Gasoline Spikes — Here’s Why…

Technical Outlook

#BONDS (SEP) 07/13/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Near-term
resistance for bonds is at 108.11 and then again at 108.18, while swing support
hits at 107.31 and below there at 107.26. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. Daily stochastics
turning lower from overbought levels is bearish and will tend to reinforce a
downside break especially if near-term support is penetrated. The next downside
target is 107.26. The 9-day RSI over 70 indicates the market is approaching
overbought levels.

T-NOTES(SEP) The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 110.30. It
is a mildly bullish indicator that the market closed over the pivot swing
number. Near-term resistance for the T-Notes is at 110.26 and then again at
110.30, while swing support hits at 110.18 and below there at 110.14. The
market’s short-term trend is positive on a close above the 9-day moving average.
With a reading over 70, the 9-day RSI is approaching overbought levels.

 

STOCK INDICES RECAP

7/12/2004

The stock market was unmoved by the slightly
favorable US economic reports as the earnings flow dominated sentiment. We also
have to think that soaring energy prices served to undermine the market, as did
comments from the President that terrorist were planning another attack on the
US. Some in the market suggest that the naming of the Democratic Vice President
increases concerns on Wall Street that Bush might lose the upcoming election,
which in turn puts prior tax cuts in jeopardy.

Technical Outlook

#S&P500 (SEP) 07/13/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. The upside closing
price reversal on the daily chart is somewhat bullish. Underlying support comes
in at 1108.50 and 1102.35, with overhead resistance at 1118.50 and 1122.35. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. Daily stochastics are trending lower, but have declined into
oversold territory. The next downside objective is now at 1102.35.

S&P E-Mini (SEP): The daily closing price
reversal up is a positive indicator that could support higher prices. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 1102.06. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1118.63 and then again at 1122.56, while swing support hits at
1108.38 and below there at 1102.06. A negative signal for trend short-term was
given on a close under the 9-bar moving average.

NASDAQ (SEP) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The market should run into resistance at 1443.25 and above there at
1450.38 with support at 1424.75 and 1413.38. Momentum studies are declining, but
have fallen to oversold levels. The next downside target is 1413.4.

MINI DOW (SEP) The daily closing price reversal
up is positive. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The market should run into
resistance at 10271 and above there at 10308 with support at 10171 and 10108.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 10108. With the close higher than the pivot swing number, the
market is in a slightly bullish posture.

 

CURRENCY MARKET RECAP

7/12/2004

With the exception of the Pound, the currency
markets seem to be mired in a tight range. Even after slightly better US
economic information the Dollar remained mostly soft and that could be because a
refinery fire fired up energy prices, which in turn leaves the US recovery in
question. We also have to think that Presidential comments about an impending
terrorism threat served to keep money from flowing toward the Dollar. Traders
should note that the Bank of Canada is talking about inflation in that country
and that could accentuate the recent strength in the Canadian Dollar.

Technical Outlook

#CURRENCIES 07/13/04: YEN (SEP): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Swing resistance is targeted at 92.78 and above there
at 92.91, with the yen finding support around 92.50 and below there at 92.35.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The next downside target is 92.35.

EURO (SEP): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.2421.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2357, with overhead resistance
at 1.2421. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap down on the day session chart is bearish with more
selling pressure possible today.

 

PRECIOUS METALS RECAP

7/12/2004

The gold market ignored slightly favorable early
European action and a mostly lower US Dollar and that probably comes off the
overbought status of gold from last week. Surprisingly gold was weaker in the
face of generally higher silver, copper and platinum prices. With the net spec
long in gold possibly reaching 100,000 contracts it isn’t surprising that gold
backs and fills on the charts. The silver market is quickly becoming a
leadership market but we are still not sure what the fundamental track is for
the bull camp.

Technical Outlook

#P-METALS 07/13/04: SILVER (SEP): A positive
setup occurred with the close over the 1st swing resistance. Initial support for
silver is at 647.7 and below there at 639.9 with resistance likely at 654.2 and
660.7. The market’s close above the 9-day moving average suggests the short-term
trend remains positive. Studies are showing positive momentum, but are now in
overbought territory so some caution is warranted. The next upside target is
654.2. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

GOLD (AUG): Support for gold today comes in near
405.10, while resistance is pegged at 410.70. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
410.70. It is a mildly bullish indicator that the market closed over the pivot
swing number. The market’s short-term trend is positive on a close above the
9-day moving average. The upside closing price reversal on the daily chart is
somewhat bullish.

