Here’s What Tomorrow’s Payroll Report Could Mean
BOND MARKET RECAP
5/5/2005
June Bonds finished up 0-08 at 114-29, 0-06 off
the high and 0-20 up from the low.
June 10 Yr Treasury Notes finished up 0-080 at
111-265, 0-065 off the high and 0-135 up from the low.
The Treasury market once again waffled
around unchanged but managed to end slightly higher into what might be a very
important monthly payroll report. With productivity readings up much stronger
than expected the market initially felt good about the ability to extend the US
growth pattern. However, countervailing the positive economic track off the
strong US productivity readings were concerns that Ford Motor was drifting
toward financial trouble and might be in line to undertake layoffs. Before the
opening IBM announced significant layoff plans and that would seem to be
counterintuitive to the recent feeling of optimism toward the US economy. In
conclusion, the coming monthly payroll report is extremely important and could
result in huge trading ranges in the coming sessions.
Technical Outlook
BONDS (JUN) 05/06/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The major trend could be turning up with the close back above the
18-day moving average. The market has a slightly positive tilt with the close
over the swing pivot. The next downside target is 114-01. The next area of
resistance is around 115-13 and 115-22, while 1st support hits today at 114-19
and below there at 114-01.
TNOTES (JUN) 05/06/2005: The crossover up in the
daily stochastics is a bullish signal. Studies are showing positive momentum but
are now in overbought territory, so some caution is warranted. The cross over
and close above the 18-day moving average indicates the longer-term trend has
turned up. The market setup is supportive for early gains with the close over
the 1st swing resistance. The near-term upside objective is at 112-140. The
market is approaching overbought levels with an RSI over 70. The next area of
resistance is around 112-065 and 112-140, while 1st support hits today at
111-185 and below there at 111-055.
STOCK INDICES RECAP
5/5/2005
June S&P finished down 0.4 at 1174.9, 5.1 off the
high and 7.4 up from the low.
June S&P E-Mini closed down 0.25 at 1175. This
was 7.5 up from the low and 5 off the high.
June Dow closed down 28 at 10344. This was 49 up
from the low and 61 off the high.
The stock market failed after some early
impressive gains. We suspect that the down grade in Ford and GM debt to Junk
status punctured the bullish optimism, especially into the coming monthly
payroll readings on Friday morning. We also have to think that recovery action
in the energy complex undermined sentiment and that the end result of the higher
than expected US productivity reading could be that the US payroll report fails
to reach lofty expectations on Friday morning. Stocks prices around the highs
Thursday were up significantly and therefore we suspect that some weak handed
longs decided to bank profits and move to sidelines ahead of the potential
volatility window on Friday.
Technical Outlook
S&P 500 (JUN) 05/06/2005: The upside crossover of
the 9 & 18 bar moving average is a positive signal. Stochastics are at mid-range
but trending higher, which should reinforce a move higher if resistance levels
are taken out. The major trend could be turning up with the close back above the
18-day moving average. The market could take on a defensive posture with the
daily closing price reversal down. The close over the pivot swing is a somewhat
positive setup. The next upside objective is 1186.82. The next area of
resistance is around 1181.15 and 1186.82, while 1st support hits today at
1168.65 and below there at 1161.83.
SP EMINI (JUN) 05/06/2005: The upside crossover
of the 9 & 18 bar moving average is a positive signal. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend could be turning up with the close back
above the 18-day moving average. The market could take on a defensive posture
with the daily closing price reversal down. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next upside target is
1186.87. The next area of resistance is around 1181.25 and 1186.87, while 1st
support hits today at 1168.75 and below there at 1161.88.
NASDAQ (JUN) 05/06/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. The market has a slightly positive tilt with the
close over the swing pivot. The near-term upside objective is at 1472.00. The
next area of resistance is around 1465.00 and 1472.00, while 1st support hits
today at 1448.00 and below there at 1438.00.
CURRENCY MARKET RECAP
5/5/2005
June US Dollar finished down 1 at 8394, 8 off the
high and 22 up from the low.
June Euro finished up 0.02 at 129.58, 0.29 off
the high and 0.2 up from the low.
June Euro Dollar closed up 0.02 at 96.605. This
was 0.015 up from the low and 0.015 off the high.
June Canadian Dollar closed up 0.1 at 80.39. This
was 0.23 up from the low and 0.11 off the high.
