Here’s What The Recovery Crowd Needs Tomorrow

Technical Outlook

BONDS (DEC) 11/5/2003: The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for bonds is at 109.14 and then again at 109.23, while swing support hits at 108.15 and below there at 107.25. 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. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 109.23. Daily studies suggest buying dips today.

T-NOTES(DEC) Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 111.18. With the close over the 1st swing resistance number, the market is in a moderately positive position. Near-term resistance for the T-Notes is at 112.20 and then again at 112.26, while swing support hits at 111.32 and below there at 111.18. The market’s short-term trend is negative as the close remains below the 9-day moving average.

STOCK INDICES RECAP

11/4/03

The bull camp was put off by the reoccurring concern over the jobs situation. One might also suggest that prices were somewhat overbought off the recent run but that seems to be looking for an excuse for a correction. Certainly the combination of a sharp jump in layoffs and the dramatic increase in tensions inside Iraq is cause to take stock prices down. It is also clear that Wall Street is a little uneasy off the most recent flap regarding mutual fund irregularities and that might be resulting in liquidation of assets. The US recovery crowd needs a strong set of numbers Wednesday to give the bulls a reason to stand in against the recent profit taking pressure.

Technical Outlook

S&P500 (DEC) 11/5/2003: It is a slightly negative indicator that the close was under the swing pivot. Underlying support comes in at 1048.50 and 1045.75, with overhead resistance at 1055.50 and 1059.75. Stochastics are rising from over sold levels which is bullish and should support higher prices. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside objective is at 1059.75.

S&P E-Mini (DEC): A new contract high was made on the rally. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1059.88. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for the S&P Mini is at 1055.75 and then again at 1059.88, while swing support hits at 1048.75 and below there at 1045.88. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average.

NASDAQ (DEC) A positive signal for trend short-term was given on a close over the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. The market should run into resistance at 1438.50 and above there at 1450.25 with support at 1420.50 and 1414.25. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1450.25.

CURRENCY MARKET RECAP

11/4/03

After the disappointment off the layoff report the Dollar came under more aggressive selling pressure. With the sharp rise in payroll the recent rallying cry of the bull camp has been defeated. It should also be noted that Japan and the euro zone posted some impressive numbers right into the disappointing US numbers. We have to think that a number of technical support levels were violated in the action Tuesday and that certainly brought in some fund longs in the Yen and the Pound. Unless the US gets back on track with some bullish economic readings Wednesday morning the Dollar might be for even more declines.

Technical Outlook

YEN (DEC): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Swing resistance is targeted at 91.68 and above there at 91.94, with the yen finding support around 91.01 and below there at 90.60. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 90.60.

EURO (DEC): 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 1.1434. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.1434, with overhead resistance at 1.1526. The close below the 9-day moving average is a negative short-term indicator for trend. The close below the 40-day moving average is an indication the longer-term trend is down. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

11/4/03

The gold market seemed to be lifted by the news that the US economy was still limping along in the job area as the layoff report showed a much bigger than expected rise in the number of jobs lost. While we suspect that the sliding Dollar sparked some buying of gold and silver it would appear that the metals are still responsive to flight to quality concerns and evidently leaving the economy in an uncertain position is supportive to the metals. Maybe the metals are wondering what happens to interest rates and the prospect of inflation if the US Fed stands pat with interest until well into the recovery.

Technical Outlook

SILVER (DEC): The market setup is supportive for early gains with the close over the 1st swing resistance. Initial support for silver is at 497.5 and below there at 490.8 with resistance likely at 502.9 and 508.5. A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 490.8.

GOLD (DEC): Support for gold today comes in near 375.58, while resistance is pegged at 383.78. 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 375.58. The close over the pivot swing is a somewhat positive setup. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

11/4/03

The copper market showed no weakness after an early dip, as the funds were aggressive buyers when the market forged a breakout on the charts. It should also be noted that the market seemed to be able to find significant buying from what appeared to be funds and commercials. Some traders think the pull back in the Dollar combined with the early weakness in copper prices inspired aggressive Chinese arbitrage buying. We have to think that the funds and small spec position has exploded to yet another new record with the pulse up Tuesday. Next targeting on the charts comes in at 97.10.

