Here’s What Some U.S. And European Players Are Saying About Energy Prices
BOND MARKET RECAP
11/1/2004
December Bonds closed down 0-23 at 113-04. This
was 0-03 up from the low and 0-21 off the high.
December 10 Yr Treasury Notes finished down 0-140
at 113-040, 0-130 off the high and 0-015 up from the low.
The Treasury market started out weak and
then saw some added pressure off the sharp decline in crude oil prices. The
market was already leaning to the downside as some players were seen moving to
the sidelines ahead of the election while other feared that the unusually active
US report flow was set to undermine prices. However, the numbers could easily
have been considered supportive of the bull case in Treasuries as the numbers
failed to live up to early expectations. The ISM new orders Index did manage to
post a slight increase but the employment Index declined. In the early set of
numbers the personal income was up slightly less than expected and the spending
reading was as expected. Construction spending was unchanged and that was
certainly a little weaker than early expectations.
Technical Outlook
BONDS (DEC) 11/02/2004: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close below the 9-day moving average is a negative short-term indicator for
trend. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is now at 112-15.
The next area of resistance is around 113-18 and 114-04, while 1st support hits
today at 112-24 and below there at 112-15.
TNOTES (DEC) 11/02/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The close below the 1st swing support
could weigh on the market. The next downside target is now at 112-245. The next
area of resistance is around 113-125 and 113-230, while 1st support hits today
at 112-295 and below there at 112-245.
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STOCK INDICES RECAP
11/1/2004
December S&P finished up 0.5 at 1130.8, 2.9 off
the high and 3.2 up from the low.
December S&P E-Mini closed up 0.5 at 1130.75.
This was 4.5 up from the low and 3.25 off the high.
December Dow closed up 33 at 10042. This was 42
up from the low and 28 off the high.
December Dow E-Mini finished up 35 at 10044, 25
off the high and 46 up from the low.
The US stock market initially took the positive
tilt from the European equity market action early in the session. Apparently
some players in the US and European markets think that recent energy market
weakness signals an end to the bull market in energy prices and that is
certainly a fundamental lift to the stock market. However, as the session wore
on it was clear that volatility was going to remain fairly high this week and we
one considers the magnitude of the rise off the October lows it is not
surprising that some longs decided to run to the sidelines into the close.
Technical Outlook
S&P 500 (DEC) 11/02/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside target is 1136.92. The
next area of resistance is around 1134.05 and 1136.92, while 1st support hits
today at 1127.95 and below there at 1124.73.
SP EMINI (DEC) 11/02/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is positive on the close above the 9-day moving average. It is a mildly bullish
indicator that the market closed over the pivot swing number. The near-term
upside target is at 1138.31. The next area of resistance is around 1134.87 and
1138.31, while 1st support hits today at 1127.13 and below there at 1122.82.
NASDAQ (DEC) 11/02/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The next upside target is 1507.62. The next area of resistance is around 1500.25
and 1507.62, while 1st support hits today at 1483.75 and below there at 1474.63.
MINIDOW (DEC) 11/02/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Market positioning is positive with the
close over the 1st swing resistance. The near-term upside target is at 10110.
The next area of resistance is around 10081 and 10110, while 1st support hits
today at 10011 and below there at 9969.
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CURRENCY MARKET RECAP
11/1/2004
December US Dollar finished up 35 at 8533, 15 off
the high and 57 up from the low.
December Euro finished down 0.44 at 127.43, 0.29
off the high and 0.27 up from the low.
December Euro Dollar closed down 0.02 at 97.655.
This was 0.005 up from the low and 0.02 off the high.
December Canadian Dollar closed down 0.13 at
81.82. This was 0.28 up from the low and 0.08 off the high.
December British Pound finished down 0.43 at
182.69, 0.26 off the high and 0.3 up from the low.
December Swiss closed down 0.58 at 83.28. This
was 0.16 up from the low and 0.25 off the high.
December Japanese Yen closed down 0.48 at 94.18.
This was 0.16 up from the low and 0.24 off the high.
