Here’s Why Cattle Is At A 2-Month Low
BOND MARKET RECAP
8/23/2004
September Bonds closed down 0-19 at 110-16. This
was 0-07 up from the low and 0-07 off the high.
September 10 Yr Treasury Notes finished down
0-105 at 112-125, 0-030 off the high and 0-045 up from the low.
The Treasury market mounted an aggressive
liquidation Monday despite a total lack of scheduled economic information. Part
of the pressure in Treasury prices came from the awareness that the last COT
report documented a massively overbought small spec and fund position. With
equity prices continuing to discount the threat of soaring prices and seeing the
Dallas Fed President downplaying the impact of current energy prices it’s not
surprising that Treasuries failed. The fact that the Fed’s McTeer also indicated
that current energy prices are troublesome should at least provide some support
under prices.
Technical Outlook
BONDS (SEP) 08/24/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The close below the 9-day moving average is a
negative short-term indicator for trend. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. The next downside objective is now at 109-22. The next area of
resistance is around 110-28 and 111-15, while 1st support hits today at 110-00
and below there at 109-22.
TNOTES (SEP) 08/24/2004: 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. A negative signal for trend
short-term was given on a close under the 9-bar moving average. The close below
the 2nd swing support number puts the market on the defensive. The next downside
target is now at 111-300. The next area of resistance is around 112-200 and
112-305, while 1st support hits today at 112-040 and below there at 111-300.
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STOCK INDICES RECAP
8/23/2004
September S&P finished down 2.5 at 1096.2, 5.3
off the high and 1.7 up from the low.
September S&P E-Mini closed down 2.5 at 1096.25.
This was 2 up from the low and 5.5 off the high.
September Dow closed down 28 at 10081. This was
14 up from the low and 51 off the high.
September Dow E-Mini finished down 26 at 10083,
50 off the high and 17 up from the low.
The stock market attempted to extend the recent
string of gains but was unable to decisively push prices in positive ground for
most of the session. The market was cheered on by suggestions that current
energy prices are not nearly as damaging to the economy as they were back into
the 70’s when inflation was a big problem. While a Fed President acknowledged
that high oil prices were dampening the recovery the Fed did say that the
economy was self sustaining growth! With energy prices somewhat weaker on the
session that also seemed to give the bulls a minor edge but from the action
Monday it would seem that the aggressive short covering has mostly run its
course.
Technical Outlook
S&P 500 (SEP) 08/24/2004: The cross over and
close above the 40-day moving average is an indication the longer-term trend has
turned positive. Momentum studies are trending higher but have entered
overbought levels. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The market has a slightly positive tilt
with the close over the swing pivot. The next upside objective is 1104.65. The
next area of resistance is around 1102.60 and 1104.65, while 1st support hits
today at 1097.40 and below there at 1094.25.
SP EMINI (SEP) 08/24/2004: The cross over and
close above the 40-day moving average indicates the longer-term trend has turned
up. Studies are showing positive momentum but are now in overbought territory,
so some caution is warranted. The close above the 9-day moving average is a
positive short-term indicator for trend. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The near-term upside
target is at 1104.87. The next area of resistance is around 1102.50 and 1104.87,
while 1st support hits today at 1097.00 and below there at 1093.88.
NASDAQ (SEP) 08/24/2004: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The next upside target is 1388.87. The next area of
resistance is around 1384.25 and 1388.87, while 1st support hits today at
1369.75 and below there at 1359.88.
MINIDOW (SEP) 08/24/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. The close over the pivot swing is a somewhat positive
setup. The near-term upside objective is at 10161. The next area of resistance
is around 10140 and 10161, while 1st support hits today at 10092 and below there
at 10064.
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CURRENCY MARKET RECAP
8/23/2004
September US Dollar finished up 95 at 8918, 1 off
the high and 93 up from the low.
September Euro finished down 1.62 at 121.41, 1.03
off the high and 0.03 up from the low.
September Euro Dollar closed down 0.0125 at
98.1125. This was 0.0025 up from the low and 0.01 off the high.
September Canadian Dollar closed down 0.64 at
76.43. This was 0.05 up from the low and 0.49 off the high.
September British Pound finished down 0.92 at
180.5, 0.99 off the high and 0.02 up from the low.
September Swiss closed down 1.11 at 78.81. This
was 0.03 up from the low and 0.7 off the high.
September Japanese Yen closed down 0.48 at 91.17.
This was 0.1 up from the low and 0.38 off the high.
