Here’s What Energy Traders Want To See

Technical Outlook

#BONDS (JUN) 5/5/2004: The outside day down is
somewhat negative. The market could take on a defensive posture with the daily
closing price reversal down. The close below the 1st swing support could weigh
on the market. Near-term resistance for bonds is at 107.07 and then again at
108.10, while swing support hits at 105.22 and below there at 105.08. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
Rising from over sold levels, daily momentum studies would support higher prices
especially on a close above resistance. The next upside objective is 108.10. The
market is approaching over sold levels on an RSI reading under 30.

T-NOTES(JUN) The outside day down is a negative
signal. The daily closing price reversal down puts the market on the defensive.
The daily stochastic’s gave a bearish indicator with a crossover down. The next
downside objective is now at 109.07. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. Near-term
resistance for the T-Notes is at 110.22 and then again at 111.15, while swing
support hits at 109.18 and below there at 109.07. The market’s short-term trend
is negative as the close remains below the 9-day moving average. With a reading
under 30, the 9-day RSI is approaching oversold levels.

 

STOCK INDICES RECAP

5/4/2004

The stock market should have been very happy with
the results of the FOMC. The initial reaction was certainly favorable as the Fed
promised to hold off on the first move and promised not to act aggressively when
they began to move. In addition to the on hold stance, the stock market also saw
a much stronger-than-expected US factory order release and a strong durable
goods reports. In short, it should have been a big day for the bull camp with
the economy growing and the Fed not coming down on the market in the process!
However, restricting gains were the lingering fears that the Fed still might be
forced to act sooner than it wants or that exploding energy prices might end up
derailing the recovery.

Technical Outlook

#S&P500 (JUN) 5/5/2004: The close over the pivot
swing is a somewhat positive setup. The daily closing price reversal down is a
negative indicator for prices. Underlying support comes in at 1107.20 and
1101.35, with overhead resistance at 1123.20 and 1133.35. 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 objective is now at
1101.35.

S&P E-Mini (JUN): The downside closing price
reversal on the daily chart is somewhat negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1101.38. 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 1123.25
and then again at 1133.38, while swing support hits at 1107.25 and below there
at 1101.38. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative.

NASDAQ (JUN) A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market has a
slightly positive tilt with the close over the swing pivot. The market should
run into resistance at 1433.00 and above there at 1450.50 with support at
1404.00 and 1392.50. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. The next downside objective is 1392.50.

MINI DOW (MAR) The daily closing price reversal
down is a negative indicator for prices. The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10344 and above there at 10427 with support at 10210 and 10159.
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
10159. The close over the pivot swing is a somewhat positive setup.

 

CURRENCY MARKET RECAP

5/4/2004

It is a little surprising that the Dollar didn’t
manage to recover some of the losses seen early in the session after the FOMC
left rates unchanged but also tried to convince the market that they were still
basically on hold and would go very slow once they decided to hike rates. It
would seem like the Dollar came under pressure from the recent highs because of
the US numbers failed to meet expectations and then the Dollar appeared to
accelerate on the downside this week because the market thought the Fed would
remain on hold. Now that the Fed is suggesting that they are in fact on hold the
Dollar should continue downward.

Technical Outlook

#CURRENCIES 5/5/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-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 91.49 and above there at
91.68, with the yen finding support around 91.03 and below there at 90.76. The
market back below the 40-day moving average suggests the longer-term trend could
be turning down. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 91.68.

EURO (JUN): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2138. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2012, with overhead resistance at 1.2138. Stochastics are
rising from over sold levels which is bullish and should support higher prices.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart.

 

PRECIOUS METALS RECAP

5/4/2004

The gold market certainly outperformed silver in
the action Tuesday and that would seem to suggest that the main driving force
behind the metals gains were associated with the weak Dollar or because of
flight-to-quality arguments. It also seemed like geopolitical issues possibly
stemming from soaring energy prices contributed to the gold gains as that
certainly increases the economic uncertainty. Maybe some gold traders took the
Fed’s stubborn stance against hiking rates as a sign that inflation was at least
going to be given a chance to become entrenched.