June British Pound finished up 0.42 at 190.2,
0.23 off the high and 0.22 up from the low.
June Swiss closed down 0.18 at 83.89. This was
0.23 up from the low and 0.24 off the high.
June Japanese Yen closed up 0.05 at 96.08. This
was 0.18 up from the low and 0.16 off the high.
The Dollar started out weak and then attempted to
recovery in the wake of better than expected US productivity numbers. However,
into the close it appeared as if some recent shorts in the Dollar decided to
move to the sidelines ahead of the US payroll report. It is also possible that
constructive dialogue from the US Federal Reserve Chairman prompted some buying
in the Dollar but it would not seem like the market is leaning aggressively in
either direction on the coming payroll report. We do think that the outlook
toward the US economy has improved consistently over the last two weeks and that
could make the coming report an extremely important event.
Technical Outlook
YEN (JUN) 05/06/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The close over the pivot swing is a somewhat positive setup. The next upside
objective is 96.41. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 96.25 and 96.41, while
1st support hits today at 95.91 and below there at 95.74.
EURO (JUN) 05/06/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The major trend has turned down with the cross over back below the 18-day
moving average. The market has a slightly positive tilt with the close over the
swing pivot. The next downside objective is 129.12. The next area of resistance
is around 129.82 and 130.09, while 1st support hits today at 129.34 and below
there at 129.12.
PRECIOUS METALS RECAP
5/5/2005
June Gold closed up 0.7 at 430.7. This was 1.9 up
from the low and 1 off the high.
July Silver finished up 0.05 at 7.063, 0.037 off
the high and 0.078 up from the low.
Gold gained some ground Thursday as fund traders
were light buyers as the metal was supported by weakness in both the Dollar and
stock prices. The stock market came under pressure after S&P corp. downgraded
the debt of two major auto makers (GM & Ford) with gold benefiting from flight
to quality buying. However, activity was light ahead of Friday’s non-farm
payroll report with a median estimate for an increase of 170,000.
Technical Outlook
SILVER (JUL) 05/06/2005: The crossover up in the
daily stochastics is a bullish signal. Momentum studies are trending higher from
mid-range, which should support a move higher if resistance levels are
penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next upside target is
716.8. The next area of resistance is around 712.1 and 716.8, while 1st support
hits today at 700.6 and below there at 693.8.
GOLD (JUN) 05/06/2005: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close below the 18-day moving average is an indication the longer-term
trend has turned down. The market has a slightly positive tilt with the close
over the swing pivot. The next downside target is 427.6. The next area of
resistance is around 432.1 and 433.3, while 1st support hits today at 429.3 and
below there at 427.6.
COPPER MARKET RECAP
5/5/2005
June Copper closed up 0.30 at 144.80. This was
1.20 up from the low and 0.70 off the high.
July copper closed slightly firmer as the market
was able to recover as the selling seemed to dry up as the market again
approached support near 140. A weaker Dollar and early strength in the stock
market led to bargain hunting in copper to take prices back into positive
territory. While market bias still remains down, July copper is showing some
resistance to prices near 140. A strong non-farm payroll report, above +170,000,
would likely encourage more buying while a weak number could drive the market
under critical support. Key resistance is at 146.40 for July copper.
ENERGY MARKET RECAP
5/5/2005
June Crude Oil closed up 0.70 at 50.83. This was
1.33 up from the low and 0.07 off the high.
June Heating Oil closed down 1.08 at 144.37. This
was 2.07 up from the low and 1.63 off the high.
June Unleaded Gas finished up 1.28 at 147.92,
0.28 off the high and 3.12 up from the low.
June Natural Gas finished up 0.06 at 6.69, 0.03
off the high and 0.12 up from the low.
June Propane closed up 0.01 at 0.81. This was
equal to the low and 0.00 off the high.
The energy complex still managed to track back up
toward and retest the recent consolidation highs despite the residual concern
off the recent inventory readings. It is a little surprising that the market
managed to rally in the face of fresh bearish supply headlines. With OPEC
exports pegged to be up +370,000 barrels per day in the 4 weeks out to May 21st
by a private service it would certainly seem like the market continues to get
bearish information. The fact that the Saudis raised June crude prices by
approximately $2.00 seems to send a threat we have forged a bottom as far as
OPEC is concerned. The weekly gas storage report showed an injection of 39 bcf
compared to estimates between +70 bcf to +15 bcf. Gas storage now stands at
1,455 bcf with stocks 238 bcf above year ago and 295 bcf above the 11 year
average. Gas stocks have increased by 206 bcf over the last four weeks. The
latest 6 to 10 day forecast (May 10th through May 14th) for the Northeast and
Midwest is for mostly above normal temperatures.
