Greenspan Dialogue Helped Support The Dollar
BOND MARKET RECAP
2/4/2005
March Bonds finished up 1-03 at 115-29, 0-10 off
the high and 1-02 up from the low.
March 10 Yr Treasury Notes finished up 0-200 at
112-210, 0-065 off the high and 0-205 up from the low.
The Treasury market exploded and was
certainly due some of the gains considering the disappointing reading from the
US payroll reading. It almost seemed like the market totally discounted the
decline in the unemployment rate and it is also possible that some of the buying
in US Treasuries came from foreign accounts. In fact, with the US Fed Chairman
downplaying the potential for a currency crisis, suggesting that the US budget
deficit was coming down off solid US growth and indicating that the US trade
deficit might come down because of favorable export market conditions we can
understand the upward adjustment in bonds and notes. We also note that the
Treasury market has a tendency to react for up to two full sessions following a
surprise reading.
Technical Outlook
BONDS (MAR) 02/07/2005: The rally brought the
market to a new contract high. 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 market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The next upside
objective is 117-05. The market is approaching overbought levels with an RSI
over 70. The next area of resistance is around 116-19 and 117-05, while 1st
support hits today at 115-04 and below there at 114-06.
TNOTES (MAR) 02/07/2005: A bullish signal was
given with an upside crossover of the daily stochastics. 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 has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
The near-term upside target is at 113-125. The next area of resistance is around
113-015 and 113-125, while 1st support hits today at 112-060 and below there at
111-210.
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STOCK INDICES RECAP
2/4/2005
March S&P finished up 12.8 at 1202.4, 1.8 off the high and
12.9 up from the low.
March S&P E-Mini closed up 13.25 at 1202.75. This was 14.5 up
from the low and 1.75 off the high.
March Dow closed up 114 at 10700. This was 130 up from the low
and 20 off the high.
The stock market action fleshed out an impressive
response to the slightly bearish non farm payroll readings. While some might
have been cheered by the surprise decline in the unemployment rate, others were
pulled into the market by favorable comments from the US Federal Reserve
Chairman regarding the US budget and trade deficits. We even wonder if the
upside breakout in the Dollar and favorable talk toward the Dollar by Greenspan
inspired international players to move into the long side of the US stock
market. However, the market continues to have a critical pivot point at 1197.50
basis the March S&P.
Technical Outlook
S&P 500 (MAR) 02/07/2005: The major trend could
be turning up with the close back above the 40-day moving average. The moving
average crossover up (9 above 18) indicates a possible developing short-term
uptrend. 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. There could be more upside follow through since the market closed
above the 2nd swing resistance. The near-term upside objective is at 1214.32.
The next area of resistance is around 1209.75 and 1214.32, while 1st support
hits today at 1195.05 and below there at 1184.93.
SP EMINI (MAR) 02/07/2005: The cross over and
close above the 40-day moving average is an indication the longer-term trend has
turned positive. The moving average crossover up (9 above 18) indicates a
possible developing short-term uptrend. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The market now above the 18-day moving average suggests the longer-term trend
has turned up. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The next upside target is 1215.81. The
next area of resistance is around 1210.87 and 1215.81, while 1st support hits
today at 1194.63 and below there at 1183.32.
NASDAQ (MAR) 02/07/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend could be turning up with the
close back above the 18-day moving average. The market has a bullish tilt coming
into today’s trade with the close above the 2nd swing resistance. The near-term
upside target is at 1557.87. The next area of resistance is around 1548.25 and
1557.87, while 1st support hits today at 1519.75 and below there at 1500.88.
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CURRENCY MARKET RECAP
2/4/2005
March US Dollar finished up 42 at 8445, 3 off the high and 100
up from the low.
March Euro finished down 0.94 at 128.81, 1.69 off the high and
0.07 up from the low.
March Euro Dollar closed up 0.005 at 97.025. This was 0.01 up
from the low and 0.01 off the high.
March Canadian Dollar closed down 0.46 at 80.08. This was 0.12
up from the low and 0.77 off the high.
March British Pound finished down 0.71 at 187.04, 1.77 off the
high and 0.14 up from the low.
March Swiss closed down 0.58 at 82.75. This was 0.09 up from
the low and 1.15 off the high.
March Japanese Yen closed up 0.47 at 96.34. This was 0.09 up
from the low and 0.56 off the high.
