Here’s What’s Forcing Energy Down

Technical Outlook

BONDS (DEC) 09/15/03: A positive setup occurred
with the close over the 1st swing resistance. Near-term resistance for bonds is
at 108.26 and then again at 109.24, while swing support hits at 106.30 and below
there at 106.00. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Studies are showing positive momentum, but
are now in overbought territory so some caution is warranted. The next upside
target is 109.24. Short-term indicators suggest buying dips today.

T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
113.09. The market’s close above the 2nd swing resistance number is a bullish
indication. The major trend is down with the cross over back below the 40-day
moving average. Near-term resistance for the T-Notes is at 112.22 and then again
at 113.09, while swing support hits at 111.13 and below there at 110.24. The
market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

9/12/2003

The stock market was buffeted by the weak US
economic numbers and by the decline in the US Dollar. In the end, the pattern of
lower lows would seem to leave stock prices pointing down next week. In fact,
considering the upside breakout in bonds it seems that the stock market is due
for more macro economic re-evaluation. In other words, the stock market is
concerned that the recovery is losing momentum and that the burden of the jobs
situation is acting like a millstone around the neck of the marketplace. Without
a distinctly positive headline the bulls in stocks look to retreat to the
sidelines.

Technical Outlook

S&P500 (DEC) 09/15/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. The upside closing
price reversal on the daily chart is somewhat bullish. Underlying support comes
in at 1010.90 and 1001.80, with overhead resistance at 1023.70 and 1027.40. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. Momentum studies are trending lower from high levels which
should accelerate a move lower on a break below the 1st swing support. The next
downside objective is now at 1001.80.

S&P E-Mini (DEC): Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The next downside objective is 1004.38. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1020.50 and then again at 1025.38, while swing support hits at
1010.00 and below there at 1004.38. A negative signal for trend short-term was
given on a close under the 9-bar moving average.

NASDAQ (DEC) The market’s close below the 9-day moving average
is an indication the short-term trend remains negative. With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
market should run into resistance at 1377.25 and above there at 1385.13 with
support at 1346.75 and 1324.13. Daily stochastics turning lower from overbought
levels is bearish and will tend to reinforce a downside break especially if
near-term support is penetrated. The next downside target is 1324.1.

CURRENCY MARKET RECAP

9/12/2003

Another big range down but this time the close
was so weak that traders expect follow through next week. The Dollar was simply
let down by a weaker than expected slate of economic reports and by the slide in
US equity prices. In fact, it would seem that the US financial markets are
really beginning to question the sustainability of the recovery and that is
directly bearish for the Dollar. The biggest benefactor of the action Friday was
the Euro which seems to be taking a leadership role again. In fact, some traders
are beginning to suggest that the US Administration wants the Dollar to fall and
the Euro to rise sharply!

Technical Outlook

YEN (DEC): 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 lower than the pivot swing
number. Swing resistance is targeted at 85.78 and above there at 86.15, with the
yen finding support around 85.19 and below there at 84.97. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 84.97.

EURO (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.1389.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.1089, with overhead resistance
at 1.1389. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap down on the day session chart is bearish with more
selling pressure possible today.

PRECIOUS METALS RECAP

9/12/2003

While New York gold remained stubbornly negative
Friday morning the London gold managed to mount a slightly higher trade into its
weekly close. Surprisingly the gold market didn’t get fresh long interest off a
fairly impressive slide in the Dollar and that is probably a function of the
trade being so significantly overbought. In fact, the COT report released after
the close certainly gives the ongoing long players concern that the market is
extremely overbought. We also have to think that slack macro economic readings
from the US create a minor concern that deflation could still be a problem for
gold and silver.

