Here’s Why Bonds Haven’t Rallied To Their February Highs

BOND MARKET RECAP

4/15/2005

June Bonds finished up 1-01 at 113-18, 0-02 off
the high and 0-20 up from the low.

June 10 Yr Treasury Notes finished up 0-180 at
110-305, 0-015 off the high and 0-125 up from the low.

The Treasuries started out positive, ran up
aggressively, fell back into mid session and then closed right around the highs.
Early in the session, lower oil prices and minor losses in equities caused some
light long profit taking but once the scheduled numbers cleared (apparently the
Fed released the Industrial production numbers by mistake over the web early) it
was clear that the US economy was slowing and that buyers were justified in
pushing Treasuries even higher. If it were not for the slide in energy prices
this week, the Treasury market might already have pushed prices back to the
February highs!

Technical Outlook

BONDS (JUN) 04/18/2005: The major trend could be
turning up with the close back above the 60-day moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The market now
above the 18-day moving average suggests the longer-term trend has turned up.
There could be more upside follow through since the market closed above the 2nd
swing resistance. The near-term upside target is at 114-22. The market is
approaching overbought levels with an RSI over 70. The next area of resistance
is around 114-13 and 114-22, while 1st support hits today at 113-11 and below
there at 112-17.

TNOTES (JUN) 04/18/2005: Momentum studies are
trending higher but have entered overbought levels. The cross over and close
above the 18-day moving average indicates the longer-term trend has turned up.
The market’s close above the 2nd swing resistance number is a bullish
indication. The near-term upside objective is at 111-195. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 111-145 and 111-195, while 1st support hits today at
110-275 and below there at 110-130.

 

STOCK INDICES RECAP

4/15/2005

June S&P finished down 17 at 1143.6, 20.2 off the
high and 0.4 up from the low.

June S&P E-Mini closed down 16.25 at 1144.25.
This was 1.25 up from the low and 19.75 off the high.

June Dow closed down 170 at 10083. This was 3 up
from the low and 192 off the high.

The stock market remained under duress and
considering the pattern of recent US economic numbers we suspect that more
pressure is ahead for the market. We suspect that the favorable G.E. earnings
are about the best one could expect from the current earnings cycle and
therefore the market missed the benefit of key bull story. Looking forward the
market will probably be confronted with weekend talk show dialogue on the
impending doom of GM and Ford and will possibly see some talk about United
Airlines and other energy impacted transportation stocks. What the market
probably won’t have to contend with is the Fed admitting that their persistent
battle against inflation is temporarily suspended. Unless energy prices fall out
of bed the macro economic look favors the bear camp, especially with the series
of numbers from the US Friday morning all flashing softness.

Technical Outlook

S&P 500 (JUN) 04/18/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The close below the 2nd swing support number puts the market on the
defensive. The next downside objective is 1128.00. The 9-day RSI under 30
indicates the market is approaching oversold levels. The next area of resistance
is around 1153.99 and 1169.19, while 1st support hits today at 1133.40 and below
there at 1128.00.

SP EMINI (JUN) 04/18/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The close below the 2nd swing
support number puts the market on the defensive. The next downside objective is
1127.88. With a reading under 30, the 9-day RSI is approaching oversold levels.
The next area of resistance is around 1154.75 and 1169.87, while 1st support
hits today at 1133.75 and below there at 1127.88.

NASDAQ (JUN) 04/18/2005: The moving average
crossover down (9 below 18) indicates a possible developing short-term
downtrend. Daily stochastics are trending lower but have declined into oversold
territory. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The close below the 2nd swing support number
puts the market on the defensive. The next downside target is now at 1393.13.
The 9-day RSI under 30 indicates the market is approaching oversold levels. The
next area of resistance is around 1428.25 and 1448.12, while 1st support hits
today at 1400.75 and below there at 1393.13.

 

CURRENCY MARKET RECAP

4/15/2005

June US Dollar finished down 49 at 8450, 64 off
the high and 18 up from the low.

June Euro finished up 0.82 at 129.28, 0.32 off
the high and 0.68 up from the low.

June Euro Dollar closed up 0.04 at 96.605. This
was 0.025 up from the low and 0.015 off the high.

June Canadian Dollar closed down 0.34 at 80.26.
This was 0.03 up from the low and 0.46 off the high.

June British Pound finished up 1.06 at 188.66,
0.34 off the high and 0.86 up from the low.