The Dollar managed to yet another higher high for
the move Friday and seemed to have left the old critical point of 84.14 behind.
We suspect that Greenspan dialogue also helped support the Dollar as the
Chairman of the Federal Reserve suggested that growth in the US was probably
serving to reduce the deficit and that the low Dollar was benefiting the US
export sector. However, we are a little surprised that the Dollar managed to
hold all the gains after some G7 dialogue suggested that the Chinese weren’t
exactly ready to move on the currency peg. Reports that the Brazil was buying
Dollars could have provided support as that is the second time this week that
they were undertaking such operations.
Technical Outlook
YEN (MAR) 02/07/2005: 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 gap up on the
day session chart gave a bullish indicator and more follow through could be seen
this session. With the close over the 1st swing resistance number, the market is
in a moderately positive position. The next downside target is 95.81. The next
area of resistance is around 96.66 and 97.10, while 1st support hits today at
96.02 and below there at 95.81.
EURO (MAR) 02/07/2005: The daily stochastics gave
a bearish indicator with a crossover down. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The close under
the 18-day moving average indicates the longer-term trend could be turning down.
The outside day down is somewhat negative. The market is in a bearish position
with the close below the 2nd swing support number. The next downside objective
is now at 127.46. With a reading under 30, the 9-day RSI is approaching oversold
levels. The next area of resistance is around 129.69 and 130.97, while 1st
support hits today at 127.93 and below there at 127.46.
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PRECIOUS METALS RECAP
2/4/2005
April Gold closed down 2.6 at 415.9. This was 0.4 up from the
low and 3.6 off the high.
March Silver finished down 0.042 at 6.635, 0.075 off the high
and 0.03 up from the low.
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Gold and silver was under early pressure Friday
but then managed to come out from under part of that pressure in the wake of the
disappointing US payroll report. In fact, with the Dollar apparently failing
after a recent upside breakout on the charts we would think that the bulls are a
little more optimistic toward gold. However, the market remains undermined as a
result of the ongoing IMF sales threat and with the gold once again violating
chart support the market would seem to remain vulnerable. With the silver and
copper also weak it would seem that the physical demand tilt in the metals is
also weakened.
Technical Outlook
SILVER (MAR) 02/07/2005: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The major trend has turned down with the cross over back below the
18-day moving average. The daily closing price reversal down puts the market on
the defensive. It is a slightly negative indicator that the close was lower than
the pivot swing number. The next downside target is 654.2. The next area of
resistance is around 668.8 and 675.1, while 1st support hits today at 658.3 and
below there at 654.2.
GOLD (APR) 02/07/2005: 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 outside
day down is a negative signal. The market setup is somewhat negative with the
close under the 1st swing support. The next downside target is 412.7. The 9-day
RSI under 30 indicates the market is approaching oversold levels. The next area
of resistance is around 417.9 and 420.7, while 1st support hits today at 413.9
and below there at 412.7.
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COPPER MARKET RECAP
2/4/2005
March Copper closed down 1.30 at 137.55. This was 0.75 up from
the low and 1.25 off the high.
While the copper market action Friday was
anything significant the return to weakness after the sharp recovery Thursday
has to disappoint the bull camp. It is important to note that the copper market
will face an extended Chinese holiday next week and that both LME and Shanghai
copper stocks forged increases on the week and that goes against the pattern in
that area. During the session Friday the market saw comments from the India
Finance Minister who suggested that current oil prices were unjustified by the
fundamentals and with the market also being confronted with milder than expected
US weather we are surprised that the market even forged the early gains Friday.
However, the lingering threat of Nigerian violence seems to give the bulls just
enough hope to hang on the face of the bearish weather.
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ENERGY MARKET RECAP
2/4/2005
March Crude Oil closed up 0.03 at 46.48. This was 0.23 up from
the low and 0.77 off the high.
March Heating Oil closed down 0.23 at 127.42. This was 0.42 up
from the low and 1.88 off the high.
March Unleaded Gas finished down 0.79 at 126.05, 1.95 off the
high and 1.05 up from the low.
March Natural Gas finished down 0.05 at 6.10, 0.10 off the
high and 0.03 up from the low.
March Propane closed up 0.02 at 0.73. This was equal to the
low and equal to the high.
The energy complex was temporarily bailed out
from the bearish North American weather track by Nigerian political concerns.
