Here’s What The Soaring Dollar Is Doing To Copper And Oil
BOND MARKET RECAP
2/25/2004
The Treasuries were surprisingly calm during the action Wednesday even though US economic numbers were soft. It is possible that soaring Dollar action reduced the potential for intervention and that countervailed the macro economic track. It would also seem like the US Fed was warning of an inflation fight ahead and that might also have discouraged some longs from entering the fray. The magnitude of the Dollar rise was so significant that the question of intervention buying might become quite significant over the coming 24 hours.
Technical Outlook
BONDS (MAR) 02/26/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 113.17 and then again at 113.25, while swing support hits at 113.03 and below there at 112.29. 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 113.25.
T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.15. It is a mildly bullish indicator that the market closed over the pivot swing number. 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 115.11 and then again at 115.15, while swing support hits at 115.02 and below there at 114.29. The market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
2/25/2004
We think the stock market acted impressively Wednesday, as the US economic reports ranged from conflicting to weak. The housing numbers were weak but the Fed National Activity Index came in a little better than expected. It would seem that the Fed continues a little more upbeat on the economy than the public and most economists and therefore we are a little surprised that the hawkish talk from the Fed Wednesday morning didn’t undermine the stock market. After 5 straight daily losses the stock market might have been primed by a little short covering profit taking.
Technical Outlook
S&P500 (MAR) 02/26/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Underlying support comes in at 1139.85 and 1135.48, with overhead resistance at 1146.75 and 1149.28. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 1135.48.
S&P E-Mini (MAR): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1134.13. The market has a slightly positive tilt with the close over the swing pivot. Near-term resistance for the S&P Mini is at 1147.25 and then again at 1150.13, while swing support hits at 1139.25 and below there at 1134.13. A negative signal for trend short-term was given on a close under the 9-bar moving average.
NASDAQ (MAR) The moving average crossover down (9 below 18) indicates a possible developing short-term downtrend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market should run into resistance at 1479.00 and above there at 1484.25 with support at 1465.00 and 1456.25. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1456.3.
MINI DOW (MAR) The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The market should run into resistance at 10632 and above there at 10656 with support at 10567 and 10526. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 10526. With the close higher than the pivot swing number, the market is in a slightly bullish posture.
CURRENCY MARKET RECAP
2/25/2004
The Dollar surprised a number of traders with the magnitude of the rise. The Treasury Secretary comments prior to the session Wednesday seemed to suggest that the US might not be as hard-line for the Chinese currency to float and that is a change of pace which provides buying interest to the dollar. Also during the session comments from the Fed seemed to be a little more hawkish and that could have resulted in some buyers moving into the Dollar. However, the economic reports released during the session certainly don’t foster additional upside in the Dollar. The volatility would make it seem like a major trend decision is in the offing.
Technical Outlook
YEN (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. Swing resistance is targeted at 92.12 and above there at 92.56, with the yen finding support around 91.46 and below there at 91.24. 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. The next downside target is 91.24. The 9-day RSI under 30 indicates the market is approaching oversold levels.
EURO (MAR): Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 1.2351. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2351, with overhead resistance at 1.2691. The market’s short-term trend is negative as the close remains below the 9-day moving average. The major trend is down with the cross over back below the 40-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.
PRECIOUS METALS RECAP
2/25/2004
The gold market finished the session nearly $9.00 down and fairly discouraged at the speculative level as the Dollar rise was simply too much to ignore. Because gold and silver recently saw an influx of speculative buying and now those positions are under water, it is possible that stop loss selling could be seen if the action Wednesday is replicated Thursday. The silver market seemed to have significant fund buying in the Asian trade but by the US close those positions were under water. Therefore, the metals are set up for a quasi make or break action.
Technical Outlook
SILVER (MAY): The swing indicator gave a moderately negative reading with the close below the 1st support number. Initial support for silver is at 643.4 and below there at 636.0 with resistance likely at 662.4 and 667.4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 636.0. Short-term indicators on the defensive. Consider selling an intraday bounce. The downside closing price reversal on the daily chart is somewhat negative.
GOLD (APR): Support for gold today comes in near 386.75, while resistance is pegged at 407.55. 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 386.75. The market is in a bearish position with the close below the 2nd swing support number. The market’s short-term trend is negative as the close remains below the 9-day moving average.
COPPER MARKET RECAP
2/25/2004
A massive range in copper would seem to scare some of the weak handed longs as the range ended up being 61 points. With housing numbers soft and the Fed talking somewhat hawkish, it is possible that the macro economic case prompted some selling in copper. However, the overnight action in copper was so strong and the US follow through was so significant that it’s not surprising that many longs decided to bank some long profits. The sharp Dollar rise might also have forced those looking to buy US copper to the sidelines as the flat price and the soaring Dollar really exploded the cost of copper to foreign buyers early in the action Wednesday.
