Has The Market Found Technical Support?
BOND MARKET RECAP
3/23/2005
March Bonds finished up 0-04 at 109-28, 0-03 off
the high and 0-28 up from the low.
March 10 Yr Treasury Notes finished down 0-035 at
108-100, 0-055 off the high and 0-145 up from the low.
The Treasury market surprised the trade by
rejecting the initial downside breakout. Apparently the market initially saw the
CPI report as inflationary but later in the day a significant decline in energy
prices might have tempered the inflation concern. We would have expected a big
decline in energy prices and a rise in equity prices would have limited the
bonds ability to recover. On the other hand, the US economic information
released during the session was somewhat soft with the home sales declining
instead of rising. It should be noted that the Chicago Fed National Activity
Index came in a little stronger than many expected which once again seems to
leave the take on the US economy conflicting. Around the lows Wednesday the
Treasury bonds probably were holding a massive 6 digit spec short position.
Technical Outlook
BONDS (JUN) 03/24/2005: The daily stochastics
have crossed over up which is a bullish indication. 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. The upside closing price reversal on the daily
chart is somewhat bullish. The market tilt is slightly negative with the close
under the pivot. The next upside objective is 110-30. The next area of
resistance is around 110-19 and 110-30, while 1st support hits today at 109-15
and below there at 108-21.
TNOTES (JUN) 03/24/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. The daily
closing price reversal up is a positive indicator that could support higher
prices. The market tilt is slightly negative with the close under the pivot. The
next downside target is 107-215. Some caution in pressing the downside is
warranted with the RSI under 30. The next area of resistance is around 108-240
and 108-300, while 1st support hits today at 108-040 and below there at 107-215.
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STOCK INDICES RECAP
3/23/2005
March S&P finished up 3.3 at 1177.5, 2.5 off the
high and 5.5 up from the low.
March S&P E-Mini closed up 3 at 1177.25. This was
8.5 up from the low and 3 off the high.
March Dow closed up 7 at 10495. This was 45 up
from the low and 24 off the high.
The stock market certainly responded to the sharp
slide in energy prices but for the lower energy price action to have a sustained
impact it might take several days of lower action to convince players that
prices are indeed going to stay down. On the other hand, the stock market was
initially deflated by the hot CPI report but apparently a large portion of the
trade decided to discount the inflation threat once the energy complex fell
apart. Therefore, the macro economic outlook is improved and it would seem like
the stock market found decent technical support around the lows Wednesday.
Technical Outlook
S&P 500 (JUN) 03/24/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The upside daily closing price reversal gives the market a bullish tilt. The
market tilt is slightly negative with the close under the pivot. The next
downside target is now at 1167.30. The 9-day RSI under 30 indicates the market
is approaching oversold levels. The next area of resistance is around 1178.60
and 1183.30, while 1st support hits today at 1170.60 and below there at 1167.30.
SP EMINI (JUN) 03/24/2005: 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. The market tilt is slightly
negative with the close under the pivot. The next downside objective is 1163.00.
Some caution in pressing the downside is warranted with the RSI under 30. The
next area of resistance is around 1180.25 and 1186.00, while 1st support hits
today at 1168.75 and below there at 1163.00.
NASDAQ (JUN) 03/24/2005: 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 upside closing price reversal on the daily
chart is somewhat bullish. The market’s close below the pivot swing number is a
mildly negative setup. The next downside target is 1462.75. The next area of
resistance is around 1487.50 and 1496.75, while 1st support hits today at
1470.50 and below there at 1462.75.
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CURRENCY MARKET RECAP
3/23/2005
March US Dollar finished up 67 at 8402, 8 off the
high and 68 up from the low.
March Euro finished down 1.15 at 129.99, 0.71 off
the high and 0.15 up from the low.
March Euro Dollar closed down 0.015 at 96.445.
This was 0.045 up from the low and 0.015 off the high.
March Canadian Dollar closed down 0.53 at 82.31.
This was 0.11 up from the low and 0.24 off the high.
March British Pound finished down 1.66 at 186.01,
1.06 off the high and 0.09 up from the low.
March Swiss closed down 0.65 at 83.92. This was
0.12 up from the low and 0.42 off the high.
March Japanese Yen closed down 0.6 at 94.88. This
was 0.08 up from the low and 0.58 off the high.