However, a slight rise in Persian Gulf tanker rates seems to reverse a weak
pattern that was seen at the beginning of the year and as long as Nigerian
production is thought to be at risk we can understand some light buying
interest. We would have expected comments from the Indian Finance to have
undermined some longs Friday morning as he suggested that current ultra high oil
prices were “completely unjustified”. With the US recovery progress apparently
not accelerating and the mild winter weather we would think that oil demand
forecasts for the first quarter of 2004 are being pulled down and that should
also diffuse some of the potential upside interest. The trade might also have
been supported by heated dialogue between the US and Venezuela as that could be
considered a threat against US supply flow.
Technical Outlook
CRUDE OIL (MAR) 02/07/2005: 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 major trend has turned down with
the cross over back below the 18-day moving average. With the close higher than
the pivot swing number, the market is in a slightly bullish posture. The next
downside target is now at 45.62. The next area of resistance is around 46.98 and
47.61, while 1st support hits today at 45.98 and below there at 45.62.
UNLEADED (MAR) 02/07/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. 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 target is now at 123.28.
The next area of resistance is around 127.55 and 129.27, while 1st support hits
today at 124.55 and below there at 123.28.
HEATING OIL (MAR) 02/07/2005: 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 daily closing price reversal down is a negative indicator for
prices. The market’s close below the pivot swing number is a mildly negative
setup. The next downside target is now at 125.49. The next area of resistance is
around 128.57 and 130.08, while 1st support hits today at 126.27 and below there
at 125.49.
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CORN MARKET RECAP
2/4/2005
March Corn finished unchanged at 195, equal to the high and
1/2 up from the low. May Corn closed unchanged at 203. This was 1/2 up from the
low and 1/4 off the high.
The market failed to add much to the downside
after new contract lows yesterday with plenty of concern with the extreme
oversold condition of the market, however, the export news was bearish and the
market lacks a good reason for speculative shorts to exit. News that Japan
bought 100,000 tons of US corn this morning leaves some hope that the break in
futures is attracting export demand. Trade was limited to a tight range on low
volume. The slow export pace, however, has traders nervous that ending stocks
will be revised higher again in next weeks USDA supply/demand report. For next
weeks supply/demand report, traders are looking ending stocks to come in near
2.04 billion bushels as compared with 1.96 billion from the January USDA report.
Support for March corn comes in at 194 and 191 with resistance at 196 and 197
3/4.
Technical Outlook
CORN (MAR) 02/07/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The close over the pivot swing is a somewhat positive setup. The
next downside target is 194 1/2. The next area of resistance is around 195 1/4
and 195 1/4, while 1st support hits today at 194 3/4 and below there at 194 1/2.
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SOY COMPLEX RECAP
2/4/2005
March Soybeans finished down 2 1/2 at 499 1/2, 2
1/2 off the high and 1 up from the low. May Soybeans closed down 2 at 502 1/4.
This was 1 1/4 up from the low and 1 3/4 off the high.
March Soymeal closed down 1.9 at 148.8. This was
0.1 up from the low and 1.7 off the high.
March Soybean Oil finished up 0.18 at 19.04, 0.06
off the high and 0.22 up from the low.
The move under psychological support at 5.00 for
March soybeans seemed to attract additional selling and the weak close to new
contract lows leaves the market vulnerable to more weakness next week;
especially if producer selling remains active on the break. Weakness in the cash
market in the western cornbelt due to talk of increased producer selling helped
to pressure the soybean market to new contract lows and with less export demand
expected in the weeks just ahead, it may take just a minor increase in producer
sales to keep the trend down. Cash bids fell 8 cents in Iowa and 3 cents in
Illinois. Good weather in South America keeps the crops on track for a record
harvest in the weeks just ahead and the world will need to absorb an all-time
record high ending stocks forecast for the 2004/2005 season which is nearly
equivalent to the size of the Brazil crop. New contract lows this week in spite
of the hefty weekly export sales reported yesterday indicates a weak undertone.
Tight producer holding and strong China demand for US soybeans have been
supportive factors during the consolidation of the past few month and both of
these factors could move to the bear camp in February. After a few more days of
dry weather, more rain in Argentina for early next week is seen as a bearish
development. For next weeks supply/demand report, traders are looking ending
stocks to be adjusted higher by about 5 million bushels as compared with the
January USDA forecast of 435 million bushels. Resistance for March soybeans
comes in at 502 and 507 with support at 498 and 495.
