Fist Loss For The Dollar In 2005. What Does It Mean?
BOND MARKET RECAP
1/10/2005
March Bonds closed up 0-08 at 112-11. This was
0-07 up from the low and 0-04 off the high.
March 10 Yr Treasury Notes finished up 0-005 at
111-125, 0-030 off the high and 0-040 up from the low.
The Treasury market held within a tight
range but did manage to show a minor upward tilt. The wholesale Inventories
report showed a build with sales falling relative to month ago figures and that
seems to support the bull case in Bonds. Later in the session the Fed’s Guynn
continued to talk about rising price pressures but yet the futures markets don’t
seem to be overly concerned about inflationary implications. On the other hand,
with the Fed indicating that US growth would only be 3.5% to 4% and suggesting
that future rate hikes have become more difficult to predict, we can understand
the Treasury market favoring the upside in the action Monday.
Technical Outlook
BONDS (MAR) 01/11/2005: 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 next upside objective is 112-25. The
next area of resistance is around 112-21 and 112-25, while 1st support hits
today at 112-07 and below there at 111-28.
TNOTES (MAR) 01/11/2005: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The market tilt is slightly negative with the close under the
pivot. The next upside objective is 111-200. The next area of resistance is
around 111-170 and 111-200, while 1st support hits today at 111-100 and below
there at 111-055.
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STOCK INDICES RECAP
1/10/2005
March S&P finished up 5.4 at 1191.7, 5 off the
high and 6.2 up from the low.
March S&P E-Mini closed up 5.5 at 1191.75. This
was 6.5 up from the low and 5 off the high.
March Dow closed up 30 at 10629. This was 44 up
from the low and 43 off the high.
The stock market surprised the trade with an
upward extension and the rally might have come off the anticipation of favorable
earnings reports but might also have been inspired by talk from the Fed which
seemed to downplay the threat of future rate hikes. Apparently the Fed suggested
that it has now become more difficult to predict future rate hikes and by some
that meant the potential for less aggressive near term rate hikes. Some
suggested that the election of a new Palestinian leader was something that might
facilitate Peace and that could have fueled some buying interest.
Technical Outlook
S&P 500 (MAR) 01/11/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. With the close over the 1st swing resistance number, the market is
in a moderately positive position. The next downside objective is 1180.20. The
next area of resistance is around 1197.30 and 1202.60, while 1st support hits
today at 1186.10 and below there at 1180.20.
SP EMINI (MAR) 01/11/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 18-day moving average is an indication
the longer-term trend has turned down. Market positioning is positive with the
close over the 1st swing resistance. The next downside target is 1180.00. The
next area of resistance is around 1197.75 and 1203.00, while 1st support hits
today at 1186.25 and below there at 1180.00.
NASDAQ (MAR) 01/11/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The market tilt is slightly negative
with the close under the pivot. The next downside target is 1550.63. The market
is approaching oversold levels on an RSI reading under 30. The next area of
resistance is around 1578.25 and 1591.62, while 1st support hits today at
1557.75 and below there at 1550.63.
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CURRENCY MARKET RECAP
1/10/2005
March US Dollar finished down 36 at 8336, 27 off
the high and 15 up from the low.
March Euro finished up 0.36 at 130.98, 0.33 off
the high and 0.18 up from the low.
March Euro Dollar closed down 0.015 at 97.04.
This was 0.01 up from the low and 0.01 off the high.
March Canadian Dollar closed up 0.72 at 81.84.
This was 0.31 up from the low and 0.24 off the high.
March British Pound finished up 0.57 at 186.89,
0.26 off the high and 0.44 up from the low.
March Swiss closed up 0.18 at 84.85. This was 0.1
up from the low and 0.25 off the high.
March Japanese Yen closed up 0.72 at 96.41. This
was 0.33 up from the low and 0.1 off the high.
The Dollar disappointed several players Monday in
the wake of favorable US equity market action. We suspect that sharp gains in
the Canadian Dollar off stellar economics from Canadian diverted the recent
attention away from the US economy and gave the Dollar cause to bank profits.
