Here’s What The Technicals On The Indices Suggest
BOND MARKET RECAP
10/9/03
If the stock market hadn’t corrected in the
afternoon the bonds would have stayed down aggressively. It is also helped
Treasury prices to see a little fresh long interest following the note auction
action. However, it would seem that the fundamental case is really serving to
exert pressure on the entire Treasury complex. Some suggested that the market
was oversold technically Thursday around mid session and deserved to bounce.
Technical Outlook
BONDS (DEC) 10/10/2003: The close below the 1st
swing support could weigh on the market. Near-term resistance for bonds is at
108.10 and then again at 109.05, while swing support hits at 106.24 and below
there at 106.01. 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 106.01. Bearish daily studies indicate selling minor rallies this
session.
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 111.04. 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 112.15 and then again at 112.29, while swing support hits at
111.18 and below there at 111.04. The market’s short-term trend is negative as
the close remains below the 9-day moving average.
STOCK INDICES RECAP
10/9/03
A major probe up failed to hold and many in the
trade are suggesting that the market topped. Maybe the technical picture
predicts a top but the fundamental information is quite the contrary. Some
traders suggested that the massive rise in energy prices could serve to derail
the recovery but with the Dollar stalled from its recent declines and the US
seeing an improvement in the initial claims report it is hard to get bearish on
the stock market unless there is a very negative string of earnings reports.
Technical Outlook
S&P500 (DEC) 10/10/2003: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1031.00 and
1025.10, with overhead resistance at 1045.00 and 1053.10. 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 1053.10.
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 1053.44. 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 1045.38 and then
again at 1053.44, while swing support hits at 1031.13 and below there at
1024.94. A positive indicator was given with the upside crossover of the 9 & 18
bar moving average.
NASDAQ (DEC) 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 setup is supportive for early gains
with the close over the 1st swing resistance. The market should run into
resistance at 1415.00 and above there at 1434.50 with support at 1381.00 and
1366.50. Daily studies suggest buying dips today. Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1434.50.
CURRENCY MARKET
RECAP
10/9/03
If the US stock market can’t manage to follow
through on the stellar gains seen early Thursday morning the sellers of the
Dollar might not totally stand back from the market as it appeared they might.
In the end the improvement in psychology might be strong enough that weakness in
the stock market might not impact the Dollar. It also seemed like the BOJ was
standing back and allowing the Yen to rise because the trade didn’t detect any
action by the Central bank. Sometimes central banks can act and not be detected.
Technical Outlook
YEN (DEC): A positive signal for trend short-term
was given on a close over the 9-bar moving average. The market made a new
contract high on the rally. The market setup is supportive for early gains with
the close over the 1st swing resistance. Swing resistance is targeted at 92.02
and above there at 92.23, with the yen finding support around 91.57 and below
there at 91.33. Rising stochastics at overbought levels warrant some caution for
bulls. The next upside objective is 92.23. The market is approaching overbought
levels with an RSI over 70.
EURO (DEC): 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 1.1611. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1611, with overhead resistance at 1.1827. The
close above the 9-day moving average is a positive short-term indicator for
trend. More selling pressure is likely given yesterday’s gap lower price action
on the day session chart.
PRECIOUS METALS
RECAP
10/9/03
The gold market is lucky that the stock market
soften slightly yesterday afternoon because too much more optimism toward the US
Dollar or the US economy could have prompted a wholesale liquidation of gold and
silver. As it stands the market did see some small spec and funds liquidating
long held positions because the setup in gold appears to have changed. Some
might think that gold and silver should be cheered by the return to economic
growth but in order to get inflation buying in gold and silver we might first
have to weather Dollar inspired long liquidation of a record speculative long
position!
Technical Outlook
SILVER (DEC): The close below the 1st swing
support could weigh on the market. Initial support for silver is at 480.2 and
below there at 474.6 with resistance likely at 483.4 and 488.2. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The next downside objective is 474.6. The market is approaching
over sold levels on an RSI reading under 30. The gap lower on the day session
chart is bearish and puts the market on the defensive.
GOLD (DEC): Support for gold today comes in near
364.03, while resistance is pegged at 377.83. 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 364.03. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. 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.
COPPER MARKET RECAP
10/9/03
The copper market didn’t perform very well
considering the very favorable outside action. In other words, the copper market
should have been basking in optimism toward demand given the stock market rise.
However, later in the afternoon the stock market slide back and the trade began
to fret about soaring energy prices derailing the recovery. We suspect that
weekly Shanghai copper stocks Friday morning will be very telling of the Chinese
interest in a market that some traders have suggested is a little expensive.
ENERGY MARKET RECAP
10/9/03
A sharp rally in crude oil prices would seem to
have been fostered by ideas that the Nigerian strike will eventually result in a
reduction of exports. The market also thinks that the resignation of Lukman will
result in problems in the Nigerian oil industry. The fact that natural gas
exploded in the face of inventory readings that might have been considered
bearish suggests that the cold winter/better economy argument might have been
helping to lift all energy markets in the action Thursday. Unless the Nigerian
strike is called off prices could make new contract highs.
