Here’s What Turned The Tide On The Dollar Today
BOND MARKET RECAP
1/7/2005
March Bonds closed unchanged at 112-03. This was 1-03
up from the low and 1-11 off the high.
March 10 Yr Treasury Notes finished down 0-035 at
111-120, 1-020 off the high and 0-210 up from the low.
Treasury prices slipped into the payroll report
but then managed to mount a slight rise following the less than expected
December non farm payroll gain of 157,000. The prior month payroll reading was
revised upward and that served to mitigate the bullish potential. In the end,
the US readings were strong enough to assume that the US economy remains in a
growth posture but apparently not strong enough put pressure on Treasury prices.
The talk of tax reform from the Bush Administration might also apply some minor
pressure on prices but only if the market sees the potential for action on
reform.
Technical Outlook
BONDS (MAR) 01/10/2005: Stochastics are at mid-range
but trending higher, which should reinforce a move higher if resistance levels
are taken out. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The daily closing price reversal
up is a positive indicator that could support higher prices. The market has a
slightly positive tilt with the close over the swing pivot. The near-term upside
target is at 115-07. The next area of resistance is around 113-23 and 115-07,
while 1st support hits today at 110-28 and below there at 109-16.
TNOTES (MAR) 01/10/2005: 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 under the 18-day moving average indicates 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 upside target is 113-125. The next
area of resistance is around 112-120 and 113-125, while 1st support hits today
at 110-175 and below there at 109-230.
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STOCK INDICES RECAP
1/7/2005
March S&P finished down 2.2 at 1186, 8.2 off the
high and 2.5 up from the low.
March S&P E-Mini closed down 2.25 at 1186. This
was 2.5 up from the low and 8.5 off the high.
March Dow closed down 21 at 10600. This was 30 up
from the low and 65 off the high.
The stock market staggered a little following the
release of the US non farm payroll report but in the end the market shook off
the potentially negative tilt and settled on the idea that US growth is moving
forward. However, the market would seem to remain vulnerable to more selling as
the fund managers don’t seem to be that interested in moving into the market
with force following the recent corrective wave. The market was partially
cheered on Friday by statements from the Treasury Secretary that hinted at tax
reform and also suggested that the US would attempt to do things that support
the Dollar.
Technical Outlook
S&P 500 (MAR) 01/10/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 18-day moving average is an indication
the longer-term trend has turned down. The downside closing price reversal on
the daily chart is somewhat negative. The market’s close below the pivot swing
number is a mildly negative setup. The next downside target is 1176.73. The next
area of resistance is around 1191.34 and 1198.12, while 1st support hits today
at 1180.65 and below there at 1176.73.
SP EMINI (MAR) 01/10/2005: 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 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
1176.50. The next area of resistance is around 1191.50 and 1198.50, while 1st
support hits today at 1180.50 and below there at 1176.50.
NASDAQ (MAR) 01/10/2005: Momentum studies are
declining, but have fallen to oversold levels. The major trend has turned down
with the cross over back below the 18-day moving average. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
target is 1542.63. The 9-day RSI under 30 indicates the market is approaching
oversold levels. The next area of resistance is around 1580.75 and 1595.62,
while 1st support hits today at 1554.25 and below there at 1542.63.
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CURRENCY MARKET RECAP
1/7/2005
March US Dollar finished up 48 at 8372, 18 off the
high and 100 up from the low.
March Euro finished down 1.16 at 130.62, 1.9 off the
high and 0.3 up from the low.
March Euro Dollar closed down 0.01 at 97.055. This
was 0.005 up from the low and 0.045 off the high.
March Canadian Dollar closed up 0.2 at 81.12. This
was 0.27 up from the low and 0.64 off the high.
March British Pound finished down 0.33 at 186.32,
1.58 off the high and 0.6 up from the low.
March Swiss closed down 0.73 at 84.67. This was 0.31
up from the low and 1.09 off the high.
March Japanese Yen closed up 0.09 at 95.69. This was
0.14 up from the low and 1.04 off the high.
