Guns Ablaze At The BOJ

Technical Outlook

BONDS (MAR) 01/02/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 109.16 and then again at 109.22, while swing support hits at 109.04 and below there at 108.30. 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 108.30.

T-NOTES(MAR) 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 111.32. It is a mildly bullish indicator that the market closed over the pivot swing number. 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 112.13 and then again at 112.17, while swing support hits at 112.04 and below there at 111.32. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

12/31/2003

The stock market started out weak very early in the overnight action, recovered after the US opening, managed a new high move in the S&P and then chopped backward for most of the session. However, it seemed like the market still had that existing bullish tilt resting just under the surface. The stock market should have been cheered by the decline in the claims readings especially since the claims are now at the lowest level in three years. Maybe some in the trade will take the favorable claims readings to mean that the upcoming unemployment report is going to show an improvement and that would really be bullish to stocks.

Technical Outlook

S&P500 (MAR) 01/02/04: It is a mildly bullish indicator that the market closed over the pivot swing number. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. Underlying support comes in at 1105.80 and 1101.85, with overhead resistance at 1112.60 and 1115.45. 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 1115.45. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1115.31. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1112.38 and then again at 1115.31, while swing support hits at 1105.63 and below there at 1101.81. A positive signal for trend short-term was given on a close over the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) 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. The swing indicator gave a moderately negative reading with the close below the 1st support number. The market should run into resistance at 1476.00 and above there at 1484.50 with support at 1460.00 and 1452.50. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1484.5.

CURRENCY MARKET RECAP

12/31/2003

We have to think that the BOJ came into the action Wednesday with intervention guns blazing, and with the market conditions thinned out by the holiday they probably got a pretty big bang for their buck. In the past,
intervention of mass proportion resulted in at least a couple days of reaction
and therefore it is possible that some stop loss selling will see the Yen slide back to 92.75. The Dollar certainly benefited from the possibly intervention, but intervention by the BOJ alone isn’t going to result in the Dollar trend being turned back up.

Technical Outlook

YEN (MAR): 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. Swing resistance is targeted at 93.57 and above there at 94.05, with the yen finding support around 92.80 and below there at 92.51. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 92.51.

EURO (MAR): 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 1.2415. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2415, with overhead resistance at 1.2675. 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 market’s key reversal down is a bearish signal. The rally brought the market to a new contract high. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

12/31/2003

The gold market was disappointed by the sharp recovery in the Dollar into the close Wednesday. It would appear that the gold market was concerned about holding longs through the extended closure possibly because a large number of longs were holding significant profits off the recent run. Since the Dollar rally was thought to a result of massive BOJ intervention it would not seem like the Dollar trend has changed but the Dollar might take a few days of consolidation before it resumes the downside tilt.

Technical Outlook

SILVER (MAR): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 592.3 and below there at 588.9 with resistance likely at 598.2 and 600.8. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over down which is a bearish indication. 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 588.9. The 9-day RSI over 70 indicates the market is approaching overbought levels. A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative.

GOLD (FEB): Support for gold today comes in near 412.88, while resistance is pegged at 419.88. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 419.88. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 rally brought the market to a new contract high. The daily closing price reversal down puts the market on the defensive.

COPPER MARKET RECAP

12/31/2003

The copper market suffered from thin volume but still managed to carve out a new high for the move. The market is looking at a critical pivot point down at 104.30 but is still firmly entrenched in the bull market mentality. Apparently industry or commercial buying fueled the gains Wednesday which is simply more of the same type of action that has been operating for the last 5 months. The copper market is closed Friday.

ENERGY MARKET RECAP

12/31/2003

We are not sure what to make of the energy market action the API/DOE reports appeared to be very supportive with US crude stocks falling sharply and the product stocks hardly showing much of an increase. In fact, the US crude stocks 8.2 million barrel decline brings the US crude stocks below the critical level pegged by the EIA. In fact the Press was trumpeting just how low the US stocks were compared to history which makes the weakness in prices very surprising. While the weather was moderated slightly many suggested that fund managers were booking profits ahead of year end. The break might end up being a buying opportunity, the first real opportunity in a couple weeks.