June Swiss closed up 0.74 at 83.52. This was 0.53
up from the low and 0.22 off the high.

June Japanese Yen closed up 0.31 at 93.25. This
was 0.4 up from the low and 0.24 off the high.

The Dollar seemed to come under some profit
taking pressure Friday after the significant run up early in the week. However,
we suspect that some players were unwilling to hold positions ahead of the week
end meetings and we also think that the disappointing US economic numbers and
the continued slide in the equity market was undermining the Dollar. Since the
Dollar comes out of the week with more of a deflationary threat than an
inflationary threat, also comes out of the week with a greater chance of rates
being on hold than being raised it would seem like the bears had a number of
things go their way. However, the US Treasury Secretary on Friday morning
suggested it was time for China to move toward floating rates but he has also
warned against causing a hard landing in China.

Technical Outlook

YEN (JUN) 04/18/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. Market positioning is positive with
the close over the 1st swing resistance. The next upside objective is 93.85. The
next area of resistance is around 93.57 and 93.85, while 1st support hits today
at 92.93 and below there at 92.57.

EURO (JUN) 04/18/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend has turned down with the cross over back below
the 18-day moving average. Follow through buying looks likely if the market can
hold yesterday’s gap on the day session chart. There could be more upside follow
through since the market closed above the 2nd swing resistance. The next upside
target is 130.19. The next area of resistance is around 129.78 and 130.19, while
1st support hits today at 128.78 and below there at 128.19.

 

PRECIOUS METALS RECAP

4/15/2005

June Gold closed up 0.9 at 426.5. This was 1.2 up
from the low and 1.3 off the high.

July Silver finished down 0.038 at 7.068, 0.077
off the high and 0.038 up from the low.

 

Once again the gold and silver markets were lucky
to avoid significant downside pressure as the burden of a slowing economic
outlook is almost fostering a deflationary attitude. Fortunately the Dollar fell
enough to cushion the gold against deflationary selling and with a weekend G7
meeting looming we suspect that some recent shorts in gold and silver decided to
move to the sidelines. The gold market was also being influence by the fear of
weekend IMF discussions about gold sales for debt relief. However, most Press
outlets were suggesting Friday, that IMF gold sales, were not likely in the near
future and that seemed to leave gold market to react to the broad based
influence of macro economic/currency developments.

Technical Outlook

SILVER (JUL) 04/18/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The market back below the 18-day moving average suggests the longer-term trend
could be turning down. It is a slightly negative indicator that the close was
under the swing pivot. The next downside target is 696.3. The next area of
resistance is around 712.6 and 719.3, while 1st support hits today at 701.1 and
below there at 696.3.

GOLD (JUN) 04/18/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. With the close higher than
the pivot swing number, the market is in a slightly bullish posture. The next
upside target is 429.0. The next area of resistance is around 427.7 and 429.0,
while 1st support hits today at 425.3 and below there at 424.1.

 

COPPER MARKET RECAP

4/15/2005

June Copper closed up 1.65 at 144.40. This was
1.40 up from the low and 0.70 off the high.

The copper market was probably benefiting from
the extreme oversold condition in the bounce Friday as the big picture macro
economic outlook remains very negative. We suspect that the decline in Shanghai
copper stocks prompted some of the short covering but apparently some physical
players were pulled into the fray along with some fund buyers. However, it would
not seem like the big picture view on the economy is improving, in fact
conditions in the US seem to be deteriorating and that could easily rekindle the
selling in the copper next week. It is possible that some arbitrage buyers were
responsible for the bounce Friday but arbitrage can’t be expected to carry
copper prices consistently against major declines in world equity markets.

 

ENERGY MARKET RECAP

4/15/2005

June Crude Oil closed down 0.72 at 52.06. This
was 0.31 up from the low and 0.39 off the high.

June Heating Oil closed down 2.43 at 146.38. This
was 1.28 up from the low and 1.32 off the high.

June Unleaded Gas finished down 2.57 at 150.47,
1.13 off the high and 1.07 up from the low.

June Natural Gas finished down 0.08 at 7.10, 0.02
off the high and 0.05 up from the low.

June Propane closed unchanged at 0.83. This was
0.00 up from the low and equal to the high.

Energy prices were weak for most of the session
Friday as the OPEC Secretary General suggested that April oil flow is indeed
rising and that rebuilding was set to accelerate. OPEC also suggested that their
production in April was going to be close to 30 million barrels per day and that
is a slightly negative revelation. On the other hand, prices were somewhat
support by additional comments from OPEC that clearly downplayed the chances of
a second 500,000 barrel per day production increase. In fact, OPEC said they
were going to watch the economy closely as a severe decline in demand might
actually result in them pulling back on past production increases.