The Dollar managed to maintain the early gains
especially after a regional Fed President comments suggested that oil prices
were not a complete disaster for the US economy. With US tanks within 250 yards
of the Mosque in Najf and the besieged leader Al-Sadr supposed into the compound
the market might have been bidding up the Dollar in hopes of a favorable outcome
from the battle. The big losers in the action Monday were the Euro and the Swiss
as many traders think that Euro zone monetary policies could leave the Euro at a
disadvantage to the US in an oil shock inspired global slowdown.
Technical Outlook
YEN (SEP) 08/24/2004: The major trend has turned
down with the cross over back below the 40-day moving average. Momentum studies
are trending higher but have entered overbought levels. The market’s short-term
trend is positive on the close above the 9-day moving average. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The near-term upside target is at 91.67. The next area of
resistance is around 91.38 and 91.67, while 1st support hits today at 90.98 and
below there at 90.86.
EURO (SEP) 08/24/2004: The close under the 40-day
moving average indicates the longer-term trend could be turning down. The daily
stochastics gave a bearish indicator with a crossover down. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The gap lower on the day session chart is bearish and
puts the market on the defensive. The market is in a bearish position with the
close below the 2nd swing support number. The next downside objective is 120.65.
The next area of resistance is around 122.04 and 122.77, while 1st support hits
today at 120.98 and below there at 120.65.
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PRECIOUS METALS RECAP
8/23/2004
October Gold closed down 2.7 at 411.3. This was
1.8 up from the low and 1.7 off the high.
September Silver finished down 0.125 at 6.745,
0.075 off the high and 0.08 up from the low.
October Platinum closed down 17.7 at 836.6. This
was 2.1 up from the low and 9.4 off the high.
All the metals came under pressure during the
session Monday but only seemed to resistance selling below the early weak price
levels. With the Dollar rising smartly, it’s understandable that gold came under
pressure but from the action Monday it was clear that the funds were jumping out
of silver and platinum at a more aggressive pace. With the equity market
managing to discount the soaring energy price structure and Bonds down
aggressively it seemed that some flight to quality longs were moving back to the
sidelines as the Iraqi situation didn’t spin out of control as some might have
expected over the weekend.
Technical Outlook
SILVER (DEC) 08/24/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. A
positive signal for trend short-term was given on a close over the 9-bar moving
average. The market setup is somewhat negative with the close under the 1st
swing support. The next downside target is 661.3. The next area of resistance is
around 686.6 and 695.3, while 1st support hits today at 669.6 and below there at
661.3.
GOLD (DEC) 08/24/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. It is a slightly negative indicator that the close was
under the swing pivot. The near-term upside target is at 416.0. The next area of
resistance is around 414.4 and 416.0, while 1st support hits today at 411.2 and
below there at 409.5.
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COPPER MARKET RECAP
8/23/2004
September Copper finished down 2.70 at 124.15,
2.15 off the high and 1.35 up from the low.
The copper market came under aggressive fund
selling as the market appeared to throw in a bull tilt that it had maintained
for most of the last three months. It is a little surprising that copper wasn’t
in favor as the financial markets continue to discount the negative impact of
ultra high energy prices. With both copper and platinum prices under significant
pressure many traders assumed that a negative Chinese bias was in effect during
the action Monday. While the Press reported aggressive fund selling in copper
the last COT report really didn’t have the fund positioning in copper at an
excessive level.
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ENERGY MARKET RECAP
8/23/2004
October Crude Oil closed down 0.67 at 46.05. This
was 0.04 up from the low and 1.05 off the high.
October Heating Oil closed down 1.64 at 122.88.
This was 0.28 up from the low and 2.62 off the high.
October Unleaded Gas finished down 1.55 at
125.04, 2.41 off the high and 0.54 up from the low.
October Natural Gas finished down 0.23 at 5.47,
0.11 off the high and 0.01 up from the low.
October Propane closed down 0.01 at 0.87. This
was equal to the low and equal to the high.
The energy complex chopped back and forth but was
mostly lower during the session Monday. In addition to Iraq turning up the flow
in the Northern Pipeline the market seemed to get some pressure from news that
US tanks were within 250 yards of the Najf Mosque and that Al-Sadr appeared to
be inside! The trade also saw suggestions from OPEC that crude oil prices had as
much as $10 to $15 of premium above fundamental fair value. With the IEA and DOE
heads meeting to discuss oil prices it is not out of the question for the market
to fear some veiled threat of a bugger stock release.