Technical Outlook
CRUDE OIL (DEC): There could be more upside
follow through since the market closed above the 2nd swing resistance. Support
for crude is keyed on 30.52 and below there at 29.71, with resistance pegged at
31.67 and 32.01. The market’s close on the 9-day moving average is neutral. .
UNLEADED GAS (DEC): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
89.39. The market has a bullish tilt coming into today’s trade with the close
above the 2nd swing resistance. Resistance today is at 89.39, while support
should be found around 79.99. 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 (DEC): There could be more upside
follow through since the market closed above the 2nd swing resistance. Heating
oil should encounter support around 81.77, with resistance is at 89.37. 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 89.37.
The market is becoming somewhat overbought now that the RSI is over 70.
CORN MARKET RECAP
10/9/03
December corn closed 1/4 cent higher on the
session with a very tight range and quiet trade. Traders await the results of
the USDA Crop Production and Supply/demand report for release before the opening
Friday. The average trade estimate for the USDA Crop Production report was
10.047 billion bushels (range 9.966-10.13) as compared with 9.944 billion last
month and 9.008 billion last year. Ending stocks were pegged at 1.064 billion
bushels in last months report but on top of the potential increase in production
(average estimate is up 103 million bushels),the Grain Stocks report indicated
that beginning stocks will be up 77 million bushels. As a result, it will take
an increase in demand to avoid a significant increase in the ending stocks
forecast. Weekly export sales came in at 965,400 tons as compared with trade
expectations at 700,000 to 900,000 tons.
Technical Outlook
CORN (DEC) 10/10/2003: Stochastics are rising
from over sold levels which is bullish and should support higher prices. The
near-term upside target is at 222 3/4. It is a slightly negative indicator that
the close was under the swing pivot. Market resistance comes in at 222 3/4
today, with support at 220 1/4. The close below the 9-day moving average is a
negative short-term indicator for trend.
SOY COMPLEX RECAP
10/9/03
The market rallied sharply ahead of the USDA Crop
Production and Supply/demand report as steady export demand and continued talk
of low yielding soybean fields helped support. The average trade estimate for
soybean production is at 2.578 billion bushels (range 2.525-2.618) as compared
with last months forecast at 2.643 billion and 2.73 billion last year. This is
down 65 million bushels from last months forecast. The low end estimate is down
118 million bushels from last months forecast and the USDA had ending stocks at
just 135 million bushels last month. As a result, it may take more price
rationing in the export area to allow or at least a pipeline minimum supply at
the end of the coming season. Meal managed a move to new contract highs ahead of
the close as record high meat prices and fund buying helped support.
Technical Outlook
SOYBEANS (NOV) 10/10/03 The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next area of resistance is around 700 and 705 3/4, while 1st support hits today
at 684 1/2 and below there at 674 3/4. The market’s close on the 9-day moving
average is neutral. Stochastics turning bearish at overbought levels will tend
to support lower prices if support levels are broken. The next downside
objective is 674 3/4.
MEAL (DEC): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside target is at 211.5. The
market rallied to a new contract high. First resistance comes in at 209.1, with
support at 203.3. The close above the 9-day moving average is a positive
short-term indicator for trend. There could be more upside follow through since
the market closed above the 2nd swing resistance. The market is becoming
somewhat overbought now that the RSI is over 70.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over 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 24.61. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The daily closing price reversal up is a positive indicator that could support
higher prices. Daily swing resistance is found at 25.36 and above there at
25.61. Support should be encountered at 24.86 and 24.61.
WHEAT MARKET RECAP
10/9/03
The market pushed slightly lower on the session
as disappointing export sales news and some additional long liquidation
technical selling helped limit the support from the oversold condition. Weekly
export sales were only 348,900 tons as compared with trade expectations at
550,000 to 750,000 tons and 762,800 tons last week. In addition, Japan bought
just 40,000 tons of wheat at their weekly tender. Cash traders are still
demanding a sharp discount on lower grade wheat as vomitoxin concerns persist.
The monthly supply/demand report, released before the opening, is expected to
show higher production but also higher demand number so ending stocks could be
slightly higher or slightly lower.
Technical Outlook
WHEAT (DEC) 10/10/2003: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 325 and below there at 322 3/4, with resistance levels at 329 1/2 and 331
3/4. A negative indicator was given with the downside crossover of the 9 & 18
bar moving average. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. The next downside objective is 322 3/4. The
market is approaching over sold levels on an RSI reading under 30.
LIVE CATTLE RECAP
10/9/03
October cattle closed limit up at 95.82 which is
the highest price ever paid for cattle futures and with Texas cash markets at
$96.00 and Nebraska at $100; it is hard to say how much higher the nearby
futures can move. December cattle closed slightly lower after hitting limit-up
and deferred cattle were sharply lower as traders see hefty supplies into 2004.
