Here’s What We Suspect About Oil
BOND MARKET RECAP
9/15/2004
December Bonds closed down 0-13 at 111-07. This
was 0-05 up from the low and 0-14 off the high.
December 10 Yr Treasury Notes finished down 0-095
at 112-110, 0-085 off the high and 0-025 up from the low.
The Treasury market came under pressure
following a surprise improvement in the New York Fed manufacturing data.
However, in the wake of the Industrial Production report Treasury managed to
find some support. For most of the session Wednesday firm energy prices and
concern for the potential damage of hurricane Ivan seemed to provide support to
Treasuries. Also providing support to Treasuries early in the session were
reports that US Business Inventories rose by .9% which in effect suggests that
some of the Nation’s production is flowing into inventory instead of being sold
to consumers.
Technical Outlook
BONDS (DEC) 09/16/2004: Rising stochastics at
overbought levels warrant some caution for bulls. A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market tilt
is slightly negative with the close under the pivot. The near-term upside
objective is at 112-01. The next area of resistance is around 111-21 and 112-01,
while 1st support hits today at 111-00 and below there at 110-22.
TNOTES (DEC) 09/16/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. It is a slightly negative
indicator that the close was under the swing pivot. The near-term upside
objective is at 112-270. The next area of resistance is around 112-195 and
112-270, while 1st support hits today at 112-065 and below there at 112-005.
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STOCK INDICES RECAP
9/15/2004
December S&P finished down 9.2 at 1120.8, 6.2 off
the high and 0.6 up from the low.
December S&P E-Mini closed down 9.25 at 1120.75.
This was 0.75 up from the low and 9.5 off the high.
December Dow closed down 98 at 10229. This was 4
up from the low and 76 off the high.
December Dow E-Mini finished down 97 at 10230, 96
off the high and 6 up from the low.
The stock market came under more significant
pressure than has been seen since August 30th. The market was a little
disappointed by the Coke earnings and was certainly dismayed by rising energy
prices and ongoing concerns being generated by hurricane Ivan. The stock market
could have been lifted by news that the New York State manufacturing Index
showed solid improvement but the tone of the market seemed to be set early and
an improvement in a second tier report was going to alter the early bias in
prices.
Technical Outlook
S&P 500 (DEC) 09/16/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The 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. The next downside target is now at
1115.40. The next area of resistance is around 1124.19 and 1128.99, while 1st
support hits today at 1117.40 and below there at 1115.40.
SP EMINI (SEP) 09/16/2004: The daily stochastics
gave a bearish indicator with a crossover down. Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. A negative signal for trend short-term was given on a close under the
9-bar moving average. The close below the 2nd swing support number puts the
market on the defensive. The next downside target is now at 1112.19. The next
area of resistance is around 1125.37 and 1132.68, while 1st support hits today
at 1115.13 and below there at 1112.19.
NASDAQ (DEC) 09/16/2004: Momentum studies are
trending higher but have entered overbought levels. The close above the 9-day
moving average is a positive short-term indicator for trend. The close below the
1st swing support could weigh on the market. The near-term upside target is at
1436.87. The next area of resistance is around 1429.75 and 1436.87, while 1st
support hits today at 1416.25 and below there at 1409.88.
MINIDOW (DEC) 09/16/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative. The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. The
next downside objective is now at 10151. The next area of resistance is around
10282 and 10355, while 1st support hits today at 10180 and below there at 10151.
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CURRENCY MARKET RECAP
9/15/2004
December US Dollar finished up 68 at 8940, 18 off
the high and 68 up from the low.
December Euro finished down 1 at 121.49, 0.85 off
the high and 0.24 up from the low.
December Euro Dollar closed down 0.01 at 97.8.
This was 0.01 up from the low and 0.005 off the high.
December Canadian Dollar closed down 0.24 at
76.99. This was 0.38 up from the low and 0.01 off the high.
December British Pound finished down 2.1 at
176.31, 1.07 off the high and 0.12 up from the low.
December Swiss closed down 0.68 at 78.98. This
was 0.11 up from the low and 0.66 off the high.
December Japanese Yen closed down 0.31 at 91.31.
This was 0.33 up from the low and 0.34 off the high.