The Dollar slid following the monthly US payroll
report, as the report failed to reach the lofty expectations set prior to the
report. However, with the Dollar around its lows for the day, the US Treasury
Secretary suggested that the US was prepared to do things that would make the
Dollar strong and that seemed to help turn the tide around in the Dollar. We
also have to think that while the US payrolls were disappointing they were still
much stronger than the Euro zone. We also think that strong Canadian payroll
readings helped to weaken the Euro and that in turn helped the
Dollar.
Technical Outlook
YEN (MAR) 01/10/2005: Daily stochastics are trending
lower but have declined into oversold territory. 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 target is 94.74. The next area of resistance is around 96.28 and
97.09, while 1st support hits today at 95.10 and below there at
94.74.
EURO (MAR) 01/10/2005: The close below the 60-day
moving average is an indication the longer-term trend has turned down. Momentum
studies are declining, but have fallen to oversold levels. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The outside day down is a negative signal. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. The next downside objective is now at 128.82. With a reading under 30,
the 9-day RSI is approaching oversold levels. The next area of resistance is
around 131.72 and 133.22, while 1st support hits today at 129.52 and below there
at 128.82.
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PRECIOUS METALS RECAP
1/7/2005
February Gold closed down 2.1 at 419.5. This was 2.4
up from the low and 6.3 off the high.
March Silver finished down 0.007 at 6.448, 0.147 off
the high and 0.058 up from the low.
April Platinum closed down 4.4 at 840.7. This was 2.2
up from the low and 7.3 off the high.
More gains in the Dollar leaves the gold market
poised for more liquidation. We suspect that the fund and small spec long in
gold has been pared down significantly but the COT report certainly understated
that long position, considering the magnitude of the declines following the
Tuesday mark-off. The gold market seemed to discount some potential labor
problems Friday because of the significant developments in the Dollar.
Contributing to the negative bias in gold during the action Friday were two
reports of increased gold production!
Technical Outlook
SILVER (MAR) 01/10/2005: 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 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 objective is
626.6. The next area of resistance is around 655.1 and 667.5, while 1st support
hits today at 634.6 and below there at 626.6.
GOLD (FEB) 01/10/2005: Daily stochastics are trending
lower but have declined into oversold territory. The major trend has turned down
with the cross over back below the 18-day moving average. The market’s close
below the pivot swing number is a mildly negative setup. The next downside
target is now at 411.8. The market is approaching oversold levels on an RSI
reading under 30. The next area of resistance is around 423.8 and 429.1, while
1st support hits today at 415.2 and below there at 411.8.
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COPPER MARKET RECAP
1/7/2005
March Copper finished down 0.50 at 137.00, 1.80 off
the high and 0.45 up from the low.
The copper market seemed to be capable of ignoring
the weakness in gold and the rise in the US Dollar but around mid session prices
dipped into negative territory. Reports of a huge increase in Peru November
copper production had a little negative impact on copper as some traders were
simply looking for reasons to bank profits from recent longs and move to the
sidelines. While some copper players suggested that the US jobs report was weak,
the zinc market seemed to mount gains in an opposite opinion on the US
economy.
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ENERGY MARKET RECAP
1/7/2005
February Crude Oil closed down 0.13 at 45.43. This
was 0.68 up from the low and 0.67 off the high.
February Heating Oil closed down 0.80 at 127.33. This
was 2.33 up from the low and 1.37 off the high.
February Unleaded Gas finished down 0.87 at 121.42,
1.68 off the high and 1.52 up from the low.
February Natural Gas finished down 0.05 at 6.00, 0.10
off the high and 0.09 up from the low.
February Propane closed up 0.01 at 0.71. This was
0.01 up from the low and equal to the high.
The energy market once again traded on both sides of
the market Friday and that type of action pretty much replicates the mostly mild
weather outlook. A number of OPEC members confirmed that the will continue to
respect the production ceiling and that seemed put some support under prices.
The fact that other OPEC members continued to suggest that it was too early to
consider a January production cut and that in our opinion is bearish because the
market at least needs a threat of lower production off the January 30th OPEC
meeting.
Technical Outlook
CRUDE OIL (FEB) 01/10/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market now
above the 18-day moving average suggests the longer-term trend has turned up.
The market has a slightly positive tilt with the close over the swing pivot. The
near-term upside objective is at 46.77. The next area of resistance is around
46.10 and 46.77, while 1st support hits today at 44.76 and below there at
44.08.