The US Dollar continues to get the benefit of the
doubt that rising US interest rates are in fact going to offer investors a
higher rate of return. We also think that sharply declining oil prices take some
of the heat off the US economy and that is a reason why some Dollar shorts have
been covering positions over the last 36 hours. It is also possible that some
fresh buyers are coming into the Dollar because they think that the US economy
is about to percolate again, especially with crude oil prices falling by close
to $5.00 a barrel since March 17th. Early in the action Wednesday the Euro was
hit with evidence of further weakening in the German economy and that seemed to
open up the trade to attack the Euro and bid up the Dollar.
Technical Outlook
YEN (JUN) 03/24/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The defensive setup, with the close under the 2nd swing support, could cause
some early weakness. The next downside objective is 94.39. The next area of
resistance is around 95.29 and 95.70, while 1st support hits today at 94.63 and
below there at 94.39.
EURO (JUN) 03/24/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. More selling pressure is likely given yesterday’s gap lower
price action on the day session chart. The close below the 1st swing support
could weigh on the market. The next downside objective is 129.30. The 9-day RSI
under 30 indicates the market is approaching oversold levels. The next area of
resistance is around 130.47 and 131.01, while 1st support hits today at 129.61
and below there at 129.30.
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PRECIOUS METALS RECAP
3/23/2005
April Gold closed down 6.2 at 425.4. This was 0.9
up from the low and 3 off the high.
March Silver finished down 0.093 at 6.985, 0.04
off the high and 0.075 up from the low.
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The metals continued to die at the hands of a
soaring US Dollar. Since both gold and silver have predicted a large portion of
the bull action, of the last 6 months, off the weak Dollar it is not surprising
that a perpetually rising US Dollar almost completely undermines the market. In
fact, given the magnitude of the spec and fund longs in gold and silver, the 218
point rally in the Dollar off the March low, one might suggest that even more
stop loss selling is in the cards in the near term. We also think that the
inflation concern is actually being seen as a negative in the metals as many
think that the ratcheting up of interest rates on top of a slow economy is
eventually going to derail current inflationary pressures.
Technical Outlook
SILVER (MAY) 03/24/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down.
Momentum studies are still bearish but are now at oversold levels and will tend
to support reversal action if it occurs. The market back below the 18-day moving
average suggests the longer-term trend could be turning down. The gap lower
price action on the day session chart is a bearish indicator for trend. The
close below the 2nd swing support number puts the market on the defensive. The
next downside objective is now at 686.2. Some caution in pressing the downside
is warranted with the RSI under 30. The next area of resistance is around 704.3
and 709.1, while 1st support hits today at 692.8 and below there at 686.2.
GOLD (APR) 03/24/2005: The close below the 60-day
moving average is an indication the longer-term trend has turned down. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The gap down on the day session chart
is bearish with more selling pressure possible today. The close below the 2nd
swing support number puts the market on the defensive. The next downside
objective is now at 422.1. With a reading under 30, the 9-day RSI is approaching
oversold levels. The next area of resistance is around 427.3 and 429.8, while
1st support hits today at 423.5 and below there at 422.1.
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COPPER MARKET RECAP
3/23/2005
March Copper closed down 5.30 at 144.45. This was
0.15 up from the low and 4.05 off the high.
After mostly ignoring the sweeping liquidation in
the precious metals the copper market came under more intense selling. We
suspect that the sharp ongoing rise in the Dollar added to the selling interest
but we also think that technical chart violations were a significant portion of
the selling impetus. A number of buyers might have been put off Wednesday by the
fact that the London and Shanghai copper markets were showing signs of weakness
as those markets have carried the US market through the recent softening of the
US economy. In the end the copper market was simply another market hit by broad
based commodity fund selling.
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ENERGY MARKET RECAP
3/23/2005
April Crude Oil closed down 2.13 at 53.90. This
was 0.50 up from the low and 1.40 off the high.
April Heating Oil closed down 1.22 at 151.70.
This was 2.80 up from the low and 1.10 off the high.
April Unleaded Gas finished down 0.72 at 159.70,
1.80 off the high and 3.20 up from the low.
April Natural Gas finished down 0.12 at 7.25,
0.09 off the high and 0.06 up from the low.
April Propane closed down 0.03 at 0.89. This was
equal to the low and equal to the high.
