Here’s Why Copper’s Failure Is Surprising

Technical Outlook

#BONDS (JUN) 04/05/04: The close below the 2nd
swing support number puts the market on the defensive. Near-term resistance for
bonds is at 113.14 and then again at 116.05, while swing support hits at 108.08
and below there at 105.25. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. The close under the 40-day
moving average indicates the longer-term trend could be turning down. Momentum
studies are declining, but have fallen to oversold levels. The next downside
target is 105.25. The 9-day RSI under 30 indicates the market is approaching
oversold levels.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 110.13. The market is in a bearish position with the close below the 2nd
swing support number. 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 114.12 and
then again at 116.05, while swing support hits at 111.16 and below there at
110.13. The market’s short-term trend is negative as the close remains below the
9-day moving average. With a reading under 30, the 9-day RSI is approaching
oversold levels.

 

STOCK INDICES RECAP

4/2/2004

The stock market was higher early, went even
higher after the numbers but seemed to lack the pep that many might have
expected considering that the fundamental picture brightened considerably. Maybe
the weekend Press will tear apart the numbers and make them not look so good but
it would seem like the fear over the jobless recovery is going away. The fact
that an Inflation measured increased sharply could create the concern of rising
interest rates and that might be the reason why stocks showed less than stellar
performance.

Technical Outlook

#S&P500 (JUN) 04/05/04: The market’s close above
the 2nd swing resistance number is a bullish indication. The gap up on the day
session chart gave a bullish indicator and more follow through could be seen
this session. Underlying support comes in at 1138.00 and 1132.00, with overhead
resistance at 1147.00 and 1150.00. The upside crossover (9 above 18) of the
moving averages suggests a developing short-term uptrend. Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 1150.00.

S&P E-Mini (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
1153.50. The market setup is supportive for early gains with the close over the
1st swing resistance. The market now above the 40-day moving average suggests
the longer-term trend is up. Near-term resistance for the S&P Mini is at 1149.00
and then again at 1153.50, while swing support hits at 1136.00 and below there
at 1127.50. A positive indicator was given with the upside crossover of the 9 &
18 bar moving average.

NASDAQ (JUN) The gap upmove on the day session
chart is a bullish indicator for trend. 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. The market should run
into resistance at 1507.25 and above there at 1514.13 with support at 1482.75
and 1465.13. The 9-day RSI over 70 indicates the market is approaching
overbought levels. Studies are showing positive momentum, but are now in
overbought territory so some caution is warranted. The next upside target is
1514.1.

MINI DOW (JUN) Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The market should run into resistance at
10522 and above there at 10568 with support at 10395 and 10314. Studies are
showing positive momentum, but are now in overbought territory so some caution
is warranted. The next upside target is 10568. The cross over and close above
the 40-day moving average indicates the longer-term trend has turned up. 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.

 

CURRENCY MARKET RECAP

4/2/2004

Finally the US got some numbers that makes the
Euro zone look a little less impressive. While the Press might try to discount
the improvement in the jobs figures it might be difficult to discount the back
month revisions. In order for the Dollar not to run off the numbers Friday
morning there will have to be a mitigating force. In the mean time the Euro and
the Swiss were significantly overbought heading into the Friday morning numbers
and may now have to adjust. Even the Yen might see a positive benefit as massive
BOJ Treasury holdings might be liquidated and that could end up helping the Yen
rally.

Technical Outlook

#CURRENCIES 04/05/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The close below the 2nd swing support number puts the market on the
defensive. Swing resistance is targeted at 96.31 and above there at 96.77, with
the yen finding support around 95.51 and below there at 95.17. 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 95.17. The 9-day RSI over 70 indicates the market is
approaching overbought levels.

EURO (JUN): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2378. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1924, with overhead resistance at 1.2378. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. The major trend is down with the cross over back below the
40-day moving average. The gap down on the day session chart is bearish with
more selling pressure possible today.

 

PRECIOUS METALS RECAP

4/2/2004

The gold market failed as some economic flight to
quality longs exited at the same time that Dollar impacted longs exited gold
positions. It was a little surprising that silver longs also felt compelled to
exit positions because the impact of an improving economy could help facilitate
increased silver demand. However, both gold and silver markets had to be holding
record or near record spec and fund long positions. In fact, the COT reports
this after will probably still understate the long positions in gold and silver
even after the break.

Technical Outlook

#P-METALS 04/05/04: SILVER (MAY): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 796.8 and below there at 776.4 with resistance
likely at 817.6 and 834.3. 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
776.4. The 9-day RSI over 70 indicates the market is approaching overbought
levels. A new contract high was made on the rally. The daily closing price
reversal up is positive.

GOLD (JUN): Support for gold today comes in near
411.50, while resistance is pegged at 435.50. 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 411.50. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. The market’s short-term trend is positive on a close above the 9-day
moving average.

 

COPPER MARKET RECAP

4/2/2004

It is very surprising that the copper market
failed into the much better than expected US economic numbers released Friday
morning. The fact that copper continues to act like a precious metal is a little
surprising because one would think that the chance for improved US demand would
be attractive to the bull camp. Some bulls suggested that soaring Dollar action
makes US copper unattractive and might push some long hedges out of position.
Therefore, one would think that the action in copper Friday was a temporary
development.

