Here’s What’s Behind This Energy Flare

Technical Outlook

#BONDS (JUN) 4/12/2004: The market tilt is
slightly negative with the close under the pivot. Near-term resistance for bonds
is at 110.16 and then again at 110.29, while swing support hits at 109.25 and
below there at 109.15. 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 109.15. The market is approaching over sold levels on an RSI reading under
30.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 112.08. The market’s close below the pivot swing number is a mildly
negative setup. Near-term resistance for the T-Notes is at 112.27 and then again
at 113.04, while swing support hits at 112.13 and below there at 112.08. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 30, the 9-day RSI is approaching oversold
levels.

 

STOCK INDICES RECAP

4/8/2004

The stock market opened strong, managed an
additional bounce and then softened toward mid session. Even in the face of
favorable US economic numbers the market seemed to back away from what looked to
be the beginning of a pre-holiday type rally. However, as the session wore on
soaring energy prices and concerns for US troops in Iraq seemed to alter
sentiment. In fact, the significant improvement in the initial claims and
ongoing claims readings should have been cause to extend the early gains right
into the close but apparently geopolitical headwinds continue to occupy the
attention of investors.

Technical Outlook

#S&P500 (JUN) 4/12/2004: It is a slightly
negative indicator that the close was under the swing pivot. The daily closing
price reversal down is a negative indicator for prices. Underlying support comes
in at 1131.20 and 1123.80, with overhead resistance at 1148.00 and 1157.40. 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 objective is at
1157.40.

S&P E-Mini (JUN): The downside closing price
reversal on the daily chart is somewhat negative. Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1161.88. The swing indicator gave a moderately negative
reading with the close below the 1st support number. Near-term resistance for
the S&P Mini is at 1147.75 and then again at 1161.88, while swing support hits
at 1126.25 and below there at 1118.88. The market’s close above the 9-day moving
average suggests the short-term trend remains positive.

NASDAQ (JUN) The market could take on a defensive
posture with the daily closing price reversal down. 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. The market should
run into resistance at 1502.25 and above there at 1516.63 with support at
1476.75 and 1465.63. Rising stochastics at overbought levels warrant some
caution for bulls. The next upside objective is 1516.63.

MINI DOW (MAR) The outside day down gives the
market a bearish tilt. 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. The market should run into resistance at 10524
and above there at 10636 with support at 10336 and 10260. Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The near-term upside target is at 10636. The market setup is somewhat
negative with the close under the 1st swing support.

 

CURRENCY MARKET RECAP

4/8/2004

The US Dollar should have seen buying interest,
as the US economic numbers were better than expected and that came on the heels
of much worse than expected European economic numbers. However, it is clear that
the world continues to downgrade US assets because of geopolitical risks and
because of the negative developments inside Iraq. The German economic numbers
were soft enough to increase the talk of Euro zone rate cuts in the coming week.
It should also be noted that Canadian employment and payroll figures softened
and that should make the US economy look even better to the world.

Technical Outlook

#CURRENCIES 4/12/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. Swing resistance is targeted at 94.56 and
above there at 94.97, with the yen finding support around 93.94 and below there
at 93.73. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The next downside objective is 93.73.

EURO (JUN): 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 1.2004. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.2004, with overhead resistance at 1.2122. 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. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.

 

PRECIOUS METALS RECAP

4/8/2004

The gold and silver markets faded initially
Thursday because of the improved economic readings from the US and because of
the Dollar rally. We continue to think that flight to quality issues are
providing some support to the precious metals but in the near term the US
economy is getting better and that is moving some longs to the sidelines. So far
the gold and silver markets have not given any credence to rising inflation
prospects even though supply situations in energies and grain point to a
potential inflationary bulge in the coming quarters. In the short term a higher
Dollar means that some longs are forced out of gold but most traders think that
the gold remains in an up trend pattern.

Technical Outlook

#P-METALS 4/12/2004: SILVER (MAY): The market
tilt is slightly negative with the close under the pivot. Initial support for
silver is at 802.3 and below there at 796.1 with resistance likely at 811.0 and
815.8. 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 796.1.

GOLD (JUN): Support for gold today comes in near
418.00, while resistance is pegged at 423.60. 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 418.00. It is a slightly negative
indicator that the close was under the swing pivot. The close below the 9-day
moving average is a negative short-term indicator for trend.

