Gold And Silver Impressive–Here’s Why
BOND MARKET RECAP
10/19/2004
December Bonds closed up 0-09 at 113-12. This was
0-26 up from the low and 0-03 off the high.
December 10 Yr Treasury Notes finished up 0-015
at 113-090, 0-025 off the high and 0-160 up from the low.
The Treasury market traded aggressively on
both sides of unchanged in the action Tuesday after starting out weak. The
strength in the equity market early, combined with another decline in energy
prices to create a better economic feeling. However, after seeing US housing
starts decline by 6% and gains in the equity market evaporate into mid session
the bonds forged an impressive recovery off the lows. The bonds might have been
lifted off dialogue from Greenspan that seemed to reconfirm that the Fed was set
to hike interest rates and many traders think that overly aggressive rate policy
will actually serve to make full recovery more difficult.
Technical Outlook
BONDS (DEC) 10/20/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. A positive signal was given by
the outside day up. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside target is at
114-04. The next area of resistance is around 113-27 and 114-04, while 1st
support hits today at 112-30 and below there at 112-09.
TNOTES (DEC) 10/20/2004: The upside crossover of
the 9 & 18 bar moving average is a positive signal. Studies are showing positive
momentum but are now in overbought territory, so some caution is warranted. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. The upside closing price reversal on the daily chart is somewhat
bullish. The close over the pivot swing is a somewhat positive setup. The
near-term upside target is at 113-240. The next area of resistance is around
113-185 and 113-240, while 1st support hits today at 113-005 and below there at
112-195.
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STOCK INDICES RECAP
10/19/2004
December S&P finished down 9.6 at 1103.5, 14.8
off the high and 1.5 up from the low.
December S&P E-Mini closed down 9.75 at 1103.25.
This was 1.25 up from the low and 15.25 off the high.
December Dow closed down 58 at 9887. This was 7
up from the low and 124 off the high.
December Dow E-Mini finished down 58 at 9887, 125
off the high and 10 up from the low.
The stock market traded on both sides of
unchanged in the morning action after appearing to have a moderately bullish
early tilt. Even with energy prices remaining moderately lower the stock market
seemed to be disappointed by the 6% decline in housing starts and the hints from
Greenspan that higher rates were more than likely still on the way. McDonald’s
stock apparently came under pressure because of concerns over global
unemployment, while the market looked at the Ford Motor earnings with favorable
eyes and then spun them into something more negative as the session progressed.
In the end we have to think that equity prices are watching energy prices
closely as a more significant capitulation might be necessary to really result
in a better forward view on the economy.
Technical Outlook
S&P 500 (DEC) 10/20/2004: A negative indicator
was given with the downside crossover of the 9 & 18 bar moving average. 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 9-day moving average
is a negative short-term indicator for trend. The daily closing price reversal
down puts the market on the defensive. The close below the 1st swing support
could weigh on the market. The next downside target is 1090.63. The next area of
resistance is around 1111.85 and 1123.22, while 1st support hits today at
1095.55 and below there at 1090.63.
SP EMINI (DEC) 10/20/2004: A negative indicator
was given with the downside crossover of the 9 & 18 bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The downside closing price reversal on the
daily chart is somewhat negative. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The next downside target
is 1090.25. The next area of resistance is around 1111.50 and 1123.25, while 1st
support hits today at 1095.00 and below there at 1090.25.
NASDAQ (DEC) 10/20/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
above the 9-day moving average is a positive short-term indicator for trend. The
daily closing price reversal down puts the market on the defensive. The market
tilt is slightly negative with the close under the pivot. The next downside
target is now at 1421.00. The next area of resistance is around 1461.00 and
1483.00, while 1st support hits today at 1430.00 and below there at 1421.00.
MINIDOW (DEC) 10/20/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. 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. The next downside target is now at 9781. The next area of
resistance is around 9954 and 10050, while 1st support hits today at 9820 and
below there at 9781.
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CURRENCY MARKET RECAP
10/19/2004
December US Dollar finished down 22 at 8693, 51
off the high and 6 up from the low.
December Euro finished up 0.17 at 125.16, 0.1 off
the high and 0.32 up from the low.
December Euro Dollar closed down 0.01 at 97.74.