With Canadian building permits rising by 9.3% and the Canadian economy recently
throwing off a very impressive monthly payroll reading the attention is pulled
away from the US and the Euro. In short, many suspect that the US Dollar decline
Monday was mostly technical and therefore the trade will put a great deal of
importance into the action Tuesday morning. Apparently during the session Monday
the Brazilian Central Bank agreed to buy US Dollar and that certainly gave the
Dollar some assistance.
Technical Outlook
YEN (MAR) 01/11/2005: The cross over and close
above the 60-day moving average is an indication the longer-term trend has
turned positive. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The close below the 18-day moving average is an
indication the longer-term trend has turned down. Market positioning is positive
with the close over the 1st swing resistance. The next downside objective is
95.93. The next area of resistance is around 96.62 and 96.78, while 1st support
hits today at 96.20 and below there at 95.93.
EURO (MAR) 01/11/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. The market’s
close below the pivot swing number is a mildly negative setup. The next downside
objective is now at 130.51. The next area of resistance is around 131.23 and
131.52, while 1st support hits today at 130.73 and below there at 130.51.
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PRECIOUS METALS RECAP
1/10/2005
February Gold closed up 0.2 at 419.7. This was
0.2 up from the low and 1.6 off the high.
March Silver finished up 0.002 at 6.45, 0.035 off
the high and 0.03 up from the low.
April Platinum closed up 6.2 at 846.9. This was
3.9 up from the low and 2.9 off the high.
The gold market didn’t seem to be lifted by the
decline in the Dollar. However, many might argue the trend in the Dollar still
isn’t clear and that a single day decline after a 5 day rise doesn’t necessarily
suggest an end to the recent strength in the Dollar. Divergence between the gold
and silver markets is typically a negative development and with the platinum
market the only metals market to show definitive upside action Monday it would
not seem like the bull camp is poised to move back into the long side of the
market.
Technical Outlook
SILVER (MAR) 01/11/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The
market’s close below the pivot swing number is a mildly negative setup. The next
downside objective is 638.7. The next area of resistance is around 648.3 and
651.6, while 1st support hits today at 641.8 and below there at 638.7.
GOLD (FEB) 01/11/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The market’s close below the pivot
swing number is a mildly negative setup. The next downside objective is 418.3.
Some caution in pressing the downside is warranted with the RSI under 30. The
next area of resistance is around 420.6 and 421.8, while 1st support hits today
at 418.8 and below there at 418.3.
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COPPER MARKET RECAP
1/10/2005
March Copper finished down 0.05 at 136.95, 0.85
off the high and 0.85 up from the low.
Copper prices continue to consolidate but
periodic fund selling seemed to countervail the initial upward track in prices.
The market also had to absorb several higher production stories but that
negative impetus should have been countervailed by a slightly lower US Dollar.
We are a little surprised that the copper market wasn’t lifted more directly by
the rise in energy prices but a number of traders suggested that any macro
economic windfall off the stock market rally was countervailed by the rather
steep rise in energy prices.
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ENERGY MARKET RECAP
1/10/2005
February Crude Oil closed down 0.10 at 45.33.
This was 0.13 up from the low and 1.97 off the high.
February Heating Oil closed up 0.30 at 127.63.
This was 0.33 up from the low and 7.37 off the high.
February Unleaded Gas finished down 0.58 at
120.84, 5.16 off the high and 0.34 up from the low.
February Natural Gas finished up 0.16 at 6.16,
0.39 off the high and 0.03 up from the low.
February Propane closed up 0.03 at 0.75. This was
0.02 up from the low and equal to the high.
The energy complex soared higher in the face of a
140,000 barrel per day outage in Norway, but the market also was lifted by the
forecast of sub zero temps due in this coming weekend. With some private
forecasts suggesting that OPEC December production declined by 100,000 barrels
per day we can see why the bulls managed to control prices again. With Iraq
asking to delay the January 30th OPEC meeting it is possible that some trader
have also discounted the potential for a near term reduction in OPEC production
but that didn’t seem to discourage the buyers.
Technical Outlook
CRUDE OIL (FEB) 01/11/2005: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market now above the 18-day moving average suggests the longer-term trend has
turned up. The market could take on a defensive posture with the daily closing
price reversal down. The market tilt is slightly negative with the close under
the pivot. The near-term upside target is at 47.89. The next area of resistance
is around 46.38 and 47.89, while 1st support hits today at 44.28 and below there
at 43.69.
