Have Beans And Corn Hit Bottom?
BOND MARKET RECAP
8/17/2004
September Bonds closed up 0-18 at 111-10. This
was 0-22 up from the low and 0-01 off the high.
September 10 Yr Treasury Notes finished up 0-130
at 112-300, 0-005 off the high and 0-160 up from the low.
The Treasury market showed signs of early
weakness but eventually soared on surprisingly weak US CPI information. With the
threat of inflation dramatically downplayed the market was quick to run higher
as the odds of a September interest rate hike was lowered by the news Tuesday.
While housing starts and permits were much stronger than expected, the second
set of numbers (Industrial production and capacity Utilization) were somewhat
conflicted and that might have allowed bonds to entrench the early gains. The
energy complex also managed to strengthen as the session progressed and that
certainly increases the macro economic uncertainty, which in turn supports the
Treasury market.
Technical Outlook
#BONDS (SEP) 8/18/2004: The market setup is
supportive for early gains with the close over the 1st swing resistance.
Near-term resistance for bonds is at 111.29 and then again at 112.05, while
swing support hits at 110.31 and below there at 110.09. A positive signal for
trend short-term was given on a close over the 9-bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 112.05. The market is approaching overbought levels with an RSI
over 70.
T-NOTES(SEP) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
113.16. The market’s close above the 2nd swing resistance number is a bullish
indication. Near-term resistance for the T-Notes is at 113.10 and then again at
113.16, while swing support hits at 112.22 and below there at 112.07. 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.
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STOCK INDICES RECAP
8/17/2004
September S&P finished up 5.7 at 1083.1, 3.9 off
the high and 3.8 up from the low.
September S&P E-Mini closed up 5.5 at 1083. This
was 7.5 up from the low and 4 off the high.
September Dow closed up 43 at 9982. This was 37
up from the low and 33 off the high.
September Dow E-Mini finished up 43 at 9982, 35
off the high and 64 up from the low.
The stock market managed to get an early perfect
storm or information with Home Depot earnings coming in positive, housing starts
and permits strong and inflation coming in very much under control. Also early
in the session it seemed like energy prices were going to remain weak and that
allowed the short covering mentality in the stock market to prevail. In general
the stock market has to be generally pleased with the pace of economic numbers
this week as they are much improved over last week.
Technical Outlook
#S&P500 (SEP) 8/18/2004: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1079.35 and
1075.48, with overhead resistance at 1087.05 and 1090.88. The close above the
9-day moving average is a positive short-term indicator for trend. Momentum
studies are rising from mid-range which could accelerate a move higher if
resistance levels are penetrated. The near-term upside objective is at 1090.88.
S&P E-Mini (SEP): Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 1093.88. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Near-term resistance for the S&P Mini is at
1089.25 and then again at 1093.88, while swing support hits at 1077.75 and below
there at 1070.88. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.
NASDAQ (SEP) A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market setup
is supportive for early gains with the close over the 1st swing resistance. The
market should run into resistance at 1345.50 and above there at 1351.75 with
support at 1332.50 and 1325.75. Daily studies suggest buying dips today. The
daily stochastics have crossed over up which is a bullish indication. The next
upside objective is 1351.75.
MINI DOW (MAR) The close above the 9-day moving
average is a positive short-term indicator for trend. The market should run into
resistance at 10032 and above there at 10074 with support at 9933 and 9876.
Momentum studies are rising from mid-range which could accelerate a move higher
if resistance levels are penetrated. The near-term upside target is at 10074.
The close over the pivot swing is a somewhat positive setup.
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CURRENCY MARKET RECAP
8/17/2004
September US Dollar finished up 12 at 8815, 19
off the high and 37 up from the low.
September Euro finished down 0.13 at 123.38, 0.47
off the high and 0.33 up from the low.
September Euro Dollar closed up 0.015 at 98.13.
This was 0.0225 up from the low and 0.0025 off the high.
September Canadian Dollar closed up 0.05 at
76.55. This was 0.21 up from the low and 0.27 off the high.
September British Pound finished down 1.38 at
182.31, 1.63 off the high and 0.11 up from the low.
September Swiss closed down 0.26 at 80.41. This
was 0.2 up from the low and 0.29 off the high.
September Japanese Yen closed up 0.37 at 90.95.
This was 0.39 up from the low and 0.17 off the high.
The Dollar should have rallied Tuesday in the
wake of much softer than expected European numbers and generally much better
than expected US economic numbers. However, the currency markets really didn’t
show any reaction to the numbers with the exception of an impressive rally in
the Japanese yen. Maybe the buyers of the Yen see the improvement in the US
numbers as a sign that export business for Japan is set to improve. Even the
Canadian Dollar posted disappointing action as it traded on both sides of
unchanged. It seems like the interest rate differential and the economic
differential arguments are being completely ignored by the market.
