CURRENCY MARKET RECAP
12/22/2004
March US Dollar finished down 5 at 8201, 22 off
the high and 10 up from the low.
March Euro finished up 0.3 at 134.05, 0.06 off
the high and 0.31 up from the low.
March Euro Dollar closed up 0.005 at 97.08. This
was 0.01 up from the low and 0.005 off the high.
March Canadian Dollar closed down 0.62 at 80.64.
This was 0.47 up from the low and 0.58 off the high.
March British Pound finished down 1.07 at 190.59,
0.31 off the high and 0.48 up from the low.
March Swiss closed up 0.06 at 87.12. This was
0.16 up from the low and 0.11 off the high.
March Japanese Yen closed up 0.14 at 96.49. This
was 0.04 up from the low and 0.27 off the high.
The Dollar managed a minor upward pulse and
seemed to do so off indirect benefits from the Pound and Canadian. We suppose
that an upward revision in US GDP helped the Dollar but the fact that some of
the currencies are beginning to come unglued could really be a sign of change.
In the GDP reading revision the US suggested that imports declined and that is
another element that is suggesting change is possibly afoot.
Technical Outlook
YEN (MAR) 12/23/2004: 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. It is a mildly bullish indicator that the
market closed over the pivot swing number. The next upside target is 96.85. The
next area of resistance is around 96.64 and 96.85, while 1st support hits today
at 96.34 and below there at 96.24.
EURO (MAR) 12/23/2004: 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. The market setup
is supportive for early gains with the close over the 1st swing resistance. The
near-term upside objective is at 134.35. The next area of resistance is around
134.23 and 134.35, while 1st support hits today at 133.87 and below there at
133.62.
PRECIOUS METALS RECAP
12/22/2004
February Gold closed down 1.5 at 441.4. This was
1.3 up from the low and 2.3 off the high.
March Silver finished down 0.092 at 6.835, 0.1
off the high and 0.015 up from the low.
January Platinum closed up 2.2 at 843.7. This was
3.6 up from the low and 1.8 off the high.
The gold market seemed to drag the rest of the
metals down on Wednesday and it showed the weakness without much of a rally in
the Dollar. Therefore it is possible that the market was simply banking some
long profits and moving to the sidelines. We suspect that silver is a little
more overbought than the gold market and therefore it would not be surprising to
see the silver drag down the entire metals complex. News that Newmont admitting
to releasing toxic waste in Indonesia might result in some significant backlash
against mining companies and could actually be a supportive development to gold
in general.
Technical Outlook
SILVER (MAR) 12/23/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside objective is 674.2. The
next area of resistance is around 689.3 and 697.1, while 1st support hits today
at 677.8 and below there at 674.2.
GOLD (FEB) 12/23/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance 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
1st swing support number suggests a moderately negative setup for today. The
next upside target is 445.2. The next area of resistance is around 443.2 and
445.2, while 1st support hits today at 439.6 and below there at 438.1.
COPPER MARKET RECAP
12/22/2004
March Copper finished down 3.30 at 140.95, 4.65
off the high and 0.65 up from the low.
The copper market did manage a sharp run up and
did manage to forge another new high. However, the market failed to hold the
gains and finished at what many consider to be a pretty negative technical
level. Supposedly aggressive fund buying in aluminum and that certainly gave the
copper market an added lift. The copper market might also have been discouraged
by economic talk Wednesday morning which seemed to dredge up the idea that
Chinese growth was still a little too fast and that might scare some would-be
longs out of position.
ENERGY MARKET RECAP
12/22/2004
February Crude Oil closed down 1.52 at 44.24.
This was 0.59 up from the low and 1.71 off the high.
February Heating Oil closed down 4.15 at 136.17.
This was 2.57 up from the low and 5.53 off the high.
February Unleaded Gas finished down 2.53 at
116.58, 4.42 off the high and 2.08 up from the low.
February Natural Gas finished down 0.05 at 6.85,
0.12 off the high and 0.10 up from the low.
January Propane closed down 0.02 at 0.80. This
was 0.01 up from the low and 0.01 off the high.
The energy complex collapsed under the shock of a
much bigger than expected crude stock build of 5.1 million barrels at the API.