Technical Outlook
BEANS (MAR) 02/07/2005: The market was pushed to
a new contract low. 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. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside objective is 496 1/2. The market is
approaching oversold levels on an RSI reading under 30. The next area of
resistance is around 501 1/4 and 503 1/4, while 1st support hits today at 497
3/4 and below there at 496 1/2.
MEAL (MAR) 02/07/2005: The market broke to a new
contract low. Daily stochastics are trending lower but have declined into
oversold territory. The major trend has turned down with the cross over back
below the 18-day moving average. More selling pressure is likely given
yesterday’s gap lower price action on the day session chart. The market is in a
bearish position with the close below the 2nd swing support number. The next
downside objective is 147.4. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 149.7 and 151.0,
while 1st support hits today at 147.9 and below there at 147.4.
BEANOIL (MAR) 02/07/2005: 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 under the 18-day moving average indicates the
longer-term trend could be turning down. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The next
upside objective is 19.28. The next area of resistance is around 19.18 and
19.28, while 1st support hits today at 18.90 and below there at 18.72.
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WHEAT MARKET RECAP
2/4/2005
March Wheat finished down 2 at 287 3/4, 3 3/4 off the high and
3/4 up from the low. May Wheat closed down 2 at 296 1/2. This was 1 1/2 up from
the low and 3 off the high.
The outside day down after hitting a new contract
low and the new low close keeps the trend down and the bears in control.
Weakness in the soybean market and fears of stiff export competition in the
weeks ahead helped pressure. While traders expected bearish news from the weekly
export reports from the US and Europe this week, both reports had a bullish
tilt. Europe subsidies were not as high as expected and US sales were much
higher than expected. Cumulative sales have reached 82.1% of the USDA forecast
for the season as compared with 73.3% on average for this time of the year. This
leaves the door open for a higher export projection from the USDA in next weeks
Supply/demand report and also a lower ending stock forecast. For next weeks
supply/demand report, traders are looking ending stocks to come in slightly
lower from the January USDA forecast of 583 million bushels. March wheat support
comes in at 287 and 284 1/2 with resistance at 290 and 292 1/4.
Technical Outlook
WHEAT (MAR) 02/07/2005: The market broke to a new
contract low. 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
outside day down is somewhat negative. The market setup is somewhat negative
with the close under the 1st swing support. The next downside objective is 284.
The next area of resistance is around 290 and 293, while 1st support hits today
at 285 1/2 and below there at 284.
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LIVE CATTLE RECAP
2/4/2005
April Live Cattle finished down 0.07 at 88.17, 0.47 off the
high and 0.35 up from the low.
March Feeder Cattle closed down 0.52 at 99.27. This was 0.07
up from the low and 1.07 off the high.
The news of higher cash trade this week supported
the early strength in the market but the lack of much support and uncertain
demand for next week helped to pressure the market to lower on the day. April
cattle closed slightly lower. Rains in the forecast for the weekend and early
next week could keep feedlots in muddy condition and might keep supply a bit
tighter than expected. Recent reports, however, indicate a hefty supply of
market-ready cattle to move off of feedlots in the weeks ahead. Boxed beef
cutout values were up 11 cents into the mid-session to $142.39 as compared with
$146.10 last week at this time. Slaughter came in at 111,000 head versus trade
guesses ranging from 114,000 to 116,000.
Technical Outlook
CATTLE (FEB) 02/07/2005: 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 daily closing price reversal down
puts the market on the defensive. It is a mildly bullish indicator that the
market closed over the pivot swing number. The near-term upside objective is at
91.770. The next area of resistance is around 91.300 and 91.770, while 1st
support hits today at 90.550 and below there at 90.250.
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LEAN HOGS RECAP
2/4/2005
April Lean Hogs finished down 0.20 at 73.00, 1.00 off the high
and 0.45 up from the low.
March Pork Bellies closed down 0.60 at 88.60. This was 0.10 up
from the low and 1.35 off the high.
The market moved moderately higher early in the
session but lacked new buying support and speculative selling emerged to drive
futures sharply lower on the day. April hogs closed near unchanged with a 145
point range. Ideas that futures were oversold and a bounce in pork values late
Thursday helped support the early bounce. More weakness in the cash market and
expectations for continued hefty supply news next week helped pressure. Cash
markets were $1.00 lower at most locations. Slaughter came in at 378,000 head
versus trade guesses ranging from 385,000 to 390,000. The CME 2-day lean index
for the period ending February 2nd came in 74.33, down 53 cents from the
previous session and down from 74.92 one week previous.
