Here’s What’s Dogging The Gold Market
BOND MARKET RECAP
5/26/2005
June Bonds finished down 0-01 at 116-13, 0-09 off
the high and 0-08 up from the low.
June 10 Yr Treasury Notes finished down 0-055 at
112-175, 0-085 off the high and 0-055 up from the low.
The Treasury market is exhibiting some less
impressive action this week and that is partly the result of the recent
overbought condition and partly the result of ongoing strength in the US equity
market. We also have to point out that ongoing claims declined and another
20,000 decline next week would bring that reading to the lowest level of the
year and could signal an improvement in the labor market. The help wanted Index
was unchanged and the Chicago Midwest Manufacturing Index rose minimally so the
economic information on Thursday was once again mixed but could have been
considered slightly bearish but the Treasuries continue to see buying on dips.
Technical Outlook
BONDS (JUN) 05/27/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The market tilt is slightly negative with the
close under the pivot. The next downside objective is 115-28. The next area of
resistance is around 116-22 and 116-31, while 1st support hits today at 116-05
and below there at 115-28.
TNOTES (JUN) 05/27/2005: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. It is a
slightly negative indicator that the close was under the swing pivot. The next
downside objective is 112-035. The next area of resistance is around 112-250 and
113-010, while 1st support hits today at 112-105 and below there at 112-035.
STOCK INDICES RECAP
5/26/2005
June S&P finished up 5.5 at 1198.1, 2.1 off the
high and 3.8 up from the low.
June S&P E-Mini closed up 5.75 at 1198.25. This
was 6.5 up from the low and 2 off the high.
June Dow closed up 67 at 10540. This was 42 up
from the low and 10 off the high.
The stock market started out firm and then
managed to add to the gains despite the fact that the GDP reading wasn’t exactly
up to initial lofty expectations. However, the GDP was revised upward and
ongoing claims declined sharply and that is a positive for future growth
prospects. We also think that medical and drug stocks were providing leadership
and in effect managed to offset more negative news from AIG, HSBC and the oil
market. Good numbers from Heinz and Costco provided the broad market with added
positive traction but it might be important for a number of market measures to
manage new highs before the end of the week.
Technical Outlook
S&P 500 (JUN) 05/27/2005: 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 is an
indication the longer-term trend has turned positive. The gap upmove on the day
session chart is a bullish indicator for trend. The market’s close above the 2nd
swing resistance number is a bullish indication. The next upside objective is
1203.52. The next area of resistance is around 1200.95 and 1203.52, while 1st
support hits today at 1195.05 and below there at 1191.73.
SP EMINI (JUN) 05/27/2005: 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 is an
indication the longer-term trend has turned positive. The market setup is
supportive for early gains with the close over the 1st swing resistance. The
next upside objective is 1205.62. The next area of resistance is around 1202.50
and 1205.62, while 1st support hits today at 1194.00 and below there at 1188.63.
NASDAQ (JUN) 05/27/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day moving average. Follow through buying looks likely if the market can hold
yesterday’s gap on the day session chart. Since the close was above the 2nd
swing resistance number, the market’s posture is bullish and could see more
upside follow-through early in the session. The near-term upside objective is at
1561.37. The market is becoming somewhat overbought now that the RSI is over 70.
The next area of resistance is around 1555.75 and 1561.37, while 1st support
hits today at 1543.25 and below there at 1536.38.
CURRENCY MARKET RECAP
5/26/2005
June US Dollar finished up 52 at 8687, 7 off the
high and 57 up from the low.
June Euro finished down 0.88 at 125.18, 0.34 off
the high and 0.18 up from the low.
June Euro Dollar closed unchanged at 96.58. This
was 0.005 up from the low and equal to the high.
June Canadian Dollar closed down 0.28 at 78.89.
This was 0.1 up from the low and 0.1 off the high.
June British Pound finished down 1.03 at 181.96,
0.49 off the high and 0.21 up from the low.
June Swiss closed down 0.57 at 81.01. This was
0.14 up from the low and 0.14 off the high.
June Japanese Yen closed down 0.24 at 92.74. This
was 0.27 up from the low and 0.09 off the high.