The Dollar seemed to get short covering into the
opening Monday especially after the Dollar dove to a new low for the move
overnight. However, it also seemed like a number of players simply wanted out
ahead of the US election, while other shorts in the Dollar were smoked out by
the sharp decline in US energy futures prices. We are not sure if any outcome
from the election is going to instantly alter the fundamental track in the
Dollar but some outcomes and specifically no outcome could significantly add to
the downside momentum in the Dollar. Besides slightly softer than expected US
economic information on Monday there really wasn’t a significant change in the
setup of the currencies and that means that most of the action Monday was simple
position balancing.
Technical Outlook
YEN (DEC) 11/02/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. 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 market’s
short-term trend is positive on the close above the 9-day moving average. The
close below the 1st swing support could weigh on the market. The next downside
target is now at 93.80. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 94.38 and
94.60, while 1st support hits today at 93.98 and below there at 93.80.
EURO (DEC) 11/02/2004: The daily stochastics have
crossed over down which is a bearish indication. Momentum studies trending lower
from overbought levels is a bearish indicator and would tend to reinforce lower
price action. The market’s short-term trend is positive on the close above the
9-day moving average. The market’s close below the pivot swing number is a
mildly negative setup. The next downside objective is now at 126.88. The next
area of resistance is around 127.71 and 127.99, while 1st support hits today at
127.15 and below there at 126.88.
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PRECIOUS METALS RECAP
11/1/2004
December Gold closed down 1.2 at 428.2. This was
1.2 up from the low and 3.3 off the high.
December Silver finished up 0.025 at 7.33, 0.045
off the high and 0.095 up from the low.
January Platinum closed down 0.6 at 832.4. This
was 4.4 up from the low and 5.6 off the high.
After some early strength the gold market
weakened and seemed to become concerned about the overly long small spec and
fund long position. The Dollar seemed to be lifted from a short covering
standing and that in turn prompted some gold longs to reconsider holding
positions into the election. A number of Press articles have suggested that once
the election is past the bull camp will have nothing to support its case. Given
the weakness in energy prices one can certainly understand the increased selling
pressure in gold Monday afternoon.
Technical Outlook
SILVER (DEC) 11/02/2004: The daily stochastics
have crossed over up which is a bullish indication. Daily stochastics have risen
into overbought territory which will tend to support reversal action if it
occurs. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next upside objective
is 745.8. The next area of resistance is around 740.0 and 745.8, while 1st
support hits today at 726.1 and below there at 717.8.
GOLD (DEC) 11/02/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. The downside closing price reversal on the daily chart is
somewhat negative. It is a slightly negative indicator that the close was under
the swing pivot. The next upside target is 433.2. The next area of resistance is
around 430.4 and 433.2, while 1st support hits today at 426.0 and below there at
424.3.
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COPPER MARKET RECAP
11/1/2004
December Copper finished down 3.00 at 130.75,
1.85 off the high and 0.25 up from the low.
The copper market gave up a significant portion
of the massive gains from last Friday and did so because of renewed concerns for
oil (early in the session) and in general because of the uncertainty associated
with the election. We also think that some Asian selling pressure was seen off
concerns of a trade flap with China and ongoing concerns for bird flu in that
region. However, even after energy prices weakened the copper market didn’t show
much interest in the upside and that is disappointing to the bull camp.
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ENERGY MARKET RECAP
11/1/2004
December Crude Oil closed down 1.63 at 50.13.
This was 0.83 up from the low and 2.37 off the high.
December Heating Oil closed down 5.65 at 140.76.
This was 1.76 up from the low and 8.19 off the high.
December Unleaded Gas finished down 3.77 at
129.08, 5.62 off the high and 0.93 up from the low.
December Natural Gas finished down 0.00 at 8.72,
0.48 off the high and 0.11 up from the low.
December Propane closed down 0.01 at 0.90. This
was equal to the low and 0.02 off the high.
The energy complex started off firm in response
to concerns of a nationwide strike in Nigeria. However, European stocks ramped
up Monday with some analysts suggesting that a near term energy price top might
already be in place. Reports that the Nigerian strike might be ruled illegal by
the courts seemed to deflate prices but yet we are not sure that the Unions will
be put off by a legal ruling. The oil complex might also have faded off headline
reports that Saudi Arabia might have captured a number of key Al-Qaida
operatives in that country. We also think that a number of energy market longs
might have decided to exit and bank profits rather than risk the negative macro
economic impact of a debacle in the US election. The OPEC basket price was down
a sharp $1.16 per barrel and that has to foster at least some technical pressure
on prices in the near term action.
