Energy Prices Find Some Support Off The Political Anxiety
BOND MARKET RECAP
2/16/2005
March Bonds finished down 0-19 at 115-08, 0-19
off the high and 0-12 up from the low.
March 10 Yr Treasury Notes finished down 0-145 at
112-035, 0-200 off the high and 0-025 up from the low.
The Treasury market came under more
aggressive liquidation in the wake of Greenspan commentary on the magnitude of
the new US debt requirements that might be necessary to solve the Social
Security problem. It is a little surprising that Treasuries weren’t supported by
the slightly less than expected activity in the US Industrial Production and
Capacity Utilization readings. We suspect that Greenspan assessments of the US
economy were a little better than expected and that also undermined the market.
Some traders were distressed by the Fed Chairman suggesting that the level of
long term rates was a conundrum.
Technical Outlook
BONDS (MAR) 02/17/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially 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 defensive setup, with the close under
the 2nd swing support, could cause some early weakness. The next downside
objective is 114-11. The next area of resistance is around 115-23 and 116-08,
while 1st support hits today at 114-25 and below there at 114-11.
TNOTES (MAR) 02/17/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The market is in a bearish position with the close
below the 2nd swing support number. The next downside target is 111-175. The
next area of resistance is around 112-150 and 112-310, while 1st support hits
today at 111-245 and below there at 111-175.
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STOCK INDICES RECAP
2/16/2005
March S&P finished down 0.2 at 1210.5, 2.9 off the high and 5
up from the low.
March S&P E-Mini closed down 0.25 at 1210.5. This was 7 up
from the low and 3 off the high.
March Dow closed down 1 at 10837. This was 52 up from the low
and 23 off the high.
The stock market came under pressure after some
very impressive early overnight gains. The downside seemed to be extended off
unfounded rumors of a missile attack in Iran. We also think that stock prices
came under additional attack following slightly disappointing Industrial
production readings and apparently less than anticipated COKE sales figures.
Around mid session it seemed like Greenspan testimony, regarding the magnitude
of the debt required to correct the Social Security problem, was seen as a
negative to stock prices. In the end, it seemed like the Greenspan dialogue
toward the economy was generally an underpin to stock prices but other issues
seemed to dominate.
Technical Outlook
S&P 500 (MAR) 02/17/2005: Rising stochastics at
overbought levels warrant some caution for bulls. 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
near-term upside objective is at 1217.87. The next area of resistance is around
1214.44 and 1217.87, while 1st support hits today at 1206.55 and below there at
1202.08.
SP EMINI (MAR) 02/17/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The close over the pivot swing is a somewhat
positive setup. The near-term upside target is at 1219.50. The next area of
resistance is around 1215.50 and 1219.50, while 1st support hits today at
1205.50 and below there at 1199.50.
NASDAQ (MAR) 02/17/2005: 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. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next upside objective is 1558.75. The next area
of resistance is around 1552.50 and 1558.75, while 1st support hits today at
1538.50 and below there at 1530.75.
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CURRENCY MARKET RECAP
2/16/2005
March US Dollar finished up 12 at 8372, 48 off the high and 21
up from the low.
March Euro finished up 0.21 at 130.43, 0.27 off the high and
0.81 up from the low.
March Euro Dollar closed down 0.0125 at 97.005. This was equal
to the low and 0.0175 off the high.
March Canadian Dollar closed down 0.33 at 80.88. This was 0.59
up from the low and 0.37 off the high.
March British Pound finished down 0.92 at 188.32, 0.18 off the
high and 1.07 up from the low.
March Swiss closed up 0.24 at 84.39. This was 0.57 up from the
low and 0.25 off the high.
March Japanese Yen closed down 0.77 at 95.15. This was 0.38 up
from the low and 0.41 off the high.
The Dollar short covered ahead of the Greenspan
testimony, dipped into the Social Security debt discussions, recovered around
mid session and then softened into the close. In other words, the market
expected some positive developments toward the Dollar but didn’t quite seem to
get such an outcome. In the end, the world might come to the conclusion that the
US is simply holding too much debt and therefore the rotation theme would seem
to remain a major undermine for the Dollar. We also have to think that the US
economic reports on Wednesday were not up to expectations and therefore the
Dollar was undermined by the macro economic condition.