UNLEADED (FEB) 01/10/2005: Momentum studies are
trending higher but have entered overbought levels. The market now above the
18-day moving average suggests the longer-term trend has turned up. The market
has a slightly positive tilt with the close over the swing pivot. The next
upside target is 124.66. The next area of resistance is around 123.02 and
124.66, while 1st support hits today at 119.82 and below there at
118.26.
HEATING OIL (FEB) 01/10/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The near-term upside
target is at 130.79. The next area of resistance is around 129.18 and 130.79,
while 1st support hits today at 125.48 and below there at 123.39.
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CORN MARKET RECAP
1/7/2005
March Corn finished down 2 at 206 3/4, 3 off
the high and 1 up from the low. May Corn closed down 1 1/4 at 214 3/4. This was
1 1/2 up from the low and 2 1/2 off the high.
The market closed slightly lower on the session but
the higher close on the week after hitting a contract low represent a weekly
closing price reversal which could support increased technical buying next week.
The higher opening failed to generate enough buying interest to take out
yesterday’s highs which triggered some light long liquidation selling. However,
buying emerged on the set-back to support. Traders believe that funds are
holding a massive net short position in corn while other index fund managers are
looking to increase the grain emphasis in 2005 which has sparked new buying.
With trader estimates of fund buying yesterday as high as 24,000 contracts, open
interest was up 468 contracts. There was some selling pressure on the open from
talk of a weaker cash basis and from reports of a jump in producer selling after
the rally yesterday. For next week’s quarterly Grain Stocks report, traders are
looking for December corn stocks near 9.289 billion bushels (range 9.223-9.381)
as compared with 7.954 billion last year. Resistance for March corn comes in at
210 1/2 and 213 with 205 1/4 and 203 3/4 as support.
Technical Outlook
CORN (MAR) 01/10/2005: 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 daily closing price reversal down is a negative
indicator for prices. The market’s close below the pivot swing number is a
mildly negative setup. The near-term upside objective is at 211 1/4. The next
area of resistance is around 208 3/4 and 211 1/4, while 1st support hits today
at 204 3/4 and below there at 203 1/4.
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SOY COMPLEX RECAP
1/7/2005
March Soybeans finished up 9 3/4 at 542 1/4, 1 3/4
off the high and 7 3/4 up from the low. May Soybeans closed up 10 1/4 at 546
1/2. This was 9 up from the low and 1/2 off the high.
March Soymeal closed up 5.2 at 162.8. This was 4.0 up
from the low and 0.2 off the high.
March Soybean Oil finished up 0.24 at 20.41, 0.08 off
the high and 0.15 up from the low.
March soybeans closed moderately higher on the day
but 5 1/4 cents lower on the week. The fund buying surge from the other grain
markets yesterday helped support some follow-through technical buying in
soybeans. Strength in the January contract helped support as well. Cash basis
levels were steady to lower today with talk of an increase in producer selling
helping to pressure. The producer may have increased selling into the cash
market due to a new tax year and the bounce off of the lows. Positioning ahead
of the January 12th supply/demand and production reports may have added to the
support with fund traders covering short positions. Meal deliveries came in at
125 contracts this morning no oil or soybeans. For next week’s quarterly Grain
Stocks report, traders are looking for December 1st soybean stocks near 2.311
billion bushels (range 2.28-2.353) as compared with 1.689 billion last year.
Resistance for March soybeans comes in at 542 3/4 and 547 with support at 537
1/2 and 533 1/2.
Technical Outlook
BEANS (MAR) 01/10/2005: The market now above the
60-day moving average suggests the longer-term trend has turned up. Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. 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. The
next downside objective is 531 1/4. The next area of resistance is around 547
and 550 1/4, while 1st support hits today at 537 1/2 and below there at 531
1/4.
MEAL (MAR) 01/10/2005: The major trend could be
turning up with the close back above the 60-day moving average. A bullish signal
was given with an upside crossover of the daily stochastics. Momentum studies
are rising from mid-range, which could accelerate a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. The gap upmove on the day session
chart is a bullish indicator for trend. There could be more upside follow
through since the market closed above the 2nd swing resistance. The near-term
upside objective is at 166.0. The next area of resistance is around 164.9 and
166.0, while 1st support hits today at 160.7 and below there at
157.7.
