Here’s Why Energy Was Strong Today

Technical Outlook

BONDS (MAR) 12/10/2003: The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. The close below the 1st swing support could weigh on the market. Near-term resistance for bonds is at 108.30 and then again at 110.12, while swing support hits at 106.24 and below there at 105.32. A negative signal for trend short-term was given on a close under the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 105.32. Bearish daily studies indicate selling minor rallies this session.

T-NOTES(MAR) The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. 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 112.29. The market’s close below the pivot swing number is a mildly negative setup. 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 111.27 and then again at 112.29, while swing support hits at 110.08 and below there at 109.23. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

12/9/2003

The stock market came out of a box Tuesday in a positive fashion, with the Dow piercing the 10,000 level early and then falling back. Into mid session stock prices began to correct possibly because U.S. numbers came in soft and because few traders wanted to stay long into the FOMC meeting. However, since the FOMC meeting provided almost no surprise the stock market was basically left without a clear cut driving force. Some in the trade were impressed by the Dows ability to get through the benchmark 10,000 level but the rest of the market isn’t confirming the upward tilt in the Dow.

Technical Outlook

S&P500 (DEC) 12/10/2003: The market setup is somewhat negative with the close under the 1st swing support. The daily closing price reversal down is a negative indicator for prices. Underlying support comes in at 1053.80 and 1049.35, with overhead resistance at 1067.60 and 1076.95. The close below the 9-day moving average is a negative short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. Momentum studies trending lower from overbought levels is a bearish indicator and would tend to reinforce lower price action. The next downside objective is now at 1049.35. Short-term indicators on the defensive. Consider selling an intraday bounce.

S&P E-Mini (DEC): A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. 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 1049.13. The swing indicator gave a moderately negative reading with the close below the 1st support number. Near-term resistance for the S&P Mini is at 1067.50 and then again at 1077.13, while swing support hits at 1053.50 and below there at 1049.13. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (DEC) The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. The market should run into resistance at 1406.00 and above there at 1438.00 with support at 1362.00 and 1350.00. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1350.00. The market back below the 40-day moving average suggests the longer-term trend could be turning down.

CURRENCY MARKET RECAP

12/9/2003

The Dollar seemed to find support off comments from the Chinese Premier on Tuesday, as the Dollar Index went from 30 lower on the day, to 10 higher on the day, shortly after the White House meeting. Seeing the Chinese Premier concede that the U.S. trade deficit is a serious problem seemed to provide a short covering impetus in the Dollar. However others took the statement from China, as a sign that they might be amenable to a floating exchange rate, which would be bearish to the dollar. The Japanese are apparently making moves to expand the budget allocated to deterring the rise in the Yen and that might provide a slight pause to traders that think the Yen is primed to move to a new higher trading range.

Technical Outlook

YEN (DEC): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market made a new contract high on the rally. The market setup is supportive for early gains with the close over the 1st swing resistance. Swing resistance is targeted at 93.79 and above there at 94.19, with the yen finding support around 93.00 and below there at 92.61. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 94.19. The market is approaching overbought levels with an RSI over 70.

EURO (DEC): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.2302. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2158, with overhead resistance at 1.2302. The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. Follow-through selling is indicated by the key reversal down. The market rallied to a new contract high. More selling pressure is likely given yesterday’s gap lower price action on the day session chart.

PRECIOUS METALS RECAP

12/9/2003

While gold dropped in the London afternoon fix, it would appear that the bull camp maintains some control over prices. Following a meeting at the White House, where the Chinese Premier suggested that China does indeed take U.S. trade relations seriously, it appeared as if the Dollar found strength off the dialogue. While a weaker dollar isn’t the only component of the current bull market in gold, it a major element and therefore the direction of the Dollar remains key. From the action Tuesday, it is that clear that both gold and silver remain in favor and that both markets have buying capacity on the sidelines.

