Gold And Silver Buying Has Legs, Here’s Why

Technical Outlook

#BONDS (JUN) 04/01/04: A positive setup occurred
with the close over the 1st swing resistance. Near-term resistance for bonds is
at 114.14 and then again at 114.21, while swing support hits at 113.22 and below
there at 113.05. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 113.05.

T-NOTES(JUN) 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 114.22. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The major
trend is down with the cross over back below the 40-day moving average.
Near-term resistance for the T-Notes is at 115.22 and then again at 115.28,
while swing support hits at 115.03 and below there at 114.22. The market’s
short-term trend is negative as the close remains below the 9-day moving
average.

 

STOCK INDICES RECAP

3/31/2004

The stock market managed an impressive
performance Wednesday despite weak US economic readings, soaring gold prices and
a big failure in the US Dollar. Certainly a sharp setback in energy prices
provided a windfall to stocks and even though the factory orders report was
below expectations it was in positive ground. In short the flow of favorable
earnings reports from the corporate world managed to steer sentiment away from
the macro economic focus. Stock prices are technically overbought from a short
term perspective and that is made even more critical by the numbers to be
released Friday morning.

Technical Outlook

#S&P500 (JUN) 04/01/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1122.90 and 1116.65, with overhead resistance at 1132.50 and
1135.85. The market’s short-term trend is positive on a close above the 9-day
moving average. Momentum studies are trending higher from mid-range which should
support a move higher if resistance levels are penetrated. The near-term upside
objective is at 1135.85.

S&P E-Mini (JUN): Stochastics are at mid-range,
but trending higher which should reinforce a move higher if resistance levels
are taken out. The next upside objective is 1136.25. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1132.75 and then again at 1136.25, while swing support hits at
1122.75 and below there at 1116.25. A positive signal for trend short-term was
given on a close over the 9-bar moving average.

NASDAQ (JUN) 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. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The market should run into resistance at 1452.25 and above there at 1459.63 with
support at 1435.75 and 1426.63. Studies are showing positive momentum, but are
now in overbought territory so some caution is warranted. The next upside target
is 1459.6.

MINI DOW (JUN) 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. The market
should run into resistance at 10404 and above there at 10445 with support at
10306 and 10249. Positive momentum studies in the neutral zone will tend to
reinforce higher price action. The next upside target is 10445. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.

 

CURRENCY MARKET RECAP

3/31/2004

The Dollar fell below several critical chart
support levels on the charts and the US economic numbers were not exactly
supportive for Dollar bulls. We also think that the possible delay in the ECB
rate cut provided the market with added incentive to short cover the Euro. We
also think that many traders were fearful that US Treasury holdings held by the
Japanese central bank were being dumped and that would certainly mean that
Dollar were being dumped! In short the Dollar will now have to get strong
numbers Friday morning to avoid a wholesale liquidation.

Technical Outlook

#CURRENCIES 04/01/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. A new contract high was made on the rally. The gap upmove on the day
session chart is a bullish indicator for trend. 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. Swing resistance is targeted at
96.32 and above there at 96.71, with the yen finding support around 95.77 and
below there at 95.61. Studies are showing positive momentum, but are now in
overbought territory so some caution is warranted. The next upside target is
96.71. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

EURO (JUN): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2367. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2161, with overhead resistance at 1.2367. The
market’s short-term trend is positive on a close above the 9-day moving average.
The major trend is down with the cross over back below the 40-day moving
average. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

PRECIOUS METALS RECAP

3/31/2004

There is a new urgency in gold and silver and
that could stem from the sharp decline in the Dollar or it could stem from the
idea that inflation is rearing its head. For instance, the Chicago purchasing
managers report on Wednesday showed some significant increases in price readings
and it should be noted that terrorism threats have truly become an international
concern and not just a Middle East/US issue. Therefore, gold and silver are
seeing broad based international investment buying and that buying seems to have
legs.

Technical Outlook

#P-METALS 04/01/04: SILVER (MAY): 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. Initial support for
silver is at 789.3 and below there at 781.6 with resistance likely at 793.2 and
799.8. 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
793.2. The 9-day RSI over 70 indicates the market is approaching overbought
levels. A new contract high was made on the rally. The gap upmove on the day
session chart is a bullish indicator for trend.