Technical Outlook
YEN (MAR) 02/17/2005: Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The close below the 1st swing support
could weigh on the market. The next upside objective is 95.94. The next area of
resistance is around 95.54 and 95.94, while 1st support hits today at 94.76 and
below there at 94.37.
EURO (MAR) 02/17/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The close over the pivot
swing is a somewhat positive setup. The near-term upside objective is at 131.37.
The next area of resistance is around 130.97 and 131.37, while 1st support hits
today at 129.89 and below there at 129.22.
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PRECIOUS METALS RECAP
2/16/2005
April Gold closed down 0.4 at 426.9. This was 3.5 up from the
low and 0.2 off the high.
March Silver finished down 0.105 at 7.255, 0.035 off the high
and 0.115 up from the low.
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The gold market was choppy and mostly weak during
the action Wednesday which wasn’t surprising given the strength in the Dollar
and weakness in other metals markets. The Dollar was sharply higher at times
during the session but yet the gold didn’t seem to encounter much in the way of
intense selling interest off the currency market action. We suspect that
Greenspan commentary about inflation being under control was a negative but the
talk about significant US borrowings to solve the Social Security problem might
have been a bigger picture support to gold and silver.
Technical Outlook
SILVER (MAR) 02/17/2005: 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 market setup is somewhat negative with the close under the
1st swing support. The near-term upside target is at 738.5. The next area of
resistance is around 733.0 and 738.5, while 1st support hits today at 718.1 and
below there at 708.5.
GOLD (APR) 02/17/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market now above the 18-day moving average suggests the longer-term
trend has turned up. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next upside objective is 429.7. The next
area of resistance is around 428.7 and 429.7, while 1st support hits today at
425.1 and below there at 422.4.
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COPPER MARKET RECAP
2/16/2005
March Copper closed down 1.05 at 144.80. This was 2.30 up from
the low and 0.30 off the high.
The copper market ran right up to the 145 level
basis the May contract but at times during the session the copper market fell
significantly lower. There continues to be a heavy flow of production talk that
would seem to undermine the bull case but apparently the market remains
convinced that demand is going to run ahead of supply. We continue to note a
pattern of rising LME copper stocks and certainly one can’t be that impressed
with the macro economic information that is flowing from the US, Japan and
Germany. However the copper market seems to be capable of discounting the growth
threat and remaining fixated on tightness and Chinese demand.
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ENERGY MARKET RECAP
2/16/2005
March Crude Oil closed up 1.07 at 48.33. This was 1.38 up from
the low and 0.32 off the high.
March Heating Oil closed up 5.07 at 134.20. This was 5.40 up
from the low and 0.20 off the high.
March Unleaded Gas finished up 2.64 at 128.28, 0.52 off the
high and 5.43 up from the low.
March Natural Gas finished down 0.07 at 6.11, 0.06 off the
high and 0.09 up from the low.
March Propane closed down 0.00 at 0.75. This was equal to the
low and equal to the high.
We are actually surprised that energy prices
weren’t down more aggressively following the significant increase in crude oil
and gasoline stocks. However, some traders might have been supported by the idea
that distillate stocks declined and by the revelation in the report that US
January domestic production declined sharply versus last year. It should also be
noted that the refinery operating rate reached the highs level since mid July
2004 and that is certainly a bearish indication. The market might have found
some support off the political anxiety present toward Syria and Iran during the
session Wednesday.
Technical Outlook
CRUDE OIL (MAR) 02/17/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. 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. Since the close was above the 2nd swing resistance number, the
market’s posture is bullish and could see more upside follow-through early in
the session. The next upside target is 49.76. The next area of resistance is
around 49.17 and 49.76, while 1st support hits today at 47.48 and below there at
46.37.
UNLEADED (MAR) 02/17/2005: Momentum studies are
rising from mid-range, which could accelerate 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 upside closing price reversal on
the daily chart is somewhat bullish. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
upside objective is 133.00. The next area of resistance is around 131.25 and
133.00, while 1st support hits today at 125.31 and below there at 121.11.