Technical Outlook
CRUDE OIL (OCT) 08/24/2004: The market rallied to
a new contract high. Stochastics turning bearish at overbought levels will tend
to support lower prices if support levels are broken. The market’s short-term
trend is positive on the close above the 9-day moving average. The market tilt
is slightly negative with the close under the pivot. The next downside objective
is 45.18. The next area of resistance is around 46.55 and 47.37, while 1st
support hits today at 45.45 and below there at 45.18.
UNLEADED (OCT) 08/24/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. It is a slightly negative
indicator that the close was lower than the pivot swing number. The next
downside target is 122.64. The next area of resistance is around 126.67 and
128.53, while 1st support hits today at 123.73 and below there at 122.64.
HEATING OIL (OCT) 08/24/2004: The market made a
new contract high on the rally. Stochastics turning bearish at overbought levels
will tend to support lower prices if support levels are broken. The close below
the 9-day moving average is a negative short-term indicator for trend. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next downside objective is now at 120.43. The next area of
resistance is around 124.05 and 126.22, while 1st support hits today at 121.15
and below there at 120.43.
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CORN MARKET RECAP
8/23/2004
September Corn finished up 3 at 234 1/4,
3/4 off the high and 4 1/2 up from the low. December Corn closed up 2 1/2 at 244
1/4. This was 4 1/4 up from the low and 1 off the high.
The strength in the soybean market and cold
weather concerns for last weeks weather helped support solid short-covering when
futures moved above last weeks highs. Argentina reported that 99% of their
2003-2004 corn crop was collected as of last Friday, with weather related losses
possibly amounting to only 712,088 hectares of the 2.89 million hectares
harvested so far! A warmer and wetter trend for this week helped trigger the
early losses but record cold temperatures in the upper Midwest on Saturday
morning with Mason City Iowa recording a low of 36 degrees helped to support the
rally. The cold weather last week has traders believing that the weekly crop
progress report tonight will show deteriorating crop condition. Weekly export
inspections came in at 34.1 million bushels as compared with 32-35 million
expected. Cumulative shipments have reached 1.785 billion bushels as compared
with 1.440 billion bushels last year at this time. The market also found support
from news that China issued export quotas for the second half of the year at
only 3 million tons as compared with earlier expectations of 7 million tons.
Support for December corn comes in 240 1/2 and 239 with 248 1/2 as next
retracement resistance.
Technical Outlook
CORN (DEC) 08/24/2004: The market now above the
40-day moving average suggests the longer-term trend has turned up. Momentum
studies are trending higher but have entered overbought levels. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
A positive setup occurred with the close over the 1st swing resistance. The next
upside target is 248 1/2. The next area of resistance is around 246 3/4 and 248
1/2, while 1st support hits today at 241 3/4 and below there at 238 1/4.
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SOY COMPLEX RECAP
8/23/2004
September Soybeans finished up 28 1/4 at 623, 3
off the high and 30 1/2 up from the low. November Soybeans closed up 26 at 611.
This was 30 up from the low and 3 3/4 off the high.
December Soymeal closed up 8.7 at 183.4. This was
10.9 up from the low and 1.8 off the high.
December Soybean Oil finished up 0.85 at 23.51,
0.09 off the high and 0.86 up from the low.
A firm tone in the cash markets helped support
early buying in the September futures and a lack of follow-through selling from
speculators helped trigger the strong rally into the mid-session. The cold
weather in Canada over the weekend may have done more damage than initially
believed and canola at the Winnipeg exchange surged higher. Some said it was the
earliest frost on the Canadian Prairies since 1992. US Midwest processor bids
jumped at Midwest locations and the firm cash market along with weather concerns
helped to drive the market higher, especially when stops were hit above last
weeks highs for November soybeans. A warmer and wetter trend for this week
helped trigger the early losses but record cold temperatures in the upper
Midwest on Saturday morning with Mason City Iowa recording a low of 36 degrees
helped to support the rally. The cold weather last week has traders believing
that the weekly crop progress report tonight will show deteriorating crop
condition. Weekly export inspections came in at 4.08 million bushels as compared
with 1-3 million expected. Cumulative shipments have reached 847.8 million
bushels as compared with 1.048 billion bushels last year at this time. Fears of
increased disease problems and reports of SDS in some areas added to the
positive tone for the market and helped trigger significant short-covering.
Support for November soybeans comes in at 594 1/2 and 582 with next retracement
resistance points at 613 3/4 and 633.
Technical Outlook
BEANS (NOV) 08/24/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The close above the 9-day
moving average is a positive short-term indicator for trend. The market’s close
above the 2nd swing resistance number is a bullish indication. The near-term
upside target is at 637 1/2. The next area of resistance is around 626 3/4 and
637 1/2, while 1st support hits today at 593 1/4 and below there at 570 1/4.