 

COPPER MARKET RECAP

4/8/2004

The copper market really didn’t respond to the
overnight news that some US copper users were asking the government to halt
exports of copper to China. Apparently some US companies want the government to
do something about soaring copper prices and want to secure some US supply for
the future. Remember there has been forecasts that suggest the world might run
out of copper supplies sometime later this year. However, the copper market
wasn’t exactly lit up by the overnight developments and also wasn’t even
supported off favorable US economic numbers and an early sharp rise in the US
equity market.

 

ENERGY MARKET RECAP

4/8/2004

Energy prices flared again on Thursday, as the
market saw fresh supply warnings from the EIA and also realized that US refiners
are not going to expand production of gasoline. It should be noted that the US
refinery-operating rate as of the first week of April, was the lowest in the
last ten years and that shows an unwillingness to increase production to meet
the coming demand requirement. The EIA seemed to be calling for foreign waivers
on gasoline rules and even that idea failed to deflate the outlook for the
market. In other words, the US might be ready to export some refining jobs just
to solve its product shortage. We also think that the market wanted to bid up
crude and gasoline prices ahead of the long weekend just in case conditions
deteriorated inside Iraq.

Technical Outlook

#ENERGIES 4/12/2004: CRUDE OIL (JUN): Market
positioning is positive with the close over the 1st swing resistance. Support
for crude is keyed on 36.19 and below there at 35.62, with resistance pegged at
36.99 and 37.22. 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 37.22. Short-term indicators suggest buying
pullbacks today.

UNLEADED GAS (JUN): Stochastics are at mid-range,
but trending higher which should reinforce a move higher if resistance levels
are taken out. The next upside objective is 116.72. The market setup is
supportive for early gains with the close over the 1st swing resistance.
Resistance today is at 116.72, while support should be found around 110.92. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.

HEATING OIL (JUN): The close over the pivot swing
is a somewhat positive setup. Heating oil should encounter support around 89.78,
with resistance is at 93.68. 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 93.68.

 

CORN MARKET RECAP

4/8/2004

The sharp break in soybeans and long liquidation
selling ahead of a long weekend contributed to the weak technical action. The
sharply higher opening and weak close leaves the market vulnerable to some long
liquidation selling. The Supply/Demand report was bullish with the USDA pegging
US ending stocks at 856 million bushels versus expectations of 850-901 million
bushels and compared to 901 million reported last month. Food, seed and
industrial usage came in at 2.555 billion bushels versus expectations of
2.515-2.520 billion bushels and compared to 2.510 billion reported last month.
World ending stocks were pegged at 67.6 million metric tons versus 67.79 million
reported last month and 102.48 million for the 2002/03 crop year. Weekly export
sales came in at 1.315 million tons as compared with trade expectations at
900,000-1.2 million tons and 593,900 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 74.6% of the forecast for the season
as compared with 70.4% on average for this time of the year. The US stocks/usage
ratio is already pegged at the second lowest level in 29 years with 95/96
(record high prices) the only lower ratio. Next years outlook looks even tighter
unless there is a jump in acreage from intentions or new record high yields as
the increased usage for the 2003/2004 season will eat into the beginning stocks
for the 2004/2005 season. May corn closed unchanged on the week.

Technical Outlook

#CORN (MAY) 4/12/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The near-term upside target is at 337 2/4. There could be more upside
follow through since the market closed above the 2nd swing resistance. Market
resistance comes in at 337 2/4 today, with support at 325. The close above the
9-day moving average is a positive short-term indicator for trend. The market is
becoming somewhat overbought now that the RSI is over 70.

 