This was 0.03 up from the low and equal to the high.
December Canadian Dollar closed down 0.07 at
79.46. This was 0.31 up from the low and 0.3 off the high.
December British Pound finished up 0.31 at
179.55, 0.25 off the high and 0.45 up from the low.
December Swiss closed up 0.11 at 81.57. This was
0.25 up from the low and 0.03 off the high.
December Japanese Yen closed up 0.73 at 92.51.
This was 0.23 up from the low and 0.14 off the high.
The Dollar started out weak, attempted to recover
but then return to the vicinity of the lows as if the bull camp was lacking in
its resolve. We suspect that the market was disappointed with the US Fed
insistence that higher interest rates were still in the offing. In other words,
the market is assuming that the Fed is prepared to fight energy inflation even
if raising interest rates might be ineffective in fighting inflation. While the
Canadian eventually discouraged the downside effort it was clear that the move
to hike interest rates initially caused traders to sell the Canadian. In other
words, the market is not happy with those in the process of hiking interest
rates because it isn’t a given that many economy’s will be able to achieve full
recovery in the face of high energy prices and rising interest rates.
Technical Outlook
YEN (DEC) 10/20/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. The gap upmove on the day session chart is a bullish
indicator for trend. There could be more upside follow through since the market
closed above the 2nd swing resistance. The near-term upside target is at 92.85.
With a reading over 70, the 9-day RSI is approaching overbought levels. The next
area of resistance is around 92.69 and 92.85, while 1st support hits today at
92.33 and below there at 92.12.
EURO (DEC) 10/20/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside objective is 125.52.
The next area of resistance is around 125.37 and 125.52, while 1st support hits
today at 124.95 and below there at 124.69.
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PRECIOUS METALS RECAP
10/19/2004
December Gold closed up 4 at 421.6. This was 3.8
up from the low and 0.6 off the high.
December Silver finished up 0.208 at 7.195, 0.015
off the high and 0.205 up from the low.
October Platinum closed down 0.1 at 841.9. This
was equal to the low and equal to the high.
We are very impressed with the gold and silver
action on Tuesday as the market seemed to alter its focus to remain positive
through out the session. In fact, as the Dollar managed a mid morning recovery,
gold and silver stayed positive and seemed to garner strength from the gains in
the equity market. Some suggest that hints from Harmony that they might raise
the bid for Gold Fields provided a boost to prices. We actually think that lower
energy prices supported gold and silver as they reduces the strain on the world
economy and that in turn could end up facilitating an improvement in physical
demand for gold and silver.
Technical Outlook
SILVER (DEC) 10/20/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The close
above the 9-day moving average is a positive short-term indicator for trend. The
market’s close above the 2nd swing resistance number is a bullish indication.
The next downside target is 692.8. The next area of resistance is around 730.5
and 736.8, while 1st support hits today at 708.5 and below there at 692.8.
GOLD (DEC) 10/20/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The market’s short-term trend is positive on the close above the
9-day moving average. A positive setup occurred with the close over the 1st
swing resistance. The next downside target is 416.4. The next area of resistance
is around 423.8 and 425.2, while 1st support hits today at 419.4 and below there
at 416.4.
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COPPER MARKET RECAP
10/19/2004
December Copper finished up 1.30 at 129.70, 1.10
off the high and 0.80 up from the low.
Copper prices managed to stay positive despite a
mid day setback in equity prices and discouraging housing starts readings. A
large copper miner indicated that they expected 4th quarter sales of gold and
copper to increase and that same miner suggested that they expected to see
production from their Indonesian facilities decline by 31% and that seemed to
provide support to copper. However, we also suspect that continued weakness in
energy prices allowed the market to assume a slightly better macro economic
situation and a sagging macro economic outlook might have been a major part of
the massive slide last week.
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ENERGY MARKET RECAP
10/19/2004
December Crude Oil closed down 0.20 at 52.64.
This was 0.69 up from the low and 0.16 off the high.
December Heating Oil closed down 0.17 at 151.03.
This was 2.03 up from the low and 0.47 off the high.
December Unleaded Gas finished up 0.60 at 136.19,
0.21 off the high and 2.29 up from the low.