UNLEADED (FEB) 01/11/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The major trend could be
turning up with the close back above the 18-day moving average. The daily
closing price reversal down is a negative indicator for prices. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next upside objective is 127.54. The next area of resistance is around 123.59
and 127.54, while 1st support hits today at 118.09 and below there at 116.55.
HEATING OIL (FEB) 01/11/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend has turned down with the cross
over back below the 18-day moving average. The market has a slightly positive
tilt with the close over the swing pivot. The near-term upside objective is at
137.09. The next area of resistance is around 131.47 and 137.09, while 1st
support hits today at 123.78 and below there at 121.69.
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CORN MARKET RECAP
1/10/2005
March Corn finished unchanged at 206 3/4,
1/4 off the high and 2 up from the low. May Corn closed unchanged at 214 3/4.
This was 2 1/4 up from the low and 1/4 off the high.
A lack of bullish news to help rationalize the
sharp run-up last week and bearish export news helped pressure the market into
the mid-session but a surge in soybeans into the close support the higher close
and close near the highs of the day. Weekly export inspections, released during
the trading session, came in at 21.57 million bushels as compared with trade
expectations at 22-27 million bushels. Cumulative shipments have reached 31.9%
of the USDA forecast for the season as compared with 34.8% on average for this
time of the year. News from China that exporters will receive additional tax
rebates helped pressure the market as traders see a possible bounce in China
exports. The technical structure of the market looks potentially bullish with a
weekly closing price reversal from a contract low last week and the weekend
Commitment-of-Traders report with options showing a record net short position of
the large trader and a record net short position of the speculator. The American
Farm Bureau senior economist indicated that corn plantings for the 2005 crop
could be near 81.5 million acres as compared with 81.0 million in 2004.
Resistance for March corn comes in at 207 1/2 and 209 1/4 with 205 3/4 and 204
as support.
Technical Outlook
CORN (MAR) 01/11/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher 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’s close below the pivot swing number is a mildly
negative setup. The next upside target is 208 1/2. The next area of resistance
is around 207 3/4 and 208 1/2, while 1st support hits today at 205 3/4 and below
there at 204 1/4.
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SOY COMPLEX RECAP
1/10/2005
March Soybeans finished up 6 1/4 at 548 1/2, 1
1/2 off the high and 11 up from the low. May Soybeans closed up 4 1/2 at 551.
This was 9 1/2 up from the low and 1 off the high.
March Soymeal closed up 3.7 at 166.5. This was
4.5 up from the low and 0.5 off the high.
March Soybean Oil finished down 0.14 at 20.27,
0.08 off the high and 0.26 up from the low.
Another surge higher in January soybeans and
commercial and fund buying helped support solid gains and a move to the highest
level since December 29th for March soybeans. Some rains in the dry areas of
southern Brazil over the weekend and talk of increased producer selling in the
US helped trigger the early weakness but minor support held and speculative
selling slowed after the early weakness with talk of strong short-term export
demand helping to support. Weekly export inspections, released during the
trading session, came in at 28.32 million bushels as compared with trade
expectations at 23-28 million bushels. Cumulative shipments have reached 55.4%
of the USDA forecast for the season as compared with 49.2% on average for this
time of the year. Meal deliveries came in at 9 contracts this morning with no
oil or soybeans. Weakness in the gulf basis levels contributed to talk that
producer selling was on the rise. There was also talk that China may have washed
out some US soybean purchases and this rumor helped to pressure the market as
well. A sharp drop in Malaysia palm futures overnight helped trigger a sharp
sell-off in oil. The American Farm Bureau senior economist indicated that
soybean plantings for the 2005 crop could be near 72.9 million acres as compared
with 75.1 million in 2004 as producers shy away from soybeans due to poor
returns and Asia rust. Resistance for March soybeans comes in at 552 and 558
with support at 544 and 538.
Technical Outlook
BEANS (MAR) 01/11/2005: The daily stochastics
have crossed over up which is a bullish indication. Momentum studies are
trending higher from mid-range, which should support 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. Market positioning is positive with the
close over the 1st swing resistance. The near-term upside target is at 558 1/2.
The next area of resistance is around 554 3/4 and 558 1/2, while 1st support
hits today at 542 1/4 and below there at 533 3/4.