The energy complex came under aggressive
liquidation pressure Wednesday in a break that was partially fostered by
speculative liquidation from Tuesday and partially because of a build in crude
oil stocks. Some traders suggested that energy prices should have found support
off the idea that US product stocks declined but in the near term the bear camp
controls sentiment and the stop loss selling pressure is significant. Talk later
in the session Wednesday suggested that the US crude oil market is somewhat
flush with cash supply and that would certainly seem to justify the weaken price
structure. We also have to wonder if warm temps next week will serve to weaken
seasonal demand and facilitate even more declines.
Technical Outlook
CRUDE OIL (MAY) 03/24/2005: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The close below the 18-day moving average is an indication
the longer-term trend has turned down. The gap down on the day session chart is
bearish with more selling pressure possible today. The close below the 2nd swing
support number puts the market on the defensive. The next downside objective is
now at 52.18. The next area of resistance is around 54.76 and 55.98, while 1st
support hits today at 52.86 and below there at 52.18.
UNLEADED (MAY) 03/24/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market tilt is slightly negative with the
close under the pivot. The next downside objective is now at 154.39. The next
area of resistance is around 162.27 and 164.38, while 1st support hits today at
157.27 and below there at 154.39.
HEATING OIL (MAY) 03/24/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The major trend could be turning up with the close back above the
18-day moving average. It is a slightly negative indicator that the close was
under the swing pivot. The next downside target is 147.24. The next area of
resistance is around 153.37 and 155.03, while 1st support hits today at 149.47
and below there at 147.24.
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CORN MARKET RECAP
3/23/2005
May Corn finished down 3 1/4 at 210 3/4, 1
off the high and 1 1/2 up from the low. December Corn closed down 3 1/4 at 234
1/4. This was 1 3/4 up from the low and 3/4 off the high.
Fears that the higher US dollar might trigger a
continued trend for funds to lighten up on long positions helped trigger the
early weakness. While open interest has barely budged off of last weeks peak,
technical support levels have failed to hold. China export activity and fears
that some of the US supply could be contaminated with unapproved GMO seed added
to the bearish tone. The USDA attaché in China indicates exports for the
2004/2005 season to total near 6 million tons as compared with the current USDA
forecast at 4 million tons. Argentina corn is thought to be near 25% harvested
and yields are said to be high with record production expected. For the weekly
export sales report, released before the opening, traders are looking for corn
sales near 650,000-850,000 tons as compared with 1.009 million tons last week.
Funds were noted sellers of near 4500 contracts into the mid-session. Resistance
for May corn comes in at 213 with support at 208 3/4 and 205.
Technical Outlook
CORN (MAY) 03/24/2005: The major trend has turned
down with the cross over back below the 60-day moving average. Daily stochastics
are trending lower but have declined into oversold territory. The close under
the 18-day moving average indicates the longer-term trend could be turning down.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart. The close below the 2nd swing support number puts the market
on the defensive. The next downside objective is 208 1/4. The next area of
resistance is around 212 and 213, while 1st support hits today at 209 1/2 and
below there at 208 1/4.
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SOY COMPLEX RECAP
3/23/2005
May Soybeans finished down 4 at 623 1/4, 2 1/4
off the high and 9 1/4 up from the low. November Soybeans closed down 5 1/4 at
602 1/2. This was 8 1/2 up from the low and 2 off the high.
May Soymeal closed down 1.8 at 185.4. This was
2.9 up from the low and 1.1 off the high.
May Soybean Oil finished up 0.03 at 22.61, 0.24
off the high and 0.41 up from the low.
The strong dollar had grain traders fearful of a
continued long liquidation trend from fund traders but after some selling early,
trade has turned quiet with some talk of an oversold condition with May soybeans
down 77 3/4 cents off of last weeks highs. Futures challenged the 614 lows late
in the day before short-covering emerged to see May beans shoot to new highs for
the day into the close. There is some light rain in the forecast for southern
Brazil and traders are nervous that continued dryness into early next week might
damage crops with some of the crop still in the flowering stage. Traders are
beginning to position ahead of next weeks key USDA reports on March 31st led by
the planted acreage report. For the weekly export sales report, released before
the opening, traders are looking for soybean sales near 500,000-700,000 tons,
meal sales near 50,000-100,000 tons and oil sales near 3,000-8,000 tons.
Short-term support for May soybeans comes in at 617 1/2 and 612 1/2 with 631 1/2
and 643 1/2 as resistance.