Technical Outlook
CRUDE OIL (JUN) 05/06/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close below the 18-day moving average is an indication the longer-term trend has
turned down. It is a mildly bullish indicator that the market closed over the
pivot swing number. The next downside objective is 49.12. The next area of
resistance is around 51.53 and 51.91, while 1st support hits today at 50.13 and
below there at 49.12.
UNLEADED (JUN) 05/06/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The market has a slightly positive
tilt with the close over the swing pivot. The next downside target is now at
143.81. The next area of resistance is around 149.62 and 150.61, while 1st
support hits today at 146.22 and below there at 143.81.
HEATING OIL (JUN) 05/06/2005: The market back
below the 60-day moving average suggests the longer-term trend could be turning
down. Momentum studies are declining, but have fallen to oversold levels. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. It is a slightly negative indicator that the close was under
the swing pivot. The next downside target is 140.56. The next area of resistance
is around 146.22 and 147.96, while 1st support hits today at 142.52 and below
there at 140.56.
CORN MARKET RECAP
5/5/2005
July Corn finished up 2 at 208, 1/2 off the
high and 3 up from the low. December Corn closed up 1 3/4 at 225 1/2. This was 2
1/2 up from the low and 1/4 off the high.
A firm tone in cash basis due to a lack of
producer selling and some talk of dry conditions in parts of the eastern
cornbelt helped to support the early bounce. Funds were light sellers into the
mid-session but failure to move into new lows helped support the late bounce to
higher on the day. Weather remains as a bearish factor with a warmer forecast
and mostly dry weather expected to support accelerated plantings in the next
several days. Warm weather this weekend and next weekend in the forecast should
also been seen as helpful to get the crop off to a good start but there is some
concerns that rainfall is beginning to slip below normal. Weekly export sales
came in at only 637,200 tonnes as compared with trade expectations at
750,000-1.0 million tonnes. Cumulative sales have reached 80.3% of the USDA
forecast for the season as compared with 77.6% on average for this time of the
year. Daily export news included a purchase of 120,000 tonnes of US corn from
Egypt. Support for July corn comes in at 205 1/2 with resistance at 211 1/4.
Technical Outlook
CORN (JUL) 05/06/2005: Momentum studies are
declining, but have fallen to oversold levels. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The outside
day up is somewhat positive. The market setup is supportive for early gains with
the close over the 1st swing resistance. The next downside target is 204. The
next area of resistance is around 209 3/4 and 210 3/4, while 1st support hits
today at 206 1/4 and below there at 204.
SOY COMPLEX RECAP
5/5/2005
July Soybeans finished up 4 1/4 at 628 3/4, 1 3/4
off the high and 3 3/4 up from the low. November Soybeans closed up 1 at 616
3/4. This was 4 1/2 up from the low and 2 1/4 off the high.
July Soymeal closed up 1.5 at 192.2. This was 1.4
up from the low and 0.3 off the high.
July Soybean Oil finished down 0.01 at 22.77,
0.08 off the high and 0.19 up from the low.
A firm tone in the cash market due to a lack of
producer selling in the cash markets and light deliveries supported the higher
trade early in the session. Fund traders were quiet and volume was though to be
slow. Ideas that producer planting progress will continue at a rapid pace due to
good weather is seen as a limiting factor. There are still no deliveries for oil
or meal and only 20 contracts delivered for May soybeans this morning as
compared with 243 lots yesterday. A strong stopper took 14 of the 20 deliveries.
Weekly export sales came in at 355,800 tonnes as compared with trade
expectations at 250,000-475,000 tonnes. Cumulative sales have reached 96% of the
USDA forecast for the season as compared with 94.2% on average for this time of
the year. Meal sales hit 110,600 tonnes as compared with trade expectations at
50,000-75,000 tonnes. Cumulative sales have reached 89.1% of the USDA forecast
for the season as compared with 79.6% on average for this time of the year. Oil
sales were 3,300 tonnes from expectations at 2,000-7,000 tonnes. July soybean
support comes in at 623 1/4 with 631 1/2 as resistance.