HEATING OIL (MAR) 02/17/2005: The cross over and
close above the 60-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are rising from mid-range, which could
accelerate 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 above the 2nd swing resistance number is a bullish
indication. The next upside target is 138.50. The next area of resistance is
around 137.00 and 138.50, while 1st support hits today at 131.40 and below there
at 127.30.
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CORN MARKET RECAP
2/16/2005
May Corn finished down 3 1/4 at 204 1/4, 1 1/2 off the high
and 1/4 up from the low. December Corn closed down 2 at 229. This was 1/2 up
from the low and 1 off the high.
The weak close in spite of the late rally in
soybeans leaves the market with a bearish technical feel for Thursday. March
corn lasted just one day above 2.00 and closed moderately lower and back toward
the middle of the 1-month trading range. A lack of short-covering from
speculators, which supported the run off of last weeks lows, seems to be the
primary bearish factor for futures at present as the market corrects from the 8
cent bounce. Southern Brazil dryness has traders nervous over possible stress to
the crop; however, the larger crop in Argentina seems to be an offsetting
factor. Argentina officials pegged the crop at 19 million tons as compared with
18-19 million tons as the previous forecast and 14 million tons last year. In
last weeks USDA World Supply/Demand report, the USDA pegged the crop at 17.5
million tons, up 500,000 from the January estimate. South Korea bought 52,500
tons of optional origin corn overnight. For the weekly export sales report,
released before the opening, traders are looking for sales near 600,000-800,000
tons as compared with 995,500 tons last week. Support for March corn comes in at
195 3/4 with resistance at 198 and 199 1/2.
Technical Outlook
CORN (MAY) 02/17/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. The gap lower price action
on the day session chart is a bearish indicator for trend. The market is in a
bearish position with the close below the 2nd swing support number. The
near-term upside target is at 206 1/4. The next area of resistance is around 205
and 206 1/4, while 1st support hits today at 203 1/2 and below there at 203.
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SOY COMPLEX RECAP
2/16/2005
May Soybeans finished down 3/4 at 534 3/4, 1/4
off the high and 5 3/4 up from the low. November Soybeans closed down 1 at 546
3/4. This was 4 3/4 up from the low and 1/4 off the high.
May Soymeal closed down 0.2 at 162.9. This was
1.9 up from the low and 0.6 off the high.
March Soybean Oil finished down 0.06 at 19.56,
0.04 off the high and 0.13 up from the low.
Overbought market concerns, ideas that rain next
week will slow yield loss in Brazil and a slow-down in the short-covering trend
of the past week helped to push futures lower. The close at the highs of the day
and above the opening is a positive short-term technical development. Talk that
southern Brazil crops are under stress from a lack of rainfall was offset by
forecasts for rains to begin in the region into the early to middle part of next
week. For their first official crop estimate for the year, Argentina officials
pegged the crop at 36-38 million tons as compared with 31.5 million tons last
year and the last USDA estimate of 39 million tons from last weeks USDA World
Supply/Demand report. Weakness in the wheat market and other Agriculture markets
added to the bearish tone. Oil continued to weaken after the bearish news from
the NOPA crush report this week with sharply higher stocks and a jump in yield
for January. For the weekly export sales report, released before the opening,
traders are looking for soybean sales near 250,000-400,000 tons, meal sales near
50,000-100,000 tons and oil sales at 5,000-10,000 tons. Resistance for March
soybeans comes in at 539 1/2 with support at 528 1/2 and 522 1/4.
Technical Outlook
BEANS (MAY) 02/17/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down.
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. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
near-term upside objective is at 539 1/4. The 9-day RSI over 70 indicates the
market is approaching overbought levels. The next area of resistance is around
537 3/4 and 539 1/4, while 1st support hits today at 531 3/4 and below there at
527 1/2.
MEAL (MAY) 02/17/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
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 daily closing price reversal down puts the market on
the defensive. It is a slightly negative indicator that the close was lower than
the pivot swing number. The near-term upside objective is at 165.1. The market
is becoming somewhat overbought now that the RSI is over 70. The next area of
resistance is around 163.6 and 165.1, while 1st support hits today at 160.4 and
below there at 158.6.