ENERGY MARKET RECAP
2/25/2004
The energy complex exploded for a sharp run and did so without clear-cut reasoning from the weekly inventory readings. Certainly the market expected to see the distillate stocks decline and it wasn’t that surprising for the unleaded stocks to fall at the DOE, but with the refinery operating rate declining 3% it is clear that the speculative crowd is concerned about the ability to get the necessary amount of gasoline in the months ahead. Even US Energy officials are concerned about the threat of higher prices and their comments Wednesday might have sparked the excessive buying interest in unleaded gas. Others suggest that soaring prices might discourage OPEC production cuts, but that might only serve to slow the upside tilt.
Technical Outlook
CRUDE OIL (APR): The rally brought the market to a new contract high. The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 34.97 and below there at 34.02, with resistance pegged at 36.39 and 36.86. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 36.86. With a reading over 70, the 9-day RSI is approaching overbought levels.
UNLEADED GAS (APR): The daily stochastics have crossed over up which is a bullish indication. The next upside target is 115.06. 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. Resistance today is at 115.06, while support should be found around 106.16. 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.
HEATING OIL (APR):The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 86.44, with resistance is at 95.84. The market’s short-term trend is positive on a close above the 9-day moving average. The major trend could be turning up with the close back above the 40-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 95.84.
CORN MARKET RECAP
2/25/2004
May Corn finished up 3/4 at 298 1/2, 1 off the high and 3 up from the low. December Corn closed unchanged at 292 1/4. This was 2 1/4 up from the low and 2 off the high.
For having such a wild session, the corn market really closed quietly. The initial strength faded quickly as some traders thought that the recent weather impact had been effectively priced into the equation. Some traders think that the weather is set to turn a little less supportive and that reminds the market of its overbought technical status. The expectations for the weekly export sales report call for 750,000 to 1,000,000 bushels and with the recent price gains it might be important to keep a firm demand tilt in the markets mind. Some traders suggested that the re-opening of the Mississippi river deflated sentiment but that issue was only been in play for a short period of time.
Technical Outlook
CORN (MAY) 02/26/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 302 . The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 302 today, with support at 294 . The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels. The rally brought the market to a new contract high.
SOY COMPLEX RECAP
2/25/2004
May Soybeans finished up 2 at 928, 9 off the high and 17 up from the low. November Soybeans closed up 5 at 732. This was 16 up from the low and 8 off the high.
May Soymeal closed up 0.3 at 280.6. This was 6.6 up from the low and 1.2 off the high.
May Soybean Oil finished down 0.33 at 33.59, 0.63 off the high and 0.24 up from the low.
The market managed to close higher on the session but the close below the opening for May soybeans leaves the door open for some technical disappointment over the close. Fears of a slowdown in demand for meal out of China and possible soybean cancellations or “wash-outs” of previously booked US soybeans from China traders added to the long liquidation selling tendency. In addition, ideas that the bullish weather set-up in South America may be about to “peak” helped contribute to the two-sided trade. Most of the selling early in the session was thought to be profit-taking after the May futures have now closed higher for 8 sessions in a row. Traders expect zero deliveries for soybeans with registrations overnight at just 96 contracts, unchanged from yesterday. Meal registrations were at 340 lots on Tuesday, unchanged from the previous session and Oil registrations were at 4557, down from 4587 the previous session. Gulf basis was steady today but there were reports of some increase in producer selling; especially for new crop. Futures made new contract highs and new multi-year highs across the board so a lower close on the day could spark technical long liquidation selling in the pits for the opening tomorrow. Weekly export sales, released before the opening, are expected to come in near 50,000-200,000 tons for soybeans, 0-50,000 tons for meal and 2,000-6,000 tons for oil.
Technical Outlook
SOYBEANS (MAY) 02/26/04: A new contract high was made on the rally. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 941 and 952 , while 1st support hits today at 915 and below there at 900 . 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 952 . The 9-day RSI over 70 indicates the market is approaching overbought levels.
MEAL (MAY): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 287.1. The rally brought the market to a new contract high. First resistance comes in at 284.5, with support at 276.7. The market’s short-term trend is positive on a close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. With a reading over 70, the 9-day RSI is approaching overbought levels.
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 34.56. It is a slightly negative indicator that the close was lower than the pivot swing number. A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. Daily swing resistance is found at 34.03 and above there at 34.56. Support should be encountered at 33.16 and 32.82. The 9-day RSI over 70 indicates the market is approaching overbought levels.
WHEAT MARKET RECAP
2/25/2004
May Wheat finished down 4 at 394 1/2, 4 1/2 off the high and 4 up from the low. July Wheat closed down 2 1/2 at 394. This was 4 up from the low and 1 1/2 off the high.
May wheat opened unchanged on the session but futures were quickly down on the session as the corn and soybeans did not surge higher as expected and the trade is a bit fearful of the overbought condition of the market. Talk that most of the China business for the year could be complete and expectations for increased competition ahead from Argentina and Australia added to the bearish tone. In addition, improving moisture prospects for the US winter wheat growing areas helped to trigger the long liquidation selling. There is talk of some rain into early next week for the western plains and even the extremely dry area of western Kansas. Export news was slow overnight but Taiwan did buy 26,830 tons of US wheat and South Korea is tendering for 23,600 tons of US wheat. Long liquidation selling from speculators and fund traders was seen shortly after the opening. CBOT registrations today were at 1960 contracts, unchanged on the day. Weekly export sales, released before the opening, are expected to come in near 300,000-400,000 tons as compared with 397,100 tons last week at this time.