Technical Outlook
BEANS (JUL) 05/06/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The major trend has
turned down with the cross over back below the 18-day moving average. A positive
setup occurred with the close over the 1st swing resistance. The next downside
target is 622 3/4. The next area of resistance is around 631 1/2 and 633 3/4,
while 1st support hits today at 626 and below there at 622 3/4.
MEAL (JUL) 05/06/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. The major trend has turned down with the cross over
back below the 18-day moving average. With the close higher than the pivot swing
number, the market is in a slightly bullish posture. The next downside objective
is 190.3. The next area of resistance is around 193.0 and 193.6, while 1st
support hits today at 191.4 and below there at 190.3.
BEANOIL (JUL) 05/06/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market now above the 18-day moving average suggests
the longer-term trend has turned up. The close over the pivot swing is a
somewhat positive setup. The near-term upside objective is at 23.01. The next
area of resistance is around 22.90 and 23.01, while 1st support hits today at
22.64 and below there at 22.48.
WHEAT MARKET RECAP
5/5/2005
July Wheat finished down 3 1/2 at 313 3/4, 4 1/4 off the high
and 1/2 up from the low. December Wheat closed down 2 1/2 at 331 3/4. This was
1/2 up from the low and 3 3/4 off the high.
Talk of hefty production and weak demand for the
new crop season helped to pressure the market early in the session. Light fund
selling was noted into the mid-session and the market pushed moderately lower
late in the day in spite of strength in the other grains. The deliveries against
the May contract were smaller this morning at 116 lots as compared with 376
yesterday. Registrations with the CBOT fell to 898 lots from 1004 previous.
Weekly export sales came in at 400,600 tonnes as compared with trade
expectations at 300,000-400,000 tonnes. Cumulative sales have reached 96.1% of
the USDA forecast for the season as compared with 91% on average for this time
of the year. A private forecast group, Informa, pegged winter wheat production
at 1.593 billion bushels as compared with 1.499 billion last year which helped
add to the negative tone for the market. The group had a forecast for soft red
winter wheat at 313 million bushels which would be the smallest crop in 15
years. July wheat support comes in at 312 1/4 with 317 and 320 as resistance.
Technical Outlook
WHEAT (JUL) 05/06/2005: Daily stochastics are
trending lower but have declined into oversold territory. The market back below
the 18-day moving average suggests the longer-term trend could be turning down.
The market’s close below the 1st swing support number suggests a moderately
negative setup for today. The next downside target is 310. The next area of
resistance is around 316 and 319 1/4, while 1st support hits today at 311 1/2
and below there at 310.
LIVE CATTLE RECAP
5/5/2005
June Live Cattle finished up 0.50 at 85.42, 0.17
off the high and 0.77 up from the low.
May Feeder Cattle closed up 0.82 at 110.42. This
was 1.22 up from the low and 0.07 off the high.
June cattle closed 50 higher on the outside
trading session and the reversal could attract short-covering support on Friday.
The market opened the session at the lowest level since April 19th but there was
a lack of new selling interest under 85.00 with cash cattle expected to trade
$91.00-$92.00 this week. Boxed beef cutout values at mid session were down $.97
to $162.15 as compared with $163.10 one week ago. Slaughter came in at 117,000
head as compared with trade expectations of 120,000-125,000 head.
Technical Outlook
CATTLE (JUN) 05/06/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. The outside day up and close above the previous
day’s high is a positive signal. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next downside
objective is now at 84.350. The next area of resistance is around 85.900 and
86.220, while 1st support hits today at 84.970 and below there at 84.350.
LEAN HOGS RECAP
5/5/2005
June Lean Hogs finished up 0.40 at 77.22, 0.37
off the high and 1.07 up from the low.
May Pork Bellies closed down 0.40 at 82.95. This
was 0.75 up from the low and 0.55 off the high.
June hogs closed 40 higher on the session finding
solid speculative buying support from the lack of a premium of June hogs to the
cash market and a solid uptrend in the cash markets. In addition, the market was
supported by solid gains in pork cut-out values which are up 6.4% in just the
past week. This has helped to improve packer demand in spite of all of the talk
of weak packer margins. The CME 2-Day lean Index for the period ending May 3rd
came in at 74.97 which was up 1.50 from the previous session and up from 70.56
the previous week. Slaughter came in at 371,000 head as compared with trade
expectations of 368,000-374,000 head.