December Natural Gas finished up 0.25 at 8.32,
0.02 off the high and 0.26 up from the low.
December Propane closed down 0.02 at 0.90. This
was 0.02 up from the low and equal to the high.
Energy prices continued to weaken as the trade
apparently refuted OPEC’s forecast of increased demand in the 3rd and 4th
quarters. In fact, the trade is actually pricing in a minor contraction in
demand due to the ultra high price level. We have to wonder if the market isn’t
posturing ahead of the coming weekly inventory report as another increase in US
crude oil stocks would make the 4th week in a row and that could be a sign of a
rebuilding trend. We suspect that the moderate build in distillate stocks would
bring about an even more significant selling pressure as the last two weeks
gains have come mostly off the talk of winter shortages.
Technical Outlook
CRUDE OIL (DEC) 10/20/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The close below the 9-day moving average is a
negative short-term indicator for trend. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next downside target
is now at 51.66. The next area of resistance is around 53.06 and 53.35, while
1st support hits today at 52.22 and below there at 51.66.
UNLEADED (DEC) 10/20/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. A negative signal for trend short-term was given on
a close under the 9-bar moving average. It is a slightly negative indicator that
the close was lower than the pivot swing number. The next downside objective is
133.17. The next area of resistance is around 137.44 and 138.17, while 1st
support hits today at 134.94 and below there at 133.17.
HEATING OIL (DEC) 10/20/2004: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The close above the 9-day moving average is a positive short-term
indicator for trend. The market tilt is slightly negative with the close under
the pivot. The next downside target is 148.14. The next area of resistance is
around 152.28 and 153.14, while 1st support hits today at 149.78 and below there
at 148.14.
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CORN MARKET RECAP
10/19/2004
December Corn finished up 3 at 207, 1 off
the high and 4 1/4 up from the low. March Corn closed up 2 1/2 at 217. This was
3 1/2 up from the low and 1 off the high.
The move to a new 3-session low failed to attract
new selling interest and strength in the other grain markets helped support a
move above Monday’s highs. Funds were noted buyers of near 4000 contracts into
late in the session and the outside day up and close at the highest level since
September 28th looks supportive. Keep in mind, the combined net short position
of large and small traders in the last COT report was close to a record high.
Given this condition, it does not take much in the way of bullish technical
action to support significant short-covering. The weekly crop progress report
showed the crop was 44% harvested as compared with trade expectations at 40-50%
complete and 39% as the 14-year average for this time of the year. Country basis
levels were steady to higher on tight producer holding. Support for December
corn comes in at 203 3/4 and 202 1/2 with 207 1/4 and 210 1/2 as resistance.
Technical Outlook
CORN (DEC) 10/20/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. A positive signal for trend short-term was given on a
close over the 9-bar moving average. A positive signal was given by the outside
day up. The market setup is supportive for early gains with the close over the
1st swing resistance. The near-term upside objective is at 211 1/4. The next
area of resistance is around 209 1/2 and 211 1/4, while 1st support hits today
at 204 1/2 and below there at 201.
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SOY COMPLEX RECAP
10/19/2004
November Soybeans finished up 13 at 527 3/4, 1
1/4 off the high and 13 1/4 up from the low. January Soybeans closed up 12 at
532 1/4. This was 12 3/4 up from the low and 1 1/4 off the high.
December Soymeal closed up 2.7 at 156.8. This was
2.5 up from the low and 0.5 off the high.
December Soybean Oil finished up 0.58 at 20.67,
0.05 off the high and 0.71 up from the low.
Traders were looking for increased selling
pressures from the advancing harvest but there was a lack of aggressive selling
and the market was supported by speculative short-covering. Improving moisture
for many areas of South America have eased dryness concerns for getting the crop
planted. Brazil is thought to be near 3-4% planted so far. AgRural consultants
from Brazil pegged the 2004/2005 soybean crop at 61.4-62.76 million tons which
is a downward revision from their July estimate of 63.5 million tons. The weekly
crop progress report showed the US crop was 71% harvested as compared with trade
expectations at 70-75% complete and 72% as the 14-year average for this time of
the year. A lack of new news, higher trade at the China exchange and firm cash
basis levels are all factors which helped to support the mid-session bounce.