 

ENERGY MARKET RECAP

4/2/2004

The crude oil continued to soften as the spec
interest is moving to the sidelines until there is a rekindling of the bull
case. With Mexico suggesting that they would continue with current production
and export patterns it is clear that Non OPEC producers are going to continue
their aggressive flow rates and that is negative to prices. We continue to be
surprised by strong price action in Natural gas but apparently Industrial and Ag
Business buyers are stepping up to secure current needs. In other words,
physical buying might be saving N-gas from the weakness brought on by the
regular energy complex.

Technical Outlook

#ENERGIES 04/05/04: CRUDE OIL (MAY): The upside
closing price reversal on the daily chart is somewhat bullish. The market’s
close below the pivot swing number is a mildly negative setup. Support for crude
is keyed on 33.77 and below there at 32.91, with resistance pegged at 35.02 and
35.41. 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 32.91.

UNLEADED GAS (MAY): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 102.74. It is a slightly negative indicator that the close was lower
than the pivot swing number. Resistance today is at 110.14, while support should
be found around 102.74. The moving average crossover down (9 below 18) indicates
a possible developing short-term downtrend.

HEATING OIL (MAY): The market’s close below the
pivot swing number is a mildly negative setup. Heating oil should encounter
support around 80.37, with resistance is at 88.77. 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 80.37. The upside closing price reversal on
the daily chart is somewhat bullish.

 

CORN MARKET RECAP

4/2/2004

December corn managed a new contract high late in
the session as a steady flow of fund and speculative buying provided support.
Strength in the soybean market, follow-through technical buying and signs of
strong export demand helped to support the early gains. The USDA announced that
US exporters sold 230,000 tons of corn to unknown destination. The market is
also finding support from this weeks planted acreage estimate and the expected
tightness ahead. The “idea” that December corn prices need to move higher “now”
relative to soybeans and cotton in order to attract increased plantings has also
supported the market. A dry forecast in the 6-10 and 8-14 day forecast models
from the National Weather Service for the entire cornbelt would suggest
conditions might be favorable for early plantings. Basis levels were mixed as
some country locations were higher with a slowdown in producer selling today
after active selling for much of the week.

Technical Outlook

#CORN (MAY) 04/05/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 335. The market’s close above the 2nd swing resistance number is
a bullish indication. Market resistance comes in at 335 today, with support at
323 1/2. The downside crossover (9 below 18) of the moving averages suggests a
developing short-term downtrend. With a reading over 70, the 9-day RSI is
approaching overbought levels.

 

SOY COMPLEX RECAP

4/2/2004

A lack of interest in holding long positions over
the weekend and a surge in corn late helped support the strong close. Strong
gains at the China exchange overnight and continued concern with the size of the
South American crops helped to support the early gains. The lack of significant
long liquidation selling from fund traders and talk that commercial buyers were
active again yesterday helped provide a base of support. Tightness expected in
the US into the summer and talk that South American supplies will be similar to
last year as compared with expectations for another new record high crop earlier
this year has changed the new crop outlook. As a result, November soybeans are
strong as the market seems to want to keep up with corn in order to not loose
too many acres back to the corn market ahead of the planting season. Basis bids
were softer in Ohio and Iowa today.

Technical Outlook

#SOYBEANS (MAY) 04/05/04: With the close higher
than the pivot swing number, the market is in a slightly bullish posture. The
next area of resistance is around 1055 1/2 and 1061, while 1st support hits
today at 1035 and below there at 1020. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1020.

MEAL (MAY): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 343.6.
The rally brought the market to a new contract high. First resistance comes in
at 340.8, with support at 331.3. The market’s short-term trend is positive on a
close above the 9-day moving average. It is a mildly bullish indicator that the
market closed over the pivot swing number. With a reading over 70, the 9-day RSI
is approaching overbought levels.

BEAN OIL (MAY): The moving average crossover down
(9 below 18) indicates a possible developing short-term downtrend. Momentum
studies are declining, but have fallen to oversold levels. The next downside
target is 31.83. It is a slightly negative indicator that the close was lower
than the pivot swing number. Daily swing resistance is found at 33.03 and above
there at 33.37. Support should be encountered at 32.26 and 31.83.

 

WHEAT MARKET RECAP

4/2/2004

The market retraced much of Thursday’s range
before finding solid buying support late in the session. Local buying was active
and strength in corn and uncertainty on weather seem to have been the factors
which helped the market hold yesterday’s lows. The solid gain on the week is
seen as a positive technical factor after July futures hit the lowest level
since March 19th on Wednesday. The market found early support from strength in
soybeans and from follow-through technical buying from the strong close on
Thursday. The drier forecast for the weekend for the central plains was seen as
a positive factor but the forecasts for rains to enter the plains by the middle
of next week helped to limit the buying support. In addition, China winter wheat
areas are off to a good start this spring and more rains into early next week
should support improving crop conditions. China dropped a 13% value-added tax on
wheat imports which is helping to provide some support but most traders believe
that China will not be an aggressive importer over the near-term as internal
wheat prices are still lower than imported wheat. Algeria is still negotiating
to import 50,000 tons of optional origin wheat. Basis levels are steady.