Technical Outlook
BEANS (MAY) 03/24/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close below the 18-day moving average is an indication the longer-term
trend has turned down. The gap lower on the day session chart is bearish and
puts the market on the defensive. The market setup is somewhat negative with the
close under the 1st swing support. The next downside target is now at 610. The
next area of resistance is around 629 and 633, while 1st support hits today at
617 1/2 and below there at 610.
MEAL (MAY) 03/24/2005: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. The gap down on the day session chart is bearish with more selling
pressure possible today. The close below the 1st swing support could weigh on
the market. The next downside objective is 181.0. The next area of resistance is
around 187.3 and 188.9, while 1st support hits today at 183.4 and below there at
181.0.
BEANOIL (MAY) 03/24/2005: 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. The upside daily closing price reversal gives
the market a bullish tilt. It is a slightly negative indicator that the close
was under the swing pivot. The next downside objective is 21.92. The next area
of resistance is around 22.93 and 23.21, while 1st support hits today at 22.29
and below there at 21.92.
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WHEAT MARKET RECAP
3/23/2005
May Wheat finished down 7 3/4 at 336 3/4, 7 1/4 off the high
and 1 3/4 up from the low. July Wheat closed down 8 at 345 3/4. This was 2 3/4
up from the low and 5 3/4 off the high.
Fund selling helped drive the market lower with
funds noted sellers of near 2500 contracts into the mid-session. Ideas that the
US wheat price may need to be cheaper to compete on the world market along with
strength in the US dollar triggered a bearish trend in prices early in the
session with May wheat pushing down to a 2-week low. Weather conditions seem to
be improving for the winter wheat crop in the plains with more rains in the
forecast for the drier areas of western Kansas/Nebraska for the weekend. Egypt
bought 120,000 tonnes of wheat this morning with 60,000 of the total as US white
wheat. South Korea bought 21,000 tonnes of US wheat overnight and South Korea is
tendering for another 21,000 tonnes tonight. Jordan is tendering for 50,000
tonnes of optional origin wheat. For the weekly export sales report, released
before the opening, traders are looking for wheat sales near 425,000-625,000
tons as compared with 551,000 tons last week. May wheat resistance comes in at
340 with 331 as next support.
Technical Outlook
WHEAT (MAY) 03/24/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The defensive setup, with the close under the 2nd
swing support, could cause some early weakness. The next downside target is now
at 329 1/4. The next area of resistance is around 341 1/4 and 347, while 1st
support hits today at 332 1/4 and below there at 329 1/4.
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LIVE CATTLE RECAP
3/23/2005
April Live Cattle finished down 0.22 at 87.40,
0.65 off the high and 0.37 up from the low.
March Feeder Cattle closed unchanged at 106.32.
This was 0.07 up from the low and 0.12 off the high.
June cattle closed moderately lower on the
session with a weaker tone for the beef market and continued concerns of
increased supply of cattle ahead, if Canadian cattle are available soon. Futures
managed to hold above last weeks lows and bounced 40 points into the close
finding some support from supportive cold storage news and from a lack of new
news on if or when Canadian cattle will be available to US packers. Boxed-beef
cut-out values at mid-session were down $.59 to $152.71 as compared with $158.37
last week. Slaughter came in at 116,000 head as compared with trade expectations
at 115,000-119,000 head.
Technical Outlook
CATTLE (APR) 03/24/2005: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Momentum
studies are declining, but have fallen to oversold levels. 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 under the swing pivot. The
next downside objective is now at 86.450. The next area of resistance is around
87.900 and 88.470, while 1st support hits today at 86.900 and below there at
86.450.
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LEAN HOGS RECAP
3/23/2005
April Lean Hogs finished down 0.42 at 70.15, 0.20
off the high and 0.65 up from the low.
March Pork Bellies closed down 2.85 at 90.10.
This was 0.15 up from the low and equal to the high.
June hogs came under heavy selling pressure from
bearish news in the USDA Monthly Cold storage report and from a weaker than
expected cash live hog market and pork product trade. The market moved to the
lowest level since June 22nd as news of the largest March 1st cold storage
stocks in history, $1.00 lower cash market and weak loin prices overnight did
not fair well with the premium structure of futures over cash. Weekly average
weights for Iowa/Minnesota for the week ending March 19th came in at 267.2
pounds as compared with 267.8 pounds last week and 265.5 pounds last year. The
gap down below the uptrend channel is a bearish technical development. In
addition, the first close below the 5-day moving average since early September
leaves the market vulnerable to long liquidation selling from fund traders.