GOLD (JUN): Support for gold today comes in near
423.28, while resistance is pegged at 431.48. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
431.48. The market’s close above the 2nd swing resistance number is a bullish
indication. 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. The gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session.

 

COPPER MARKET RECAP

3/31/2004

The copper market posted a wild trading session
with the market showing early weakness and then managing to recover into the
close. It seemed as if the Dollar weakness kicked in arbitrage buying in the US
copper market and that precious metals long interest actually lent support to
copper prices. Surprisingly the equity market was weak and US economic numbers
were soft and that could have prevented the copper market from forging gains.
However, the copper trade is looking ahead to the upcoming US payroll report on
Friday as the future of global growth could hinge on the situation in the US.

 

ENERGY MARKET RECAP

3/31/2004

Night and day, are how one describes the
sentiment in the crude oil market before the US opening and what sentiment ended
up being after the shocking US inventory reports. With US crude stocks rising
massively in both the API and DOE reports and managing to rise persistently over
the last 6 weeks it would seem that the second quarter seasonal stock rebuilding
was in fact a 1st quarter stock rebuilding pattern. With OPEC not sending off
signs that they are in control of their destiny the market feels more confident
in attacking the short side. However, it was clear that bullishness in the
natural gas market remained in place and that is really quite surprising
considering the recent correlation between natural gas and crude oil.

Technical Outlook

#ENERGIES 04/01/04: CRUDE OIL (MAY): The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. Support for crude is keyed on 35.19 and below there at 34.44, with
resistance pegged at 36.34 and 36.74. The market’s short-term trend is negative
as the close remains below 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 34.44. Daily studies pointing down
suggests selling minor rallies.

UNLEADED GAS (MAY): 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
108.63. It is a slightly negative indicator that the close was lower than the
pivot swing number. Resistance today is at 117.63, while support should be found
around 108.63. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

HEATING OIL (MAY): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 85.41, with resistance is at 92.41. The market’s short-term trend
is negative as the close remains below 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 85.41.

 

CORN MARKET RECAP

3/31/2004

The USDA reports this morning were bullish and
the market quickly moved to new contract highs led by the December futures which
were up more than 15 cents on the session at 3.22 for the early high. Nearby
futures hit a new 7 1/2 year high. The sharp drop in soybeans is a limiting
factor for the market but the bullish planting estimate has provided solid
underlying support. The USDA pegged planted acreage at 79.004 million acres as
compared with the average trade estimate at 80.29 million acres (range
79.5-81.0) and 78.736 million acres planted last year. The number coming in
below the range of estimates suggests record yields will be necessary for the
coming season to avoid a significant drawdown in stocks. March 1st corn stocks
were pegged at 5.271 billion bushels as compared with the average trade estimate
of 5.275 billion bushels (range 5.208-5.340) and 5.132 billion bushels last year
at this time. South Korea bought 105,000 tons of optional origin corn overnight
and Taiwan is tendering for 23,000 tons of US corn. Funds were noted buyers of
near 8000 contracts on the session. Weekly export sales, released before the
opening, are expected to come in near 800,000-1.1 million tons as compared with
1.192 million tons last week.

Technical Outlook

#CORN (MAY) 04/01/04: The daily stochastics gave
a bullish indicator with a crossover up. The near-term upside objective is at
328. The market’s close above the 2nd swing resistance number is a bullish
indication. Market resistance comes in at 328 today, with support at 309. The
downside crossover (9 below 18) of the moving averages suggests a developing
short-term downtrend. The rally brought the market to a new contract high.