Technical Outlook

CRUDE OIL (FEB): The outside day down is a negative signal. 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. Support for crude is keyed on 32.07 and below there at 31.74, with resistance pegged at 32.97 and 33.54. 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 31.74. Daily studies pointing down suggests selling minor rallies.

UNLEADED GAS (FEB): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 96.52. The swing indicator gave a moderately negative reading with the close below the 1st support number. Resistance today is at 96.52, while support should be found around 91.12. 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 (FEB):The market’s close below the 1st swing support number suggests a moderately negative setup for today. Heating oil should encounter support around 89.23, with resistance is at 94.83. Daily studies pointing down suggests selling minor rallies. 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 89.23.

CORN MARKET RECAP

12/31/2003

The corn started out firmer than what most traders expected and closed with some fairly impressive price action. The wheat market fundamentals certainly provided corn with some support and with the Chinese all over the soybean and wheat export news it is not a difficult projections that China might import some corn next year. We also note more bullish weather conditions in Argentina during the session and that gives the bulls a reason to bid up prices.

Technical Outlook

CORN (MAR) 01/02/04: 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 248 3/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 248 3/4 today, with support at 242 1/4. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average.

SOY COMPLEX RECAP

12/31/2003

The soybean market traded on both sides of unchanged but probably saw some benefit from the strength in wheat. With China now rumored to be showing up for wheat, many might become comfortable with the idea that Chinese demand for soybeans is an ongoing development and not a flash in the pan. With the sharply higher close the soybeans stand within striking distance of the highs and look to avoid thin trade weakness as was feared into the opening Wednesday.

Technical Outlook

SOYBEANS (MAR) 01/02/04: A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 801 and 805 1/2, while 1st support hits today at 787 and below there at 777 1/2. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 805 1/2. Short-term indicators suggest buying dips today.

MEAL (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 247.3. First resistance comes in at 246.0, with support at 242.3. The market’s short-term trend is positive on a close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (MAR): 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 28.38. 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 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 28.17 and above there at 28.38. Support should be encountered at 27.52 and 27.08.

WHEAT MARKET RECAP

12/31/2003

The wheat market certainly saw a benefit from the Chinese demand stories as the wheat market rally was the feature of the session in the grain markets. In fact, the wheat managed to break out above consolidation resistance but may have benefited from some year end short covering as the shorts were fairly aggressive in the month of December. It is also possible that new lows in the Dollar inspired some cash market interest and with the Dollar reversing from the recent lows some buyers might be fearful that they missed a cheap currency adjusted price for wheat and may be paying up more in the future.

Technical Outlook

WHEAT (MAR) 01/02/04: Since the close was above the
second swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. Look for near-term support at 371 1/2 and below there at 363 1/4, with resistance levels at 382 1/2 and 385 3/4. 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 385 3/4.

LIVE CATTLE RECAP

12/31/2003

Cattle futures closed sharply lower today but well off of its lows, as the market continued to adjust to the mad cow scare and falling cash cattle prices undermined any hopes
or ideas that the market would stabilize. Cash cattle traded $74 to $75/cwt, down $1 from Tuesday, and packer bids fell to $73. Although their supplies may be light, packers were not willing to go beyond immediate needs, given the uncertainty over how the market will play this out. With today’s declines, Feb cattle fell to within striking distance of the March 2003 contract lows at 71.00. Trendline support on the weekly chart would come in around 73.65.

Technical Outlook

CATTLE (FEB) 01/02/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 69.85. The close below the 2nd swing support number puts the market on the defensive. Support should be encountered at 71.87 and below there at 69.85. Market resistance is at 75.20 and then again at 76.50. The gap lower price action on the day session chart is a bearish indicator for trend. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The 9-day RSI under 20 suggests the market is extremely oversold.