Technical Outlook

#WHEAT (MAY) 04/05/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Look for
near-term support at 410 and below there at 402 1/4, with resistance levels at
422 and 426 1/4. 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 426 1/4.

 

LIVE CATTLE RECAP

4/2/2004

The lack of cash trade on the week was seen as a
mixed bag and kept the market inside of Thursday’s range. April cattle were firm
as the discount of futures to cash helped support. Boxed-beef cut-out values
were up 28 cents to $139.98 as compared with $138.65 last week at this time.
Hopes for progress on the export front and a relatively tight supply of
market-ready cattle helped to provide support. Weakness in the pork market and
expectations for cattle supplies to increase in the weeks ahead helped to limit
the buying support.

Technical Outlook

#CATTLE (JUN) 04/05/04: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The next upside
target is 76.87. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. Support should be encountered at 75.20 and
below there at 74.72. Market resistance is at 76.27 and then again at 76.87. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.

 

LEAN HOGS RECAP

4/2/2004

The market fell sharply on the session led by
weakness in the cash market. Peoria hogs were $1.00 lower on the session with
talk of ample supplies for packers to meet near-term needs helping to force cash
down. The 2-day lean index was down 50 points to $66.84 as compared with $68.24
one week previous. Pork cut-out values were down $1.08 on Thursday afternoon
which helped trigger the sharply lower opening. Talk of weak domestic demand
ahead of the Easter Holiday and some uncertainty on the ability of the export
market to remain strong if poultry and beef bans are lifted helped trigger the
long liquidation selling.

Technical Outlook

#HOGS (JUN) 04/05/04: The market is in a bearish
position with the close below the 2nd swing support number. Resistance levels
comes in at 73.42 and 74.32 today, while support is around 72.17 and then 71.82.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. 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 71.82.

 

COCOA MARKET RECAP

4/2/2004

We are not sure if the funds simply decided to
dump cocoa holdings because of developments in the bond market or if the market
suddenly decided to discount the tensions at the Ivory Coast. Even with
headlines suggesting that Ivory Coast farmers were upset with cocoa prices the
market caved in possibly because we have seen a number of surplus forecasts this
week and there really isn’t a near term threat against supply. Certainly
tensions could flare but basic fundamentals do not suggest that buyers should
rush into the market to pick up value.

Technical Outlook

COCOA (MAY) 04/05/04 There could be some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. Cocoa should run into resistance at 1473 and above there at 1548
with support at 1364 and 1330. The daily stochastics have crossed over down
which is a bearish indication. The next downside target is 1329.75.

 

COFFEE MARKET RECAP

4/2/2004

July coffee pushed 65 lower on the session Friday
but managed to close 155 points higher on the week. More good weather in the
forecast for Brazil next week has cash dealers thinking the crop could be as
high as 42-45 million bags. Increasing exchange stocks have also provided
support. The Council of Green Coffee Exporters of Brazil indicated that Brazil
March exports should total about 2 million bags as compared with 2.02 million
last year and 1.53 million bags in February.

Technical Outlook

COFFEE (MAY) 4/5/04 The close below the 1st swing
support could weigh on the market. The daily stochastics have crossed over down
which is a bearish indication. The next downside objective is now at 71.80. The
Coffee contract should run into resistance at 74.20 and above there at 75.00
with support at 72.6 and 71.80. The market’s short-term trend is negative as the
close remains below the 9-day moving average. Daily studies pointing down
suggests selling minor rallies.

 

SUGAR MARKET RECAP

4/2/2004

May sugar closed 11 higher on the session and up
27 points on the week as the market managed to hold support after trading at 605
(last weeks lows) before experiencing strong speculative buying and a 31 point
surge into the close. Futures gapped lower off of weakness in London but the
sell-off failed to find new selling interest at the lows. Weakness in the CRB
Index helped pressure the market early. Brazil exported 1.24 million tons in
March as compared with 249,900 tons last year. Russia produced 717,100 tons of
refined sugar from imported raw sugar in the first quarter of 2004 which is down
19% from last year.

Technical Outlook

#SUGAR (MAY) 04/05/04: The upside closing price
reversal on the daily chart is somewhat bullish. It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.62, with support found at 5.96. 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 5.96.

 

COTTON MARKET RECAP

4/2/2004

The market closed sharply higher on the session
with the oversold condition of the market and hopes that planted acreage may be
down from March 1st intensions due to strength in soybeans providing support.
The strong economic numbers released before the opening and solid gains in the
stock market helped provide support for the higher opening and short covering
was active. Exporters were hopeful of increased business due to this week’s
cheaper price, the improving economy and the sudden turn in the dollar which
might scare some buyers to take action now before the dollar gets too far away
from the current level.

Technical Outlook

#COTTON (MAY) 04/05/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 63.34 and then again at 63.96, while support is
targeted at 61.91 and 61.10. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 61.10.