Technical Outlook

SILVER (DEC): The swing indicator gave a
moderately negative reading with the close below the 1st support number. Initial
support for silver is at 511.7 and below there at 504.9 with resistance likely
at 526.9 and 531.7. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The daily stochastics have crossed over
down which is a bearish indication. Daily stochastics turning lower from
overbought levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside target is
504.9. The new contract high and close below the previous day’s low constitutes
a key reversal which is a bearish signal. The outside day down and close below
the previous day’s low is a negative signal. A new contract high was made on the
rally. The downside closing price reversal on the daily chart is somewhat
negative.

GOLD (DEC): Support for gold today comes in near
371.45, while resistance is pegged at 385.05. The daily stochastic’s 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 next downside objective is now at 371.45. Daily studies
pointing down suggests selling minor rallies. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The daily closing price reversal down puts the market on the
defensive.

COPPER MARKET RECAP

9/12/2003

After the surprise rally Thursday the copper
market ran out of interested buyers and slumped aggressively. We have to think
the lackluster Chinese interest Friday morning and the sharp rise in Shanghai
copper stocks deflated the bull tilt. We also think that weak US economic
numbers and weak US equity prices cause some longs to fear future demand
patterns for copper. In short the market isn’t too sure that the threat of
deflation is past and that the US economy is still in a recovery mode. We also
have to think that recently weak US numbers give the concern over the jobless
recovery a made foothold in sentiment. The copper market is also a little overly
long as measured by the COT report.

ENERGY MARKET RECAP

9/12/2003

Several things combined to force energy prices
down. First of all, the track of the hurricane seems to be more easterly and
that reduces the potential impact on Gulf of Mexico energy facilities. We also
note that the US economy is being downgraded and we have already seen forecasts
that energy demand for the summer was softer than expected and that in turn
means that current demand is softer than expected and that is about to join a
little lower seasonal use! We also think the market realized that prices were
still historically high around the highs of the week and with the market unable
to rally on tight crude stocks and ongoing problems in Iraq the longs simply
decided to bank profits and move to the sidelines. Even the natural gas should
see additional pressure as the track of the hurricane is “less bullish” and the
US is expected to see gradually lower cooling demand in the coming weeks.

Technical Outlook

CRUDE OIL (NOV): The market’s close below the 1st
swing support number suggests a moderately negative setup for today. Support for
crude is keyed on 27.94 and below there at 27.49, with resistance pegged at
28.86 and 29.33. The market’s short-term trend is negative as the close remains
below the 9-day moving average. Daily stochastics are trending lower, but have
declined into oversold territory. The next downside objective is now at 27.49.
With a reading under 30, the 9-day RSI is approaching oversold levels.

UNLEADED GAS (NOV): Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
77.74. It is a slightly negative indicator that the close was lower than the
pivot swing number. Resistance today is at 81.74, while support should be found
around 77.74. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative.

HEATING OIL (NOV): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 74.71, with resistance is at 77.31. The market’s short-term trend
is negative as the close remains below the 9-day moving average. Daily
stochastics are trending lower, but have declined into oversold territory. The
next downside objective is now at 74.71. With a reading under 30, the 9-day RSI
is approaching oversold levels. The gap down on the day session chart is bearish
with more selling pressure possible today.

CORN MARKET RECAP

9/12/2003

Another weak session in corn was apparently
brought on by talk that corn yields might eventually come in even better than
what the US projected in the latest report. In other words, the trade is
suggesting that the crop is better and that ending stocks will end up being a
little larger. Given the magnitude of the selling this week the net spec and
fund positioning in the corn could have reached a fairly large short position in
the action Friday but because most of the losses this week came after the COT
report was measured the net short is more than likely dramatically understated
in the COT report. Exiting longs are suggesting that there is little left to
threaten production so why be long! Keep in mind that the corn market doesn’t
have a spec long position as that should mitigate the downside potential.

Technical Outlook

CORN (DEC) 09/15/03: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The next downside objective is now at 224 1/2. The market’s close below the
1st swing support number suggests a moderately negative setup for today. Market
resistance comes in at 233 today, with support at 224 1/2. The downside
crossover (9 below 18) of the moving averages suggests a developing short-term
downtrend. Daily studies pointing down suggests selling minor rallies. The gap
down on the day session chart is bearish with more selling pressure possible
today.