LEAN HOGS RECAP

12/31/2003

Lean Hog futures traded sharply lower this morning in the wake of the bearish hogs & pigs report yesterday afternoon. The report showed the largest hog herd in 5 years and that initially undermined the trade. However, stronger cash hog prices were a mitigating factor in the action. In the Midwest, cash hogs traded steady to $1 higher. Improving pork prices have encouraged packers to keep up slaughter activity which managed to underpin to prices. Feb lean hogs have stayed well above last Friday’s pivotal low at 50.75, which was put in place on a key reversal move, Key technical support is 50.75 in Feb hogs, and by closing this morning’s gap at 53.80 it would seem that the market has put the Hogs and Pigs report behind it.

Technical Outlook

HOGS (FEB) 01/02/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 54.30 and 54.80 today, while support is around 52.55 and then 51.30. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. 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 54.80.

COCOA MARKET RECAP

12/31/2003

Cocoa is lower across the board on Wednesday. The London cocoa market will be open Friday and the US market will be closed. Apparently signs of renewed peace in the Ivory Coast have continued to pressure the cocoa prices and with former rebels recently agreeing to join the country’s unity party anxiety continues to decline. March cocoa has now fallen to its lowest level since its gap higher day on December 1st. Respecting that gap (1438-1503) even though it traded briefly down to 1500 could be a slightly positive sign. However, a close down into that gap could next week could portend a retest of the October lows.

Technical Outlook

COCOA (MAR)01/05/04 The outside day down and close below the previous day’s low is a negative signal. The downside closing price reversal on the daily chart is somewhat negative. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1544 and above there at 1579 with support at 1487 and 1465. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1464.75.

COFFEE MARKET RECAP

12/31/2003

Coffee futures were quiet and traded within a 2-week trading range probably because few specs wanted to have fresh positions ahead of a long weekend. London coffee also closed near unchanged, as roasters have been mostly absent during the holiday period. March coffee is coiling into an ever tightening range, with current resistance at 64.90 and support at 63.00. With the thin conditions ahead of the holiday we are inclined to discount the technical breakout that was forged Wednesday in the action.

Technical Outlook

COFFEE (MAR)1/05/04 The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 66.45.The Coffee contract should run into resistance at 65.95 and above there at 66.45 with support at 64 and 62.55. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

12/31/2003

Sugar was lower across the board today primarily on fund selling going into the long weekend. Small specs continue to seek an explanation of the weakness in the January contract and that seems to be coming from some open contracts that can’t find a home. With difficult delivery conditions (lack of shipping space, heavy insurance and energy costs and no reason to think that the down trend is going to end few are willing to step into a wild delivery condition. March futures fell to 5.66 their lowest level since September 4th of 2002. Next support level is down around 554. China will lower its sugar import duty for 2004 to 15% from the current 20% effective Jan. 1. China sugar imports are expected to be 585,000 metric tons for Jul 03 to Jun 04 vs. 600,000 the previous year. China has not been a huge buyer in the past, but there is some hope that if price declines to the 5.25 area, they could come in with some large purchases.

Technical Outlook

SUGAR (MAR) 01/05/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 5.82, with support found at 5.58. 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 5.58. With a reading under 20, the 9-day RSI indicates the market is extremely oversold.

COTTON MARKET RECAP

12/31/2003

March cotton traded higher this morning and did manage to break out above yesterday’s high. Therefore, the market is looking for a potential follow through move next week after the extended market closure. A move through key resistance at 75.00 could project a move towards the gap at 77.85 to 73.46. Cotton export guesses for Friday’s sales report are 150,000 – 200,000 bales versus 213,700 last week.

Technical Outlook

COTTON (MAR) 01/05/04: The market’s close above the 9-day moving average suggests the short-term trend remains positive. Short-term indicators suggest buying dips today. A positive setup occurred with the close over the 1st swing resistance. Next resistance area comes in at 75.55 and then again at 75.80, while support is targeted at 74.60 and 73.90. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 75.80. ORANGE JUICE (MAR)1/05/04 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. The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 64.40 and above there at 64.60 with support at 63.80 and 63.40. The 9-day RSI under 20 suggests the market is extremely oversold. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 63.4.