SOY COMPLEX RECAP

4/8/2004

The weak close after a sharply higher opening
leaves the market vulnerable to additional long liquidation selling as traders
suspect that the COT report will show a hefty net long position from the
speculator. The Supply/Demand report was considered bullish as the USDA pegged
ending stocks at just 115 million bushels versus expectations of unchanged from
last month’s estimate at 125 million bushels and compared to 178 million bushels
for the 2002/03 crop year. Domestic crush and exports were revised higher.
Brazil’s production was pegged at 56 million metric tons versus 59.5 reported
last month. Argentina’s production came in at 35 million metric ton versus 36.5
million reported last month. World ending stocks came in at 33 million metric
tons versus 35.88 million reported last month and 39.27 million for the 2002/03
crop season. Other more recent trade estimates for Brazil are coming in well
below this level. The Brazil Association of Vegetable Oil Industries pegged the
crop at 52.8 million tons from 56.9 million tons as their previous forecast. A
smaller than expected South America crop could put more reliance from world
importers on the US crop; both old and new crop. Weekly export sales for
Soybeans came in at 114,500 tons as compared with trade expectations at 100,000
to 250,000 tons. Old crop sales were 102,500 tons as compared with 43,300 tons
necessary each week to reach the USDA projection. Cumulative sales have reached
96.2% of the forecast for the season as compared with 89% on average for this
time of the year. Old crop sales meal sales were 37,600 tons as compared with
22,500 tons necessary each week to reach the USDA projection. Cumulative sales
have reached 84.7% of the forecast for the season as compared with 72.2% on
average for this time of the year. Oil weekly sales were a negative 3200 tons
vs. 1000-5000 tons expected. Long liquidation selling emerged when the market
was unable to add to early gains with some profit-taking setting in ahead of a
long holiday weekend and ahead of a long harvest weekend for Brazil and
Argentina. The weekly closing price reversal from a contract high for nearby
futures could attract more long liquidation selling next week. May Soybeans
closed 57 ½ cents lower on the week.

Technical Outlook

#SOYBEANS (MAY) 04/12/04 The outside day down is
somewhat negative. The market could take on a defensive posture with the daily
closing price reversal down. There could be some early pressure today given the
market’s negative setup with the close below the 2nd swing support. The next
area of resistance is around 1010 and 1042, while 1st support hits today at 966
and below there at 954. 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 954.

MEAL (MAY): 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 305.3. The outside day down gives
the market a bearish tilt. The daily closing price reversal down is a negative
indicator for prices. First resistance comes in at 323.6, with support at 310.1.
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.

BEAN OIL (MAY): 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 31.06. The close below the 2nd swing
support number puts the market on the defensive. Daily swing resistance is found
at 32.42 and above there at 33.20. Support should be encountered at 31.35 and
31.06.

 

WHEAT MARKET RECAP

4/8/2004

The market did not view the slight decline in
ending stocks as bullish enough to help support. The lower close on the week
after a contract high is seen as a technical sign of a top by some traders. The
market is getting into the heart of the key weather season for the northern
hemisphere winter wheat crops and with expectations of a significant jump in
world production and more competition to US wheat exporters ahead, it may take a
significant weather problem to hold a positive tilt to the market. The USDA
reports this morning were considered slightly bearish against trade
expectations. US wheat ending stocks were pegged at 531 million bushels versus
trade expectations of 524-534 million bushels and compared to 544 million
reported last month. Feed usage was 225 million bushels versus expectations of
235-245 million bushels and compared to 225 million reported last month. Exports
were revised higher by 15 million bushels. World ending stocks were 127.46
million metric tons versus 124.93 million reported last month and 167.48 million
for the 2002/03 crop year. Weekly export sales came in at 586,900 tons as
compared with trade expectations at 350,000 to 550,000 tons. Old crop sales were
456,900 tons as compared with 240,000 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 93.5% of the forecast for the season
as compared with 86.9% on average for this time of the year. Good weather in
China in the forecast for the weekend may be helping to offset the risk of some
freeze damage in the US. In addition, the cold weather is coming with rains
which might help benefit some crops. May wheat closed 1 ¾ cents lower on the
week.

Technical Outlook

#WHEAT (MAY) 4/12/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 409 2/4 and below there at 403 3/4, with resistance levels at 419 2/4 and
423 3/4. 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 403 3/4.

 

LIVE CATTLE RECAP

4/8/2004

June cattle pushed moderately higher on the
session but remained inside of Wednesday’s trade. The stiff discount of futures
to the cash market and continued strong gains in the beef market helped to
support. Boxed-beef cut-out values for choice (600-750 lbs) rose $2.20 to
$154.24 as compared with $139.70 last week at this time. In the US Plains, cash
cattle traded $86, up $2 from last week’s sales. Cattle slaughter should begin
to increase now that packers have profitable margins. Volume was slow in
holiday-type trade due to early closing.

Technical Outlook

#CATTLE (JUN) 4/12/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
77.47. The market has a slightly positive tilt with the close over the swing
pivot. Support should be encountered at 76.22 and below there at 75.67. Market
resistance is at 77.12 and then again at 77.47. A positive signal for trend
short-term was given on a close over the 9-bar moving average.

 

LEAN HOGS RECAP

4/8/2004

June and summer month hogs moved to new contracts
highs as fund buyers turned active in bellies and summer month hogs. The hog
market was moderately lower on the session early in the day but rallied 190
points off of the lows for June hogs to close 145 higher on the session and up
235 points on the week. Early weakness was seen from weak cash market news but
the trade focus turned to hopes for strong demand into the early summer. The
2-day lean Index was down $1.04 to $64.21.