ENERGY MARKET RECAP

11/4/03

The energy complex continues to be weak but it would seem that the anxiety in Iraq is providing some support to prices. However, with the market encountering another weekly inventory report Wednesday morning we suspect that the bear camp will continue to control prices. It should also be noted that the weather in the US remains mostly bearish with the Eastern US posting consistently above normal temps and with very little early heating needs. The IEA is suggesting that world inventories are rebuilding but are still a little to low to avoid price volatility in the coming winter months.

Technical Outlook

CRUDE OIL (DEC): It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 28.54 and below there at 28.29, with resistance pegged at 28.97 and 29.15. The market’s close on the 9-day moving average is neutral. . Some caution in pressing the downside is warranted with the RSI under 30.

UNLEADED GAS (DEC): Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 77.03. The market tilt is slightly negative with the close under the pivot. Resistance today is at 79.63, while support should be found around 77.03. A negative signal for trend short-term was given on a close under the 9-bar moving average.

HEATING OIL (DEC): It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 76.93, with resistance is at 78.93. 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 76.93.

CORN MARKET RECAP

11/4/03

The corn market collapsed to close sharply lower on the session and closed right on the 50% correction level of the October 21st to October 30th rally. Trade expectations for an increase in the crop production estimate for next weeks USDA report and active fund selling helped pressure the market. The traders report on Friday showed that fund traders were net buyers of near 58,000 contracts for the week ending October 28th which caused a shift from a net short to a net long position. Talk of producer selling of the tail end of the record crop harvest and weakness in soybeans and meal added to the bearish tone. A further break below the 50% retracement support level could trigger additional technical selling.

Technical Outlook

CORN (DEC) 11/5/2003: The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 226 . The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Market resistance comes in at 241 1/2 today, with support at 226 . The close below the 9-day moving average is a negative short-term indicator for trend. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

SOY COMPLEX RECAP

11/4/03

The soybean market collapsed to close 33 3/4 cents lower on the session with massive long liquidation selling from speculators. The fundamental news has been bullish since Wednesday with massive buying from China and purchases of US soybeans from Thailand, Taiwan and South Korea. However, the inability of the market to move to a higher price level in spite of the bullish demand news and expectations for a smaller crop in next weeks USDA Crop Production report helped trigger the long liquidation selling. The recent Commitment-of-Traders reports showed a very overbought condition with speculators holding a net long of over 76,000 contracts in soybeans and over 53,000 in oil and meal. Follow-through selling from Monday’s contract high-lower close reversal added to the bearish tone.

Technical Outlook

SOYBEANS (JAN) 11/05/03 Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next area of resistance is around 780 and 804 , while 1st support hits today at 746 1/2 and below there at 737 . A negative signal for trend short-term was given on a close under the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 737 .

MEAL (DEC): A crossover down in the daily stochastics is a bearish signal. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside target is now at 236.5. First resistance comes in at 250.5, with support at 239.7. The close below the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the close under the 2nd swing support, could cause some early weakness.

BEAN OIL (DEC): A negative signal for trend short-term was given on a close under the 9-bar moving average. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 24.61. The close below the 2nd swing support number puts the market on the defensive. Daily swing resistance is found at 25.75 and above there at 26.25. Support should be encountered at 24.93 and 24.61.

WHEAT MARKET RECAP

11/4/03

In spite of the friendly export news and continued concerns that China may be buying on the world market, December wheat closed 1 1/2 cents lower on the session with the lowest close since October 22nd. The sharp break in the other grains dragged the market down into the close. China grain officials are meeting with the USDA in Washington and the rumors persist that China may be in the process of buying near 1 million tons from US/Canada/Australia has provided some underlying support. In addition, Egypt bought 60,000 tons of US wheat at their optional origin tender. In addition, Taiwan is tendering for US wheat and crop conditions showed a significant decline on the week to 49% in good to excellent condition from 53% last week and 58% last year.

Technical Outlook

WHEAT (DEC) 11/5/2003: The market tilt is slightly negative with the close under the pivot. Expect near-term support around 359 1/2 and below there at 357 , with resistance levels at 367 and 372 . A negative signal for trend short-term was given on a close under the 9-bar moving average. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 357 .

LIVE CATTLE RECAP

11/4/03

The cattle market closed slightly higher in choppy, two-sided trade. The lack of cash activity for the week and concerns of weaker demand due to poor packer profit margins and high beef prices helped to trigger the early weakness. A more stable beef market and ideas that the smaller beef production will soon support beef prices helped support. In addition, the steep discount of cattle to the cash market added to the positive tone. Boxed-beef cut-out values were down 10 cents to $169.66. Slaughter came in at 128,000 head as compared with 119,000-126,000 head expected and just 77,000 head on Monday. The higher than expected slaughter suggests better packer demand. Slaughter for the week is just 202,000 head as compared with 241,000 last week and 257,000 head last year at this time. The sharply lower slaughter weights combined with tighter supply should keep weekly production down 12-16% from last years pace.