Technical Outlook

CRUDE OIL (JUN) 04/18/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The next downside
objective is now at 51.38. The next area of resistance is around 52.41 and
52.78, while 1st support hits today at 51.71 and below there at 51.38.

UNLEADED (JUN) 04/18/2005: 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 148.29. The next area of resistance is around
151.57 and 152.68, while 1st support hits today at 149.37 and below there at
148.29.

HEATING OIL (JUN) 04/18/2005: The major trend has
turned down with the cross over back below the 40-day moving average. 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 swing indicator gave a moderately negative reading with the close
below the 1st support number. The next downside objective is now at 143.79. The
next area of resistance is around 147.67 and 148.99, while 1st support hits
today at 145.08 and below there at 143.79.

 

CORN MARKET RECAP

4/15/2005

May Corn finished down 1 1/4 at 206 1/4, 1
1/2 off the high and 1 1/2 up from the low. December Corn closed down 1 1/4 at
230 1/4. This was 1 up from the low and 1 3/4 off the high.

The lack of aggressive fund buying which was seen
in the market yesterday helped to trigger the early weakness today. A late break
in wheat added to the bearish tone but the market lacked much follow-through
selling on the move under Thursday’s lows. May futures ended lower on the
session but up 2 cents on the week. Improving weather for US corn producers to
get more acreage planted ahead of next weeks rains helped to trigger weakness.
In addition, the European Union plans to block imports of US corn gluten feed
unless there is proof they are free of illegal GMO material. Japanese buyers are
also thought to stay sidelined until more is known on the risk of contamination
for US corn cargoes. A firm tone for cash basis, a lack of producer selling and
oversold technical indicators were seen as supportive factors. Support for May
corn comes in at 203 3/4 with resistance at 207 1/2.

Technical Outlook

CORN (MAY) 04/18/2005: 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 close below the 18-day moving average is
an indication the longer-term trend has turned down. The market’s close below
the pivot swing number is a mildly negative setup. The next upside objective is
209 1/4. The next area of resistance is around 207 3/4 and 209 1/4, while 1st
support hits today at 204 3/4 and below there at 203 1/4.

 

SOY COMPLEX RECAP

4/15/2005

May Soybeans finished down 3/4 at 616 1/4, 4 3/4
off the high and 2 3/4 up from the low. November Soybeans closed down 3 at 603.
This was 3 1/2 up from the low and 5 1/2 off the high.

May Soymeal closed down 0.9 at 187.4. This was
1.2 up from the low and 1.9 off the high.

May Soybean Oil finished up 0.22 at 22.64, 0.11
off the high and 0.21 up from the low.

The market traded both sides of unchanged early
in the session as traders attempted to sort through the near-term fundamental
impact of outside market influences. The lower US dollar helped to provide some
underlying support while there is a general perception that large speculators
are shifting away from commodity markets with the perception of less risk for
inflation due to a weaker economy. However, weather looks favorable for harvest
in Brazil and this is clashing with good weather for US corn producers which
might cause more corn and less soybean planted acreage in the US. The USDA
announced a sale of 110,000 tonnes of US soybeans to unknown destination. Oil
received strength from bio-diesel demand hopes and meal/oil spread liquidation
while meal was pressured by talk of a potential back-up of corn gluten feed in
the US if EU GMO trade issues flood the US market with feed. May soybean support
comes in at 614 with 624 1/2 as resistance.

Technical Outlook

BEANS (MAY) 04/18/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The close below the 18-day moving average is an
indication the longer-term trend has turned down. It is a slightly negative
indicator that the close was lower than the pivot swing number. The near-term
upside target is at 624 1/4. The next area of resistance is around 620 and 624
1/4, while 1st support hits today at 612 1/2 and below there at 609 1/4.

MEAL (MAY) 04/18/2005: The upside crossover of
the 9 & 18 bar moving average is a positive signal. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The cross over and close above the 18-day moving average
is an indication the longer-term trend has turned positive. The market tilt is
slightly negative with the close under the pivot. The next upside objective is
190.6. The next area of resistance is around 188.9 and 190.6, while 1st support
hits today at 185.9 and below there at 184.5.