BEANOIL (MAR) 01/10/2005: The downside crossover of
the 9 & 18 bar moving average is a negative signal. Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The gap upmove on the day session chart is a bullish indicator for
trend. There could be more upside follow through since the market closed above
the 2nd swing resistance. The next downside target is now at 20.17. The next
area of resistance is around 20.52 and 20.62, while 1st support hits today at
20.30 and below there at 20.17.
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WHEAT MARKET RECAP
1/7/2005
March Wheat finished up 1 1/2 at 309 3/4, 2 1/4
off the high and 3 1/4 up from the low. May Wheat closed up 1 1/2 at 317. This
was 3 up from the low and 2 off the high.
Futures hit the highest level since November 24th
before experiencing a long liquidation sell-off into mid-session. However, March
wheat managed to close 1 1/2 higher on the session and up 2 1/4 cents higher on
the week. The weekly reversal from a contract low is considered a bullish
technical signal and could attract new buying and more short-covering next week.
Traders believe that big commodity funds have re-weighted funds away from energy
and soft markets and are putting more emphasis on grains this year. This, along
with a near record net short position of the fund traders coming into the week
has set the stage for the 4-day, 19 3/4 cent bounce for March wheat. South Korea
passed on a tender to buy 19,000 tonnes of US wheat overnight. For next week’s
quarterly Grain Stocks report, traders are looking for December 1st wheat stocks
near 1.424 billion bushels (range 1.412-1.449) as compared with 1.520 billion
last year. March wheat resistance comes in at 311 1/2 and 316 1/2 with support
at 307 1/2 and 304 1/2.
Technical Outlook
WHEAT (MAR) 01/10/2005: 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. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next upside
objective is 315. The next area of resistance is around 312 1/2 and 315, while
1st support hits today at 307 and below there at 304.
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LIVE CATTLE RECAP
1/7/2005
February Live Cattle finished up 0.57 at 88.92, 0.37
off the high and 0.60 up from the low.
January Feeder Cattle closed up 0.60 at 103.80. This
was 0.45 up from the low and 0.05 off the high.
February cattle closed moderately higher on the
session as a jump in beef prices and ideas that feedlot conditions could be
sloppy next week helped support. After melting snow on the weekend, rains hit
the region on Tuesday. Traders absorbed news this week of a packer-induced
slaughter slowdown as there is some hope that mudding feedlots might cause poor
feeding performance as well. If slaughter falls off as much as advertised, we
would believe that average slaughter weights will jump significantly into the
end of the month. Slaughter was 107,000 head as compared with expectations at
106,000-119,000 head. Boxed-beef cut-out values were up $2.15 to $142.71 as
compared with $140.38 one week ago.
Technical Outlook
CATTLE (FEB) 01/10/2005: The major trend could be
turning up with the close back above the 60-day moving average. Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
target is 87.900. The next area of resistance is around 89.400 and 89.820, while
1st support hits today at 88.450 and below there at 87.900.
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LEAN HOGS RECAP
1/7/2005
February Lean Hogs finished down 0.85 at 74.95, 1.50
off the high and 0.05 up from the low.
February Pork Bellies closed down 0.27 at 94.82. This
was 0.57 up from the low and 0.27 off the high.
After a higher opening, the market pushed moderately
lower on the session as the trade fears a sharp rise in pork production next
week after the weather clears. Producer marketings were slow this week and
average weights are at a record high for this time of the year so the market may
face higher than expected pork production next week. The premium of futures to
cash was not a big issue this week as the cash market was moving higher but if
cash markets push lower, holding the premium becomes more difficult. The 2-Day
Lean index for the period ending January 5th was up 1.15 to 69.20 as compared
with 64.37 last week at this time. After a contract high this week, April hogs
closed 100 lower on the week and the reversal will be seen as a bearish
technical development. Slaughter came in at 385,000 head as compared with trade
expectations for 380,000-400,000 head.
Technical Outlook
HOGS (FEB) 01/10/2005: The daily stochastics gave a
bearish indicator with a crossover down. Momentum studies are trending lower
from high levels which should accelerate a move lower on a break below the 1st
swing support. The major trend could be turning up with the close back above the
18-day moving average. It is a slightly negative indicator that the close was
under the swing pivot. The next downside target is now at 73.770. The next area
of resistance is around 75.700 and 76.850, while 1st support hits today at
74.200 and below there at 73.770.