The Dollar leaped higher and probably forged the
gains off the much stronger than expected New York State Fed manufacturing
readings. Given that the Fed readings were significantly stronger that seemed to
bolster a recently suffering view on the US economy. The biggest losers against
the Dollar were the Pound and the Euro. The Pound was already under significant
technical duress before the favorable US numbers were floated and that certainly
seems to justify the carnage. In other to keep the Dollar on the rise the US
will have to see good numbers on Thursday morning and avoid severe hurricane
damage.
Technical Outlook
YEN (DEC) 09/16/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next downside
objective is 90.65. The next area of resistance is around 91.64 and 91.98, while
1st support hits today at 90.98 and below there at 90.65.
EURO (DEC) 09/16/2004: The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The close below the 9-day moving
average is a negative short-term indicator for trend. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. The
near-term upside objective is at 122.73. The next area of resistance is around
122.03 and 122.73, while 1st support hits today at 120.95 and below there at
120.56.
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PRECIOUS METALS RECAP
9/15/2004
December Gold closed down 0.7 at 406.8. This was
2.1 up from the low and 0.2 off the high.
December Silver finished up 0.07 at 6.3, 0.025
off the high and 0.13 up from the low.
October Platinum closed up 2.6 at 850.7. This was
4.7 up from the low and 1.3 off the high.
At times during the session Wednesday gold and
silver showed divergent price action and that typically is a negative
development for prices. However, from the action Wednesday it is clear that the
gold market is tracking the Dollar more than silver but it also suggests that
silver isn’t tracking the macro economic condition especially with the stock
market down hard and silver prices holding firm for most of the session. Given
that the Dollar was sharply higher we have to think that the edge in the gold
market is left with the bear camp and with gold holding significantly above the
recent consolidation lows the market is vulnerable from a technical perspective.
Technical Outlook
SILVER (DEC) 09/16/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The daily closing price
reversal up is a positive indicator that could support higher prices. A positive
setup occurred with the close over the 1st swing resistance. The near-term
upside objective is at 642.9. The next area of resistance is around 637.8 and
642.9, while 1st support hits today at 622.3 and below there at 611.9.
GOLD (DEC) 09/16/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The market tilt is slightly negative with the close under the pivot.
The next upside objective is 408.6. The next area of resistance is around 407.9
and 408.6, while 1st support hits today at 405.7 and below there at 404.1.
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COPPER MARKET RECAP
9/15/2004
December Copper finished down 0.85 at 127.15,
1.45 off the high and 0.55 up from the low.
The copper market attempted to extend the recent
upside probe but stalled and began paying attention to the weakness in the US
equity market. The economic information released Wednesday was countervailing
for copper as the New York Fed information showed an improvement in the economy
while the Industrial production figures were a little disappointing. We were a
little surprised that the Press didn’t play up the threat of labor problems in
Chile during the session but the fear of the hurricane and other negatives from
the macro economic front seemed to dominate psychology.
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ENERGY MARKET RECAP
9/15/2004
October Crude Oil closed down 0.81 at 43.58. This
was 0.18 up from the low and 1.72 off the high.
October Heating Oil closed down 2.15 at 120.61.
This was 0.81 up from the low and 4.39 off the high.
October Unleaded Gas finished down 2.59 at
121.42, 4.18 off the high and 0.12 up from the low.
October Natural Gas finished down 0.10 at 4.82,
0.15 off the high and 0.07 up from the low.
October Propane closed down 0.01 at 0.79. This
was equal to the low and 0.01 off the high.
The energy market started out weak but then
started to firm as hurricane Ivan drew closer to the Coast. We have to think
that the weekly inventory readings were partly supportive of prices as US crude
stocks at the API decline by 2.3 million barrels, while the DOE crude stocks
showed a massive decline of 7.1 million barrels. The rest of the inventory
readings were mixed to slightly supportive. With a large portion of US Gulf
energy operations suspended and the market awaiting the final landfall track we
suspected that the bull camp would maintain control over prices.
Technical Outlook
CRUDE OIL (OCT) 09/16/2004: The market back below
the 40-day moving average suggests the longer-term trend could be turning down.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The close below the 9-day moving average is a negative short-term
indicator for trend. The outside day down is a negative signal. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The near-term upside objective is at 45.86. The next area of
resistance is around 44.53 and 45.86, while 1st support hits today at 42.63 and
below there at 42.07.