The DOE also showed a build in crude stocks of 2.1 million barrels but the
distillate stocks showed a surprising decline of 1.9 million barrels at the API
and a minimal gain of 600,000 barrels. While the current cold system should have
been supportive it seems like there is a slight warm up ahead and that probably
gave the bears the resolve to attack the market. Yukos is suggesting that
Gazprom acted illicitly in the auction of its asset auction and that could
eventually result in some Western Oil companies pulling back from Russia. In the
short term the crude crisis seems to have been moderated but the market still
needs the factor the inability to get crude oil made into the tight heating oil
product.
Technical Outlook
CRUDE OIL (FEB) 12/23/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The near-term
upside target is at 46.82. The next area of resistance is around 45.38 and
46.82, while 1st support hits today at 43.09 and below there at 42.22.
UNLEADED (FEB) 12/23/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend has turned down with the cross over back below
the 18-day moving average. 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 123.66. The next area
of resistance is around 119.83 and 123.66, while 1st support hits today at
113.33 and below there at 110.67.
HEATING OIL (FEB) 12/23/2004: The close under the
60-day moving average indicates the longer-term trend could be turning down.
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 is an indication the longer-term trend has turned
positive. A negative signal was given by the outside day down. The close below
the 2nd swing support number puts the market on the defensive. The near-term
upside target is at 145.01. The next area of resistance is around 140.22 and
145.01, while 1st support hits today at 132.12 and below there at 128.81.
CORN MARKET RECAP
12/22/2004
March Corn finished down 1/4 at 205 1/2,
1/2 off the high and 1 1/2 up from the low. May Corn closed unchanged at 213.
This was 1 3/4 up from the low and 1/4 off the high.
Fears that producer selling could increase into
the new tax has helped limit the buying support while a record net short
position of the fund traders leaves the market vulnerable to significant
short-covering if resistance levels are violated. Taiwan bought 60,000 tons of
US corn overnight and South Korea bought up to 55,000 tons of optional origin
corn overnight. Gulf basis was steady/firm due to slow producer movement. Weekly
export sales, released before the opening, are expected to come in near
600,000-800,000 tons as compared with 636,700 tons last week at this time.
Support for March Corn comes in at 204 1/2 and 203 1/2 with resistance at 206
and 206 3/4.
Technical Outlook
CORN (MAR) 12/23/2004: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. 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 near-term upside
objective is at 207 1/4. The next area of resistance is around 206 1/2 and 207
1/4, while 1st support hits today at 204 1/2 and below there at 203 1/4.
SOY COMPLEX RECAP
12/22/2004
January Soybeans finished down 2 3/4 at 546 1/4,
2 3/4 off the high and 2 1/4 up from the low. March Soybeans closed down 1 3/4
at 545. This was 3 1/2 up from the low and 2 off the high.
March Soymeal closed down 0.1 at 159.6. This was
1.4 up from the low and 0.9 off the high.
March Soybean Oil finished up 0.01 at 21, 0.09
off the high and 0.34 up from the low.
The forecast for more rains in Brazil for next
week was seen as a bearish force for the soybean complex. The Census Bureau
crush report this morning showed November soybeans crushed at 151.976 million
bushels as compared with trade expectations at 151.5-152 million bushels and the
October crush at 155.96 million. Oil stocks were pegged at 1.216 billion pounds
from trade expectations at 1.288 billion pounds with meal stocks pegged at
288,374 tons from expectations at 367,000 tons. Traders were looking for the oil
yield to come in higher than the NOPA estimate of 11.2 pounds per bushel.
However, yield was pegged at 11.16 pounds per bushels which might help provide
support the oil market today. Interior Midwest basis was steady/weak due to
higher producer selling from earlier in the week. Oil opened higher and meal
lower before two-sided trade developed for both markets into the mid-session.
Weekly export sales, released before the opening, are expected to come in near
750,,000-950,000 tons for soybeans, 50,000-125,000 tons for meal and
5,000-15,000 tons for as compared with 636,700 tons last week at this time.
Support for March soybeans comes in at 544 1/2 and 542 with resistance at 547
1/2 and 550 3/4.
Technical Outlook
BEANS (JAN) 12/23/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. The
near-term upside objective is at 551 1/4. The next area of resistance is around
548 3/4 and 551 1/4, while 1st support hits today at 543 3/4 and below there at
541 1/2.