 

COPPER MARKET RECAP

7/12/2004

Supposedly the funds jumped into copper early and
decided to bank profits as the market turned on a dime after hitting even
numbered 130. One would have expected favorable US regional Fed manufacturing
reading to help copper sustain early gains but in the end the fresh longs seemed
to want out of positions. It is also possible that soaring energy prices gave
copper longs pause as it isn’t a stretch that soaring energy prices could derail
international base metals demand.

 

ENERGY MARKET RECAP

7/12/2004

Energy prices exploded after reports of a
refinery fire in Norway fueled the gasoline market sharply higher off
concentrated speculative buying. Apparently the market was focusing so much on
Iraqi supply flow that they were caught off guard by a fresh supply issue for an
unusual source. The market was also driven by ideas that long haul shipments
into the US are now expected to tail off and that might rekindle the overall
tightness theme in the US crude oil market. The markets’ inability to hold the
early gains shows that the refinery issue is not that significant.

Technical Outlook

#ENERGIES 07/13/04: CRUDE OIL (AUG): The outside
day down is a negative signal. The daily closing price reversal down puts the
market on the defensive. The market is in a bearish position with the close
below the 2nd swing support number. Support for crude is keyed on 38.84 and
below there at 38.46, with resistance pegged at 40.17 and 41.12. The market’s
short-term trend is positive on a close above the 9-day moving average. Momentum
studies are trending higher, but have entered overbought levels. The near-term
upside objective is at 41.12.

UNLEADED GAS (AUG): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 138.17. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Resistance today is at
138.17, while support should be found around 125.07. The new contract high and
close below the previous day’s low constitutes a key reversal which is a bearish
signal. The outside day down and close below the previous day’s low is a
negative signal. A new contract high was made on the rally. The downside closing
price reversal on the daily chart is somewhat negative. The market’s close above
the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (AUG): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 102.31, with resistance is at 112.11. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The daily stochastic’s gave a bearish indicator with a crossover down.
Momentum studies are trending lower from high levels which should accelerate a
move lower on a break below the 1st swing support. The next downside objective
is now at 102.31. The market’s key reversal down is a bearish signal. The
outside day down is a negative signal. The rally brought the market to a new
contract high. The daily closing price reversal down puts the market on the
defensive.

 

CORN MARKET RECAP

7/12/2004

The higher close after hitting the lowest level
of the year for December corn could attract some technical buying. In addition,
closing higher after receiving bearish fundamental news (both weather and USDA)
may also help shift the trade psychology slightly. Ideas that actual yields may
have a difficult time in reaching beyond 145 bu/acre combined with the
short-term oversold condition of the market helped to trigger the short-covering
bounce after the early break. The USDA pegged beginning stocks for the 2004/2005
season at 896 million bushels as compared with trade estimates near 873 million
bushels and 806 million last month. The USDA pegged corn production at 10.635
billion bushels as compared with trade estimates at near 10.54 billion bushels.
Ending stocks were pegged at 991 million bushels as compared with trade
estimates at 940 million bushels and 741 million projected last month. World
ending stocks for the 2004/2005 season were pegged at 75.86 million tons as
compared with 68.86 million tons last month, 92.15 million this year and 122.25
last year. In export news, the US sold 109,728 tons of corn to Japan. Weekly
export inspections came in at 37.3 million bushels as compared with trade
expectations at 28-32 million bushels. Cumulative shipments have reached 1.575
billion bushels as compared with 1.279 billion bushels last year at this point.
December corn support comes in at 250 and the reversal leaves 263 and 267 1/2 as
initial resistance points.

Technical Outlook

#CORN (DEC) 07/13/04: The daily stochastics gave
a bullish indicator with a crossover up. The near-term upside objective is at
258 1/2. The market’s close above the 2nd swing resistance number is a bullish
indication. Market resistance comes in at 258 1/2 today, with support at 247
1/2. 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. The outside day up is a positive signal. The upside closing
price reversal on the daily chart is somewhat bullish.

 