Technical Outlook

SILVER (MAR): The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Initial support for silver is at 561.5 and below there at 555.8 with resistance likely at 564.6 and 569.5. A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 564.6. The market is approaching overbought levels with an RSI over 70. The market made a new contract high on the rally. If yesterday’s gap higher on the day session chart holds, additional buying could develop this session.

GOLD (FEB): Support for gold today comes in near 404.58, while resistance is pegged at 412.78. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 412.78. The close over the pivot swing is a somewhat positive setup. The close above the 9-day moving average is a positive short-term indicator for trend. The market is becoming somewhat overbought now that the RSI is over 70. The market rallied to a new contract high.

COPPER MARKET RECAP

12/9/2003

We suspect that the initial 150 point rally in copper came complements of the strong international trade action overnight. However, copper did manage to add to the overnight gains and then softened into mid-session after U.S. economic numbers came in weak and the stock market fell back. In the end, U.S. copper prices were able to maintain most of the early gains. Since the trade and is documenting thinner than normal activity and the market is obviously overbought (from a short-term technical perspective) one can expect choppy action ahead.

ENERGY MARKET RECAP

12/9/2003

It would appear that the energy complex reached a slightly overbought status and decided bank some profits in the action Tuesday. However since the EIA continues to provide support to prices, by suggesting that the market has yet to fully compensate for the progression of the global recovery, more gains might be ahead. OPEC was once again playing up the negative influence of the sagging Dollar on their revenues, which many feel is simply a precursor to a 2004 production cut. Some in trade expect crude stock inventories to decline in the Wednesday report and were buyers in the action Tuesday. Natural gas prices finally corrected more aggressively and tempered some of the extensive overbought status of that market. While there is another winter storm flowing through the mid section of the US, temperatures don’t appear to be that much below normal in the current system and therefore natural gas prices may have difficulty maintaining recent lofty levels.

Technical Outlook

CRUDE OIL (JAN): It is a slightly negative indicator that the close was under the swing pivot. Support for crude is keyed on 31.41 and below there at 31.16, with resistance pegged at 32.11 and 32.56. The close above the 9-day moving average is a positive short-term indicator for trend. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 32.56.

UNLEADED GAS (JAN): Stochastics are at mid-range, but trending higher which should reinforce a move higher if resistance levels are taken out. The next upside objective is 88.21. The market tilt is slightly negative with the close under the pivot. Resistance today is at 88.21, while support should be found around 84.81. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (JAN): It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 86.93, with resistance is at 91.33. The close above the 9-day moving average is a positive short-term indicator for trend. Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 91.33.

CORN MARKET RECAP

12/9/2003

Corn prices started out strong, but weakened into mid-session. It appeared as if traders were concerned about the short-term overbought status of the market and concerned with reports that U.S. planted acreage might rise in 2004. The current price relationship between corn and soybeans would not seem to foster increased corn acres, at the expense of beans, but some farmers are expressing dissatisfaction with yield performance results in soybeans and threatening to shift to corn out of rotation. News that China recently bought wheat from the U.S., combined with statements that China might release additional buffer stocks of wheat, would seem to be bullish to corn. In other words, if China is tight with respect to wheat supplies, maybe they are also tight with respect corn supplies.

Technical Outlook

CORN (MAR) 12/10/2003: The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 252 1/2. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 252 1/2 today, with support at 245 1/2. The close above the 9-day moving average is a positive short-term indicator for trend.

SOY COMPLEX RECAP

12/9/2003

The soybean market started the session on a very firm note but relinquished the gains into mid-session. Brazil’s Parana 2003-2004 soybean crop is reportedly 99% planted up to December 8th and that could reduce some of the weather premium recently being interjected into prices. The soybean oil market continued to show strength, with a new contract high in the action Tuesday and would appear to be a mainstay of the complex. U.S. Soybeans were initially lifted Tuesday by ideas that Chinese soybean prices settled prices higher on the overnight session but without a significant downward extension in the U.S. Dollar on Tuesday, U.S. beans did not become that much more attractive to international buyers. In the end, news that Brazil’s crop was nearing 100% planting completion, in certain key regions, might also have dampened the early rally. An Oil World article suggested that US/Brazil and Argentina will have ending stocks of only 28.4 million, at the end of February and that compares to 36.1 million last year.