BEANOIL (MAY) 02/17/2005: The upside crossover (9
above 18) of the moving averages suggests a developing short-term uptrend.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. It is
a slightly negative indicator that the close was under the swing pivot. The
near-term upside target is at 19.82. The next area of resistance is around 19.75
and 19.82, while 1st support hits today at 19.57 and below there at 19.47.
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WHEAT MARKET RECAP
2/16/2005
May Wheat finished down 7 at 299 3/4, 5 1/4 off the high and
1/4 up from the low. July Wheat closed down 7 at 306 1/2. This was 1/2 up from
the low and 6 off the high.
Fears of excess supply on the world market and a
lack of weather concerns for the new crop could slow the recent short-covering
trend in wheat. A lack of weather concerns and a trend toward improving crop
conditions for the winter wheat crop in the US helped pressure the market in the
past two trading sessions. A senior farm industry official in Romania indicated
that the wheat crop could come in near 8 million tons this year as compared with
a bumper crop of 7.7 million tons last year. Excellent winter weather conditions
caused the higher estimate. Basis continued to weaken for hard red winter wheat
in the plains with gulf track bids down by 4 cents this morning and Oklahoma
basis down 6 cents. South Korea issued a tender to buy 24,000 tons of US wheat
overnight. For the weekly export sales report, released before the opening,
traders are looking for sales near 250,000-400,000 tons as compared with 473,300
tons last week. March wheat support comes in at 290 1/2 with resistance at 296
3/4 and 298 3/4.
Technical Outlook
WHEAT (MAY) 02/17/2005: 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. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. There
could be some early pressure today given the market’s negative setup with the
close below the 2nd swing support. The next upside objective is 306 1/2. The
next area of resistance is around 302 1/2 and 306 1/2, while 1st support hits
today at 297 and below there at 295 1/2.
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LIVE CATTLE RECAP
2/16/2005
April Live Cattle finished up 0.65 at 87.67, 0.07 off the high
and 0.52 up from the low.
March Feeder Cattle closed up 0.47 at 100.72. This was 0.52 up
from the low and 0.07 off the high.
April cattle found late support from a firming
tone for cash markets due to expectations for sloppy weather in the plains for
late this week and the weekend and hopes that the muddy feedlots will keep the
available supply moving off feedlots tight. The hand-to-mouth buying pattern by
retailers so they do not get caught holding too much beef inventory when the
Canadian border opens in early March is a bearish force but the weather might
have temporarily offset the bearish trend. Slaughter came in at 119,000 head as
compared with 115,000-118,000 head expected. Positioning ahead of Friday’s
cattle-on-Feed report kept the trade choppy before the end of the session
bounce.
Technical Outlook
CATTLE (APR) 02/17/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The major trend has turned down with the cross over back
below the 18-day moving average. Since the close was above the 2nd swing
resistance number, the market’s posture is bullish and could see more upside
follow-through early in the session. The next downside objective is now at
86.970. The next area of resistance is around 87.950 and 88.150, while 1st
support hits today at 87.400 and below there at 86.970.
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LEAN HOGS RECAP
2/16/2005
April Lean Hogs finished up 0.90 at 73.90, 0.65 off the high
and 0.50 up from the low.
March Pork Bellies closed down 0.17 at 85.95. This was 0.50 up
from the low and 0.35 off the high.
Hog futures pushed sharply higher led by higher
cash markets at some locations, expectations for higher cash trade into the
weekend, and higher pork cut-out values of the past few days in spite of hefty
pork production. Traders look for slaughter on Saturday of more than 80,000 head
from 60,000 head last week and 16,000 head on Saturday last year. Improving
packer demand due to improved profit margins along with ideas that producer
marketings might slow helped to support as well. Loins jumped higher on
Wednesday afternoon which led to ideas that exports are still running strong.
Weekly average weights for Iowa/Minnesota for the week ending February 12th came
in at 267.7 pounds as compared with 267.8 pounds last week and 264.5 last year.
The 2-day lean index for the period ending February 14th came in at 67.86,
down.53 on the session and down from 70.69 last week.
Technical Outlook
HOGS (APR) 02/17/2005: The market now above the
60-day moving average suggests the longer-term trend has turned up. Momentum
studies are trending higher from mid-range, which should support 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. If yesterday’s gap
higher on the day session chart holds, additional buying could develop this
session. The market setup is supportive for early gains with the close over the
1st swing resistance. The near-term upside objective is at 75.070. The next area
of resistance is around 74.450 and 75.070, while 1st support hits today at
73.350 and below there at 72.800.