BEANOIL (DEC) 08/24/2004: A positive indicator
was given with the upside crossover of the 9 & 18 bar moving average.
Stochastics are at mid-range but trending higher, which should reinforce a move
higher if resistance levels are taken out. The close above the 9-day moving
average is a positive short-term indicator for trend. A positive signal was
given by the outside day up. The market has a bullish tilt coming into today’s
trade with the close above the 2nd swing resistance. The near-term upside target
is at 193.7. The next area of resistance is around 189.6 and 193.7, while 1st
support hits today at 177.0 and below there at 168.4.
MEAL (DEC) 08/24/2004: Rising stochastics at
overbought levels warrant some caution for bulls. A positive signal for trend
short-term was given on a close over the 9-bar moving average. 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 24.27. With a reading over 70, the 9-day RSI is approaching
overbought levels. The next area of resistance is around 24.00 and 24.27, while
1st support hits today at 23.06 and below there at 22.38.
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WHEAT MARKET RECAP
8/23/2004
September Wheat finished up 9 at 321, 1/2 off the high and 10
1/2 up from the low. December Wheat closed up 8 at 332 1/2. This was 10 up from
the low and 1/2 off the high.
Strength in the other grains helped support the
early bounce and then strong fund buying and speculative short-covering
supported strong gains. Funds were noted buyers of near 6000 contracts. The move
to the highest level since August 9th along with the positive influence of the
August 16th daily reversal and last weeks weekly reversal from a contract low
are all positive technical factors. Talk that China might be in the market for
more wheat soon added to the positive tone. Spring wheat at the Minneapolis
exchange helped to lead the market higher on cold weather concerns for the crop.
However, ideas that export competition will increase due to bumper world crops
continue to limit gains. The cold weather last week has traders believing that
the weekly crop progress report tonight will show deteriorating crop condition.
Weekly export inspections came in at 20.16 million bushels as compared with
16-18 million bushels expected. Cumulative shipments have reached 229.3 million
bushels as compared with 221.3 million bushels last year at this time. Support
for December wheat comes in at 326 and 323 with resistance at 336 3/4 and 338
1/4.
Technical Outlook
WHEAT (DEC) 08/24/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close above
the 9-day moving average is a positive short-term indicator for trend. 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 340 1/2. The next area of resistance is around 337 3/4 and 340 1/2,
while 1st support hits today at 327 1/4 and below there at 319 3/4.
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LIVE CATTLE RECAP
8/23/2004
October Live Cattle closed down 0.45 at 85.82.
This was 0.47 up from the low and 0.37 off the high.
October Feeder Cattle finished down 0.22 at
112.90, 0.70 off the high and 0.45 up from the low.
October live cattle closed at its lowest level
since July 20th after trading in a fairly narrow range. Last Friday’s Cattle on
Feed report was neutral against expectations but overall negative for closer in
contracts. Today’s action appeared to be a little more follow-through on last
Thursday’s big down day. The cash cattle market is expected to be lower this
week after some animals were left unsold at the end of last week. Offers today
were at $88/cwt after last week’s trades mostly at $87/cwt. No bids were seen.
The boxed beef cutout this morning was reported $0.28 lower at $140.31. Today’s
estimated slaughter came in at 108,000 head versus expectations of 115,000 to
124,000 and compared to 119,000 last week and 132,000 a year ago.
Technical Outlook
CATTLE (OCT) 08/24/2004: Momentum studies are
declining, but have fallen to oversold levels. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
close below the 1st swing support could weigh on the market. The next downside
objective is now at 84.970. The next area of resistance is around 86.250 and
86.650, while 1st support hits today at 85.420 and below there at 84.970.
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LEAN HOGS RECAP
8/23/2004
October Lean Hogs closed down 1.07 at 64.70. This
was 0.07 up from the low and 1.60 off the high.
February Pork Bellies finished up 0.15 at 94.35,
1.75 off the high and 0.75 up from the low.
The hog market managed a massive range down trade
but did manage to respect recent consolidation support on the charts. Apparently
contract roll over took control of the market and resulted in some stop loss
selling by the funds and small specs. Apparently the market couldn’t generate
much in the way of bargain hunting even in the face of the sell off. Cash hogs
were surprising firm in the western plains but lacked direction in the eastern
half of the Midwest. Since the small specs were already net short in the last
COT report the downside action since the report has probably put that position
in a moderately oversold condition. In the end, huge production from last week
(+8.5% above the prior year) continues to weigh aggressively on pork prices.