MEAL (JAN) 12/23/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The major trend could be turning up with the close back above the
18-day moving average. The market tilt is slightly negative with the close under
the pivot. The next downside target is now at 157.1. The next area of resistance
is around 159.9 and 160.8, while 1st support hits today at 158.1 and below there
at 157.1.
BEANOIL (JAN) 12/23/2004: Daily stochastics have
risen into overbought territory which 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. The market has a slightly positive tilt with
the close over the swing pivot. The next upside objective is 21.24. The next
area of resistance is around 21.10 and 21.24, while 1st support hits today at
20.70 and below there at 20.44.
WHEAT MARKET RECAP
12/22/2004
March Wheat finished up 1 1/2 at 307, 1 off the high and 2 up
from the low. May Wheat closed up 2 3/4 at 315. This was 2 3/4 up from the low
and equal to the high.
Minor support from a boost in export news along
with short-covering supported the higher trade. Commercial traders are beginning
to see a slowdown in activity for the holiday. However, with funds holding a
record net short position, some commercial buying due to a jump in export news
may have a stronger than normal impact on the futures. Fund traders are likely
to do nothing unless resistance levels are violated in which case some
additional short-covering is likely. Pakistan is tendering for 400,000 tons of
milling wheat, there are rumors that Cuba bought up to 125,000 tons of US wheat,
there are rumors that Iraq is negotiating to buy 300,000 to 500,000 tons, South
Korea is tendering for 23,500 tons and Japan bought 120,000 tons of wheat at
their weekly tender overnight of which 80,000 was from the US. Snow in the
southern mid-west today is likely to insulate the crop from potential cold
damage. Weekly export sales, released before the opening, are expected to come
in near 400,000-600,000 tons as compared with 394,600 tons last week at this
time. Support for March wheat comes in at 305 and 302 1/4 with 308 and 310 1/2
as resistance. A 50% correction of the October to December break leaves
additional technical resistance at 315 1/2.
Technical Outlook
WHEAT (MAR) 12/23/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The major trend
could be turning up with the close back above the 18-day moving average. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
next upside target is 309 3/4. The next area of resistance is around 308 1/2 and
309 3/4, while 1st support hits today at 305 1/2 and below there at 303 3/4.
LIVE CATTLE RECAP
12/22/2004
February Live Cattle closed down 0.02 at 91.15.
This was 0.60 up from the low and 0.55 off the high.
January Feeder Cattle finished down 0.57 at
104.72, 1.27 off the high and 0.47 up from the low.
December cattle surged higher on the day led by
sharply higher cash trade in Nebraska but the February cattle managed to take
out yesterday’s highs by 5 points before collapsing to moderately lower on the
day. Ideas that the worst of the weather news in the plains has already passed
along with profit-taking from the longs due to the overbought condition helped
pressure. Nebraska traded at $90.00 this week, up $4.00 from the bulk of the
trade last week which helped support the early bounce. Traders await cash market
trade in the panhandle with futures already pricing in a $2.00-$3.00 rally from
last week. Boxed-beef cut-out values at mid-session were down $.36 to $140.76 as
compared with 140.34 last week at this time.
Technical Outlook
CATTLE (FEB) 12/23/2004: The upside crossover of
the 9 & 18 bar moving average is a positive signal. 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 could take on a defensive posture with the daily closing price
reversal down. It is a mildly bullish indicator that the market closed over the
pivot swing number. The next upside target is 92.270. The next area of
resistance is around 91.720 and 92.270, while 1st support hits today at 90.600
and below there at 90.000.
LEAN HOGS RECAP
12/22/2004
February Lean Hogs closed unchanged at 73.10.
This was 0.45 up from the low and 0.30 off the high.
February Pork Bellies finished down 1.50 at
95.70, 0.80 off the high and 0.45 up from the low.
The market pushed lower early in the day
absorbing some light long liquidation selling from speculators and weakness in
the pork cut-out values on strength in the cattle market and ideas that
marketings could be limited by bitter cold weather for the next two days helped
to support the bounce off of the lows. The Monthly cold storage report provided
some light support to the hog market but the weekly cold storage report was seen
as bearish and drove February bellies sharply lower and o the lowest level since
November 1st. The CME 2-day lean index for the period ending December 20th was
reported at 69.09, down $1.11 on the session and down from 77.45 one week
previous.