News that Taiwan bought 60,000 tons of US soybeans overnight helped support but
talk of good rains in parts of Brazil overnight was seen as a limiting factor.
November soybean support comes in at 523 1/4 and 519 with 527 1/4 and 539 as
resistance.
Technical Outlook
BEANS (NOV) 10/20/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The next upside
objective is 539 1/4. The next area of resistance is around 535 and 539 1/4,
while 1st support hits today at 520 1/2 and below there at 510 1/4.
MEAL (DEC) 10/20/2004: A bullish signal was given
with an upside crossover of the daily stochastics. Rising from oversold levels,
daily momentum studies would support higher prices, especially on a close above
resistance. The close above the 9-day moving average is a positive short-term
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. The near-term upside target is at 159.3. The next area of
resistance is around 158.3 and 159.3, while 1st support hits today at 155.3 and
below there at 153.3.
BEANOIL (DEC) 10/20/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s close above the 9-day moving average suggests the
short-term trend remains 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 objective is 21.26. The next area of resistance is around 21.05 and
21.26, while 1st support hits today at 20.29 and below there at 19.75.
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WHEAT MARKET RECAP
10/19/2004
December Wheat finished up 4 1/2 at 319 1/4, 1 1/2 off the
high and 6 up from the low. March Wheat closed up 3 1/4 at 329 3/4. This was 5
1/4 up from the low and 1 3/4 off the high.
Excellent progress in the winter wheat planting
campaign was seen as a limiting factor but the market appears to remain under
the positive technical influence of a daily and weekly closing price reversal
last week. A lack of new demand news combined with the expected weakness in the
other grains and follow-through technical selling from yesterday’s weak close
were all factors which were expected to pressure the market but the move under
yesterday’s lows was met with a lack of new selling interest and buying support
from commercials. News that 78% of the winter wheat crop is now planted failed
to cause much of a reaction. However, news that the two largest Canadian export
ports are having walk-off problems with inspectors left some hope of better
demand news ahead. December wheat support comes in at 314 1/4 and 311 1/2 with
resistance at 324 1/4 and 331.
Technical Outlook
WHEAT (DEC) 10/20/2004: The market now above the
40-day moving average suggests the longer-term trend has turned up. The upside
crossover of the 9 & 18 bar moving average is a positive signal. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The daily closing price
reversal up is a positive indicator that could support higher prices. Market
positioning is positive with the close over the 1st swing resistance. The
near-term upside target is at 325 1/2. The next area of resistance is around 323
and 325 1/2, while 1st support hits today at 315 1/2 and below there at 310 3/4.
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LIVE CATTLE RECAP
10/19/2004
December Live Cattle closed unchanged at 89.05.
This was 0.47 up from the low and 0.10 off the high.
November Feeder Cattle finished up 0.02 at
112.30, 0.25 off the high and 0.50 up from the low.
The cattle market fell sharply into the
mid-session on commercial hedge selling and only light fund buying but the
market found support from the uptrend in beef prices and hopes for higher trade
again this week for the cash cattle market. Boxed-beef cutout values (600-750
choice) were up $1.16 on the day at mid-session to $140.90 as compared with
$136.27 last week at this time. Packer profit margins have improved in the past
week but traders believe that packer margins are still not out of the red.
Technical Outlook
CATTLE (DEC) 10/20/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside target is 89.520. The
next area of resistance is around 89.320 and 89.520, while 1st support hits
today at 88.770 and below there at 88.400.
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LEAN HOGS RECAP
10/19/2004
December Lean Hogs closed up 1.40 at 66.50. This
was 1.40 up from the low and 0.25 off the high.
February Pork Bellies finished up 0.27 at 94.52,
0.12 off the high and 1.87 up from the low.
The hog market found support from the discount of
futures to the cash market, a steady tone in the live market, ideas that futures
were overdone on the sell-off on Monday and from a lack of new selling interest
after a close at the low end of a 362 point range yesterday. With December
trading at a 700 point discount to the cash market, futures find support when
the cash trades steady on the day. Positive packer profit margins has helped to
support improved demand for a large Saturday slaughter, thought to be near
160,000 head, and helped support a firm tone for cash markets for late this
week. The CME 2-Day Lean Index for the period ending October 15th was reported
at 71.06, down $1.00 from the previous session.