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COCOA MARKET RECAP
1/7/2005
March Cocoa finished down 41 at 1473, 38 off the high
and 3 up from the low.
The cocoa market remained under pressure with even
more critical technical points violated. Apparently the market was undermined by
the talk that cocoa was being removed from the Dow Jones-AIG Commodity Index. We
suspect that the Index change is a temporary impact on the cocoa market and that
the viability of the cocoa contract is exceptional despite what would appear to
be a short sighted exclusion from a commodity Index. We also think that a
significant ongoing rise in the US Dollar is undermining the cocoa and
contributing to the near term downtrend pattern.
Technical Outlook
COCOA (MAR) 01/10/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close under the
18-day moving average indicates the longer-term trend could be turning down. The
close below the 2nd swing support number puts the market on the defensive. The
next downside target is 1441. The market is approaching oversold levels on an
RSI reading under 30. The next area of resistance is around 1493 and 1522, while
1st support hits today at 1453 and below there at 1441.
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COFFEE MARKET RECAP
1/7/2005
March Coffee closed down 0.55 at 96.25. This was 0.15
up from the low and 2.40 off the high.
An inside day down in coffee leaves the coffee market
in a negative technical position to end the week. Brazilian coffee exports
continue to tail off as would be expected and less physical supply flow is
certainly something that could partially diffuse the downward tilt in prices
seen since the late December high. We suspect that the COT report overstated the
magnitude of the fund and small spec long and with the damage done on the
charts, one has to think that the long camp is under pressure to liquidate. A
number of traders suggest that March coffee has very little in the way of solid
chart support until the 94.90 level.
Technical Outlook
COFFEE (MAR) 01/10/2005: The close below the 40-day
moving average is an indication the longer-term trend has turned down. 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. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next downside target
is now at 94.30. The next area of resistance is around 97.50 and 99.35, while
1st support hits today at 95.00 and below there at 94.30.
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SUGAR MARKET RECAP
1/7/2005
March Sugar closed down 0.28 at 8.71. This was 0.02
up from the low and 0.30 off the high.
The May futures managed to collapse and close 25
lower on the session as fund long liquidation selling emerged to send the market
down to the lowest close since December 17th. After hitting a new contract high
this week, the May contract closed 24 lower on the week and the weekly closing
price reversal after a contract high is a bearish technical development. After
the recent set-back in energy prices, ethanol demand is a little more in
question. And addition, traders await the COT report after the close which is
expected to show a massive net long position and a long liquidation
trend.
Technical Outlook
SUGAR (MAR) 01/10/2005: The close under the 60-day
moving average indicates the longer-term trend could be turning down. Momentum
studies trending lower at mid-range should accelerate a move lower if support
levels are taken out. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The outside day down and close
below the previous day’s low is a negative signal. 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 now at 8.46. The next area of
resistance is around 8.87 and 9.10, while 1st support hits today at 8.55 and
below there at 8.46.
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COTTON MARKET RECAP
1/7/2005
March Cotton finished up 0.75 at 46.56, 0.42 off the
high and 1.16 up from the low.
The market opened lower on a continued flow of
bearish old crop news but commodity fund buying emerged to trigger sharply
higher trade on the session and on the week. May cotton moved to the highest
level since October 20th with traders expecting the COT report tonight to show a
still hefty net short position from fund traders. In addition, the cotton
industry annual get together this week had several speakers who gave promising
fundamental developments for the 2005/2006 season with surging China demand and
lower world production expected. Given the massive ending stocks for the world
and US Supply demand for the 2004/2005 season and the slow pace of export sales,
the market is likely to need evidence of the strong China demand soon or
increased producer selling could trigger a sell-off once the fund short-covering
slows.
Technical Outlook
COTTON (MAR) 01/10/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. A positive signal was given by the outside day up. There could be more
upside follow through since the market closed above the 2nd swing resistance.
The near-term upside target is at 47.95. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
47.35 and 47.95, while 1st support hits today at 45.77 and below there at
44.80.