Technical Outlook
WHEAT (MAY) 02/26/04: The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 390 and below there at 386 , with resistance levels at 398 1/2 and 403 . 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 403 .
LIVE CATTLE RECAP
2/25/2004
Higher cattle & beef prices took April cattle prices sharply higher Wednesday, but gains were trimmed by the close. Cash cattle traded at $82 per cwt, up $3 compared to last week. Boxed-beef prices also rose $1.27 to $131.31. The market continued to get support from expectations that the Mexico & Canada may soon lift their import ban on US beef, which would ease concerns of a supply glut down the road. There was also an improvement in packer profit margins, although they were still negative. Next area of resistance for April cattle is just under 78.
Technical Outlook
CATTLE (APR) 02/26/04: Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 77.92. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 75.57 and below there at 75.02. Market resistance is at 77.02 and then again at 77.92. The gap upmove on the day session chart is a bullish indicator for trend. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The 9-day RSI over 70 indicates the market is approaching overbought levels.
LEAN HOGS RECAP
2/25/2004
April hogs closed moderately lower on the session led by the sharp drop in loin prices, weaker cash markets this week and bear spreading which has been active in the past two sessions. Ideas that high prices for meal and corn could trigger some light breeding stocks liquidation this spring helped pressure the April and June to some extent but supported the deferreds. The sharp drop in cut-out values and the potential need to absorb hefty total meat supplies in March due to export bans added to the bearish tone and the long liquidation trend.
Technical Outlook
HOGS (APR) 02/26/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Resistance levels comes in at 60.80 and 61.60 today, while support is around 59.45 and then 58.90. 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 61.60.
COCOA MARKET RECAP
2/25/2004
The cocoa market showed surprising strength again after an impressive run in the prior session. Therefore, the trade is looking hard for some new development. We have to think that the physical trade is beginning to detect a slowing of physical movement and is stepping forward to cover needs. It is also possible that the short funds have decided to exit shorts considering the impressive bottoming action of the last four sessions. There would not appear to be cause for persistent upside gains.
Technical Outlook
COCOA (MAY)02/26/04 The market has a slightly positive tilt with the close over the swing pivot. Cocoa should run into resistance at 1533 and above there at 1543 with support at 1494 and 1465. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1543.25.
COFFEE MARKET RECAP
2/25/2004
May coffee closed .60 lower as speculators took profits after Tuesday’s sharp rally. However, roaster buying was present under the market which limited losses. While the price break in futures since the Feb 17th COT report has likely lowered the excessively net long position by the fund trader, it may still need to be reduced before futures can make a sustained up side move. Light origin selling contributed to the weaker price action with producers back from holiday. Peru’s government estimated its 2004 coffee production could reach 4 million bags and would be slightly higher than last year.
Technical Outlook
COFFEE (MAY)2/26/04 The market has a slightly positive tilt with the close over the swing pivot. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 75.30.The Coffee contract should run into resistance at 74.65 and above there at 75.30 with support at 73.6 and 73.20. The market’s short-term trend is negative as the close remains below the 9-day moving average.
SUGAR MARKET RECAP
2/25/2004
The market continues to find solid gains from active short-covering as fund traders are caught holding a hefty net short position and the major producer sellers seem to be on the sidelines to see how far China and Middle East buying might pull the price higher. Since the major top in February of last year, there have been 3 major rallies within the bear trend. While the trend was down, May sugar managed a 85 point rally off of the March 20th lows, a 80 point rally off of the June 30th lows and a 73 point bounce off of the November 3rd lows. Off of the February 12th weekly reversal low, May sugar is already up 64 points and the short-term technical indicators are approaching an overbought level.
Technical Outlook
SUGAR (MAY) 02/26/04: The gap upmove on the day session chart is a bullish indicator for trend. With the close over the 1st swing resistance number, the market is in a moderately positive position. Swing resistance comes in at 6.26, with support found at 6.00. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 6.26. With a reading over 70, the 9-day RSI is approaching overbought levels.
COTTON MARKET RECAP
2/25/2004
Fund selling amid thin market conditions pushed May cotton to a weaker close. May cotton prices have been trending higher over the last two weeks and could see more profit taking Thursday if export sales & shipments disappoint the market. Estimates for export sales range between 250,000 to 300,000 bales. Sales are expected to be lower than last week’s 566,700 bale sale since cotton prices have rallied since then and the dollar has gained ground. Shipments are estimated between 240,000 to 300,000 bales compared to 287,100 bales last week.
Technical Outlook
COTTON (MAY) 02/26/04: The market’s close above the 9-day moving average suggests the short-term trend remains positive. The close below the 2nd swing support number puts the market on the defensive. Next resistance area comes in at 70.96 and then again at 72.08, while support is targeted at 69.36 and 68.88. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 72.08. ORANGE JUICE (MAY)2/26/04 The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 63.85 and above there at 64.40 with support at 62.60 and 61.90. The market’s short-term trend is negative as the close remains below the 9-day moving average. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 61.9.