SOY COMPLEX RECAP

7/12/2004

The bulls were disappointed with the weather
forecast and the lack of supportive news for the report. The USDA left South
America production numbers unchanged from last month but traders were looking
for lower production from Brazil and Argentina. Cash markets were quiet and
instead of responding to the bullish old crop stocks news, August soybeans were
hit with active long liquidation selling. The USDA pegged 2003/2004 ending
stocks at just 105 million bushels as compared with trade estimates at 107
million bushels and 115 million last month. This is the lowest ending stocks
since the 103 million bushels in the 1976-77 crop year but total usage in 76/77
was 1.431 billion bushels as compared with 2.497 projected for this season. New
crop ending stocks were pegged at 210 million bushels as compared with the
average trade guess at 206 million bushels (range 180-246) and 220 million in
the June report. November soybeans moved to the lowest level since December 26th
before bouncing 12 cents off of the days lows. However, the lower close and
close below the opening are still negative technical factors. For the World
supply/demand report, world ending stocks were pegged at 33.5 million tons from
33.01 million tons last month and 39.72 million tons last year. For the 04/05
season, ending stocks were pegged at 47 million tons from 46.69 million last
month. Heavy rains over the weekend in the heart of the cornbelt along with a
lack of heat in the 6-10 day forecast was enough to trigger the more aggressive
speculative selling spree shortly after the opening. Weekly export inspections
came in at 1.669 million bushels as compared with trade expectations at 2-4
million bushels. Cumulative shipments have reached 831.6 million bushels as
compared with 1.00 billion bushels last year at this point. The close under 642
1/2 for November soybeans leaves 605 1/2 as next key support with resistance at
645 and 656.

Technical Outlook

#SOYBEANS (NOV) 07/13/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 649 and 655, while 1st support hits today at
633 and below there at 623. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 623.

MEAL (DEC): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
194.9. First resistance comes in at 204.4, with support at 197.9. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. Daily studies pointing down suggests
selling minor rallies.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 21.96. A positive setup occurred with the close over the 1st
swing resistance. The outside day up and close above the previous day’s high is
a positive signal. The daily closing price reversal up is positive. Daily swing
resistance is found at 23.75 and above there at 24.10. Support should be
encountered at 22.68 and 21.96.

 

WHEAT MARKET RECAP

7/12/2004

The USDA reports this morning were considered
supportive. All wheat production came in at 2.059 billion bushels as compared
with the average trade forecast at 2.070 billion bushels (range 2.040-2.103) and
the June forecast of 2.061 billion bushels. Last years production was 2.337
billion. Winter wheat production was 1.47 billion bushels vs. the average trade
forecast at 1.503 billion bushels (range 1.485-1.532). The USDA June forecast
was 1.531 billion bushels and last years production was 1.707 billion bushels.
Ending stocks were pegged at 495 million bushels as compared with trade guesses
at 494 million bushels (range 450 to 530 million). Ending stocks for the
2003/2004 season were 546 million bushels. For the world report, ending stocks
were pegged at 132.24 million tons as compared with last months forecast of
126.43 million tons for the 2004/2005 season. Production was boosted for China
(up 2 million tons), Europe, Russia and the former Soviet Union countries. China
imports, however, were left unchanged at 8 million tons. While the world numbers
were bearish, the market saw the US winter wheat production as bullish and that
the higher spring wheat forecast will still be dependent on summer weather.
Weekly export inspections came in at 18.07 million bushels as compared with
trade expectations at 18-24 million bushels. Cumulative shipments have reached
102.5 million bushels as compared with 84.5 million bushels last year at this
point. Support for September wheat comes in at 340 1/2 and 338 with 349 and 360
1/4 as resistance.

Technical Outlook

#WHEAT (DEC) 07/13/04: The outside day up and
close above the previous day’s high is a positive signal. The daily closing
price reversal up is positive. Short-term indicators suggest buying dips today.
A positive setup occurred with the close over the 1st swing resistance. Look for
near-term support at 353 1/2 and below there at 347 1/2, with resistance levels
at 363 and 366 1/2. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The daily stochastics have crossed over
up which is a bullish indication. The next upside target is 366 1/2.

 

LIVE CATTLE RECAP

7/12/2004

August cattle closed lower Monday on ideas that
cash cattle prices would trade weaker this week. The market is anticipating cash
will trade at $84 cwt, dow $1 to $2 from last week. Adding to the market’s bear
tone was speculation that this week’s showlist will be large and include cattle
not sold last week. Packer profit margins were negative last week and became
even more negative on Monday. August cattle failed to hold support at 83.65
which puts the next downside target at 82.65.

Technical Outlook

#CATTLE (AUG) 07/13/04: Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
82.90. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Short-term indicators on the defensive. Consider
selling an intraday bounce. Support should be encountered at 83.20 and below
there at 82.90. Market resistance is at 84.15 and then again at 84.80. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

 

LEAN HOGS RECAP

7/12/2004

August hogs closed 12 higher on the session but
down 62 from the highs of the day. The early strength was trigger by a widening
of packer profit margins and higher pork cut-out values from Friday but the
close below the opening is seen as a slightly negative technical development as
traders appear to becoming increasingly nervous about supply of pork into the
late summer and early fall. July hogs managed a new contract high before closing
slightly lower on the session. Peoria hogs were .50 lower. Slaughter came in at
380,000 head as compared with trade estimates at 378,000-392,000 head. The trade
expected hot and humid weather to slow marketings this week but a more moderate
weather outlook for this week may have added to the negative tone late in the
session. The 2-day lean index for the period ending July 8th was down .10 to
79.18 as compared with 80.40 one week previous.