 

SOY COMPLEX RECAP

3/31/2004

The soybean market managed to put in lows near
the opening and the bounce into the close in a wild session with wide price
swings. Meal managed a two-sided trading session as the strength in the corn
market helped to support ideas that meal usage will remain strong. The USDA
reports this morning were considered bearish with higher than expected soybean
stocks and more planted acreage as well. March 1st stocks were pegged at 905.5
million bushels as compared with the average trade estimate of 867 million
bushels (range 850-904). Last year’s March 1st stocks were 1.202 billion bushels.
This leaves March 1st stocks at 296 million bushels below last year while ending
stocks are expected to be 125 million bushels, down 53 million bushels from last
year. Soybean planting intentions were pegged at a record all-time high of
75.411 million acres as compared with the average trade estimate of 74.508
million acres (range 71.822-76.4). Last year’s planted acreage was 73.404 million
acres. Commercial sellers were active early in the session but speculative
selling did not seem to be too active and the market is finding some support
from bargain hunters. Taiwan is tendering for 40,000-60,000 tons of US or Brazil
soybeans. Funds were noted sellers of near 2200 contracts in soybeans, 2000 in
meal and 2600 in oil. Weekly export sales, released before the opening, are
expected to come in near 50,000-200,000 tons for soybeans, 0-70,000 tons for
meal and 0-5000 tons for oil.

Technical Outlook

#SOYBEANS (MAY) 04/01/04: The close below the 2nd
swing support number puts the market on the defensive. The next area of
resistance is around 1012 and 1030 1/2, while 1st support hits today at 978 and
below there at 962 1/2. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 962 1/2.

MEAL (MAY): 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 302.4. The daily closing
price reversal down puts the market on the defensive. First resistance comes in
at 319.8, with support at 308.8. 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 (MAY): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The next downside target is 31.61. The close below the 2nd swing support
number puts the market on the defensive. The gap lower price action on the day
session chart is a bearish indicator for trend. Daily swing resistance is found
at 32.59 and above there at 33.03. Support should be encountered at 31.88 and
31.61. The close under the 40-day moving average indicates the longer-term trend
could be turning down.

 

WHEAT MARKET RECAP

3/31/2004

The trade was disappointed with the lower opening
after a higher call. Weakness in the soybean complex, expectations for improving
crop conditions in the US and fears of losing out on export business to
Australia in the spring and Europe in the summer helped pressure the market.
Speculative long liquidation selling was active and appeared to be the dominant
force on the session. The USDA reports this morning were considered bullish
against trade expectations. All wheat planted acreage was pegged at 59.462
million acres as compared with the average trade estimate of 59.854 million
acres (59-61 range) and 61.7 million planted last year. March 1st wheat stocks
were pegged at 1.019 billion bushels as compared with the average trade estimate
at 1.037 billion bushels (range 1.02-1.064) and 907 million bushels last year at
this time. Spring wheat acreage was pegged at 13.333 million acres vs. estimate
near 13.488 million acres (range 13.1-14.1). Taiwan bought 43,000 tons of US
wheat overnight and South Korea bought 16,500 tons. The weather outlook seems
mixed with some rains in the forecast for the winter wheat belt but there is
still talk of dryness for the far western areas. Weekly export sales, released
before the opening, are expected to come in near 300,000-500,000 tons as
compared with 789,900 tons last week.

Technical Outlook

#WHEAT (MAY) 04/01/04: The downside closing price
reversal on the daily chart is somewhat negative. The swing indicator gave a
moderately negative reading with the close below the 1st support number. Look
for near-term support at 396 1/2 and below there at 384 1/4, with resistance
levels at 419 1/2 and 430 1/4. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 430 1/4.

 

LIVE CATTLE RECAP

3/31/2004

Cattle closed mixed in choppy trade with June
closing 7 higher on the session but up more than 100 points from the lows. At
mid-day, boxed-beef cut-out values for choice 600-750 pound cuts were up 87
cents to $138.91 as compared with $140.77 last week at this time. Cumulative
slaughter for week has reached 355,000 head as compared with 354,000 last week
at this time and 372,000 head last year. Traders see the technical set-up as
positive with futures in a solid uptrend, futures at a big discount to the cash
market and packer profit margins improving. Sharply higher corn prices weighed
on the Feeder Cattle market which added to the negative tone early in the
session but talk that the supply of market-ready cattle this week is a little
tighter than last week helped support the strong close for cattle and the bounce
off of the lows for feeders.