SOY COMPLEX RECAP

9/12/2003

The soybean market continue to think that tighter
stocks are ahead and that August weather served to crimp the US crop severely.
It would seem that few traders are giving much thought to the idea that the
South American soybean crop is expected to be massive and capable of reducing
the supply anxiety currently in the mind of the market. In the near term the
market is apparently rushing to factor in a weather premium of sorts for the
South American crop. The soybean oil market is also providing a great deal of
support to soybean prices as the trade is fixated on the idea that oil stocks
are also a key concern. In fact, the funds seemed to be especially interested in
soybean oil and that is giving the market legs.

Technical Outlook

SOYBEANS (NOV) 09/15/03: The daily closing price
reversal up is positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next area of resistance is around
629 and 633 , while 1st support hits today at 617 and below there at 609 . The
market’s close above the 9-day moving average suggests the short-term trend
remains positive. The daily stochastics have crossed over up which is a bullish
indication. The next upside target is 633 . The 9-day RSI over 70 indicates the
market is approaching overbought levels.

MEAL (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 193.5.
First resistance comes in at 191.8, with support at 188.4. The market’s
short-term trend is positive on a close above the 9-day moving average. The
market’s close below the pivot swing number is a mildly negative setup. With a
reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (DEC): The market’s close above the
9-day moving average suggests the short-term trend remains positive. Studies are
showing positive momentum, but are now in overbought territory so some caution
is warranted. The next upside target is 22.90. 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 gap upmove on the day session
chart is a bullish indicator for trend. Daily swing resistance is found at 22.70
and above there at 22.90. Support should be encountered at 22.07 and 21.64. The
9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

9/12/2003

The technical action in wheat remained bearish
Friday with another new low and little bounce off the session low. Furthermore,
open interest would seem to be high enough to continue to foster additional
selling. Even the European wheat market was locked in a tighter range as the
market is looking for something new to trade off. It should also be noted that
lower pricing is beginning to lower cash movement and that might help to put a
floor under wheat prices. Some traders suggested that the December wheat has now
moved down into levels that should begin to give support off the top of the May
and June consolidation.

Technical Outlook

WHEAT (DEC) 09/15/03: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 346 1/2 and below there at 342 1/2, with resistance levels
at 356 1/2 and 362 1/2. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 342
1/2. The 9-day RSI under 30 indicates the market is approaching oversold levels.

LIVE CATTLE RECAP

9/12/2003

December cattle appeared to take some profits as
the gains of the week must have been too much for the funds to simply leave on
the table. With October finishing limit down and open interest extremely high
there is plenty of talk about a major top. Some in the trade feared holding
longs into the Monday opening considering the magnitude of the long registered
in the COT report. As always there were rumors about Canada and a major top
floating around in the cash market. However, if the Canadian beef was starting
to have an impact, one would expect at least a minor downtick in beef prices.
Boxed-beef was up 65 cents at mid-session to $158.49 which is a new all-time
high. In addition, cash traders look for trade at $91.00 early next week.

Technical Outlook

CATTLE (OCT) 09/15/03: The daily stochastics have
crossed over down which is a bearish indication. Daily stochastics turning lower
from overbought levels is bearish and will tend to reinforce a downside break
especially if near-term support is penetrated. The next downside target is
85.57. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Support should be encountered at 85.92 and below
there at 85.57. Market resistance is at 87.25 and then again at 88.22. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

LEAN HOGS RECAP

9/12/2003

October Hogs posted a critical failure Friday
with a big range down extension that took prices to the lowest level since
September 8th. With open interest and volume extremely high around the recent
top we have to think that a number of longs are trapped in losing positions. The
trade did decide to bank some profits and also was aware of slightly softer cash
market activity. It is also possible that some October longs were exiting and
either rolling to December or simply getting out altogether. It would not be
beyond the funds to exit considering the technical damage seen Friday which
means that more downside Monday could force even more fund selling.

