Here’s Why Follow-Through May Continue For Gold

Technical Outlook

#BONDS (JUN) 03/23/04: 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. Near-term resistance for bonds
is at 116.05 and then again at 116.12, while swing support hits at 115.12 and
below there at 114.26. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. 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
114.26.

T-NOTES(JUN) 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 115.17. The market’s close
above the 2nd swing resistance number is a bullish indication. The major trend
is down with the cross over back below the 40-day moving average. Near-term
resistance for the T-Notes is at 116.12 and then again at 116.17, while swing
support hits at 115.28 and below there at 115.17. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

3/22/2004

The stock market came under significant duress in
the action Monday because the world sees Middle East tensions exploding due to
the weekend death of the founder of the Hamas. The trade was also undermined by
the idea that terrorist might have obtained nuclear weapons and that adds a
significant negative to the equation. In short the market is fearful of so many
things that the market is now seeing panic type selling. Too much risk, could
keep the bulls on the run for most of the coming week.

Technical Outlook

#S&P500 (JUN) 03/23/04: The market is in a
bearish position with the close below the 2nd swing support number. The gap down
on the day session chart is bearish with more selling pressure possible today.
Underlying support comes in at 1085.85 and 1079.43, with overhead resistance at
1100.35 and 1108.43. 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
1079.43.

S&P E-Mini (JUN): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 1075.38. The close below the 1st swing support could weigh
on the market. Near-term resistance for the S&P Mini is at 1103.25 and then
again at 1115.38, while swing support hits at 1083.25 and below there at
1075.38. A negative signal for trend short-term was given on a close under the
9-bar moving average.

NASDAQ (JUN) The gap lower price action on the
day session chart is a bearish indicator for trend. The market’s close below the
9-day moving average is an indication the short-term trend remains negative. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. The market should run into resistance at 1393.25 and above there
at 1403.63 with support at 1371.75 and 1360.63. The 9-day RSI under 30 indicates
the market is approaching oversold levels. Momentum studies are declining, but
have fallen to oversold levels. The next downside target is 1360.6.

MINI DOW (JUN) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10115 and above there at 10210 with support
at 9955 and 9890. The daily stochastics have crossed over down which is a
bearish indication. The next downside target is 9890. The swing indicator gave a
moderately negative reading with the close below the 1st support number.
Short-term indicators on the defensive. Consider selling an intraday bounce.

 

CURRENCY MARKET RECAP

3/22/2004

The Dollar remained under pressure and did manage
to violate several key support areas during the action Monday. We would have
expected Fed commentary to support the Dollar Monday but the trade simply isn’t
buying into the prospect that things are going to get better in the US without
real proof. With the Fed reiterating the idea that they could afford to be
patient with rate increases it is clear that the Dollar will remain out of favor
on the interest rate differential argument. The British Pound continues to be
the prime benefactor of US Dollar strength but the Euro seemed to be gather some
momentum in the wake of the Dollar declines Monday.

Technical Outlook

#CURRENCIES 03/23/04: YEN (JUN): 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. Swing resistance is targeted at 94.07 and above there
at 94.16, with the yen finding support around 93.77 and below there at 93.56.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 94.16. 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 1.2398. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2244, with overhead resistance at 1.2398. The
market’s short-term trend is positive on a close above 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

3/22/2004

Both gold and silver added to last week’s upside
action on the opening Monday and with the US Dollar lower and terrorism anxiety
running extremely high, it would seem that even more flight to quality buying
will be seen ahead. The gold market spec long position isn’t thought to be at an
extreme like the silver market, but in the near term the funds seem to be
capable of overcoming significantly overbought technicals. It would seem that
the gold market is being driven by flight to quality and a falling Dollar while
the silver market is being almost exclusively fueled higher by fund buying.

Technical Outlook

#P-METALS 03/23/04: 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 757.6 and below there at 752.8 with resistance
likely at 764.3 and 768.1. 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 764.3. The 9-day RSI over 70 indicates the market is
approaching overbought levels.

GOLD (JUN): Support for gold today comes in near
415.18, while resistance is pegged at 421.78. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
421.78. The market’s close above the 2nd swing resistance number is a bullish
indication. The market’s short-term trend is positive on a close above the 9-day
moving average. With a reading over 70, the 9-day RSI is approaching overbought
levels. The gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session.