Technical Outlook

#CATTLE (JUN) 04/01/04: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next upside
target is 77.12. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Support should be encountered at 75.67 and
below there at 74.92. Market resistance is at 76.77 and then again at 77.12. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

 

LEAN HOGS RECAP

3/31/2004

The nearby contracts were weak with April down
115 points into the close as the cash markets were steady to lower and the trade
believes that packers have booked most of their needs for the week. Weakness in
the bellies after a bullish weekly cold storage report added to the long
liquidation trend of the market. June hogs closed unchanged on the session but
the close below the opening after hitting new contract highs is a slight warning
signal of a near-term top. The 2-day Lean Index was down 40 cents to $67.56 as
compared with $68.13 one week ago. Cumulative slaughter for week has reached
1.146 million head as compared with 1.139 million last week at this time and
1.119 million head last year.

Technical Outlook

#HOGS (JUN) 04/01/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 75.37 and 75.92 today, while support is around 73.92 and then 73.02.
The rally brought the market to a new contract high. 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 75.92. With a reading over 70, the 9-day RSI is approaching
overbought levels.

 

COCOA MARKET RECAP

3/31/2004

The cocoa market managed an impressive rally
Wednesday despite recent surplus forecast that would seem to have deflated the
bull case. It would seem as if the funds decided to exit a large short position
and that gave the market a surprise lift. We still think that background
political tensions can surface and drive cocoa prices higher but one should not
expect a significant shift in fundamentals in the cocoa market. The fact that UN
Peacekeeping Officers returned to the Ivory Coast sends a signal that tensions
are running a little high and that could certainly have been an issue prompting
the funds to cover shorts.

Technical Outlook

COCOA (MAY) 04/01/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Cocoa
should run into resistance at 1574 and above there at 1589 with support at 1525
and 1491. Studies are showing positive momentum, but are now in overbought
territory so some caution is warranted. The next upside target is 1588.75.

 

COFFEE MARKET RECAP

3/31/2004

July coffee pushed higher again and is in what
appears to be an upside thrust. The July would have to rally all the way up to
77.00 to fill an old gap on the charts and roaster buying would seem to suggest
that the professional trade is interested in the market despite progressively
more expensive pricing. Brazil indicated that March 1st to March 29th exports
were at 1.553 million bags and that would seem to be enough to discourage
aggressive physical buying of futures. Like cocoa, the coffee market supposedly
saw fund short covering.

Technical Outlook

COFFEE (MAY) 4/1/04 The market has a slightly
positive tilt with the close over the swing pivot. Momentum studies are
declining, but have fallen to oversold levels. The next downside objective is
now at 72.90. The Coffee contract should run into resistance at 74.20 and above
there at 74.60 with support at 73.35 and 72.90. The market’s short-term trend is
negative as the close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

3/31/2004

May sugar managed a wide range of trade and then
managed to finish the session slightly higher on the session. Commodity fund
short covering was seen in other exotic commodity markets and it might have been
present in sugar on Wednesday. In fact, many traders think that fresh fund
buyers were present in sugar and that is a new element. Maybe the idea of tight
high fructose corn syrup supplies later in the year is going to begin to support
sugar prices which many consider to be close to deflated price levels.

Technical Outlook

#SUGAR (MAY) 04/01/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.60, with support found at 6.18. The downside crossover (9 below
18) of the moving averages suggests a developing short-term downtrend. Daily
stochastics are trending lower, but have declined into oversold territory. The
next downside objective is now at 6.18.

 

COTTON MARKET RECAP

3/31/2004

The cotton market was crossed up by the USDA
report as the trade was expecting to see some reduction in acres off a switching
to soybeans. However, with the USDA actually raising cotton acres the market was
caught leaning the wrong direction and massive stop loss selling came into play.
With the limit down move the trade expects more downside action but it is also
possible that the USDA revises the figures for results posted after the March
1st cutoff. Planted area came in at 1.4 million and that was a 7% increase over
the prior year. Texas supposedly saw the biggest increase so all the talk about
increased delta soybeans didn’t really materialize.

Technical Outlook

#COTTON (MAY) 04/01/04: 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 63.28 and then again at 65.04, while support is
targeted at 60.93 and 60.34. The daily stochastics have crossed over down which
is a bearish indication. The next downside target is 60.34. The 9-day RSI under
30 indicates the market is approaching oversold levels. The gap lower price
action on the day session chart is a bearish indicator for trend.