Technical Outlook

#P-METALS 5/5/2004: SILVER (JUL): The market
setup is supportive for early gains with the close over the 1st swing
resistance. Initial support for silver is at 617.5 and below there at 617.5 with
resistance likely at 617.5 and 617.5. A negative signal for trend short-term was
given on a close under the 9-bar moving average. Rising from over sold levels,
daily momentum studies would support higher prices especially on a close above
resistance. The next upside objective is 617.5. If yesterday’s gap higher on the
day session chart holds, additional buying could develop this session.

GOLD (JUN): Support for gold today comes in near
389.15, while resistance is pegged at 395.15. Stochastics are rising from over
sold levels which is bullish and should support higher prices. The near-term
upside target is at 395.15. There could be more upside follow through since the
market closed above the 2nd swing resistance. 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.

 

COPPER MARKET RECAP

5/4/2004

The copper market traded in a tight range Tuesday
despite what appeared to be some stellar US economic numbers. While the US Fed
promised to remain on hold the financial markets weren’t convinced of that and
that could also have kept a lid on copper prices. With the US Dollar falling
sharply that could have made copper look a little more attractive which is
important considering that the only demand concerns for copper, right now are
focused on China. With US factory orders Tuesday morning coming in strong and
the US equity market trying to rally it would seem that the net shake from the
macro economic area is a positive for copper.

 

ENERGY MARKET RECAP

5/4/2004

Prices soared Tuesday on concerns that gasoline
tightness was beginning to be hyped by the trade. Certainly the impact of a
California gasoline pipeline problem exaggerated the upside action but some
traders were reportedly buying ahead of the weekly inventory report. If the
pattern of gasoline stock declines continues for another couple weeks, the
market won’t wait to factor in a more aggressive supply scare. In other words,
the market wants to see the supply now–not later!

Technical Outlook

#ENERGIES 5/5/2004: CRUDE OIL (JUL): The market
rallied to a new contract high. Follow through buying looks likely if the market
can hold yesterday’s gap on the day session chart. There could be more upside
follow through since the market closed above the 2nd swing resistance. Support
for crude is keyed on 38.35 and below there at 37.83, with resistance pegged at
39.15 and 39.43. 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 39.43. The market is becoming somewhat overbought now that
the RSI is over 70.

UNLEADED GAS (JUL): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
129.06. The market setup is supportive for early gains with the close over the
1st swing resistance. Resistance today is at 129.06, while support should be
found around 122.76. The market made a new contract high on the rally. 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.

HEATING OIL (JUL): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 96.82, with resistance is at 99.92. 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 99.92. The market is becoming
somewhat overbought now that the RSI is over 70. The market rallied to a new
contract high. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart.

 

CORN MARKET RECAP

5/4/2004

Corn futures consolidated recent gains and the
ability to avoid a sell-off with a record fast plantings pace and good weather
for planting ahead could be a sign of solid underlying support. The record fast
plantings pace released by the weekly crop progress report at 63% as of Sunday
compared with trade expectations near 50% and helped to pressure the market. In
addition, the outlook for warm and dry weather this week was a signal to traders
that producers may be in a position to plant even more acres in the coming week.
The crop has emerged for 18% of the corn area as compared with 11% as the 5-year
average. Deliveries were 262 contracts against the May futures. The run-up in
the wheat market is led by the first heat wave of the season into the plains
this week and this helped to provide underlying support. Support levels for
December corn include 317 and 315 3/4 with 322 3/4 and 324 1/2 as resistance.

Technical Outlook

#CORN (JUL) 5/5/2004: 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 328 3/4. It is a slightly negative
indicator that the close was under the swing pivot. Market resistance comes in
at 328 3/4 today, with support at 318 3/4. The upside crossover of the 9 & 18
bar moving average is a positive signal. The daily closing price reversal down
is a negative indicator for prices.

