Here’s How Bird Flu Affects Hogs

Technical Outlook

BONDS (MAR) 02/12/04: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 113.24 and then again at 114.14, while swing support hits at 111.31 and below there at 110.28. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 114.14. Short-term indicators suggest buying dips today.

T-NOTES(MAR) The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. 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 115.24. With the close over the 1st swing resistance number, the market is in a moderately positive position. 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 115.08 and then again at 115.24, while swing support hits at 113.30 and below there at 113.04. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/11/2004

The stock-market certainly got the best of two worlds with statements from the Federal Reserve on Wednesday morning. With the Fed suggesting they had the ability to be patient with interest-rate hikes, it would seem as if more growth will be allowed before the brakes are applied. The Disney/Comcast merger would also seem to be a net positive, as that could stimulate additional merger activity and could also inflate various media stock prices. In the end, leaving the status quo in place and promising to tolerate even greater levels of growth, without hiking interest rates, is a favorable prescription for the bull camp. The Fed even indicated that a decline in the U.S. Dollar was beneficial to the U.S., which in a sense of turns a potential negative into a positive.

Technical Outlook

S&P500 (MAR) 02/12/04: The market’s close above the 2nd swing resistance number is a bullish indication. Underlying support comes in at 1146.45 and 1135.38, with overhead resistance at 1163.55 and 1169.58. The market’s short-term trend is positive on a close above the 9-day moving average. 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 1169.58. 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. 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 1170.13. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1164.00 and then again at 1170.13, while swing support hits at 1146.50 and below there at 1135.13. 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) The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. The market should run into resistance at 1524.50 and above there at 1532.25 with support at 1500.50 and 1484.25. Short-term indicators suggest buying dips today. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1532.3.

MINI DOW (MAR) A new contract high was made on the rally. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market should run into resistance at 10781 and above there at 10839 with support at 10620 and 10517. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 10839. 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 9-day RSI over 70 indicates the market is approaching overbought levels.

CURRENCY MARKET RECAP

2/11/2004

While the Dollar throttled sharply lower in the early action Wednesday, but it did manage to recoil from the vicinity of the January lows. Therefore the bear camp in the Dollar will have to prove that the Dollar can trade to an even lower trading range. We suspect that Foreign central banks will respond to the downward extension in the Dollar in the coming sessions. In other words, one can expect a further expansion in daily price volatility. In our opinion, the strongest trend in the currency markets, is the upper track in the British Pound, as that economy continues to spin off favorable numbers, while its central bank has not consistently threatened intervention.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A new contract high was made on the rally. The daily closing price reversal up is positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 95.24 and above there at 95.45, with the yen finding support around 94.75 and below there at 94.47. 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 94.47.

EURO (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.2946. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2590, with overhead resistance at 1.2946. The market’s short-term trend is positive on a close above the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

2/11/2004

The gold market deserved the upward adjustment in price on Wednesday especially when one considers the sharp decline in U.S. Dollar. However in order to pull in a new fresh wave of buyers, the March Dollar index will have to close below the January low and appear to be headed even lower. In the meantime, both gold and silver should benefit from the decline in the Dollar and from the prospect of ongoing economic growth in the U.S. economy. However part of the Fed comments could have been taken negatively by metals traders, as the Chairman discounted the prospect of inflation and the threat of the current account deficit, mostly because of the decline in the US Dollar.

Technical Outlook

SILVER (MAY): 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. Initial support for silver is at 643.8 and below there at 625.1 with resistance likely at 655.4 and 671.3. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 655.4. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive.

GOLD (APR): Support for gold today comes in near 403.23, while resistance is pegged at 416.63. 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 416.63. Consider buying pull-backs since daily studies are bullish. With the close over the 1st swing resistance number, the market is in a moderately positive position. The market’s short-term trend is positive on a close above the 9-day moving average. The upside closing price reversal on the daily chart is somewhat bullish.

COPPER MARKET RECAP

2/11/2004

The copper market exploded to the upside Wednesday, partly because of renewed physical buying and partly because of the optimistic economic track thrown off by the U.S. Federal Reserve Chairman. Copper was also assisted in the upward thrust, by the recent technical correction in copper and by forecasts of an expanding copper deficit in 2004. Market sources now indicate that the annual copper deficit could approach 500,000 metric tons in 2004. In other words, the tightness is extending further into the future and buyers will have to remain attentive.