Technical Outlook

SOYBEANS (JAN) 12/10/03 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next area of resistance is around 795 and 799 1/2, while 1st support hits today at 779 and below there at 767 1/2. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 799 1/2.

MEAL (JAN): Momentum studies are rising from mid-range which could accelerate a move higher if resistance levels are penetrated. The near-term upside target is at 239.4. First resistance comes in at 237.6, with support at 230.9. The close above the 9-day moving average is a positive short-term indicator for trend. There could be more upside follow through since the market closed above the 2nd swing resistance. The cross over and close above the 40-day moving average is an indication the longer-term trend is up.

BEAN OIL (JAN): A positive signal for trend short-term was given on a close over the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 28.74. A positive setup occurred with the close over the 1st swing resistance. The market made a new contract high on the rally. Daily swing resistance is found at 28.60 and above there at 28.74. Support should be encountered at 28.14 and 27.82. The market is approaching overbought levels with an RSI over 70.

WHEAT MARKET RECAP

12/9/2003

After favorable US opening wheat prices fell back, possibly because of talk of increased precipitation in the Midwest and possibly because there was no mention of new Chinese imports of U.S. wheat in the U.S./Chinese meeting at the White House. The wheat market did see support early from a newly announced U.S. export sales that shifted from an unknown cargo, to a cargo sold to China. The U.S. market might also have been undermined by a weak European cash wheat market. While US wheat prices probably haven’t received too much support from recent talk of dryness in the U.S one has to think that some of the rally off the November low was building in some concerns over the crop. In short, the potential for near term US precipitation is a negative to prices.

Technical Outlook

WHEAT (MAR) 12/10/2003: The market could take on a defensive posture with the daily closing price reversal down. The market tilt is slightly negative with the close under the pivot. Expect near-term support around 401 and below there at 395 3/4, with resistance levels at 412 1/4 and 418 3/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 418 3/4.

LIVE CATTLE RECAP

12/9/2003

Feb cattle closed locked limit down as the huge build up of fund & small trader longs head for the exit. The technical chart action turned bearish last week as last Wednesday’s price action saw a key reversal with a reversal also in place on the weekly chart. Supplies of market ready cattle is expected to rise in the next couple of weeks while demand has been tempered due to the surge in beef prices. Cash cattle prices traded $2 lower in Texas vs last week and boxed beef cut out value at $157.89 was down sharply from last week’s price at $162.86.Another limit down move on Wednesday would put Feb cattle at 88.62.

Technical Outlook

CATTLE (FEB) 12/10/2003: Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 88.75. Could see some early pressure today given the market’s negative setup with the close below the 2nd swing support. Support should be encountered at 89.20 and below there at 88.75. Market resistance is at 91.05 and then again at 92.40. The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

12/9/2003

February hogs closed limit down as long liquidation selling set-in during the mid-session and the hog pit experienced overflow selling from the limit-down trade in cattle. Indications that the snow in Iowa will not be too disruptive to the flow of hogs on the market helped weigh on prices and when the market failed to find new buyers on the move over Monday’s highs, the aggressive long liquidation selling set in. Cash hogs were steady at Peoria. Cut-out values were unquoted at mid-session with hams down $4.00-$6.00 which added to a bearish demand trend. Stops were activated below the market and when support failed at 53.30, selling turned even more active. The technical swing count from the new lows for the move is down at 51.15.