Technical Outlook
HOGS (OCT) 08/24/2004: Momentum studies are
declining, but have fallen to oversold levels. A negative signal for trend
short-term was given on a close under the 9-bar moving average. A negative
signal was given by the outside day down. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. The next downside objective is 63.420. The next area of resistance is
around 65.520 and 66.750, while 1st support hits today at 63.870 and below there
at 63.420.
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COCOA MARKET RECAP
8/23/2004
September Cocoa finished up 21 at 1734, 1 off the
high and 46 up from the low.
The cocoa market probed below the prior days low
and managed another impressive new high close. However, for a change the market
noted some trade selling as few players have been willing to sell into the
upward thrust in prices. With the Press reporting increased interest on the part
of the small spec traders that would seem to suggest the market is being held by
weaker hands. Since the trade saw reports of ongoing low soil moisture content
at the Ivory Coast the trade can continue to fear significant damage to the
coming crop. With rain fall in the second 10 days of August at the Ivory Coast
reported to be light it is clear that the weather issue continues to play
loudly.
Technical Outlook
COCOA (DEC) 08/24/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is positive on the close above the 9-day moving average. The daily closing price
reversal up on the daily chart is somewhat positive. With the close higher than
the pivot swing number, the market is in a slightly bullish posture. The next
upside objective is 1807. The next area of resistance is around 1789 and 1807,
while 1st support hits today at 1727 and below there at 1682.
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COFFEE MARKET RECAP
8/23/2004
September Coffee closed up 3.30 at 69.85. This
was 2.60 up from the low and 0.15 off the high.
The coffee market managed to forge a sharp rally
and seemed to do so off talk that Brazilian supplies were still seeing quality
problems. The fact that Colombian physical supplies are so tight also provided
long interest to coffee. With the last COT report showing the funds to be short
15,464 contracts we are not surprised to see the market flash higher after
managing to climb above a series of critical chart points. With prices managing
to rise above the 40 day moving average that might be cause for the fund short
to shift around to a fund long as the funds are typically driven by technical
signals.
Technical Outlook
COFFEE (DEC) 08/24/2004: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
Momentum studies are trending higher from mid-range, which should support a move
higher if resistance levels are penetrated. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The gap up on the
day session chart gave a bullish indicator and more follow through could be seen
this session. The market’s close above the 2nd swing resistance number is a
bullish indication. The next upside objective is 75.50. The next area of
resistance is around 74.70 and 75.50, while 1st support hits today at 72.25 and
below there at 70.55.
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SUGAR MARKET RECAP
8/23/2004
October Sugar closed up 0.04 at 7.77. This was
0.09 up from the low and 0.05 off the high.
October sugar closed firm Monday in a light trade
supported by some news of physical cash business and an improving chart pattern.
Libya bought 50,000 tonnes of white with another 50,000 tonnes expected. This
tender was expected. The COT report with options showed both the large and small
trader reduced their net long position which helps to rebalance the market.
While the market lacks direction from fresh fundamental news, the chart pattern
for October sugar has improved with prices moving away from the 7.53 to 7.60
level and closing above resistance at 7.76. The market now appears it can firm
back to 8 with a close above there helping to confirm the market is starting its
next leg higher. Brazil dockworkers have returned to full work from their 3 day
slowdown last week and have no plans to repeat the slowdown as a wage & benefit
bargaining toll.
Technical Outlook
SUGAR (OCT) 08/24/2004: A bullish signal was
given with an upside crossover of the daily stochastics. Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near-term resistance is taken out. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
The near-term upside target is at 7.90. The next area of resistance is around
7.84 and 7.90, while 1st support hits today at 7.70 and below there at 7.62.
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COTTON MARKET RECAP
8/23/2004
October Cotton finished down 0.20 at 50.60, 0.55
off the high and 0.50 up from the low.
While the cotton market managed to post another
new high for the move it barely managed to forge a higher close from the prior
session. Apparently the market was lifted by the results of the weekly COT
report as it showed the small specs and funds to still be net short cotton. The
trade expected to get a slight benefit from the weekly crop conditions report
which showed
Technical Outlook
COTTON (OCT) 08/24/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The close above the 9-day moving average is a positive short-term
indicator for trend. The market could take on a defensive posture with the daily
closing price reversal down. The close over the pivot swing is a somewhat
positive setup. The next upside target is 51.66. The market is becoming somewhat
overbought now that the RSI is over 70. The next area of resistance is around
51.12 and 51.66, while 1st support hits today at 50.08 and below there at 49.57.