 

SOY COMPLEX RECAP

5/4/2004

July soybeans were in a choppy trading range with
little direction while November soybeans remained in a decisive uptrend as
perfect weather for corn plantings is an indication of potentially “less”
soybean plantings. November soybeans moved to the highest level since April
15th. Ideas that the market was overbought after yesterday’s jump, a fast
plantings pace last week and the outlook for good weather for planting this week
helped trigger the early losses. Plantings reached 12% complete as of Sunday as
compared with trade expectations near 10%. Declining crop estimates for the
Brazil and Argentina crop and ideas that the US crush pace is still too high to
believe that ending stocks will not need to be tightened further from the
current USDA forecast for a 27 year low added to the positive tone. Oil
deliveries were 93 contracts and there is still talk that US end users will
import Brazil oil this month failed to pressure oil. Basis was steady/firm.
Near-term support for July soybeans comes in at 1017 and 1009 with resistance at
1038 and 1052. Support for November soybeans comes in at 766 3/4 and 760 1/2
with 780 and 786 1/4 as resistance.

Technical Outlook

#SOYBEANS (JUL) 05/05/04 The market has a
slightly positive tilt with the close over the swing pivot. The next area of
resistance is around 1031 and 1040 3/4, while 1st support hits today at 1011 2/4
and below there at 1001 3/4. A positive indicator was given with the upside
crossover of the 9 & 18 bar moving average. Rising stochastics at overbought
levels warrant some caution for bulls. The next upside objective is 1040 3/4.

MEAL (JUL): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 329.4. First resistance comes in at 325.3,
with support at 317.9. The upside crossover of the 9 & 18 bar moving average is
a positive signal. It is a slightly negative indicator that the close was under
the swing pivot.

BEAN OIL (JUL): 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 34.04. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Daily swing resistance is found at
33.84 and above there at 34.04. Support should be encountered at 33.33 and
33.02.

 

WHEAT MARKET RECAP

5/4/2004

July wheat drove sharply higher and to the
highest level since April 12th as weather concerns were enough to trigger
aggressive new buying. Rumors that China may buy near 3 million tons of wheat
from the US, Canada and Australia was additional fuel to the fire. Talk of upper
90’s temperatures by tomorrow in western Kansas was enough to trigger aggressive
new buying and significant short-covering early in the session. Private
forecasters see the first 3-4 day heat wave of the season hitting the central
plains this week and the timing of the heat just when the crop is “heading out”
along with potential moisture stress at the end of the period was seen as
bullish factors. Deliveries this morning totaled 562 contracts as compared with
694 contracts and the trade views this as light when compared with deliverable
stocks. Export news is light as the market still views the weather conditions as
key over the near-term. The fact that crop conditions were unchanged from last
week at 48% good to excellent in last nights weekly crop progress report was
seen as a supportive factor as traders expected improving crop conditions after
recent rains have hit the plains. July wheat support moves up to 409 1/4 and 402
3/4 (50% of the April break) with resistance at 419 1/2 and 430 1/2.

Technical Outlook

#WHEAT (JUL) 5/5/2004: If yesterday’s gap higher
on the day session chart holds, additional buying could develop this session.
The market has a bullish tilt coming into today’s trade with the close above the
2nd swing resistance. Expect near-term support around 404 and below there at 394
2/4, with resistance levels at 418 and 422 2/4. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market now
above the 40-day moving average suggests the longer-term trend is up.
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 422 2/4.

 

LIVE CATTLE RECAP

5/4/2004

June cattle closed 245 higher on the session and
into new contract highs as expectations or rumors that cash cattle traded at
$91.00 in Nebraska and hopes of $90.00 cash trade this week in the panhandle
helped to trigger more short-covering and active new buying due to the discount
of futures to cash. Boxed beef cut-out values were up $1.03 to $160.45 as
compared with $157.25 last week at this time. Sales were mostly $87 last week
and $85 the week before that. Slaughter came in at 130,000 head versus
expectations of 120,000 to 130,000. The big discount of futures to cash still
seems to be the primary bullish force along with solid demand.

Technical Outlook

#CATTLE (JUN) 5/5/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
86.47. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. Support should be encountered at 83.35 and below
there at 81.57. Market resistance is at 85.80 and then again at 86.47. The
market made a new contract high on the rally. 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.

 

LEAN HOGS RECAP

5/4/2004

The hog market experienced a technical correction
off of the highs with increased concerns for the market from the supply
perspective helping to trigger mild long liquidation selling. July bellies
recovered to close just slightly lower on the session but near 150 points off of
the lows of the day. Cash hogs were mostly higher with Peoria said to be $1.00
higher. Pork production last week was up 6.7% from last year as compared with
trade expectations from the last Hogs and Pigs report that pork production would
be near 2-3% over last year. Traders are also concerned that tighter packer
profit margins could slow demand for live hogs. Estimated hog slaughter came in
at 368,000 head versus expectations of 370,000 to 378,000.