Technical Outlook

HOGS (FEB) 12/10/2003: The market setup is somewhat negative with the close under the 1st swing support. Resistance levels comes in at 53.52 and 55.22 today, while support is around 51.27 and then 50.72. The outside day down gives the market a bearish tilt. The market broke to a new contract low. The daily closing price reversal down is a negative indicator for prices. Short-term indicators on the defensive. Consider selling an intraday bounce. The close below the 9-day moving average is a negative short-term indicator for trend. A crossover down in the daily stochastics is a bearish signal. The next downside target is now at 50.72.

COCOA MARKET RECAP

12/9/2003

Cocoa prices gapped higher and moved within striking distance of the August highs, on what appears to be a combination of small spec and fund buying. While it is possible that the small spec long position is becoming quite overdone, the fund position it’s probably not that overextended. While the market is documenting ongoing tensions at the Ivory Coast, that issue does not appear to be the main driving force behind the current buying force. While we suspect that some origin selling is taking place, it certainly isn’t dampening the upward tilt in prices. The London trade is specifically citing the slow arrival rate as the catalyst behind the rally. In the near-term, until one can document physical supply flow to the market, few could argue against more gains.

Technical Outlook

COCOA (MAR)12/10/03 The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Cocoa should run into resistance at 1771 and above there at 1792 with support at 1692 and 1634. 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 1792.25.

COFFEE MARKET RECAP

12/9/2003

March coffee came under some producer selling pressure following a two week rally which brought prices back to the 50% retracement level of the May/Nov decline. Tightening supplies with a small 2003/04 Brazilian crop and a smaller 2004/05 crop now expected for next year has brought roasters back to the US market where the weakening Dollar is making NY coffee look less expensive to foreign purchasers. Global coffee production is expected to be down 15% from last year. However, the decline in open interest on the rally in March futures suggests short covering rather than new buying and the market may need to be fed more bullish news to sustain higher prices from here.

Technical Outlook

COFFEE (MAR)12/10/03 The market tilt is slightly negative with the close under the pivot. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 67.30.The Coffee contract should run into resistance at 66.80 and above there at 67.30 with support at 65.5 and 64.70. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

12/9/2003

The market closed 6 higher but the close was 16 higher from the lows of the day as the sharp drop early in the session found solid buying support from the trade. The move to a new 7 1/2 year high for the CRB Index and hopes that China may be a more significant importer in the coming year has provided underlying support to the market on the current rally. Traders suspect that funds are shifting from a net short to a net long position and the technical action remains quite positive for the market with rising open interest on the recent uptrend, a gap of the major downtrend channel and a break-out of the head and shoulders bottom formation. Cash differentials were firming up this week on news of increased interest in new purchases from Egypt, Iran, and Indonesia and there are still hopes that China is a buyer.

Technical Outlook

SUGAR (MAR) 12/10/2003: The upside daily closing price reversal gives the market a bullish tilt. The close over the pivot swing is a somewhat positive setup. Swing resistance comes in at 6.87, with support found at 6.51. The close above the 9-day moving average is a positive short-term indicator for trend. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 6.87. The market is becoming somewhat overbought now that the RSI is over 70.

COTTON MARKET RECAP

12/9/2003

Long liquidation continues to pressure March cotton as uncertainty surrounding the export situation is causing longs to take profit. Technically, the market is still under the influence of the key reversal in October. Fundamentally, the outlook remains bullish for cotton with big export sales expected. However, the trade could also be adjusting positions ahead of the world supply/demand report, which could give further insight into the China’s cotton crop and import needs. Next key support for March cotton is at 67.09.

Technical Outlook

COTTON (MAR) 12/10/2003: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. Next resistance area comes in at 71.69 and then again at 72.60, while support is targeted at 68.79 and 66.80. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 66.80. The daily closing price reversal up is a positive indicator that could support higher prices. ORANGE JUICE (JAN)12/10/03 The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 69.80 and above there at 70.05 with support at 69.00 and 68.45. The market’s short-term trend is positive on a close above the 9-day moving average. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 70.05.