MEAL (MAR) 01/11/2005: 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 market’s close above the 2nd swing
resistance number is a bullish indication. The near-term upside target is at
170.5. The next area of resistance is around 169.0 and 170.5, while 1st support
hits today at 164.0 and below there at 160.5.
BEANOIL (MAR) 01/11/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The next downside
objective is 19.89. The next area of resistance is around 20.44 and 20.56, while
1st support hits today at 20.10 and below there at 19.89.
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WHEAT MARKET RECAP
1/10/2005
March Wheat finished down 2 at 307 3/4, 1 1/4 off the high and
4 1/2 up from the low. May Wheat closed down 1 3/4 at 315 1/4. This was 4 1/2 up
from the low and 3/4 off the high.
Strength in soybeans helped pull futures off of
the lows but the market still closed lower and below the opening. Slow exports
and talk of an overbought condition after the 4-day spurt last week helped to
trigger some increased speculative selling. Weekly export inspections, released
during the trading session, came in at 15.063 million bushels as compared with
trade expectations at 12-16 million bushels. Cumulative shipments have reached
66.5% of the USDA forecast for the season as compared with 63.4% on average for
this time of the year. Positioning ahead of the USDA reports on Wednesday may
have added to the long liquidation selling with a lack of follow-through fund
buying contributing to the sell-off as well. With traders looking for lower
wheat plantings and lower ending stocks estimates, the report looks to have a
slight bullish tilt. A lack of weather problems for any of the world’s primary
producers and talk of snow cover ahead of the weekend cold blast may have helped
pressure the market as well. A weekly reversal last week combined with a record
net short position of the speculator leaves futures vulnerable to more
short-covering ahead. March wheat resistance comes in at 308 1/2 and 311 1/2
with support at 302 1/4 and 299 3/4.
Technical Outlook
WHEAT (MAR) 01/11/2005: 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 is an
indication the longer-term trend has turned positive. The market’s close below
the pivot swing number is a mildly negative setup. The near-term upside target
is at 312 1/2. The next area of resistance is around 310 1/2 and 312 1/2, while
1st support hits today at 305 and below there at 301 1/4.
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LIVE CATTLE RECAP
1/10/2005
February Live Cattle finished up 1.62 at 90.55,
0.20 off the high and 1.05 up from the low.
January Feeder Cattle closed up 1.02 at 104.82.
This was 0.92 up from the low and 0.05 off the high.
February cattle closed 162 higher on the session
and to the highest close since December 28th as weather fears seeped back into
the market with talk of rains, snow and then bitter cold weather into the
weekend has traders looking for significant stress to feedlot cattle. In
addition, the surge in beef prices added to the positive tone. April cattle
managed to move to the highest level since August 18th (contract highs) as
technical buying and fund buying continued to support. Slaughter was 105,000
head as compared with expectations at 104,000-116,000 head. The lower than
expected slaughter is a sign of weak packer demand. Boxed-beef cut-out values
were up $3.67 to $146.85 as compared with $140.59 one week ago.
Technical Outlook
CATTLE (FEB) 01/11/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. 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. If yesterday’s gap higher
on the day session chart holds, additional buying could develop this session.
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 target is now at 89.100. The next area of resistance is around
91.170 and 91.570, while 1st support hits today at 89.950 and below there at
89.100.
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LEAN HOGS RECAP
1/10/2005
February Lean Hogs finished up 0.10 at 75.05,
0.35 off the high and 0.72 up from the low.
February Pork Bellies closed up 2.15 at 96.97.
This was 2.07 up from the low and 0.72 off the high.
The early weakness was triggered by expectations
for increasing hog slaughter early this week as temperatures in the mid-west
thaw and allow for more active producer marketings. However, strength in the
cattle market and talk of more weather problems for late this week helped
support the late rally. The premium of futures to the cash market along with a
weaker tone in pork cut-out values from late Friday added to the bearish tone.
The 2-Day Lean index for the period ending January 6th was up 1.12 to 70.32 as
compared with 65.09 last week at this time. Slaughter came in at 400,000 head as
compared with trade expectations for 386,000-398,000 head.