Technical Outlook

#HOGS (AUG) 07/13/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 76.77 and 77.30 today, while support is around 75.90 and then 75.55.
The market’s short-term trend is positive on a close above the 9-day moving
average. Momentum studies trending lower at mid-range should accelerate a move
lower if support levels are taken out. The next downside objective is now at
75.55.

 

COCOA MARKET RECAP

7/12/2004

Cocoa prices were mostly higher during the
session Monday but price have managed to remain close to the recent highs
suggesting that something more than short covering is impacting cocoa prices.
Apparently the dry weather that was feared last week in Africa has been
countered with some rain at the Ivory Coast and that means that the market isn’t
going to get help from the supply side. With the European grind coming in barely
in position ground (versus) expectations it would not seem like the demand side
of the equation is poised to support an extension of the recent upside action in
cocoa.

Technical Outlook

COCOA (SEP) 07/13/04 The daily closing price
reversal up is positive. The market setup is supportive for early gains with the
close over the 1st swing resistance. Cocoa should run into resistance at 1463
and above there at 1475 with support at 1425 and 1399. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 1474.50. Short-term indicators suggest
buying dips today.

 

COFFEE MARKET RECAP

7/12/2004

September coffee closed 30 lower Monday as Brazil
escaped from any freezing weather over the weekend. The extended weather
forecast for Brazil is calling for mild temperatures and no threat of frost
through July 28th. Despite the negative weather news, September futures were
able to hold above 70 cents, and with the COT report with options showing the
Funds continuing to decrease their net long position, which could now be close
to flat, the selling pressure may be easing. Brazilian Cooperatives reported
that about 30% of the coffee crop in the Minas Gerais state has been harvested
and are arriving at ports, but there are quality concerns. Sources at Brazil
ports are reporting poor quality beans so far due to rains during May and June.
Despite the possibility of poor quality beans from Brazil, the market may not
have yet fully priced in the huge harvest there and supply coming from Colombia
and Vietnam.

Technical Outlook

COFFEE (SEP) 7/13/04 The market tilt is slightly
negative with the close under the pivot. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 69.70. The
Coffee contract should run into resistance at 71.15 and above there at 71.70
with support at 70.15 and 69.70. The market’s short-term trend is negative as
the close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

7/12/2004

October sugar was pushed to a new contract high
Monday as fund traders continue to aggressively buy futures in NY and London.
October futures were capped just below 8.40 as the recent surge in prices has
attracted producer selling. It is surprising the market continues to attract
speculative buying since the COT report with options showed both the funds and
small spec increased their net long position as of July 6th. With the market
rallying since the report was measured, the combined spec net long position has
likely grown to burdensome levels making the market increasingly vulnerable to
profit taking. The physical market has become less active as the rally has
sidelined most buyers. The market has been rallying sharply in anticipation of
sugar purchases by Russia and with the fund net long approaching a recent record
high, we would think confirmation of the anticipated Russian purchase could be
the trigger for a profit taking break.

Technical Outlook

#SUGAR (OCT) 07/13/04: The rally brought the
market to a new contract high. It is a mildly bullish indicator that the market
closed over the pivot swing number. Swing resistance comes in at 8.45, with
support found at 8.19. The market’s short-term trend is positive on a close
above the 9-day moving average. Momentum studies are trending higher, but have
entered overbought levels. The near-term upside objective is at 8.45. With a
reading over 70, the 9-day RSI is approaching overbought levels.

 

COTTON MARKET RECAP

7/12/2004

The trade initially thought that the cotton
market had factored the USDA figures but in the end December cotton realized
that there is a wall of cotton into the future. Weather in some areas of the US
is questionable but that concern is more than offset by very good crops in other
regions. In short, supply isn’t threatened and the numbers would seem to leave
an overwhelming supply in place in the future. Even after the massive downside
extension few traders are suggesting that the cotton market is sold out
technically. Locals were apparently aggressive sellers and the trade found no
offsetting buying to stop the price slide.

Technical Outlook

#COTTON (OCT) 07/13/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
The close below the 2nd swing support number puts the market on the defensive.
Next resistance area comes in at 47.45 and then again at 48.18, while support is
targeted at 45.75 and 44.78. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 44.78. The 9-day RSI under 20
suggests the market is extremely oversold. The sell-off took the market to a new
contract low. The gap lower price action on the day session chart is a bearish
indicator for trend.