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COCOA MARKET RECAP
2/16/2005
May Cocoa finished down 7 at 1585, 14 off the high and 9 up
from the low.
While cocoa managed a slight new high for the
year in the action Wednesday the market once again failed to hold all of the
gains. Apparently a higher Dollar inspired some selling in cocoa but we also
think that a little less commodity fund interest facilitated the weaker close in
cocoa. We also suspect that part of the gains in the cocoa early in the session
were sparked by talk that the main crop cocoa harvest in Ghana was falling off
prematurely and because of Ivory Coast farmers threats to strike next week if
the government doesn’t meet their demand to finance COOP purchases. We really
don’t think that cocoa prices are that sensitive to concerns of tightness but
that was certainly part of the recovery off the January lows.
Technical Outlook
COCOA (MAY) 02/17/2005: 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
indicates the longer-term trend has turned up. The market’s close below the
pivot swing number is a mildly negative setup. The next downside objective is
now at 1564. The next area of resistance is around 1596 and 1609, while 1st
support hits today at 1574 and below there at 1564.
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COFFEE MARKET RECAP
2/16/2005
May Coffee closed down 1.10 at 119.50. This was 0.50 up from
the low and 2.00 off the high.
The coffee market closed slightly lower on the
session and gave back some of Tuesday’s solid gains with talk of the overbought
condition helping to pressure. Weakness in sugar and light long liquidation
selling helped to pressure as there was a lack of new buying support on the move
to contract and 5-year highs early in the session. The reversal from a contract
low could attract some technical selling on Thursday. January exports from
Colombia, Mexico, Central America, Peru and Dominican Republic came in at 2.27
million bags, up 7.3% from last year.
Technical Outlook
COFFEE (MAY) 02/17/2005: A new contract high was
made on the rally. Rising stochastics at overbought levels warrant some caution
for bulls. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The downside closing price
reversal on the daily chart is somewhat negative. The market has a slightly
positive tilt with the close over the swing pivot. The next upside target is
122.35. With a reading over 70, the 9-day RSI is approaching overbought levels.
The next area of resistance is around 120.75 and 122.35, while 1st support hits
today at 118.25 and below there at 117.40.
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SUGAR MARKET RECAP
2/16/2005
May Sugar closed down 0.22 at 9.24. This was 0.09 up from the
low and 0.16 off the high.
May sugar collapsed and challenged the February
lows as talk of a slowdown ion cash business due to the recent rally helped
trigger the lower opening. Follow-through selling in London and the emergence of
massive speculative long liquidation selling helped drive May futures 31 lower
on the day. Some light trade house buying supported the bounce off of the lows.
News that Pakistan had already bought 310,000 tons of sugar since the import
tariffs were dropped may have led traders to believe that much of the short-term
demand is exhausted. As of February 15th, March open interest was down 10,580
contracts to 59,806 contracts with March futures expiring on February 28th.
Technical Outlook
SUGAR (MAY) 02/17/2005: The market back below the
40-day moving average suggests the longer-term trend could be turning down. A
crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The major trend has turned down with the cross over back below the
18-day moving average. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
downside objective is now at 9.01. The next area of resistance is around 9.36
and 9.50, while 1st support hits today at 9.12 and below there at 9.01.
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COTTON MARKET RECAP
2/16/2005
May Cotton finished down 0.08 at 46.83, 0.42 off the high and
0.57 up from the low.
After 5 days straight up, cotton futures
experienced more two-sided trade today. Talk of a short-term overbought
condition of the market and the presence of chart support near the mid-January
consolidation helped to limit the short-covering support. For the weekly export
sales report, released before the opening, traders are looking for sales near
150,000-250,000 bales as compared with 454,600 bales last week.
Technical Outlook
COTTON (MAY) 02/17/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market tilt is slightly negative with the
close under the pivot. The next upside objective is 47.78. The next area of
resistance is around 47.32 and 47.78, while 1st support hits today at 46.34 and
below there at 45.81.