Technical Outlook
CRUDE OIL (DEC) 11/02/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
outside day down and close below the previous day’s low is a negative signal.
The close below the 2nd swing support number puts the market on the defensive.
The next downside target is now at 47.32. The next area of resistance is around
51.73 and 53.71, while 1st support hits today at 48.53 and below there at 47.32.
UNLEADED (DEC) 11/02/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Momentum studies are declining, but have fallen to oversold levels. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
A negative signal was given by the outside day down. The market setup is
somewhat negative with the close under the 1st swing support. The next downside
target is now at 123.71. The next area of resistance is around 132.35 and
136.80, while 1st support hits today at 125.81 and below there at 123.71.
HEATING OIL (DEC) 11/02/2004: Momentum studies
are declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The outside day
down and close below the previous day’s low is a negative signal. The defensive
setup, with the close under the 2nd swing support, could cause some early
weakness. The next downside target is 132.42. The next area of resistance is
around 145.73 and 152.31, while 1st support hits today at 135.79 and below there
at 132.42.
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CORN MARKET RECAP
11/1/2004
December Corn finished down 2 1/2 at 200, 2
1/2 off the high and 3/4 up from the low. March Corn closed down 2 at 211. This
was 1/2 up from the low and 2 off the high.
The outlook for clear weather this week in the
northwestern cornbelt suggests increased harvest selling pressures on the week
and news of increased export activity from China (South Korea bought 50,000 tons
from China over the weekend) added to the bearish tone. Funds were noted sellers
of near 4500 contracts into the mid-session which helped drive December corn
down as much as 8 1/4 cents off of Friday’s high. In addition, December corn
traded under $2.00/bushel for only the second day in the life-of-contract.
Weekly export inspections came in at just 24.76 million bushels as compared with
trade expectations at 34-40 million bushels. The market needs to see 41.8
million bushels per week to reach the USDA projection and cumulative exports
have reached 12.7% of the USDA forecast for the entire season as compared with
17.3% on average for this time of the year. Traders expect tonight’s weekly crop
progress report to show the crop near 63-65% harvested as compared with 55% last
week. Support for December corn comes in at 199 and 197 with resistance at 201
1/2 and 203 1/2.
Technical Outlook
CORN (DEC) 11/02/2004: A negative indicator was
given with the downside crossover of the 9 & 18 bar moving average. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
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. The next downside objective is now at 197 1/4. The next area of
resistance is around 201 1/2 and 203 1/2, while 1st support hits today at 198
1/2 and below there at 197 1/4.
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SOY COMPLEX RECAP
11/1/2004
January Soybeans finished down 12 at 521 1/2, 8
1/2 off the high and 3 up from the low. March Soybeans closed down 12 3/4 at 527
1/2. This was 2 1/2 up from the low and 10 off the high.
December Soymeal closed down 3.8 at 150.1. This
was 0.1 up from the low and 2.6 off the high.
December Soybean Oil finished down 0.32 at 21.18,
0.27 off the high and 0.15 up from the low.
Fears of a decline in the short-term demand from
China and ideas that it may take lower prices to absorb the tail end of harvest
helped trigger more speculative selling in soybeans which drove January beans to
the lowest level since October 19th. Funds were noted sellers of near 3000
contracts into the mid-session. Traders are bracing for trade estimates for the
November USDA Crop Production report with suspicions that traders will raise
average soybean yields for the report. Weekly export inspections came in at 52.5
million bushels as compared with trade expectations at 38-44 million bushels.
The market needs to see 18.3 million bushels per week to reach the USDA
projection and cumulative exports have reached 19.5% of the USDA forecast for
the entire season as compared with 19.9% on average for this time of the year.
Even the surge in exports failed to support the market as new lows were scored
after the export news was released. Traders expect tonight’s weekly crop
progress report to show the crop near 82-86% harvested as compared with 80% last
week. January soybean resistance comes in at 528 and 530 with support at 521 and
514.
Technical Outlook
BEANS (JAN) 11/02/2004: A crossover down in the
daily stochastics is a bearish signal. Momentum studies trending lower at
mid-range could accelerate a price break if support levels are broken. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. The next downside objective is now at 511 1/2. The
next area of resistance is around 527 1/4 and 534 1/4, while 1st support hits
today at 515 3/4 and below there at 511 1/2.