BEANOIL (MAY) 04/18/2005: The daily stochastics
have crossed over up which is a bullish indication. Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The market back below the 18-day
moving average suggests the longer-term trend could be turning down. The market
setup is supportive for early gains with the close over the 1st swing
resistance. The near-term upside objective is at 22.93. Consider buying
pull-backs since daily studies are bullish. The next area of resistance is
around 22.80 and 22.93, while 1st support hits today at 22.48 and below there at
22.30.

 

WHEAT MARKET RECAP

4/15/2005

May Wheat finished down 3 3/4 at 305 1/4, 4 3/4 off the high
and 2 1/4 up from the low. July Wheat closed down 4 at 314 1/4. This was 2 1/4
up from the low and 4 3/4 off the high.

The new low for the week attracting new
speculative selling and additional long liquidation selling early in the session
and a collapse in Minneapolis wheat helped trigger additional selling late in
the day. Good planting weather in North Dakota helped trigger a break of near 15
cents for May Minneapolis wheat. Good weather for the winter wheat crops was
also seen as a bearish influence on prices with more and more traders looking
for bumper-type yields for the key winter wheat crops in the US, China and
India. The Philippines bought 25,000 tonnes of feedwheat from China overnight
and Morocco bought 60,000 tonnes of wheat from the EU. USDA reports from China
and from India indicated bigger crops than last year for both locations which
suggests non-routine demand for wheat in the world could be slow if China import
demand drops. More rain in the forecast for the plains and the Midwest next week
should help maintain good crop conditions and traders look for improving crop
conditions for Monday afternoon’s weekly progress report. May wheat resistance
comes in at 308 1/2 with 302 1/2 and 296 1/2 as support.

Technical Outlook

WHEAT (MAY) 04/18/2005: 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
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. The next downside target is now at 299. With a reading under 30,
the 9-day RSI is approaching oversold levels. The next area of resistance is
around 308 3/4 and 312 3/4, while 1st support hits today at 301 3/4 and below
there at 299.

 

LIVE CATTLE RECAP

4/15/2005

June Live Cattle finished down 0.42 at 84.42,
0.57 off the high and 0.52 up from the low.

May Feeder Cattle closed down 0.02 at 106.22.
This was 0.67 up from the low and 0.17 off the high.

June cattle closed 42 lower on the session but up
70 points on the week. The early break was triggered by a weaker tone for beef
prices and some demand concerns but the market managed to hold right at the
50-day moving average to close higher. Cash cattle traded at $92 in the
panhandle which was up $2.00 on the week and leaves June cattle at a significant
discount to the cash market. Boxed beef cutout values at mid-session were down
18 cents on the day to $155.12 as compared with $154.18 a week ago. Slaughter
came in at 104,000 head as compared with trade expectations of 110,000-116,000
head.

Technical Outlook

CATTLE (JUN) 04/18/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The major trend has turned down with the cross
over back below the 18-day moving average. The close below the 1st swing support
could weigh on the market. The next upside objective is 85.520. The next area of
resistance is around 84.950 and 85.520, while 1st support hits today at 83.900
and below there at 83.350.

 

LEAN HOGS RECAP

4/15/2005

June Lean Hogs finished up 0.65 at 77.90, 0.32
off the high and 0.75 up from the low.

May Pork Bellies closed up 1.10 at 86.97. This
was 1.10 up from the low and 0.32 off the high.

June hogs closed 65 higher on the session and up
20 points for the week. The more positive technical action attracted some fund
buying and speculative buy-stops were triggered on the move above Thursday’s
highs. The jump in loin prices helped to support ideas of better export demand
ahead and also helped boost confidence in a continued mild uptrend in cash
markets into May. Next weeks cash markets, however, are up for grabs. Dry
weather through the weekend and early next week should keep producer marketings
slow for the first two sessions of next week but rains in the middle of the week
could trigger a jump in hog marketings. The CME 2-day Lean Hog index for the
period ending April 13th came in at 69.08, up.36 on the day and up from 68.08
last week at this time. Slaughter came in at 371,000 head vs. estimates between
385,000 and 392,000.

Technical Outlook

HOGS (JUN) 04/18/2005: The daily stochastics gave
a bullish indicator with a crossover up. 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 close below the 18-day moving average is an indication the
longer-term trend has turned down. With the close over the 1st swing resistance
number, the market is in a moderately positive position. The next upside target
is 78.850. Consider buying pull-backs since daily studies are bullish. The next
area of resistance is around 78.420 and 78.850, while 1st support hits today at
77.370 and below there at 76.720.