Technical Outlook
#CURRENCIES 8/18/2004: YEN (SEP): A positive
indicator was given with the upside crossover of the 9 & 18 bar moving average.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. Swing resistance is targeted at 91.23 and above there at
91.46, with the yen finding support around 90.67 and below there at 90.34. The
market back below the 40-day moving average suggests the longer-term trend could
be turning down. Stochastics are at mid-range, but trending higher which should
reinforce a move higher if resistance levels are taken out. The next upside
objective is 91.46.
EURO (SEP): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2422. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2262, with overhead resistance at 1.2422. The close above
the 9-day moving average is a positive short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.
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PRECIOUS METALS RECAP
8/17/2004
October Gold closed up 1.5 at 405.3. This was 3.8
up from the low and 1.5 off the high.
September Silver finished down 0.007 at 6.73,
0.055 off the high and 0.07 up from the low.
October Platinum closed down 3.8 at 879.4. This
was 5.8 up from the low and 0.4 off the high.
The gold and silver markets were initially
deflated off talk that the US CPI was down 0.1%. However, with the US equity
market higher again and other US economic information mostly positive it seemed
as if the metals were relieved that the US wasn’t heading into a deflationary
condition. Some buyers of gold and silver cited the prospect of the large
Russian oil company bankruptcy as cause for the late buying wave. Surprising the
gold and silver markets managed the gains in the face of a mostly higher US
Dollar and that shows a divergence away from the old currency market focus.
Technical Outlook
#P-METALS 8/18/2004: SILVER (SEP): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 666.8 and below there at 660.1 with resistance likely at 685.1
and 679.3. A positive signal for trend short-term was given on a close over the
9-bar moving average. Rising stochastics at overbought levels warrant some
caution for bulls. The next upside objective is 685.1. The market could take on
a defensive posture with the daily closing price reversal down.
GOLD (OCT): Support for gold today comes in near
399.43, while resistance is pegged at 410.03. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 410.03. The close over the pivot swing is a
somewhat positive setup. The close above the 9-day moving average is a positive
short-term indicator for trend.
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COPPER MARKET RECAP
8/17/2004
September Copper finished down 0.80 at 130.75,
0.75 off the high and 0.85 up from the low.
The copper market was mostly weaker on the
session despite what appeared to be mostly favorable macro economic readings
from the US. With US housing starts and permits rising moderately one would
think that copper would have seen support off the prospect of physical demand
but that wasn’t the case. Copper didn’t even seem to garner support off the news
that China’s largest copper producer was set to expand capacity by 12.5% into
late 2005 and that shows the potential for improvements in demand from the area
that copper has been focusing on. It is possible that rising production stories
from the southern hemisphere has temporarily undermined the bull case in copper.
It is also clear that nearby copper prices above 132 seem to be a little too
expensive for the current market.
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ENERGY MARKET RECAP
8/17/2004
September Crude Oil closed up 0.70 at 46.75. This
was 1.12 up from the low and 0.20 off the high.
September Heating Oil closed up 1.91 at 122.19.
This was 2.59 up from the low and 1.11 off the high.
September Unleaded Gas finished up 0.10 at
130.55, 1.85 off the high and 1.15 up from the low.
September Natural Gas finished down 0.00 at 5.37,
0.07 off the high and 0.04 up from the low.
September Propane closed down 0.01 at 0.87. This
was equal to the low and equal to the high.
The energy complex showed some recovery action
Tuesday and did so off expectations that the weekly inventory readings on
Wednesday would show some contraction off the transportation delays in the Gulf
of Mexico last week. It also seemed like energy prices were getting some support
off renewed concerns that Yukos was about to declare bankruptcy. Early in the
session the energy complex was weakened off reports that a Russian Railroad
planned to continue shipping Yukos oil in the event that the energy giant
declared bankruptcy. The market was also supported off new that July OPEC output
was below the prior months tally by 160,000 barrels per day. OEPC was also
preparing to meet and was expected to discuss the quota system and possibly the
banding mechanism.