Technical Outlook
HOGS (FEB) 12/23/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. It is a mildly bullish indicator that the market closed over the pivot
swing number. The near-term upside objective is at 73.800. The next area of
resistance is around 73.450 and 73.800, while 1st support hits today at 72.750
and below there at 72.320.
COCOA MARKET RECAP
12/22/2004
March Cocoa finished up 15 at 1587, 14 off the
high and 31 up from the low.
The cocoa market forged a wild trading range but
managed to reject an early slide on the opening to close impressively higher.
However, the trade suggested that the shorts decided to bank profits and level
positions prior to the extended market closure on Friday. Supposedly the
commercial or professional buyers were the one in around the lows and that might
suggest that somebody saw value around the lows Wednesday.
Technical Outlook
COCOA (MAR) 12/23/2004: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
The daily closing price reversal up is a positive indicator that could support
higher prices. With the close over the 1st swing resistance number, the market
is in a moderately positive position. The next downside objective is now at
1538. The next area of resistance is around 1609 and 1627, while 1st support
hits today at 1565 and below there at 1538.
COFFEE MARKET RECAP
12/22/2004
March Coffee closed down 3.80 at 101.25. This was
2.25 up from the low and 3.25 off the high.
The coffee market gapped lower and collapsed to
match Friday’s lows before finding some relief from the speculative sell-off to
bounce 225 points off of the lows of the day but still lost 380 points for the
session. Technical selling intensified with speculators holding a record net
long position and the market finding follow-through selling from Tuesday’s
reversal from a contract high. FO Licht indicated a world production deficit on
near 3 million bags for the 2004/2005 season and that the deficit could widen
further for the coming season. If first support at 89.90 can not hold, the next
technical support comes in near 95.90 for March coffee.
Technical Outlook
COFFEE (MAR) 12/23/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. 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
indicates the longer-term trend has turned up. More selling pressure is likely
given yesterday’s gap lower price action on the day session chart. The market is
in a bearish position with the close below the 2nd swing support number. The
next downside objective is 96.05. The next area of resistance is around 104.00
and 107.00, while 1st support hits today at 98.50 and below there at 96.05.
SUGAR MARKET RECAP
12/22/2004
March Sugar closed up 0.01 at 8.86. This was 0.11
up from the low and 0.02 off the high.
March sugar bounced off of the early session
break as key support at 874 held and the market managed to close 1 higher on the
session but 11 off of the low. London closed lower for the second session in a
row with talk of the higher than expected European beet crop helping to provide
light selling pressures. Weakness in the coffee and the lower trade in London
helped to pressure the market lower early in the session but a slowdown in the
speculative long liquidation selling and some light trade house buying supported
the market on the set-back. The Sao Paulo Cane Industry Union indicated that
Brazil has crushed 324.5 million tons of cane from the center-South crop through
December 15th, up 8.7% from last year.
Technical Outlook
SUGAR (MAR) 12/23/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend could be turning up with the close back
above the 18-day moving average. The daily closing price reversal up on the
daily chart is somewhat positive. It is a mildly bullish indicator that the
market closed over the pivot swing number. The near-term upside objective is at
8.96. The next area of resistance is around 8.92 and 8.96, while 1st support
hits today at 8.80 and below there at 8.71.
COTTON MARKET RECAP
12/22/2004
March Cotton finished down 0.90 at 42.72, 0.98
off the high and 0.51 up from the low.
The market opened unchanged on the day but a
persistent flow of speculative selling on fears that producer selling could see
a jump higher into the first few weeks of the year for tax purposes helped to
pressure. For the weekly export sales, released before the opening, it may take
a bullish surprise if the market is to recovery from the weak technical action
of the past several sessions. Large world crop production this season has
contributed to the excess supply with world and US enduing stocks expected to
rise sharply. India government officials approved of a plan to export 2 million
bales this year. While India is not usually a large exporter, India produced
21.3 million bales this season as compared with consumption which is pegged at
19.3 million bales. Certified exchange stocks deliverable against the exchange
totaled 56,055 bales as of December 21st from 54,772 bales as of December 20th
and 50,233 bales on the 17th. The jump in stocks is a bit of a negative
development after the drop in stocks of the past few weeks.
Technical Outlook
COTTON (MAR) 12/23/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The close under the 18-day moving
average indicates the longer-term trend could be turning down. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The next upside target is 44.32. The next area of
resistance is around 43.46 and 44.32, while 1st support hits today at 41.98 and
below there at 41.35.