Technical Outlook
HOGS (FEB) 02/07/2005: 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 daily
closing price reversal down puts the market on the defensive. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. The next downside objective is 69.550. The 9-day RSI under 30 indicates
the market is approaching oversold levels. The next area of resistance is around
71.620 and 72.700, while 1st support hits today at 70.070 and below there at
69.550.
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COCOA MARKET RECAP
2/4/2005
March Cocoa finished down 18 at 1576, 11 off the high and 14
up from the low.
The cocoa market failed at near term chart
support and would seem to be getting a little additional selling pressure off
the strength in the Dollar. We suspect that the March contract is beginning to
see some rotation into the May and that might leave the overall market in
weakened posture. While the trade can’t effectively compared annual arrival
rates due to smuggled shipments the mere mention of the cumulative arrival rate
of 633,947 tons reiterates that the cocoa market is at or just passing the
period of highest supply and that is bearish.
Technical Outlook
COCOA (MAR) 02/07/2005: The major trend has
turned down with the cross over back below the 60-day moving average. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The market setup is somewhat
negative with the close under the 1st swing support. The next upside target is
1600. The next area of resistance is around 1588 and 1600, while 1st support
hits today at 1564 and below there at 1551.
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COFFEE MARKET RECAP
2/4/2005
March Coffee closed up 5.20 at 110.50. This was 6.20 up from
the low and 1.25 off the high.
Coffee ended the week with a stunning rally to
new contract highs, with nearby prices at their highest levels since July 2000.
Large volume was reported, fund buying was evident, but more significantly,
producers appeared to be active buyers. With Brazilian production expected to
fall by 17% this year, it would not surprise us to see producers aggressively
buying back hedges. Brazil’s green coffee exports were up 19% in January. With
the size of buying that occurred today, the Commitments of Traders spec and fund
long position in this afternoon’s report is likely to be dramatically
understated, as that data was collected as of Tuesday.
Technical Outlook
COFFEE (MAR) 02/07/2005: The market made a new
contract high on the rally. Momentum studies are trending higher but have
entered overbought levels. The major trend could be turning up with the close
back above the 18-day moving average. A positive signal was given by the outside
day up. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. The near-term upside objective is at 116.70. The
9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 114.20 and 116.70, while 1st support hits
today at 106.80 and below there at 101.85.
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SUGAR MARKET RECAP
2/4/2005
March Sugar closed up 0.14 at 9.08. This was 0.14 up from the
low and 0.01 off the high.
The sugar market pushed sharply higher on the
session as fund buying emerged on news that Pakistan plans to buy 1.0 million
tonnes of sugar next week to relieve tight supplies. After the recent long
liquidation trend in the March contract, the slow-down in liquidation added to
the positive tone. The quick emergence of commercial buying on the liquidation
break this week was seen as a bullish force. The close over 940 for March sugar
leaves 975 as next technical swing objective.
Technical Outlook
SUGAR (MAR) 02/07/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The cross over and close above the 18-day moving average is an indication the
longer-term trend has turned positive. Market positioning is positive with the
close over the 1st swing resistance. The next downside objective is now at 8.90.
The next area of resistance is around 9.15 and 9.19, while 1st support hits
today at 9.01 and below there at 8.90.
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COTTON MARKET RECAP
2/4/2005
March Cotton finished up 0.08 at 43.20, 0.25 off the high and
0.39 up from the low.
The cotton market pushed moderately lower on
follow-through technical selling from the poor close on Thursday. The fact that
the market could not rally even with bullish export news from the weekly export
sales report triggered some “throw in the towel” long liquidation selling from
speculators who were hoping that strong demand could offset bearish old crop
stocks situation. The lowest close for the year for May cotton leaves the market
vulnerable to more long liquidation selling next week, especially if the traders
report shows that specs are still holding a net long position.
Technical Outlook
COTTON (MAR) 02/07/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The major trend has turned down with the cross over back
below the 18-day moving average. The daily closing price reversal up is a
positive indicator that could support higher prices. It is a slightly negative
indicator that the close was lower than the pivot swing number. The next
downside objective is 42.53. The next area of resistance is around 43.52 and
43.80, while 1st support hits today at 42.88 and below there at 42.53.