Technical Outlook

#HOGS (JUN) 5/5/2004: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 74.37 and 75.07 today, while support is around 73.32 and then 72.97.
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 target is at
75.07.

 

COCOA MARKET RECAP

5/4/2004

The cocoa market managed a slightly higher trade
and did so off reports that professional or commercial interests were buying
around the lows Tuesday. With the Dollar falling sharply it is possible that the
commercial buyers were enticed by the arbitrage value of the US cocoa market. In
general the market is searching around for ongoing justification for the run off
the late April low as the whole political uncertainty story is not being bought
by the large physical players.

Technical Outlook

COCOA (JUL) 05/05/04 The daily closing price
reversal up is positive. The market has a slightly positive tilt with the close
over the swing pivot. Cocoa should run into resistance at 1415 and above there
at 1433 with support at 1375 and 1353. Positive momentum studies in the neutral
zone will tend to reinforce higher price action. The next upside target is
1432.50.

 

COFFEE MARKET RECAP

5/4/2004

The highest close since April 19th could spark
more short-covering and new seasonal buying over the near-term if there is
enough fundamental news to help rationalize near-term cash market firmness.
Brazil shipments in the April 1st to 30th time frame came in at 1.25 million
bags which was down from 1.87 million bags last year and shipments of 2.02
million bags in March. Guatemala exports for April were pegged at 421,701 bags,
down 16% from last year. Costa Rica exports in April were pegged at 237,708
bags, down 7.6% from last year. The Brazil frost season begins late this month
and there could be seasonal buying from ahead of this period. The harvest is
getting underway in Brazil as well with an official crop estimate at 38.28
million bags from 28.82 million last year. Traders believe the crop is closer to
42 million bags. Indonesia production is expected to be near 360,000 tonnes, up
20% from last year and traders believe the Vietnam crop could be near 13 million
bags as compared with the official government estimate of 11.5-12.0 million
bags.

Technical Outlook

COFFEE (JUN) 5/5/04 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 74.40. The Coffee contract should run into
resistance at 73.60 and above there at 74.40 with support at 70.9 and 69.00. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

5/4/2004

July sugar closed slightly lower on the session
but near the highs of the day as the early test of last weeks lows failed to
attract new selling interest. Traders await some new fundamental news which may
help the market break-out of the past months trading range which is the same as
the 60-point range of April 28th. The delivery of 44,000 tons of sugar against
the May contract failed to attract significant interest from the bulls or the
bears. London trade house rumors have Russia buying 75,000 tons of Cuban raw
sugar. Brazil exports for April were pegged at 726,900 tons as compared with
211,000 tons last year, according to Trade officials. Traders expect a record
center-south crop for the 2004/2005 season, up 6.8% from last year. Commercial
buyers were noted in the options to help support but producer selling in the
futures helped to pressure.

Technical Outlook

#SUGAR (JUL) 5/5/2004: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
6.98, with support found at 6.72. The close below the 9-day moving average is a
negative short-term indicator for trend. Stochastics trending lower at midrange
will tend to reinforce a move lower especially if support levels are taken out.
The next downside target is now at 6.72.

 

COTTON MARKET RECAP

5/4/2004

The market pushed lower with December cotton down
71 on the session with the market giving back some of the gains off of last
weeks spike bottom low. The CotLook A Index was up 60 points at on the session
after losing 105 points last week. The USDA attaché in Pakistan pegged crop
production for the 2004/2005 season at the second largest crop ever at 1.96
million metric tons as compared to 1.7 million tons last year. Planting progress
in the US as of Sunday reached 31% complete as compared with 23% last week, 29%
last year and 28% on average. Traders are watching deliverable stocks closely
with total deliveries this month at 2835 contracts. If stocks are decertified,
traders will assume that there is a home for the cotton and futures are likely
to be supported.

Technical Outlook

#COTTON (JUL) 5/5/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 60.36 and then again at 61.20, while support is targeted at 59.01
and 58.50. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The next downside objective is 58.50.