The Dollar thrust up to another new high for the
move and did so off decent US numbers and ongoing concern for the EU vote this
weekend. The Dollar could have been dampened by concerns that the Chinese were
getting set to move on their currency, as the US Treasury Secretary told
Congress that China was ready to move forward during the action Thursday. The
fact that the US stock market was strong again, also seemed facilitate the move
toward Dollars and away from Euros. About the only major negative toward the
Dollar Thursday was the fact that energy prices continued to firm and that is
generally thought to hurt the US economy more than other countries.
Technical Outlook
YEN (JUN) 05/27/2005: 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 gap
lower price action on the day session chart is a bearish indicator for trend.
The close below the 1st swing support could weigh on the market. The next
downside target is now at 92.34. The next area of resistance is around 92.92 and
93.05, while 1st support hits today at 92.56 and below there at 92.34.
EURO (JUN) 05/27/2005: A crossover down in the
daily stochastics is a bearish signal. 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. The gap lower price action on the day
session chart is a bearish indicator for trend. The market is in a bearish
position with the close below the 2nd swing support number. The next downside
objective is 124.70. The market is approaching oversold levels on an RSI reading
under 30. The next area of resistance is around 125.44 and 125.74, while 1st
support hits today at 124.92 and below there at 124.70.
PRECIOUS METALS RECAP
5/26/2005
June Gold closed down 0.9 at 418. This was 0.9 up
from the low and 0.8 off the high.
July Silver finished up 0.024 at 7.162, 0.043 off
the high and 0.117 up from the low.
The gold market is simply being dogged by the
soaring US Dollar and the sagging Euro. The gold market continues to under
perform the silver and copper markets, which seem to be getting a slight lift
from macro economic optimism and from consistent fund buying. In fact, the
silver market seems to be the leadership market in the precious metals and that
is because it is less interactive with the US Dollar on a day to day basis. Some
traders continue to think that uncertainty over the EU constitution vote will
prompt some flight to quality gold buying before the close on Friday but we
doubt that flight to quality issues are capable of overcoming Dollar action.
Technical Outlook
SILVER (JUL) 05/27/2005: 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 market has a slightly positive tilt
with the close over the swing pivot. The near-term upside objective is at 730.4.
The next area of resistance is around 724.2 and 730.4, while 1st support hits
today at 708.3 and below there at 698.4.
GOLD (JUN) 05/27/2005: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. 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 objective is now at 416.3. The next
area of resistance is around 418.8 and 419.6, while 1st support hits today at
417.2 and below there at 416.3.
COPPER MARKET RECAP
5/26/2005
June Copper closed up 2.15 at 148.30. This was
2.80 up from the low and 0.20 off the high.
The copper market exploded aggressively as a
number of fundamentals seemed to improve. In addition to declining LME stocks
this week, the equity market provided solid macro economic support to copper. We
must also note that fund interest in copper picked up and considering the
extremely bullish Chinese import stats on copper it would seem that even higher
copper prices are ahead. Even a sharply higher US Dollar failed to discourage
the buyers as copper rose to the highest level since May 11th. In addition to
the fund buyers the copper trade was buying and that in turn sparked small spec
buying in copper. However, considering that the copper market was sold so
aggressively early in May we doubt that copper prices have shifted to an
excessively overbought short term condition.
ENERGY MARKET RECAP
5/26/2005
July Crude Oil closed up 0.03 at 51.01. This was
0.36 up from the low and 0.69 off the high.
July Heating Oil closed up 1.21 at 144.84. This
was 2.54 up from the low and 1.46 off the high.
July Unleaded Gas finished down 0.25 at 145.13,
1.77 off the high and 1.23 up from the low.
July Natural Gas finished down 0.16 at 6.21, 0.16
off the high and 0.08 up from the low.
July Propane closed up 0.01 at 0.80. This was
equal to the low and equal to the high.
The energy complex climbed off steadily improving
macro economic conditions that in turn could indicate better energy demand
ahead. News that OPEC-11 shipments (out to June 11th) increased by 500,000
barrels per day, gives some credibility to the improving demand argument. Prices
could have been dampened by news that Saudi Arabia was still pumping 9.5 million
barrels per day from March and OPEC thinks that will result in a rebuilding of
inventories in the next winter but apparently the trade is convinced that short
term conditions are supportive to prices. The weekly gas storage report in
natural gas showed an injection of 93 bcf compared to estimates between +70 bcf
to +115 bcf. Gas storage now stands at 1,692 bcf with stocks 228 bcf above year
ago and 322 bcf above the 11 year average which along with the weather is
negative to natural gas prices. Gas stocks have increased by 276 bcf over the
last four weeks. In fast, the latest 6 to 10 day forecast (May 31st through June
4th) for the Northeast and Midwest is for mostly below normal temperatures.