UNLEADED (OCT) 09/16/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down. A
positive indicator was given with the upside crossover of the 9 & 18 bar moving
average. Stochastics are at mid-range but trending higher, which should
reinforce a move higher if resistance levels are taken out. A positive signal
for trend short-term was given on a close over the 9-bar moving average. The
market could take on a defensive posture with the daily closing price reversal
down. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The near-term upside objective is at
126.73. The next area of resistance is around 123.57 and 126.73, while 1st
support hits today at 119.27 and below there at 118.14.
HEATING OIL (OCT) 09/16/2004: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. A positive signal for trend short-term was
given on a close over the 9-bar moving average. The outside day down is a
negative signal. The swing indicator gave a moderately negative reading with the
close below the 1st support number. The next upside objective is 126.70. The
next area of resistance is around 123.21 and 126.70, while 1st support hits
today at 118.01 and below there at 116.31.
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CORN MARKET RECAP
9/15/2004
December Corn finished up 1/2 at 218 1/2, 1
1/2 off the high and 1 1/4 up from the low. March Corn closed up 1 1/4 at 228
1/2. This was 1 3/4 up from the low and 1 off the high.
Strength in the other grains and a surge higher
in the wheat market helped to support an increase in buying in the corn market
after early selling pushed the market to a new contract low for the 4th session
in a row. The higher close today after hitting contract lows is considered a
bullish technical development and the reversal and could attract additional
buying from technicians over the near-term. Heavy rains pounded parts of Iowa
and the western cornbelt which should slow the harvest and could have done some
yield damage in areas of flooding rains and high winds. South Korea bought
105,000 tons of optional origin corn overnight. Rain into the Midwest could slow
harvest progress. There were 880 contracts delivered against the expired
September contract this morning. For the weekly export sales report, released
before the opening, traders are looking for sales near 500,000-700,000 tons as
compared with 524,300 tons last week. December corn support comes in at 218 1/4
and 217 1/4 with resistance comes in at 220 3/4 and 224.
Technical Outlook
CORN (DEC) 09/16/2004: The sell-off took the
market to a new contract low. Daily stochastics are trending lower but have
declined into oversold territory. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The upside
closing price reversal on the daily chart is somewhat bullish. The market tilt
is slightly negative with the close under the pivot. The next downside target is
now at 216. The market is approaching oversold levels on an RSI reading under
30. The next area of resistance is around 219 3/4 and 221 1/4, while 1st support
hits today at 217 1/4 and below there at 216.
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SOY COMPLEX RECAP
9/15/2004
November Soybeans finished up 1 at 566 1/2, 5 1/2
off the high and 2 up from the low. January Soybeans closed up 1 1/4 at 574 1/4.
This was 1 3/4 up from the low and 4 3/4 off the high.
December Soymeal closed unchanged at 167.2. This
was 0.2 up from the low and 2.6 off the high.
December Soybean Oil finished up 0.24 at 22.87,
0.17 off the high and 0.21 up from the low.
News of export demand and rains in the northern
and western cornbelt which might slow harvest helped to support higher trade
early in the session. Heavy rains pelted the northern and western sections of
the cornbelt with more than 10 inches reported in northwestern Iowa in the past
24 hours. The USDA announced a sale of 110,000 tons of US soybeans to unknown
destination before the opening which helped support the higher opening. The
market also received a boost when the Governor of Minnesota ask to have 29
Minnesota counties declared federal Agriculture disaster areas due to a freeze
in August which caused damage to crops estimated at near $200 million. Minnesota
was the 3rd largest soybean producing state in 2003 and the 4th largest corn
producer. While the USDA projected corn yields to exceed the old record high by
5% due to exceptional weather this year, the USDA pegged average soybean yields
at 38.5 bu/acre in the September report which is down 6% from the record high.
If the September weather allows yields to increase to just 2.4% under the
previous record, ending stocks would come in near 300 million bushels which
would be the highest since 98/99 and the second highest in 10 years. For the
weekly export sales report, released before the opening, traders are looking for
soybean sales near 350,000-500,000 tons, meal sales near 50,000-80,000 tons and
oil sales near 1,000-5,000 tons. Deliveries against the expired September
contracts totaled 12 for soybeans, 239 for oil and 262 for meal. November
soybean resistance comes in at 575 and 577 1/2 with 552 and 541 as next support
levels.
Technical Outlook
BEANS (NOV) 09/16/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. It is a slightly negative
indicator that the close was under the swing pivot. The next downside target is
now at 560. The next area of resistance is around 570 1/4 and 574 3/4, while 1st
support hits today at 562 3/4 and below there at 560.