Technical Outlook

CATTLE (DEC) 11/5/2003: 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 94.20. The market has a slightly positive tilt with the close over the swing pivot. Support should be encountered at 91.80 and below there at 91.00. Market resistance is at 93.40 and then again at 94.20. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average.

LEAN HOGS RECAP

11/4/03

December hogs closed 57 higher on the session and 147 higher from the lows of the day as the strength in the cash market helped futures hold support on the move under 52.00. Peoria cash hogs were up $1.50 on the session and up $1.00 yesterday so traders look for a gradual increase in the CME 2-day lean index in the days and weeks ahead. The premium of futures to the cash market was a limiting factor. The 2-day Lean index was down 12 cents to 48.40. Daily slaughter came in at 392,000 head as compared with trade estimates near 390,000-396,000 head. Strong packer demand should hold cash steady for tomorrow. The weekly cold storage report showed an in-movement of 1.93 million pounds of bellies into cold storage as compared with trade expectations of 1.6-3.0 million pounds in. The report is neutral.

Technical Outlook

HOGS (DEC) 11/5/2003: The close over the pivot swing is a somewhat positive setup. Resistance levels comes in at 53.97 and 54.35 today, while support is around 52.50 and then 51.40. The upside daily closing price reversal gives the market a bullish tilt. 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 54.35.

COCOA MARKET RECAP

11/4/03

The cocoa market could have spiked sharply higher Tuesday off news that tensions in certain regions of the Ivory Coast were flaring up again. Once again the trade was noted as buying and the origins were selling which means that some of the harvest flow is being passed on to the market in an orderly fashion. However, seeing the reports of violence with reports of some farms being burned should have the net effect of pulling in both spec and commercial buying interest. It is even more surprising that the Dec/Mar spread has been strong when one might expect to see a pure roll over into the March contract.

Technical Outlook

COCOA (DEC)11/05/03 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1467 and above there at 1484 with support at 1418 and 1386. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1483.75. Short-term indicators suggest buying dips today.

COFFEE MARKET RECAP

11/4/03

A triple bottom is seen around 56.60 seems to give the market a sense of a bottom. We think that the market saw the recent rain and acted like the entire crop was assured when there is still plenty of problems and time for issues to surface. Industry buying probably came in because the market stopped going down causing them to extend forward coverage somewhat. The Press reported a significant amount of rolling out of the December into the March contract and that could end up robbing the December contract of near term follow through interest.

Technical Outlook

COFFEE (DEC)11/5/03 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 58.10.The Coffee contract should run into resistance at 60.55 and above there at 61.10 with support at 59.05 and 58.10. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

11/4/03

The market found good buying support from trade houses on the steady opening and the lack of new interest on the sell side led to a technical bounce to 599 for the March contract; up 13 on the session. With speculators holding a hefty net short position, the lack of aggressive selling from Brazil producers on the move to a new 12-month low has helped trigger some short covering. The lower returns for dollar-denominated sugar exports could be a factor for the slowdown in selling as returns are down with prices not changing much. However, traders remain concerned with the hefty size of expected ending stocks in Brazil with estimates near 2 million tons for the end of the season in April of 2004.

Technical Outlook

SUGAR (MAR) 11/5/2003: Market positioning is positive with the close over the 1st swing resistance. Swing resistance comes in at 6.09, with support found at 5.83. 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 5.83.

COTTON MARKET RECAP

11/4/03

December cotton closed 114 higher on the session with trade house buyers providing support and a lack of new interested sellers helping to exaggerate the move. Expectations for more buying from China and other key end users and ideas that the 907 point break from last weeks highs has moved a long way in correcting the overbought condition of the market helped support. With a China trade delegation in Washington visiting the USDA, traders did not want to go home short and this added to the positive tone. The USDA attache in Brazil raised their cotton planted acreage estimate due to higher profitability. The 2003/2004 crop, however, is already 60-70% contracted by domestic and international buyers.

Technical Outlook

COTTON (DEC) 11/5/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Next resistance area comes in at 78.15 and then again at 78.53, while support is targeted at 76.95 and 76.13. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 76.13.