Technical Outlook
CRUDE OIL (JUL) 05/27/2005: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. 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 52.14.
The next area of resistance is around 51.53 and 52.14, while 1st support hits
today at 50.49 and below there at 50.05.
UNLEADED (JUL) 05/27/2005: Momentum studies are
rising from mid-range, which could accelerate 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. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The next upside
target is 148.26. The next area of resistance is around 146.63 and 148.26, while
1st support hits today at 143.63 and below there at 142.27.
HEATING OIL (JUL) 05/27/2005: 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 market has a slightly positive
tilt with the close over the swing pivot. The next upside objective is 148.57.
The next area of resistance is around 146.84 and 148.57, while 1st support hits
today at 142.84 and below there at 140.57.
CORN MARKET RECAP
5/26/2005
July Corn finished up 2 1/4 at 225, 1/2 off
the high and 4 1/2 up from the low. December Corn closed up 2 at 241 3/4. This
was 4 up from the low and 1/4 off the high.
The market found solid support from uncertainty
over the rain outlook for the next 10 days in the eastern cornbelt which was
offset by slow export news and quiet trade from fund traders. Fund buying picked
up late and into the mid-session funds were noted buyers of near 3000 contracts.
Weekly export sales were pegged at 600,600 tonnes as compared with trade
expectations at 600,000-925,000 tonnes. Cumulative sales have reached 86.4% of
the USDA forecast for the season as compared with 83.6% on average for this time
of the year. The International Grain Council pegged the 2005/2006 world coarse
grain production at 963 million tonnes as compared with 1.01 billion tonnes last
year. With different weather models uncertain on the outlook for rain on the
6-10 day maps, the market appears to see a reason to build a weather premium
ahead of the long weekend. Commercial selling (thought to be producer selling)
helped limit the gains. July corn support comes in at 222 1/2 with 227 1/2 as
next resistance.
Technical Outlook
CORN (JUL) 05/27/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day 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
229. The 9-day RSI over 70 indicates the market is approaching overbought
levels. The next area of resistance is around 227 1/2 and 229, while 1st support
hits today at 222 1/2 and below there at 219.
SOY COMPLEX RECAP
5/26/2005
July Soybeans finished up 9 1/2 at 676, 1 1/2 off
the high and 12 1/2 up from the low. November Soybeans closed up 11 at 676 1/2.
This was 15 up from the low and 1 off the high.
July Soymeal closed up 2.6 at 210.3. This was 3.8
up from the low and 0.7 off the high.
July Soybean Oil finished up 0.53 at 23.78, 0.08
off the high and 0.45 up from the low.
Demand news was not as positive as traders had
wanted to see this morning but there seemed to be enough uncertainty for the
weather and enough fund buying to provide support for new contract highs in the
new crop and a move to the highest level since March 18th for the July contract.
The monthly Census crush report this morning pegged soybeans crushed in April at
139.4 million bushels as compared with trade expectations at 141-142 million
bushels. In addition, the March crush was revised lower to 148.49 million
bushels from 149.7 million previous. The report is negative against trade
expectations and shows that soybean demand is not as strong as believed. Oil
stocks were pegged at 1.783 billion pounds from 1.889 expected which is a slight
offset to the crush news. Weekly export sales were pegged at 289,600 tonnes as
compared with trade expectations at 250,000-350,000 tonnes. Cumulative sales
have reached 97% of the USDA forecast for the season as compared with 96.2% on
average for this time of the year. Meal sales were 78,300 tonnes from
expectations at 50,000-100,000 tonnes and oil sales were 4100 tonnes from
0-5,000 expected. The surge higher in the US dollar this morning was seen as a
slightly negative force and the cash basis for soybeans in the Midwest was lower
due to more active producer selling. Funds were noted buyers of near 4600
contracts for soybeans and near 3500 oil into the mid-session. Uncertainty on
the possibility of rains in the 6-10 day outlook helped support more buying
ahead of the long weekend. Support for July soybeans comes in at 667 with 678
and 685 as next resistance.
Technical Outlook
BEANS (JUL) 05/27/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average indicates the
longer-term trend has turned up. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The near-term upside
objective is at 687 1/4. The 9-day RSI over 70 indicates the market is
approaching overbought levels. The next area of resistance is around 683 and 687
1/4, while 1st support hits today at 669 and below there at 659 1/4.