ENERGY MARKET RECAP

2/11/2004

The energy complex could’ve made more significant gains in the action Wednesday but might have might have been severely overbought technically from the gains posted Tuesday. The weekly inventory statistics showed a moderate crude stock decline, as well as significant products stock declines, and therefore the bull track remains supported by the statistics. With U.S. crude stocks declining to 268 million barrels at the DOE and the market seeing the crude stocks significantly below the critical level of 280 million barrels the bulls have to feel confident. While the refinery Operating Rate increased, the decline in all the stocks readings simply leaves the bulls in control of prices.

Technical Outlook

CRUDE OIL (APR): It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 32.17 and below there at 31.58, with resistance pegged at 33.12 and 33.48. The market’s short-term trend is positive on a close above the 9-day moving average. 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 33.48.

UNLEADED GAS (APR): Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 107.84. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Resistance today is at 107.84, while support should be found around 102.64. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (APR):It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 82.27, with resistance is at 86.87. The market’s short-term trend is positive on a close above the 9-day moving average. 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 86.87.

CORN MARKET RECAP

2/11/2004

Once again the corn market saw initial selling but the market eventually managed to reject the lower levels and return and to a fresh contract high close. Apparently the market continues to view corrections, as buying opportunities and is doing so despite the lofty existing fund long position. In the end, it would appear that the bullish fundamentals brought forth by the USDA report, were finally allowed to manifest themselves in the marketplace and did so despite news of a second bird flu occurrence in Delaware. In fact, the whole bird flu situation has probably kept the corn market from responding fully to the bullish USDA fundamentals released on Tuesday morning. Expectations for the weekly export sales data call for 700,000 to 900,000 metric tons, which compares to a 986,300 metric ton reading last week.

Technical Outlook

CORN (MAY) 02/12/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 296 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 296 today, with support at 282 . The market’s short-term trend is positive on a close above the 9-day moving average. The upside closing price reversal on the daily chart is somewhat bullish.

SOY COMPLEX RECAP

2/11/2004

The expectations for weekly export sales in the soybeans, call for a 200,000 to 400,000 metric ton range, which compares to a 368,200 metric ton reading last week. The soybean market did manage to fall below the previous day’s low but rejected those lows and attempted to recover into mid-session. Apparently some funds decide to liquidate on the early decline below 827 1/2 in the May contract but since the market rejected that lower probe it is clear that the sellers lack conviction. One does have to considering the rather lofty existing long position in soybeans as that could spark stop loss selling on minor chart support violations.

Technical Outlook

SOYBEANS (MAY) 02/12/04: It is a slightly negative indicator that the close was lower than the pivot swing number. The next area of resistance is around 844 1/2 and 851 1/4, while 1st support hits today at 832 1/2 and below there at 827 1/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 851 1/4.

MEAL (MAY): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 245.1. First resistance comes in at 249.7, with support at 246.3. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the pivot swing number is a mildly negative setup.

BEAN OIL (MAY): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 32.81. A positive setup occurred with the close over the 1st swing resistance. A new contract high was made on the rally. Daily swing resistance is found at 32.52 and above there at 32.81. Support should be encountered at 31.70 and 31.17. The 9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

2/11/2004

The Wheat market managed to climb above the recent chart consolidation and close quite impressively Wednesday. The market could have softened off the slack European cash wheat market action. In the end the trade is looking ahead to the Chinese visit next week and garnering support from that visit. The market was probably still responding to the last USDA report as the bullish tilt of the report was countervailed by the bird flu surprise on Tuesday. Expectations for the weekly export sales report call for a range of 400,000 to 600,000 metric tons, which compares to last weeks reading of 575.500 metric tons.

Technical Outlook

WHEAT (MAY) 02/12/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Look for near-term support at 390 1/2 and below there at 387 1/2, with resistance levels at 398 and 402 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 402 1/2.

LIVE CATTLE RECAP

2/11/2004

April cattle closed sharply higher on the session with February hogs and February cattle both limit-up on the session. A general perception that the Delaware bird flu cases are isolated and that poultry exports will resume soon helped provide broad-based support to grains, livestock and even stock prices for poultry exporters. Boxed-beef cut-out values were higher for the second day in a row which added to the positive tone. Daily slaughter came in at just 114,000 head as compared with trade expectations at 124,000-130,000 head. The slow slaughter could be a sign of weak demand from the packer. Cash markets remained inactive with bids at $72 and best offers at $75; unchanged from last week.