Boxed-beef cut-out values were up $2.65 to $167.35 which is up about $10.00 from
last week. Slaughter this week has reached just 491,000 head as compared with
504,000 head last week and 526,000 head last year at this time.
Technical Outlook
CATTLE (DEC) 10/10/2003: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
93.15. The market has a slightly positive tilt with the close over the swing
pivot. Support should be encountered at 89.65 and below there at 88.70. Market
resistance is at 91.87 and then again at 93.15. The outside day up is somewhat
positive. The market made a new contract high on the rally. The daily closing
price reversal up is a positive indicator that could support higher prices. 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
10/9/03
December hogs matched their contact high at 59.50
on the opening finding strength from yet another limit-up move in cattle but
when cattle began trading off the limit, pork futures collapsed and hogs closed
at 56.82, down 112 points on the session and down 267 points from the highs. The
recent cash fundamentals have been negative but the market has found strength
mainly from the fear of being short any meat given the situation in cattle. Cash
markets were steady to lower. Slaughter came in at 391,000 head which brought
weekly slaughter up to 1.561 million head from 1.543 million last week at this
time. Keep in mind, last weeks slaughter was up 3% from last year and weights
are running 1.6% over last years pace.
Technical Outlook
HOGS (DEC) 10/10/2003: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 58.20 and 60.22 today, while support is around 55.45 and then 54.72.
The daily closing price reversal down is a negative indicator for prices. 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
60.22.
COCOA MARKET RECAP
10/9/03
We recent private forecasts from the Ivory Coast
crop coming in a little higher than expected part of the improved German Grind
is discounted. As it stands higher production is coming and the market will have
to see steadily improving demand to keep prices from sliding into the period of
highest supply. With the Press reporting industry buying Thursday that should
help to discourage aggressive fund selling but may not do anything to discourage
origin selling.
Technical Outlook
COCOA (DEC)10/10/03 The daily closing price
reversal up is positive. The market tilt is slightly negative with the close
under the pivot. Cocoa should run into resistance at 1482 and above there at
1494 with support at 1451 and 1432. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 1432.25.
COFFEE MARKET RECAP
10/9/03
December coffee fell sharply early in the session
on expectations for good rains in key Brazilian coffee region into the weekend.
After taking out the September, the August and the July lows, the aggressive
selling slowed and the market bounced 100 points off of the lows to close just
45 lower on the session. Holding the June lows is impressive and the close above
the opening may also attract some short-covering and technical buying. While the
rain event looks to improve soil conditions, the forecast for dry and warmer
weather for the Sunday to Thursday time frame was seen as somewhat supportive.
Technical Outlook
COFFEE (DEC)10/10/03 The market tilt is slightly
negative with the close under the pivot. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 60.75.The
Coffee contract should run into resistance at 62.90 and above there at 63.35
with support at 61.6 and 60.75. The market’s short-term trend is negative as the
close remains below the 9-day moving average.
SUGAR MARKET RECAP
10/9/03
The market managed to reach the 591 downside
objective for March sugar before finding some support. The downside breakout
this week, however is a sign that the market may need to move to a low enough
price level to attract new demand and to discourage new supply. Bearish USDA
attach‚ reports showing record production in China and Thailand combined with
slow demand from traditional importers and hefty supplies from Brazil are all
bearish forces. In addition, Russia beet production was better than expected.
The International Sugar Organization remains pessimistic about sugar prices over
the near-term and reviewed their forecast for a 1.5 million ton surplus for the
2003/2004 season. The surplus would not be such a negative factor but on the
heels of a 6 million ton surplus for the 2002/2003 season, the impact remains
negative.
Technical Outlook
SUGAR (MAR) 10/10/2003: It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
6.16, with support found at 5.84. 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 5.84.
COTTON MARKET RECAP
10/9/03
December cotton closed 36 higher on the session
but 95 points down from the early session contract highs and new 5-year highs.
Rains moving into China late this week combined with solid merchant and
speculative buying provided solid buying support. The market is now extremely
overbought and will need to see some bullish news in Friday mornings USDA
reports in order to add to the recent gains. After piercing psychological
resistance at the 70.00 level, the close back under this level is slightly
negative. However, the results of the report will set the tone tomorrow. Traders
are looking for production to come in near 17.128 million bales as compared with
last months forecast at 16.94 million bales. Traders are looking for the USDA to
drop China cotton production by another 760,000 bales from last months forecast
of 25.5 million bales.
Technical Outlook
COTTON (DEC) 10/10/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The market
has a slightly positive tilt with the close over the swing pivot. Next
resistance area comes in at 70.46 and then again at 71.26, while support is
targeted at 69.15 and 68.64. Rising stochastics at overbought levels warrant
some caution for bulls. The next upside objective is 71.26. The market is
approaching overbought levels with an RSI over 70. The market made a new
contract high on the rally.