MEAL (JUL) 05/27/2005: 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 close
over the pivot swing is a somewhat positive setup. The near-term upside target
is at 214.0. With a reading over 70, the 9-day RSI is approaching overbought
levels. The next area of resistance is around 212.5 and 214.0, while 1st support
hits today at 208.1 and below there at 205.1.
BEANOIL (JUL) 05/27/2005: 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 is an indication the longer-term trend has turned positive. Since
the close was above the 2nd swing resistance number, the market’s posture is
bullish and could see more upside follow-through early in the session. The next
upside objective is 24.21. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 24.04 and 24.21, while
1st support hits today at 23.52 and below there at 23.16.
WHEAT MARKET RECAP
5/26/2005
July Wheat finished up 7 1/2 at 337 3/4, 1 3/4 off the high
and 11 3/4 up from the low. December Wheat closed up 6 3/4 at 356 1/2. This was
10 1/2 up from the low and 1 1/2 off the high.
The rainy weather in the plains helped pressure
the market early but a turn higher in soybeans and solid export news helped
support the rally into the mid-session. Funds were noted buyers of near 200
contracts. The market closed above the 50-day moving average for the 4th session
in a row to the highest close since March 31st. Weekly export sales were pegged
at 441,500 tonnes as compared with trade expectations at 200,000-400,000 tonnes.
Cumulative sales for the new crop season have reached 7.5% of the USDA forecast
for the season as compared with 8.3% on average for this time of the year.
Taiwan bought 86,000 tonnes of US wheat overnight and Japan bought 90,000 tonnes
of wheat at their weekly tender with 70,000 of the total from the US. The
International Grain Council pegged the 2005/2006 world crop production at 604
million tonnes as compared with 625 million tonnes last year. July wheat support
comes in at 329 with 339 3/4 and 347 3/4 as next resistance.
Technical Outlook
WHEAT (JUL) 05/27/2005: The cross over and close
above the 60-day moving average indicates the longer-term trend has turned up.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. With
the close over the 1st swing resistance number, the market is in a moderately
positive position. The next upside objective is 348 3/4. The next area of
resistance is around 344 1/2 and 348 3/4, while 1st support hits today at 331
and below there at 321 3/4.
LIVE CATTLE RECAP
5/26/2005
June Live Cattle finished unchanged at 84.60,
0.32 off the high and 0.25 up from the low.
August Feeder Cattle closed down 0.02 at 110.77.
This was 0.17 up from the low and 0.67 off the high.
June and August cattle closed unchanged with
choppy, two-sided trade as continued weakness in cash and beef prices this week
failed to trigger more selling in futures with the market at a discount to the
cash market. Cash markets traded $2.00 lower on the week in the southern plains
at $87. At mid-session, boxed beef cutout values were down $2.67 on the day to
$152.05 as compared with $156.98 one week ago. Slaughter came in at 119,000 head
as compared with trade expectations of 122,000-125,000 head. This was the second
day in a row that slaughter was well below expectations. Some traders believe
that slaughter is dropping off due to poor packer demand and poor margins and
others believe that the feedlots are current and market-ready supplies have
tightened.
Technical Outlook
CATTLE (JUN) 05/27/2005: The downside crossover
of the 9 & 18 bar moving average is a negative signal. 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. It is a mildly bullish indicator that the
market closed over the pivot swing number. The next downside objective is
84.050. The next area of resistance is around 84.870 and 85.170, while 1st
support hits today at 84.320 and below there at 84.050.
LEAN HOGS RECAP
5/26/2005
June Lean Hogs finished down 0.55 at 71.10, 1.05
off the high and 0.20 up from the low.
August Pork Bellies closed down 3.00 at 73.55.
This was equal to the low and 3.60 off the high.
July Hogs closed 20 lower on the session with
June down 55 as commercial selling late in the session helped pressure. Early
support based on follow-through technical buying from the Wednesday reversal
faded with hefty weights and collapsing pork cut-out values helping to pressure.
The sharp break in cash bellies and loins could eat into packer profit margins
and packer demand for live inventory should be slow tomorrow with plant closings
on Monday. The CME 2-Day Lean Index for the period ending May 24th came in at
74.69 which was down.91 from the previous session and down from 76.47 one week
ago. Slaughter came in at 384,000 head as compared with trade expectations of
380,000-386,000 head.