MEAL (DEC) 11/02/2004: 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 market’s
short-term trend is negative as the close remains below the 9-day moving
average. The gap lower price action on the day session chart is a bearish
indicator for trend. The market is in a bearish position with the close below
the 2nd swing support number. The next downside target is 148.1. Some caution in
pressing the downside is warranted with the RSI under 30. The next area of
resistance is around 151.4 and 153.4, while 1st support hits today at 148.8 and
below there at 148.1.
BEANOIL (DEC) 11/02/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is negative as the close remains below the 9-day moving average. The close below
the 1st swing support could weigh on the market. The near-term upside objective
is at 21.63. The next area of resistance is around 21.39 and 21.63, while 1st
support hits today at 20.97 and below there at 20.79.
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WHEAT MARKET RECAP
11/1/2004
December Wheat finished down 10 1/4 at 306 1/4, 7 3/4 off the
high and 1 3/4 up from the low. March Wheat closed down 9 1/2 at 319. This was 2
1/4 up from the low and 6 1/2 off the high.
Weakness in soybeans and other commodity markets
combined with fears of a slowdown in demand from China helped trigger another
round of active selling from speculators in Wheat which drove futures to the
lowest level since October 12th. Funds were noted sellers of near 3000 contracts
by mid-session which helped contribute to the sharp losses with the December
contract down as much as 21 1/2 cents off of Friday’s highs. The lack of
commercial support underneath the market is a major concern to the grain bulls.
Weekly export inspections came in at 24.97 million bushels as compared with
trade expectations at 18-24 million bushels. The market needs to see 15.18
million bushels per week to reach the USDA projection and cumulative exports
have reached 50.7% of the USDA forecast for the entire season as compared with
45.1% on average for this time of the year. December wheat support comes in at
303 and 300 with 308 and 311 1/2 as resistance.
Technical Outlook
WHEAT (DEC) 11/02/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. A negative signal for trend short-term was given on a close under the
9-bar moving average. The close below the 2nd swing support number puts the
market on the defensive. The next downside target is now at 298 1/4. The next
area of resistance is around 311 and 317 1/4, while 1st support hits today at
301 1/2 and below there at 298 1/4.
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LIVE CATTLE RECAP
11/1/2004
December Live Cattle closed down 0.52 at 83.95.
This was 0.40 up from the low and 0.27 off the high.
November Feeder Cattle finished down 0.50 at
108.70, 0.60 off the high and 0.20 up from the low.
The cattle market traded mostly lower on the
session but stayed inside of Friday’s 320 point range. Traders saw the market as
slightly overvalued with talk of a weak tone for cash markets again this week
after cash traded at $85.00 on Friday, down $1-$2 on the week. Average slaughter
weights are high, beef prices are falling and traders are fearful that exports
will not pick-up until well into the new year. Boxed-beef prices were down $1.18
to $138.27 at mid-session as compared with $142.45 last week at this time.
Slaughter came in at 124,000 head as compared with trade expectations at 118,000
to 123,000 head.
Technical Outlook
CATTLE (DEC) 11/02/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The market tilt is slightly negative
with the close under the pivot. The next downside target is now at 83.250. Some
caution in pressing the downside is warranted with the RSI under 30. The next
area of resistance is around 84.270 and 84.570, while 1st support hits today at
83.620 and below there at 83.250.
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LEAN HOGS RECAP
11/1/2004
December Lean Hogs closed up 1.72 at 69.17. This
was 1.47 up from the low and 0.17 off the high.
February Pork Bellies finished up 3.00 at 97.80,
equal to the high and 2.80 up from the low.
December hogs traded sharply higher on the
session and to the highest level since September 30th as a firm tone to the cash
market this week and hopes for continued strong pork exports ahead helped to
support. Peoria live markets were steady while St. Louis was $1.00 higher. The
discount to cash and active fund buying support the sharp gains after the market
gapped higher to start the week which is seen as a bullish technical
development. The CME 2-Day Lean Index for the period ending October 28th was
reported at 71.15, up 4 cents from the previous session and up from 69.89 the
previous week. Traders believe the US market could easily absorb some “extra”
hogs this week if the strike at the slaughter plant in Ontario (28,000 head per
week) is extended.