Technical Outlook
#ENERGIES 8/18/2004: CRUDE OIL (SEP): The market
rallied to a new contract high. The upside daily closing price reversal gives
the market a bullish tilt. Market positioning is positive with the close over
the 1st swing resistance. Support for crude is keyed on 46.09 and below there at
45.20, with resistance pegged at 47.41 and 47.84. The close above the 9-day
moving average is a positive short-term indicator for trend. The crossover up in
the daily stochastics is a bullish signal. The near-term upside target is at
47.84. The market is becoming somewhat overbought now that the RSI is over 70.
UNLEADED GAS (SEP): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
133.73. The market tilt is slightly negative with the close under the pivot.
Resistance today is at 133.73, while support should be found around 127.73. The
daily closing price reversal up is a positive indicator that could support
higher prices. A positive indicator was given with the upside crossover of the 9
& 18 bar moving average.
HEATING OIL (SEP): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 118.12, with resistance is at 125.52. Short-term indicators
suggest buying pullbacks today. The close above the 9-day moving average is a
positive short-term indicator for trend. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 125.52. The outside day up gives the market a
positive tilt. The market rallied to a new contract high. The upside daily
closing price reversal gives the market a bullish tilt.
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CORN MARKET RECAP
8/17/2004
September Corn finished up 6 1/4 at 228
1/2, 1 3/4 off the high and 4 1/2 up from the low. December Corn closed up 6 3/4
at 239 3/4. This was 5 up from the low and 1 3/4 off the high.
After December corn gapped 2 1/2 cents higher off
the crop conditions report it seemed that additional short covering surfaced all
the way into the close. Efven with the sharp extension of the rally many suspect
that the funds are still heavily short. However, there might be enough
production uncertainty for some fresh buying interest. The fact that Northern
growing regions are behind schedule, in the face of forecasts for even more cool
and wet ahead, could mean that conditions will remain suspect and capable of
driving prices upward. Prior to the low Monday, the concerns for the crop were
mostly anecdotal and regionalized but with the USDA crop conditions report
Monday night showing a decline, the stories of crop problems are given a little
more substance. In fact, a central Illinois crop tour suggested that corn yields
are coming in below last year but part of the trade was already suspecting that
to be the case. Some trade estimates suggest that the net spec and fund short
coming into the session Tuesday still stood at 60,000 contracts and that
certainly leaves open the prospect of even more short covering. Support for
December corn now climbs to 236 1/2, with lower support at 234 3/4. Resistance
for December corn comes in at 242 and 249.
Technical Outlook
#CORN (DEC) 8/18/2004: Momentum studies are
rising from mid-range which could accelerate a move higher if resistance levels
are penetrated. The near-term upside target is at 245 2/4. There could be more
upside follow through since the market closed above the 2nd swing resistance.
Market resistance comes in at 245 2/4 today, with support at 232. The close
above the 9-day moving average is a positive short-term indicator for trend.
Follow through buying looks likely if the market can hold yesterday’s gap on the
day session chart.
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SOY COMPLEX RECAP
8/17/2004
September Soybeans finished up 16 1/4 at 591 3/4,
5 1/4 off the high and 9 3/4 up from the low. November Soybeans closed up 15 1/4
at 584. This was 8 3/4 up from the low and 4 1/2 off the high.
August Soymeal closed up 5.7 at 177.6. This was
3.6 up from the low and 0.9 off the high.
August Soybean Oil finished up 0.56 at 22.35,
0.25 off the high and 0.27 up from the low.
After September Soybeans gapped higher on the
opening and established an early range of 582 to 594 they attempted to make an
even stronger rally around mid session before settling back off the highs. While
the surprising decline in crop conditions provided the lion’s share of upside
momentum Tuesday morning, the trade was also supported by a slightly firmer
interior basis readings and ongoing technical short covering. Despite some
private weather service studies (that were released Monday night) that showed
improving yields off cold and wet August weather patterns, there is a sector of
the market thinking that below normal temperatures and minimal rainfall, in
select areas, is going to result in a slightly lower national average output. In
conclusion, the market has uncertainty with respect to production and that is
something that was lacking prior to August 12th. With crop tours noting the crop
to be behind the normal schedule in many areas and the return of cool temps
expected at the end of the week, many suspect more buying interest in the market
ahead. It seems as if the soybeans are getting a little more fresh buying than
the corn market and that could be because weather is currently more important
for soybeans than for corn development. However, the crop tour information for
soybeans released during the session Tuesday might not have been as supportive
for beans as corn! In any regard, the trade was being supported by concerns that
dry areas in central Illinois still hadn’t managed to totally alleviate their
dry conditions. Support in November soybeans comes in at 578 and 575 ¾.
Resistance in November is seen at 586 ½ and 589.