Technical Outlook
HOGS (JUN) 05/27/2005: 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. The daily closing
price reversal down is a negative indicator for prices. The swing indicator gave
a moderately negative reading with the close below the 1st support number. The
next downside target is 70.070. The 9-day RSI under 30 indicates the market is
approaching oversold levels. The next area of resistance is around 71.700 and
72.550, while 1st support hits today at 70.500 and below there at 70.070.
COCOA MARKET RECAP
5/26/2005
July Cocoa finished down 14 at 1415, 12 off the
high and 2 up from the low.
The cocoa market continued to slide in the wake
of ongoing Dollar gains and generally insignificant fundamental conditions. In
other words, the market continues to extract the anxiety premium built into
cocoa prices over the last three years. Despite the massive slide off the 2005
highs, cocoa prices (on a monthly chart) are still more than double the price
levels seen around the late 2000 lows. So far, the market just isn’t concerned
about the fear of reduced or slow arrival data. For almost the whole year, the
cocoa market has discounted dryness in the main and mid crops, low or slow
arrivals and other issues that might have supported prices off lower supply
fears.
Technical Outlook
COCOA (JUL) 05/27/2005: 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. The swing indicator
gave a moderately negative reading with the close below the 1st support number.
The next downside target is now at 1404. The next area of resistance is around
1422 and 1431, while 1st support hits today at 1408 and below there at 1404.
COFFEE MARKET RECAP
5/26/2005
July Coffee closed up 1.30 at 123.70. This was
1.90 up from the low and 0.30 off the high.
The coffee market extended its recent pattern of
gains on Thursday and like many other markets managed at least part of the gains
off fund buying. With the US stock market rising and overall attitudes toward
the US economy improving it would seem like some commodities are being lifted by
slightly improved demand expectations or maybe we should say by a leveling of
the deflationary expectation that accompanied the ultra high energy prices of
the 1st quarter. We suspect that the frost buyers are migrating into the market,
especially since mostly cool temps have been forecasted for the first half of
June in Brazil. It is also possible that concern for a decline in the Vietnam
crop was behind part of the rally on Thursday.
Technical Outlook
COFFEE (JUL) 05/27/2005: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are rising from mid-range, which could
accelerate 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.
Market positioning is positive with the close over the 1st swing resistance. The
near-term upside target is at 125.50. The next area of resistance is around
124.80 and 125.50, while 1st support hits today at 122.65 and below there at
121.15.
SUGAR MARKET RECAP
5/26/2005
July Sugar closed up 0.07 at 8.80. This was 0.10
up from the low and 0.01 off the high.
The sugar market certainly posted some impressive
action on the charts with the strong close on Thursday. While a portion of the
buying appears to be fund short covering, the magnitude of the gains and the
outside market developments suggests that some fresh buying is contributing to
the gains. The market has seen some increased volume on the rally but so far
hasn’t seen open interest rise enough to confirm a fresh buying interest in the
market. As in a number of other markets, a series of long term technicals levels
were kicked off this week and certainly seems to have changed the funds attitude
toward many markets. In other words, the overly bearish tilt in the market from
the March high is in the process of being tempered and possibly reversed.
Technical Outlook
SUGAR (JUL) 05/27/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The major trend could be turning up with the close back above the
18-day 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
8.88. The next area of resistance is around 8.85 and 8.88, while 1st support
hits today at 8.75 and below there at 8.67.
COTTON MARKET RECAP
5/26/2005
July Cotton finished up 0.01 at 50.38, 0.52 off
the high and 0.03 up from the low.
December cotton closed slightly lower in quiet
trade as the early trade higher failed to attract new buying and speculators
were noted as sellers which was thought to be more long liquidation selling
ahead of the long holiday weekend. Weekly export sales were pegged at 462,500
bales as compared with trade expectations at 325,000-380,000 bales. Cumulative
sales have reached 107.7% of the USDA forecast for the season as compared with
106.3% on average for this time of the year. China was the largest buyer at
217,300 bales of the total. Shipments for the week hit 276,900 bales from trade
expectations at 300,000-400,000 bales.
Technical Outlook
COTTON (JUL) 05/27/2005: 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 over the pivot swing is a somewhat positive setup. The next downside
target is 49.96. The next area of resistance is around 50.65 and 51.05, while
1st support hits today at 50.11 and below there at 49.96.