Technical Outlook
HOGS (DEC) 10/20/2004: The major trend could be
turning up with the close back above the 40-day moving average. Stochastics are
at mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The market has a slightly
positive tilt with the close over the swing pivot. The near-term upside
objective is at 67.850. The next area of resistance is around 67.320 and 67.850,
while 1st support hits today at 65.700 and below there at 64.570.
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COCOA MARKET RECAP
10/19/2004
December Cocoa finished down 16 at 1440, 38 off
the high and 6 up from the low.
The cocoa market failed to sustain early gains
despite the talk about cocoa Union strikes and increased demand from the Ivory
Coast farmers. With reports of increased 2003-2004 Ivory Coast product exports
and news that 2003-2004 Ivory Coast cocoa bean exports declined we would have
thought the fundamental data would have been push. However, it almost seems like
the market is anticipating the ongoing flow of harvest beans and is unwilling to
embrace the threats against supply.
Technical Outlook
COCOA (DEC) 10/20/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. The
outside day down is a negative signal. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The next upside
objective is 1492. The next area of resistance is around 1462 and 1492, while
1st support hits today at 1418 and below there at 1404.
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COFFEE MARKET RECAP
10/19/2004
December Coffee closed down 0.90 at 72.95. This
was 0.10 up from the low and 0.75 off the high.
The lowest close since September 8th for December
coffee leaves the market in a bearish set-up as the last “traders” report showed
speculators still holding a hefty net long position. The market failed to
respond to the supportive monthly stocks report this week with a focus of
attention on the improved longer-term outlook for production due to good weather
in Brazil. In addition, the trade is nervous that the market will have to absorb
a bumper crop from Vietnam when the harvest begins late this month. In fact, the
nearby contract in London moved to the lowest level since early September of
2002 in anticipation of a bumper crop from Vietnam.
Technical Outlook
COFFEE (DEC) 10/20/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. The market
setup is somewhat negative with the close under the 1st swing support. The next
downside objective is 72.30. The next area of resistance is around 73.35 and
73.95, while 1st support hits today at 72.55 and below there at 72.30.
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SUGAR MARKET RECAP
10/19/2004
March Sugar closed down 0.02 at 8.93. This was
0.08 up from the low and 0.12 off the high.
The market closed 2 lower on the session and 2
below the opening after a 20 point range and 2-sided trade. Weakness in crude
oil and follow-through technical selling helped contribute to the sell-off but
trade house buyers helped support on the break. There is plenty of talk of a
lack of commercial buying interest at recent higher price levels with talk that
prices are too high for some international buyers like India or Bangladesh,
however, the market seems to find plenty of support on breaks. Talk of drought
conditions for one of the main China producing areas helped provide some
underlying support.
Technical Outlook
SUGAR (MAR) 10/20/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The market’s short-term trend is negative as the close
remains below the 9-day moving average. It is a slightly negative indicator that
the close was lower than the pivot swing number. The next downside target is now
at 8.74. The next area of resistance is around 9.02 and 9.14, while 1st support
hits today at 8.83 and below there at 8.74.
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COTTON MARKET RECAP
10/19/2004
December Cotton finished up 1.12 at 47.54, 0.21
off the high and 1.54 up from the low.
The cotton market opened lower but experienced a
strong recovery and solid rally on the session as December futures found support
from continued commercial bull spreading and buyers are concerned that the
pipeline has remained tight deep into harvest as the Texas crop was slow to
mature and crops in the southeast and delta have quickly moved into the loan
program. While yields are expected to be high, Texas harvest reached just 22% as
of Sunday as compared with 21% the previous week and 36% as the 5-year average
for this time of the year. The market closed above the level where futures were
trading ahead of last weeks bearish US and world USDA reports.
Technical Outlook
COTTON (DEC) 10/20/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
close above the 9-day moving average is a positive short-term indicator for
trend. The market’s close above the 2nd swing resistance number is a bullish
indication. The next upside objective is 48.95. The next area of resistance is
around 48.41 and 48.95, while 1st support hits today at 46.67 and below there at
45.46.