Technical Outlook
#SOYBEANS (NOV) 08/18/04 The gap upmove on the
day session chart is a bullish indicator for trend. The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next area of resistance is around 590 3/4 and 596 1/4, while 1st support hits
today at 577 2/4 and below there at 569 3/4. The market’s close on the 9-day
moving average is neutral. Stochastics are at mid-range, but trending higher
which should reinforce a move higher if resistance levels are taken out. The
next upside objective is 596 1/4. Daily studies suggest buying dips today.
MEAL (DEC): Momentum studies are rising from
mid-range which could accelerate a move higher if resistance levels are
penetrated. The near-term upside target is at 181.4. Follow through buying looks
likely if the market can hold yesterday’s gap on the day session chart. First
resistance comes in at 179.9, with support at 175.4. The close above the 9-day
moving average is a positive short-term indicator for trend. There could be more
upside follow through since the market closed above the 2nd swing resistance.
BEAN OIL (DEC): A positive indicator was given
with the upside crossover of the 9 & 18 bar moving average. Stochastics are at
mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 22.87. A positive
setup occurred with the close over the 1st swing resistance. Daily swing
resistance is found at 22.61 and above there at 22.87. Support should be
encountered at 22.09 and 21.83. Short-term indicators suggest buying dips today.
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WHEAT MARKET RECAP
8/17/2004
September Wheat finished up 6 at 308 3/4, 1 1/4 off the high
and 4 1/4 up from the low. December Wheat closed up 5 3/4 at 322 1/2. This was 4
1/2 up from the low and 1 1/2 off the high.
December wheat gapped higher on the open today
and followed with a strong day, trading on the overall strength in the grain
markets this morning after last night’s crop conditions reports indicated
deterioration in both the corn and soybean crops. Yesterday’s progress report
also indicated the spring wheat harvest is only 21% complete versus 53% last
year and an average of 44%. The cool/wet weather in the northern plains has not
only delayed harvest; it has also slowed development of the ripening crop.
Argentina’s 03/04 wheat export sales have reached 6.15 million tons as of August
13th, up from 6.001 million the week before and compared to 5.53 million last
year at this time.
Technical Outlook
#WHEAT (DEC) 8/18/2004: If yesterday’s gap higher
on the day session chart holds, additional buying could develop this session.
The market setup is supportive for early gains with the close over the 1st swing
resistance. Expect near-term support around 319 2/4 and below there at 315 3/4,
with resistance levels at 325 2/4 and 327 3/4. A negative signal for trend
short-term was given on a close under the 9-bar moving average. A bullish signal
was given with an upside crossover of the daily stochastics. The next upside
objective is 327 3/4.
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LIVE CATTLE RECAP
8/17/2004
October Live Cattle closed down 0.32 at 89.02.
This was 0.22 up from the low and 0.75 off the high.
October Feeder Cattle finished up 0.15 at 115.07,
0.17 off the high and 0.72 up from the low.
October cattle futures closed lower but still
within Friday’s big range day, but the market may eventually get disappointed
with the lack upside follow-through from Friday’s gains. Cash cattle are
currently offered at 88-90 with no trades reported on the week, with some
possible offers at 87. Last week cash cattle traded 84-86 with some scattered
trades reported at 87. The upcoming Labor Day holiday could provide some cash
support, but after that the demand situation is in doubt. The boxed beef cutout
was $1.47 higher at mid-session at $139.16. Today’s estimated cattle slaughter
came in at 122,000, at the bottom of expectations ranging from 122,000 to
126,000 head.
Technical Outlook
#CATTLE (OCT) 8/18/2004: Stochastics are at
mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 90.12. The market
tilt is slightly negative with the close under the pivot. Support should be
encountered at 88.55 and below there at 88.17. Market resistance is at 89.52 and
then again at 90.12. A positive signal for trend short-term was given on a close
over the 9-bar moving average.
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LEAN HOGS RECAP
8/17/2004
October Lean Hogs closed down 1.12 at 65.20. This
was 0.82 up from the low and 0.80 off the high.
February Pork Bellies finished up 1.20 at 94.35,
0.60 off the high and 3.35 up from the low.
October lean hogs gapped lower this morning and
trade in a big range down but closed well off their lows. August bellies opened
lock limit down 87.00 and could be set for expanded limits tomorrow. Cash
markets were reported $1-$2 lower in the Midwest. They have been trending weaker
as supplies are perceived to be adequate. The US Commerce Department has
rejected a request by American pork producers to impose countervailing duties on
Canadian pork imports. A final decision is not scheduled until December 28th.
The 2-day lean index for the period ending August 13th was 78.25, down 67 cents
from the previous day and down from 79.73 on August 9th. Today’s slaughter came
surprisingly strong at 398,000 head, way above expectations ranging from 386,000
to 392,000 head.