Technical Outlook

HOGS (OCT) 09/15/03: The market’s close below the
1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 59.25 and 60.55 today, while support is around
57.52 and then 57.10. The market’s short-term trend is positive on a close above
the 9-day moving average. Momentum studies are trending lower from high levels
which should accelerate a move lower on a break below the 1st swing support. The
next downside objective is now at 57.10.

COCOA MARKET RECAP

9/12/2003

After massive selling Thursday, the cocoa market
managed yet another aggressive slide Friday and that really hints at broad based
negative sentiment. Apparently the presence of physical supply undermines the
price structure. In fact, given all the political problems at the Ivory Coast we
suspect that growers will be quick to move product and if the price structure is
weak they might also want to sell before prices fall even further. It is also
clear that funds were willing to sell into cocoa last week and that has long
been a pattern by the group.

Technical Outlook

COCOA (DEC)09/15/03 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1524 and above there at 1551 with support at 1475 and 1453. The 9-day RSI under
30 indicates the market is approaching oversold levels. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1453.25.

COFFEE MARKET RECAP

9/12/2003

A double top around the highs Friday and a
significantly failure off that level would seem to undermine coffee in the
coming sessions. The London coffee market also saw profit taking and with signs
of increased origin selling during the action Friday the market have more than
enough reason smash prices. Some traders suggested that options expiration might
have caused the slide which means the action on the opening Monday will be very
important. However, with the net spec and fund positioning in coffee pretty
close to balanced the market certainly isn’t vulnerable to long liquidation.

Technical Outlook

COFFEE (DEC)9/15/03 The close below the 1st swing
support could weigh on the market. Studies are showing positive momentum, but
are now in overbought territory so some caution is warranted. The near-term
upside objective is at 74.10.The Coffee contract should run into resistance at
71.90 and above there at 74.10 with support at 68.4 and 67.10. The market’s
short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

9/12/2003

The sugar market continued to consolidate and
that helps to build up the idea of a bottom. The trade reported industry buying
and that would also seem to hint at a possible bottom. The fear of deliveries is
certainly serving to keep a lid on the market. The market was also hemmed in by
options expiration in London and US markets. The COT report showed that the
small spec and fund long position continue to deflate from the near record
levels posted at the beginning of 2003 and that seems to suggest more
consolidation potential ahead for sugar. Rumors in the cash market are that some
Brazilian barges don’t have a home and that could be a negative. Is there an
excess of supply of sugar ready to move onto the market.

Technical Outlook

SUGAR (OCT) 09/15/03: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.15, with support found at 5.95. The market’s short-term trend is
negative as the close remains below the 9-day moving average. Daily momentum
studies are on the rise from low levels and should accelerate a move higher on a
push through the 1st swing resistance. The near-term upside objective is at
6.15.

COTTON MARKET RECAP

9/12/2003

The cotton market maintained the positive bias
fostered by the USDA report and is now feeding higher off the threat of adverse
weather. All eyes are on hurricane Isabel with the storm track possibly putting
heavy rains on open bolls in the Carolinas. Even if the storm doesn’t have a
direct track into cotton producing areas the size and strength of the storm
might make a near miss just as damaging. Until the combined small spec and fund
long reaches 45,000 to 50,000 contracts it should not be considered without
additional buying capacity. Dow Jones noted record cotton options volume which
is another way of suggesting heavy speculative interest is pouring into a market
with massive volatility potential.

Technical Outlook

COTTON (DEC) 09/15/03: The market’s close above
the 9-day moving average suggests the short-term trend remains 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. Next
resistance area comes in at 66.72 and then again at 67.04, while support is
targeted at 65.54 and 64.68. Studies are showing positive momentum, but are now
in overbought territory so some caution is warranted. The next upside target is
67.04. The 9-day RSI over 70 indicates the market is approaching overbought
levels. A new contract high was made on the rally.