Technical Outlook

CATTLE (APR) 02/12/04: The daily stochastics have crossed over up which is a bullish indication. The next upside target is 74.05. A positive setup occurred with the close over the 1st swing resistance. Consider buying pull-backs since daily studies are bullish. Support should be encountered at 72.25 and below there at 71.60. Market resistance is at 73.47 and then again at 74.05. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

2/11/2004

The hog market pushed sharply higher led by a general perception that the bird flu situation in Delaware will be contained and that poultry exports will resume to most key importers soon. The CME 2-day Lean Index for the period ending February 9th was up 83 cents to 61.58 as compared with $57.96 at the end of January. Continued hopes of strong exports to South Korea and Japan and surging loin values provided support. Cash hogs were mixed with western cornbelt locations steady to $1.00 higher and Peoria hogs down 50 cents. The bullish weekly cold storage report and weekly weight data reports were also supportive. Weekly average weights for Iowa/southern Minnesota for the week ending February 7th came in at 264.3 pounds, down 1.5 pounds from the previous week. Fears that hog producers had backed-up hogs in the country during the week ending February 7th was a limiting factor for hog futures last week but the report shows that producer marketings are current. As a result, the recent high slaughter pace is likely a function of strong demand not increasing supply.

Technical Outlook

HOGS (APR) 02/12/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Resistance levels comes in at 60.87 and 61.40 today, while support is around 59.47 and then 58.60. The market’s short-term trend is positive on a close above the 9-day moving average. 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 58.60.

COCOA MARKET RECAP

2/11/2004

The cocoa market managed to avert a continuation of the downside action seen early in the week with a minimal gain. The Ivory Coast’s president has called on cocoa producers to export cocoa through the normal domestic channels, instead of smuggling cocoa through Ghana. The trade has actually estimated that up to 100,000 metric tons of cocoa has been smuggled through non typical channels and that in a sense could understate the upcoming Ivory Coast’s main crop size. In the meantime, commercial buying seems to capable of putting in a near-term bottom but we doubt that cocoa prices have the capacity to drive prices sharply higher without some fresh fundamental development.

Technical Outlook

COCOA (MAY)02/12/04 The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1537 and above there at 1545 with support at 1516 and 1503. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1503.25.

COFFEE MARKET RECAP

2/11/2004

The trade thinks that coffee has a critical support zone at 70.75 but from the action Wednesday it would appear that the bull camp is totally in control of prices. Early in the session, the coffee market saw trade and roaster buying much in the same fashion as was seen Tuesday. The funds which were recently long 30,227 options and futures contracts were apparently not interested in the long side Wednesday possibly because of the early weakness and the proximity to critical chart support.

Technical Outlook

COFFEE (MAY)2/12/04 The market has a slightly positive tilt with the close over the swing pivot. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 74.90.The Coffee contract should run into resistance at 77.50 and above there at 78.10 with support at 75.9 and 74.90. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

2/11/2004

March closed slightly lower. The market remains in a slow but steady downtrend and it will probably take a supply scare from Brazil in order to turn the trend. While China could be a decent buyer this season, traders already expect imports of near 1 million tons and it may take weather problems in China to assume a major deviation from this forecast. The market seems to lack the headline-type news which would turn the trend and seems set to move to a low enough price level to absorb a record production outlook for Brazil’s 2004 crop and burdensome beginning stocks in Brazil. While traders might view the New York market as “low priced”, the sharp drop in domestic prices in Brazil for sugar and alcohol could leave the New York price as appealing to Brazil millers. Open interest is at the highest level since February of 2003 and especially high for the March contract with only 11 trading days left before last trading day (still 113,647 contracts open) which leaves the speculator vulnerable to more long liquidation selling ahead.

Technical Outlook

SUGAR (MAY) 02/12/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 5.77, with support found at 5.59. 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 5.59. With a reading under 30, the 9-day RSI is approaching oversold levels.

COTTON MARKET RECAP

2/11/2004

Cotton closed lower again as the long liquidation selling persisted after Tuesday’s collapse. A bounce at mid-session failed to attract new buying interest and longs seemed willing to exit positions on the bounce. The trade anticipates active weekly export sales totals from China, Pakistan, Turkey and India for the weekly report, released before the opening. Traders are looking for 350,000-600,000 bales as compared with last weeks sales at 283,900 bales. A major downside probe in cotton comes despite what appeared to be a mostly unchanged USDA supply and demand report. Export shipments are expected to come in near 300,000-330,000 bales as compared with 320,400 bales last week. Open interest was down just 2662 contract on Tuesday to 80,124 contracts which suggests a tendency for more long liquidation selling unless the weekly sales numbers can change psychology.

Technical Outlook

COTTON (MAY) 02/12/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Next resistance area comes in at 68.16 and then again at 69.64, while support is targeted at 65.73 and 64.78. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 64.78. The 9-day RSI under 30 indicates the market is approaching oversold levels. ORANGE JUICE (MAR)2/12/04 The sell-off took the market to a new contract low. The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 61.10 and above there at 62.40 with support at 59.00 and 58.20. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 58.2.