Technical Outlook
#HOGS (OCT) 8/18/2004: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 66.00 and 66.82 today, while support is around 64.37 and then 63.57.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart. Short-term indicators on the defensive. Consider selling an
intraday bounce. The downside crossover of the 9 & 18 bar moving average is a
negative signal. Momentum studies are still bearish, but are now at oversold
levels and will tend to support reversal action if it occurs. The next downside
target is now at 63.57.
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COCOA MARKET RECAP
8/17/2004
September Cocoa finished up 3 at 1577, 16 off the
high and 47 up from the low.
The cocoa market dropped down to lower chart
support early in the session but then managed to recovery and close slightly
higher. We suspect that the cocoa market found an equilibrium price around the
lows Tuesday and with the cash trade suggesting that warehouse owners are
looking to secure some supply it is possible that physical buying now begins to
support prices on breaks. Given the recoil away from the lows Tuesday the market
is beginning to have more respect for the even numbered support at $1,600.
Technical Outlook
COCOA (SEP) 08/18/04 The daily closing price
reversal up is positive. The market tilt is slightly negative with the close
under the pivot. Cocoa should run into resistance at 1609 and above there at
1632 with support at 1546 and 1506. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 1506.25.
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COFFEE MARKET RECAP
8/17/2004
September Coffee closed up 0.30 at 69.20. This
was 0.90 up from the low and 0.80 off the high.
Fund short covering slowed, but December coffee
still managed to close higher Tuesday. The market may now see some sideways
consolidation since without more aggressive fund short covering, Dec coffee will
run into resistance around the early July consolidation lows around 73.25.
Concerns of the quality of Brazil’s crop due to wet cool weather in the
preceding months and a 3 day work slowdown by Brazilian dock workers at the main
Santos port may help to keep prices firm. In other news, Brazilian cooperatives
reported coffee stocks fell 42.9 percent as of July 31st compared to a year ago,
but 48% higher than at the end of June, 2004.
Technical Outlook
COFFEE (SEP) 8/18/04 The market has a slightly
positive tilt with the close over the swing pivot. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The near-term upside objective is at 70.90.
The Coffee contract should run into resistance at 70.10 and above there at 70.90
with support at 68.4 and 67.50. The market’s short-term trend is positive on a
close above the 9-day moving average.
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SUGAR MARKET RECAP
8/17/2004
October Sugar closed down 0.08 at 7.54. This was
0.01 up from the low and 0.11 off the high.
The sugar market once again fell aggressively
continues to be the victim of momentum and the overly long small spec and fund
long positioning. It is also important to note that open interest in sugar
remains high enough continue feeding the stop loss selling wave. Reports of
aggressive fund liquidation in the October contract fueled the slide in prices
and even with talk of potential port problems in Brazil (labor issues) the
market showed no sign of checking the aggressive downward momentum. Reports that
China sold another round of sugar totaling 150,000 tons might have given the
bear camp a little added impetus.
Technical Outlook
#SUGAR (OCT) 8/18/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
7.69, with support found at 7.45. The close below the 9-day moving average is a
negative short-term indicator for trend. Momentum studies are still bearish, but
are now at oversold levels and will tend to support reversal action if it
occurs. The next downside target is now at 7.45. Some caution in pressing the
downside is warranted with the RSI under 30.
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COTTON MARKET RECAP
8/17/2004
October Cotton finished up 3.00 at 46.60, equal
to the high and 3.10 up from the low.
December cotton scored a big rally today and
closed limit-up just 3 sessions after putting in contract lows on forecasts of a
huge US crop in last Thursday’s USDA Crop Production report. Chilly weather in
the Texas Plains that occurred after the USDA survey for the report and right
into a critical growing period could keep US production below the recent
estimate. This adds to ideas that the market may have already taken into account
the largest possible crop. So far the Crop Conditions reports don’t seem to
support the idea that the crop in Texas is deteriorating. Yesterday’s weekly
crop conditions report showed 76% of the Texas crop in good to excellent
condition, versus 73% as of August 9th and 67% on August 2nd. Overall US crop
conditions showed an improvement as well. Technical traders may view the trend
as positive now that December cotton has risen above 45.98.
Technical Outlook
#COTTON (OCT) 8/18/2004: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. The market has
a bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. Next resistance area comes in at 48.15 and then again at 48.93,
while support is targeted at 45.05 and 42.73. Stochastics are at mid-range, but
trending higher which should reinforce a move higher if resistance levels are
taken out. The next upside objective is 48.93.