 

COCOA MARKET RECAP

4/15/2005

July Cocoa finished down 10 at 1533, 10 off the
high and 13 up from the low.

Apparently the cocoa market remained under
pressure because of players exiting the May contract and not choosing to roll
forward. We also suspect that long fund and spec players were simply exiting
because of the sagging macro economic condition and because the US Grind stats
fail to create any kind of buzz on demand. The US grind came out down.07, which
some claim was in line with estimates. In our opinion the grind is negative
because it isn’t escalating and in the process serving to tighten fundamentals.
Fundamentals do need to tighten with nearby cocoa prices hovering above $1,500,
as $1,500 is roughly $200 a ton above the mid 2004 crop year lows! In other
words, without lower supply or stronger demand or anxiety at the Ivory Coast the
market has little reason to hold significantly above last years price levels.

Technical Outlook

COCOA (JUL) 04/18/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down. It
is a slightly negative indicator that the close was under the swing pivot. The
next downside target is 1510. The market is approaching oversold levels on an
RSI reading under 30. The next area of resistance is around 1544 and 1555, while
1st support hits today at 1522 and below there at 1510.

 

COFFEE MARKET RECAP

4/15/2005

July Coffee closed up 1.55 at 115.65. This was
2.90 up from the low and 0.15 off the high.

July coffee rebounded Friday after early weakness
attracted roaster buying. Coffee growers in Brazil were warning that if current
dry conditions persist it could begin to affect the 2006 crop. Some very light
scattered showers are forecasted for Brazil’s coffee growing areas this weekend,
but the next 10 days are expected to be mostly dry and stressful to the trees.
The concern for the 2006 coffee crop comes on the heels of this year’s
production expected to be down significantly this year which brings the supply
issue back into focus. March Colombian coffee production was reported to be down
7.5% vs last year.

Technical Outlook

COFFEE (JUL) 04/18/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The upside closing price reversal on
the daily chart is somewhat bullish. The market has a slightly positive tilt
with the close over the swing pivot. The next downside target is now at 111.95.
The next area of resistance is around 117.15 and 118.00, while 1st support hits
today at 114.15 and below there at 111.95.

 

SUGAR MARKET RECAP

4/15/2005

July Sugar closed down 0.06 at 8.22. This was
0.09 up from the low and 0.07 off the high.

Position rolling and speculative selling
continued to push sugar prices lower Friday. July sugar has fallen significantly
since topping around mid-March and with prices nearing the 8.10 to 8.00 cent
support zone, over sold technical signals may begin to provide support while
cash business may soon begin to pick up. He International Sugar Organization
forecasted that India will continue to be a sugar importer over the next year
despite a rebound in domestic production. Indian purchases in 2005 have been
consistent, but in smaller than expected amounts. China’s Sugar Association
lowered 2004/05 sugar production to 9.4 million tones, down from an earlier
estimate of 10 million tones. China is expected to need to import a minimum of
500,000 tonnes of sugar.

Technical Outlook

SUGAR (JUL) 04/18/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was under the swing pivot. The next downside objective is now at
8.06. The 9-day RSI under 30 indicates the market is approaching oversold
levels. The next area of resistance is around 8.29 and 8.37, while 1st support
hits today at 8.14 and below there at 8.06.

 

COTTON MARKET RECAP

4/15/2005

July Cotton finished down 0.20 at 53.14, 0.58 off
the high and 0.14 up from the low.

July cotton closed 20 lower on the session and
down 172 points on the week. While avoiding a downside breakout for the week,
the technical action still could turn sour and leave this weeks bounce with the
appearance of a successful test of the highs and a lower close. First notice day
for May cotton comes in on Monday, May 25th and there is still talk of a
potential strong stopper. The market held up relatively well against the other
commodity markets and against the other economic sensitive commodities with
export demand to China and others thought to be a solid trend. A dry weather
trend for California cotton producing areas should help producers catch up on
planting progress which was behind normal due to a wet spring.

Technical Outlook

COTTON (JUL) 04/18/2005: The downside crossover
of the 9 & 18 bar moving average is a negative signal. Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The close under
the 18-day moving average indicates the longer-term trend could be turning down.
The market could take on a defensive posture with the daily closing price
reversal down. The market’s close below the pivot swing number is a mildly
negative setup. The next downside objective is 52.53. The next area of
resistance is around 53.50 and 53.97, while 1st support hits today at 52.78 and
below there at 52.53.