Technical Outlook

#HOGS (JUN) 4/12/2004: There could be more upside
follow through since the market closed above the 2nd swing resistance.
Resistance levels comes in at 76.32 and 77.15 today, while support is around
73.97 and then 72.45. The outside day up gives the market a positive tilt. The
market rallied to a new contract high. The upside daily closing price reversal
gives the market a bullish tilt. The close above the 9-day moving average is a
positive short-term indicator for trend. The crossover up in the daily
stochastics is a bullish signal. The near-term upside target is at 77.15.

 

COCOA MARKET RECAP

4/8/2004

The cocoa market managed another new low for the
move, seemed to reject that low but then softened into the later part of the
session. A rising US Dollar made US cocoa look less attractive to the
international trade and since the higher demand forecasts were mostly discounted
it would seem that the bull camp is unable to turn the bearish tide in the
marketplace. The trade even saw signs that the Nigerian cocoa crop was mostly
marketed and even that failed to alleviate the pressure on cocoa prices.

Technical Outlook

COCOA (MAY) 04/12/04 The daily closing price
reversal up is positive. The market has a slightly positive tilt with the close
over the swing pivot. Cocoa should run into resistance at 1422 and above there
at 1435 with support at 1383 and 1357. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 1357.25.

 

COFFEE MARKET RECAP

4/8/2004

The coffee market gave up the gains of the prior
session and close below the 75.00-cent level in the July contract. Maybe options
expiration undermined the action Thursday but it would also seem like the bull
camp is having trouble holding the gains off the March low. In fact, without
some additional supply uncertainty, one has to think that the short-term trend
in coffee is pointing down. Many traders continue to think that low producer
stocks and a downward revision in the Brazilian production total later this
month will serve to put a firm floor under coffee prices at levels that are
significantly above the November 2003 lows.

Technical Outlook

COFFEE (MAY) 4/12/04 The downside closing price
reversal on the daily chart is somewhat negative. The close below the 1st swing
support could weigh on the market. The daily stochastics have crossed over down
which is a bearish indication. The next downside objective is now at 71.40. The
Coffee contract should run into resistance at 73.30 and above there at 74.40
with support at 71.8 and 71.40. The market’s short-term trend is negative as the
close remains below the 9-day moving average. Daily studies pointing down
suggests selling minor rallies.

 

SUGAR MARKET RECAP

4/8/2004

May sugar closed 13 ticks higher and mostly right
on the high of the session and that leaves the sugar market with a big gain on
the shortened week. The trade noted heavy interest in the May/August spread and
that could mean that bullish sentiment toward the market is picking up momentum.
We have to think that the potential tightness in high fructose corn syrup
supplies could be coming into the background. It is also possible that Brazil
might be inclined to setup the use of sugar for ethanol as gasoline prices
soared in the action Thursday.

Technical Outlook

#SUGAR (MAY) 4/12/2004: The close over the pivot
swing is a somewhat positive setup. Swing resistance comes in at 6.85, with
support found at 6.69. 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 6.85.

 

COTTON MARKET RECAP

4/8/2004

The cotton market failed to follow-through to the
upside after a strong opening. The supply/demand report was neutral but the
weekly export sales numbers were supportive. Traders were looking for a possible
drop in the 2003/04 export forecast by 100,000 to 200,000 bales from the record
13.8 million bushels projected in the March report. However, exports and ending
stocks were left unchanged. World ending socks were revised slightly to 31.73
million bales from 31.61 million bales last month and 36.29 million bales last
week. Weekly export sales came in at 431,500 bales as compared with trade
expectations at 200,000 to 300,000 bales. Old crop sales were 254,700 bales tons
as compared with 52,500 bales necessary each week to reach the USDA projection.
Cumulative sales have reached 92.6% of the forecast for the season as compared
with 95% on average for this time of the year. Weekly shipments came in at a
marketing year high at 441,400 bales and the shipment pace of the past several
weeks has been very strong. Fears of a larger world crop for the coming season
and that US producers may come close to the hefty prospective plantings estimate
of the USDA has kept the tone in the market weak.

Technical Outlook

#COTTON (MAY) 4/12/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 62.24 and then again at 63.02, while support is targeted at 61.19
and 60.92. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 60.92.