Technical Outlook
HOGS (JUN) 05/06/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. The outside day up
is somewhat positive. Market positioning is positive with the close over the 1st
swing resistance. The near-term upside objective is at 78.500. The next area of
resistance is around 77.950 and 78.500, while 1st support hits today at 76.520
and below there at 75.620.
COCOA MARKET RECAP
5/5/2005
July Cocoa finished down 16 at 1480, 13 off the
high and 5 up from the low.
The cocoa market continued its downward drift
today and is threatening a test of the April and January lows. Buyers are
apparently standing back in the face of decent prospects for the mid-crop.
Weather is also a bearish factor, as rain forecasts for western Africa into the
weekend are viewed as favorable to the mid-crop as well as the main crop. A
developing pattern of rising exchange stocks could also be pressuring prices.
While we think the declining US Dollar ought to eventually lend some support to
cocoa prices, the reaction so far has been nil.
Technical Outlook
COCOA (JUL) 05/06/2005: A bearish signal was
triggered on a crossover down in the daily stochastics. Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The market setup is somewhat negative with the close under the
1st swing support. The next downside target is 1464. The next area of resistance
is around 1489 and 1500, while 1st support hits today at 1471 and below there at
1464.
COFFEE MARKET RECAP
5/5/2005
July Coffee closed down 2.50 at 122.95. This was
3.20 up from the low and 3.80 off the high.
July coffee closed 255 lower on the session
giving back most of yesterday’s gains as fund selling turned active after a lack
of follow-through buying in the morning trade. Over-flow selling from the other
soft markets added to the bearish tone with sugar, cocoa and cotton markets
turning sharply lower on speculative selling as well. A lack of commercial trade
on either side of the market has traders a bit jumping on coffee. Brazil exports
in April came in at 1.7 million bags as compared with 1.54 million bags last
year at this time.
Technical Outlook
COFFEE (JUL) 05/06/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 18-day moving average is an indication the
longer-term trend has turned down. It is a slightly negative indicator that the
close was under the swing pivot. The next downside target is now at 116.10. The
next area of resistance is around 126.40 and 130.05, while 1st support hits
today at 119.45 and below there at 116.10.
SUGAR MARKET RECAP
5/5/2005
July Sugar closed down 0.26 at 8.23. This was
0.01 up from the low and 0.20 off the high.
July sugar gapped lower and collapsed while
absorbing more active long liquidation selling from speculators who appear to be
holding a net long position in a downtrending market. The long liquidation
selling and sharp break may move the market low enough to attract more
significant commercial buying activity. The market managed to find some support
near the 825 level with talk of expanding ethanol demand for cane-based ethanol
out of the center-south region in Brazil. Brazil car sales of flex-fuel cars
which run on gasoline and/or ethanol are expected to reach 50% of all new
vehicle sales by the end of this year and 90% by the end of next year. A
combination of lower freight rates and the drop in prices is expected to attract
new buying from Russia and possible others.
Technical Outlook
SUGAR (JUL) 05/06/2005: The daily stochastics
have crossed over down which is a bearish indication. Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The major trend has turned down with the cross over back below the
18-day moving average. The gap lower price action on the day session chart is a
bearish indicator for trend. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
downside target is 8.07. The next area of resistance is around 8.33 and 8.48,
while 1st support hits today at 8.13 and below there at 8.07.
COTTON MARKET RECAP
5/5/2005
July Cotton finished down 0.63 at 53.26, 1.14 off
the high and 0.66 up from the low.
After a higher opening, the market collapsed to
close sharply lower with another round of active long liquidation helping to
pressure. Weakness in the other soft commodity markets and some buy the rumor,
sell the fact selling trigger some selling. Weekly export sales came in at 1.03
million bales as compared with trade expectations at 200,000-500,000 bales with
931,000 bales for old crop. China was a noted buyer of 664,800 bales on the
week. Cumulative sales have reached 104.4% of the USDA forecast for the season
as compared with 103% on average for this time of the year. Talk that a good
portion of the rally of the past several months has been on expectations for
China to become a more active buyer helped reduce the positive impact of the big
sales. Export shipments were just 300,000 bales as compared with expectations at
300,000-400,000 bales.
Technical Outlook
COTTON (JUL) 05/06/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The daily closing price reversal down puts the
market on the defensive. It is a slightly negative indicator that the close was
lower than the pivot swing number. The next downside target is now at 51.58. The
next area of resistance is around 54.15 and 55.17, while 1st support hits today
at 52.36 and below there at 51.58.