Technical Outlook
HOGS (FEB) 01/11/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend could be turning up with the close back above the 18-day
moving average. The daily closing price reversal up is a positive indicator that
could support higher prices. The market’s close below the pivot swing number is
a mildly negative setup. The next downside objective is 73.900. The next area of
resistance is around 75.570 and 76.020, while 1st support hits today at 74.520
and below there at 73.900.
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COCOA MARKET RECAP
1/10/2005
March Cocoa finished down 7 at 1466, 23 off the
high and 2 up from the low.
The cocoa market was once again mostly weak and
in the wake of a series of technical failures last week and at least a couple
negative fundamental developments there would seem to be little interest in
picking a near term bottom. The Press noted early in the session that Indonesian
cocoa powder quality was so low that some export flow was being held back but
that is only a minimally supportive development. Also released during the
session were reports that German 4th quarter grind was up 2.7% on the year but
apparently the market isn’t that sensitive to bullish information, following the
move last week to remove cocoa from a commodity Index. We continue to think that
the flap over the cocoa removal from a Commodity Index has simply pushed cocoa
prices down to an overdone price zone.
Technical Outlook
COCOA (MAR) 01/11/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. The market tilt is slightly negative with the close under the
pivot. The next downside objective is 1447. Some caution in pressing the
downside is warranted with the RSI under 30. The next area of resistance is
around 1478 and 1496, while 1st support hits today at 1454 and below there at
1447.
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COFFEE MARKET RECAP
1/10/2005
March Coffee closed down 0.65 at 95.60. This was
0.50 up from the low and 1.40 off the high.
The coffee market failed to hold at last weeks
lows and would seem to be getting persistent fund and small spec liquidation.
With the net spec and fund long in coffee still holding at a rather lofty level
of 48,000 contracts and Brazilian weather looking to favor production a little
more in the coming week we can understand a portion of the long, throwing in the
towel. The New York market was certainly pulled down by weakness in
international coffee markets on Monday so the US weakness seems to be part of a
bigger picture trend.
Technical Outlook
COFFEE (MAR) 01/11/2005: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Daily stochastics are trending lower but have declined into oversold
territory. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The market’s close below the pivot swing
number is a mildly negative setup. The next downside objective is now at 93.95.
The next area of resistance is around 96.55 and 97.70, while 1st support hits
today at 94.70 and below there at 93.95.
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SUGAR MARKET RECAP
1/10/2005
March Sugar closed down 0.19 at 8.52. This was
0.01 up from the low and 0.21 off the high.
The sugar market continued to see a significant
liquidation effort and with the recent pattern of record open interest and
record spec long readings in the COT report, the violation of critical chart
support is not an insignificant development. After the fleeting declines in
energy prices last week, it seemed as if some traders were anticipating an
improvement in physical demand due to lower freight rates but since the lows
last week freight rates have recovered and sugar prices have declined sharply to
the net impact on physical prices might be mostly unchanged. In fact, some in
the Press suggested Monday that White sugar is being taken to task because of
the high freight rates while raw sugar prices are managing to avoid at least
part of the pressure.
Technical Outlook
SUGAR (MAR) 01/11/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The major trend has turned down with the cross over back below the 18-day moving
average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside objective is 8.35. The
9-day RSI under 30 indicates the market is approaching oversold levels. The next
area of resistance is around 8.63 and 8.79, while 1st support hits today at 8.41
and below there at 8.35.
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COTTON MARKET RECAP
1/10/2005
March Cotton finished up 0.68 at 47.24, 0.06 off
the high and 1.14 up from the low.
The cotton market continues to mount some
impressive technical action on the charts as it reached the highest price level
since October 20th in the action Monday. The surprising thing in cotton is that
managing the upside action into a coming USDA report and in the face of fresh
negative longer term supply forecasts from well known cotton experts! The USDA
report calls for the cotton crop to come in right at or slightly above the prior
USDA production reading of 22.82 million, with exports rising slightly from the
prior report and ending stocks to have declined slightly. Therefore, one could
suggest that the cotton market is seeing its fundamental case cleaned up
slightly but probably not enough to justify the 5 cent run up off the December
lows.
Technical Outlook
COTTON (MAR) 01/11/2005: 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 market has a slightly positive tilt with the close over the swing
pivot. The near-term upside objective is at 48.17. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 47.84 and 48.17, while 1st support hits today at 46.64 and below there at
45.77.