Technical Outlook
HOGS (DEC) 11/02/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. The gap up on the
day session chart gave a bullish indicator and more follow through could be seen
this session. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The near-term upside objective is at
70.500. The next area of resistance is around 69.970 and 70.500, while 1st
support hits today at 68.350 and below there at 67.200.
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COCOA MARKET RECAP
11/1/2004
December Cocoa finished down 16 at 1453, 16 off
the high and 2 up from the low.
The cocoa market started out weak and slide even
lower on news that the Ivory Coast farmers would delay the marketing block or
strike by another day. Apparently seeing some trucks sneak in under the wire
ahead of the stoppage on Monday conspired to weaken cash prices and with the
March cocoa not having much in the way of technical support until $1,458.
According to the most recent COT report the market is still holding a moderate
spec and fund long position and that would seem to make the chart violation
Monday morning more significant.
Technical Outlook
COCOA (DEC) 11/02/2004: The close under the
40-day moving average indicates the longer-term trend could be turning down. The
daily stochastics have crossed over down which is a bearish indication. Momentum
studies trending lower at mid-range could accelerate a price break if support
levels are broken. A negative signal for trend short-term was given on a close
under the 9-bar moving average. The market’s close below the pivot swing number
is a mildly negative setup. The next downside target is 1439. The next area of
resistance is around 1462 and 1474, while 1st support hits today at 1444 and
below there at 1439.
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COFFEE MARKET RECAP
11/1/2004
December Coffee closed down 0.20 at 74.20. This
was 0.40 up from the low and 1.40 off the high.
Another new low for the move leaves the near term
technical bias pointing downward. The US coffee market actually finished weaker
despite higher London coffee market action Monday. Apparently the London market
saw roaster buying and that seemed to give the market a positive attitude but
that same attitude didn’t carry any weight in the US action. The most recent COT
report showed coffee to be holding a net spec and fund long of 14,000 contracts
and that would certainly seem to justify a continued slide in prices.
Technical Outlook
COFFEE (DEC) 11/02/2004: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market’s close below the pivot swing
number is a mildly negative setup. The next downside target is 72.65. The next
area of resistance is around 75.10 and 76.25, while 1st support hits today at
73.30 and below there at 72.65.
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SUGAR MARKET RECAP
11/1/2004
March Sugar closed down 0.14 at 8.46. This was
0.06 up from the low and 0.17 off the high.
A very damaging technical trade was seen in sugar
and the Press was suggesting that the funds were running for the exits. Some
traders think that the fundamental support for sugar prices is softening along
with the recent weakness in energy prices, as lower ethanol/alcohol needs could
in turn reduce the demand for sugar. The biggest impact on sugar prices
continues to flow from Brazil where domestic sugar supply has been pressed into
use in the energy complex. Considering that the recent fund long in sugar was
pegged at 117,000 contracts and the small spec long was 36,000 contracts there
is certainly a huge liquidation potential in sugar to start this week!
Technical Outlook
SUGAR (MAR) 11/02/2004: Daily stochastics are
trending lower but have declined into oversold territory. A negative signal for
trend short-term was given on a close under the 9-bar moving average. The
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. The next downside target is 8.26. The next area of resistance is
around 8.57 and 8.71, while 1st support hits today at 8.35 and below there at
8.26.
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COTTON MARKET RECAP
11/1/2004
December Cotton finished down 1.00 at 43.98, 0.92
off the high and 0.43 up from the low.
The cotton market continues to fail as the
production cycle continues without a major hitch to what is considered a massive
US output. However, with the most recent COT report showing signs that cotton
was already net spec short there is a chance that the August lows might be
capable of supporting prices. It is also possible that cotton is somewhat
deflated by the uncertainty over the global economy but seeing the election pass
without a long legal battle and seeing energy prices continue to decline might
help cotton avoid even steeper near term losses.
Technical Outlook
COTTON (DEC) 11/02/2004: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
9-day moving average is a negative short-term indicator for trend. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next downside target is now at 42.76. The next area of
resistance is around 44.65 and 45.45, while 1st support hits today at 43.31 and
below there at 42.76.