MEAL (DEC) 09/16/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside objective is now at 165.0. The next area
of resistance is around 168.6 and 170.6, while 1st support hits today at 165.8
and below there at 165.0.
BEANOIL (DEC) 09/16/2004: The market now above
the 40-day moving average suggests the longer-term trend has turned up. The
moving average crossover down (9 below 18) indicates a possible developing
short-term downtrend. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. A negative signal for trend
short-term was given on a close under the 9-bar moving average. It is a mildly
bullish indicator that the market closed over the pivot swing number. The next
downside objective is 22.48. The next area of resistance is around 23.06 and
23.24, while 1st support hits today at 22.68 and below there at 22.48.
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WHEAT MARKET RECAP
9/15/2004
December Wheat finished up 5 1/2 at 337 1/4, 3 3/4 off the
high and 4 3/4 up from the low. March Wheat closed up 5 at 347 1/2. This was 4
up from the low and 4 off the high.
Commercial buying helped support the market
shortly after the opening and buy-stops were hit when the market took out
Tuesday’s highs. Fears of crop damage from too much rain, snow and cold weather
in Canada and potential quality problems due to too much rain for the tail end
of the US spring wheat harvest helped support. Cool weather is expected to
hamper harvest efforts in Canada into the weekend. China’s Ag Minister believes
the 2004/2005 winter wheat crop could be up 4% from this season. There were 2
deliveries posted this morning against the expired September contract. The move
to the highest level since July 23rd along with a hefty net short position from
fund traders leaves the market vulnerable to short-covering if resistance levels
are violated. For the weekly export sales report, released before the opening,
traders are looking for sales near 400,000-600,000 tons as compared with 486,900
tons last week. Support for December wheat comes in at 333 1/2 and 331 with 347
1/4 and 351 as next resistance points.
Technical Outlook
WHEAT (DEC) 09/16/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. A positive setup occurred with the close over the 1st
swing resistance. The near-term upside objective is at 345 1/2. The next area of
resistance is around 341 1/2 and 345 1/2, while 1st support hits today at 333
and below there at 328 1/2.
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LIVE CATTLE RECAP
9/15/2004
October Live Cattle closed up 0.27 at 85.70. This
was 0.82 up from the low and 0.10 off the high.
October Feeder Cattle finished up 0.07 at 111.47,
0.20 off the high and 0.87 up from the low.
The cattle market opened higher on continued talk
of a firm cash market this week and higher beef prices but the market pushed
lower into the mid-session with traders awaiting for more direction from the
cash markets or confirmation of higher cash markets to help rationalize the
October trade near the 86 level. Some positioning ahead of Friday’s
Cattle-on-Feed report helped keep trade choppy. The average trade estimate for
September 1st on-feed supply is at 103% (range 101-104.3), August placements at
93.5% (range 86-98.1) and August marketings at 91% (range 87-94.3). Boxed-beef
cutout values (600-750 choice) were up $1.72 on the day at mid-session to
$135.19 as compared with $131.38 last week at this time.
Technical Outlook
CATTLE (OCT) 09/16/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s short-term trend is positive on the close above the
9-day moving average. The upside closing price reversal on the daily chart is
somewhat bullish. The close over the pivot swing is a somewhat positive setup.
The next upside objective is 86.420. The next area of resistance is around
86.150 and 86.420, while 1st support hits today at 85.250 and below there at
84.600.
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LEAN HOGS RECAP
9/15/2004
October Lean Hogs closed up 0.95 at 68.65. This
was 1.15 up from the low and 0.05 off the high.
February Pork Bellies finished down 0.05 at
94.72, 0.52 off the high and 0.80 up from the low.
A firm tone for the cash market and
follow-through technical buying due to this week’s bullish action helped support
the early gains and sme late fund buying as week. Weekly average weights from
Iowa/Minnesota for the week ending September 11th came in at 263.7 pounds which
was up 1.4 pounds from the previous week, up 5.8 pounds from last year and up
near 10 pounds per hog above the 5-year average for this time of the year. While
cool weather may help explain some of the high weights, the data indicates the
availability of a hefty supply of market-ready hogs. The CME 2-Day Lean index
for the period ending September 13th was up 17 cents to 71.83 which leaves the
Index down just 60 cents since the end of August. The slow pace of decline in
the cash market has provided solid underlying support to the discounted futures
market.