Slaughter came in at 390,000 head as compared with trade expectations at
385,000-390,000 head. The 2-day lean index for the period ending March 19th came
in at 68.77, down.18 on the session and down from 71.36 one week previous.
Technical Outlook
HOGS (APR) 03/24/2005: 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 market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is now at 69.200.
The next area of resistance is around 70.570 and 70.870, while 1st support hits
today at 69.750 and below there at 69.200.
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COCOA MARKET RECAP
3/23/2005
May Cocoa finished down 143 at 1588, 53 off the
high and 13 up from the low.
The cocoa market fell sharply under the weight of
a rising Dollar and a continued calming down of tensions at the Ivory Coast.
Certainly the broad based fund selling action seen in many commodity markets was
probably an influence in cocoa on Wednesday, especially after the recent over
wound spec long positioning. We suspect that cocoa was set for a washout as the
fundamentals were just not fresh and the market was attempting to hold levels
that seemed to be forged off bold speculation.
Technical Outlook
COCOA (MAY) 03/24/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down.
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 gap down on the day
session chart is bearish with more selling pressure possible today. The market
is in a bearish position with the close below the 2nd swing support number. The
next downside target is 1532. Some caution in pressing the downside is warranted
with the RSI under 30. The next area of resistance is around 1621 and 1664,
while 1st support hits today at 1555 and below there at 1532.
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COFFEE MARKET RECAP
3/23/2005
May Coffee closed down 6.10 at 125.25. This was
0.25 up from the low and 3.15 off the high.
The coffee market forged an aggressive gap down
washout Wednesday and would seem to be getting the same broad based commodity
fund selling seen in a number of other markets. After the London market
confirmed aggressive fund selling early in the action Wednesday it is not
surprising that the US coffee market fell victim to the same bearish influence.
However, in the coffee market the 100 day moving average is all the way down at
107.00 and that could suggest a rather significant near term corrective
capacity. Even more important is the fact that New Coffee was fresh off a new
open interest record on Tuesday and that probably breeds increased near term
volatility on more price declines.
Technical Outlook
COFFEE (MAY) 03/24/2005: 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. More selling pressure is likely given
yesterday’s gap lower price action on the day session chart. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. The next downside objective is 122.60. The next area of
resistance is around 126.90 and 129.35, while 1st support hits today at 123.55
and below there at 122.60.
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SUGAR MARKET RECAP
3/23/2005
May Sugar closed down 0.12 at 8.63. This was 0.01
up from the low and 0.10 off the high.
Rumors that China might have been poised to
import or buy sugar were dashed and in the face of less dryness in Brazil we can
understand the aggressive washout in sugar. In fact, many in the trade are back
to expecting a record Brazilian crop and that would seem to make the overly long
small spec and fund long position even more vulnerable. London sugar closed at
the lowest level since July 13th 2004 and that would seem to facilitate the
liquidation. This week sugar has failed to hold the 100 day moving average and
that could foster follow through fund selling in the days ahead. In short, there
are both technical and fundamental reasons to justify the downside tilt in
prices. One might even think that the sharply rising Dollar is generally a
negative toward near term sugar prices.
Technical Outlook
SUGAR (MAY) 03/24/2005: 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 below the 1st swing support could weigh on the market.
The next downside objective is now at 8.55. The market is approaching oversold
levels on an RSI reading under 30. The next area of resistance is around 8.68
and 8.76, while 1st support hits today at 8.58 and below there at 8.55.
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COTTON MARKET RECAP
3/23/2005
May Cotton finished down 0.80 at 50.58, 0.39 off
the high and 0.83 up from the low.
May cotton closed 83 lower on the session but
managed to close above the opening and near the highs of the day. Aggressive
fund selling across a wide spectrum of commodity markets helped pressure the
market. After the break of the past week, traders will be expecting to see solid
export sales numbers as the cumulative pace is still behind the pace to reach
the USDA projection. The focus of attention is still centered on the key USDA
reports for late next week including the prospective plantings report. Traders
seem to be looking for cotton plantings near 13.5-14.0 million acres as compared
with 13.76 million acres last year. For the weekly export sales report, released
before the opening, traders are looking for cotton sales near 100,000-150,000
bales as compared with 162,700 bales last week.
Technical Outlook
COTTON (MAY) 03/24/2005: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The next downside objective is now at 49.25.
The next area of resistance is around 51.19 and 51.69, while 1st support hits
today at 49.97 and below there at 49.25.