Technical Outlook
HOGS (OCT) 09/16/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market’s short-term trend is positive on the close above the 9-day
moving average. The market has a bullish tilt coming into today’s trade with the
close above the 2nd swing resistance. The near-term upside objective is at
69.570. The next area of resistance is around 69.250 and 69.570, while 1st
support hits today at 68.070 and below there at 67.200.
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COCOA MARKET RECAP
9/15/2004
December Cocoa finished up 6 at 1482, 13 off the
high and 23 up from the low.
The cocoa market managed to forge a new high for
the move but failed to get above critical technical levels on the charts.
Apparently London cocoa provided some upside impetus as some short players
decided to move to the sidelines. Dampening the upside tilt were forecasts from
Nestle that world cocoa prices would be mostly unchanged in the 2004 to 2005
time frame. It is a little surprising that cocoa managed the early rally in the
face of a rising Dollar as that can make US cocoa more expensive than
alternative sources.
Technical Outlook
COCOA (DEC) 09/16/2004: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. It is a mildly bullish
indicator that the market closed over the pivot swing number. The next downside
target is 1444. The next area of resistance is around 1500 and 1515, while 1st
support hits today at 1464 and below there at 1444.
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COFFEE MARKET RECAP
9/15/2004
December Coffee closed down 0.75 at 77.05. This
was 0.35 up from the low and 0.65 off the high.
Commercial selling emerged in London to drive
November futures in London sharply lower and testing the September lows which
contributed to the weaker trade in New York. New York December futures ended
down 75 points to 77.05 which is still up near 14% off of the August lows. Talk
of potential damage to warehouses due to hurricane, short-covering from funds
and hopes that an extended truck drivers strike in Colombia helped to provide
support. The Vietnam harvest is expected to begin in another month with traders
expecting a large crop of near 15 million bags from near 14 million this year.
The market seems to lack the fundamental news to follow-through to the upside
but the technical action has been positive and producer selling from Brazil has
been absent.
Technical Outlook
COFFEE (DEC) 09/16/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The market tilt is slightly negative with the
close under the pivot. The near-term upside target is at 78.10. The next area of
resistance is around 77.55 and 78.10, while 1st support hits today at 76.60 and
below there at 76.15.
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SUGAR MARKET RECAP
9/15/2004
October Sugar closed up 0.04 at 7.75. This was
0.13 up from the low and 0.02 off the high.
October futures in London were weak again but the
selling did not materialize in New York and October futures closed 4 higher on
the session with an inside day. Talk of strong demand from India for the coming
year and a world production deficit helped to provide underlying support. The
French Farm Minister pegged the 2004 beet crop at 28.55 million tons from 29.36
million tons last year. Talk that an India firm bought 25,000 tons of raw sugar
from an international firm. Open interest was down 14,933 contracts for the
October futures which leaves 78,742 contract open with just 11 trading sessions
left before the contract expires.
Technical Outlook
SUGAR (MAR) 09/16/2004: Momentum studies are
trending higher but have entered overbought levels. A positive signal for trend
short-term was given on a close over the 9-bar moving average. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside objective is at 8.74. The next area of resistance is around
8.70 and 8.74, while 1st support hits today at 8.59 and below there at 8.51.
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COTTON MARKET RECAP
9/15/2004
October Cotton finished up 0.30 at 51.75, 0.95
off the high and 0.55 up from the low.
The market found some early buying support from
expectations of some damage from the hurricane rains this week but the weak
technical action from Tuesday helped attract more technical selling interest as
traders believe that the damage will not be enough to significantly shift the
bearish outlook from the current supply/demand outlook. The North Europe Cotlook
A Index was down 120 points to 56.90. With some uncertainty on the extent of the
coverage and yet another hurricane on the horizon for the southeast next week,
the market found some underlying support. For the weekly export sales report,
released before the opening, traders are looking for sales near 50,000-100,000
bales as compared with 90,500 bales last week.
Technical Outlook
COTTON (DEC) 09/16/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 9-day moving average is a negative short-term
indicator for trend. The market’s close below the pivot swing number is a mildly
negative setup. The next downside objective is 49.04. The next area of
resistance is around 50.91 and 51.93, while 1st support hits today at 49.47 and
below there at 49.04.