 

COPPER MARKET RECAP

3/22/2004

The copper market appeared to look over its
shoulder at the deterioration in the global macro economic condition. Apparently
the pre-opening forecast from the ICSG that the deficit would last until 2005
wasn’t enough to gloss over the concern for the economy. Considering the back
and forth action in the copper traders are going to have to get used to
excessive price volatility. The copper market was reportedly negatively impacted
by the severe declines in world equity prices. Therefore, the copper market is
now seeing a daily impact off the uncertain macro economic outlook.

 

ENERGY MARKET RECAP

3/22/2004

The energy complex showed some slight profit
taking action early in the action Monday and with rumors circulating that OPEC
might delay the upcoming cut. Some traders suggested that the sharp slide in
world equity prices were highlighting in the threat to the global economy and
that more than anything would seem to discourage OPEC from making an unneeded
cut. With the airlines stocks in especially bad shape it is possible that OPEC
will relent and that could take $1-$2 off the price of crude oil. The warmer
temperature forecast might also have undermined sentiment but in the recent
past, minor price weakness was simply viewed as a buying opportunity.

Technical Outlook

#ENERGIES 03/23/04: CRUDE OIL (MAY): The gap down
on the day session chart is bearish with more selling pressure possible today.
The market is in a bearish position with the close below the 2nd swing support
number. Support for crude is keyed on 36.71 and below there at 36.31, with
resistance pegged at 37.40 and 37.69. The market’s short-term trend is positive
on a close above 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 36.31.

UNLEADED GAS (MAY): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 115.59. The close below the 2nd swing support number puts
the market on the defensive. Resistance today is at 115.59, while support should
be found around 109.59. The market’s close above the 9-day moving average
suggests the short-term trend remains positive.

HEATING OIL (MAY): The market’s close below the
1st swing support number suggests a moderately negative setup for today. Heating
oil should encounter support around 87.73, with resistance is at 93.53. The
market’s short-term trend is positive on a close above the 9-day moving average.
The daily stochastic’s gave a bearish indicator with a crossover down. The next
downside objective is now at 87.73. The gap down on the day session chart is
bearish with more selling pressure possible today.

 

CORN MARKET RECAP

3/22/2004

The market continues to try to keep pace with
soybeans and a limit-up move in the wheat market added to the positive tone.
December corn moved to the highest level for the December contracts since the
December 1996 contract which put in highs at 389 on July 12th, 1996. Gulf basis
levels were steady but cash dealers believe that producer selling might pick-up
on the move to new highs. Weekly export inspections came in at 42.5 million
bushels as compared with 32-34 million expected. Cumulative shipments have
reached 1.042 million billion bushels as compared with 819.5 million bushels
last year at this time. In addition, the USDA announced a sale of 345,000 tons
of US corn to unknown destination. The bullish export demand news combined with
continued strong gains in soybeans and wheat added to the bullish tone. The
market continues to find support in new crop December futures from the “need” to
keep up with the soybean rally in order to keep planted acreage incentives in
place for US producers. The record net long position for the fund trader in the
weekly Commitment-of-Traders report with options released Friday (nearly 175,000
contracts as of March 16th) has traders concerned with the overbought condition
of the market and may be a limiting factor for continued strong gains. Futures
posted new contract highs across the board and nearby futures are at the highest
level since the April 1997 highs at 320.

Technical Outlook

#CORN (MAY) 03/23/04: Momentum studies are
trending higher, but have entered overbought levels. The near-term upside
objective is at 321 1/4. The market’s close above the 2nd swing resistance
number is a bullish indication. Market resistance comes in at 321 1/4 today,
with support at 314 1/4. The market’s short-term trend is positive on a close
above the 9-day moving average. With a reading over 70, the 9-day RSI is
approaching overbought levels. The rally brought the market to a new contract
high. The gap up on the day session chart gave a bullish indicator and more
follow through could be seen this session.

 

SOY COMPLEX RECAP

3/22/2004

The 4th day of a full strike of workers and port
operators at Paranagua, Brazil helped to support the strong opening and more
speculative buying. China prices were also higher with China futures moving
above 4000 Yuan and converting to US dollar, $13.00 soybeans. Funds were noted
buyers of near 2500 contracts by mi-session. Highway police in Brazil now
estimate near 6,000 trucks waiting to unload soybeans and corn at the port with
the line-up of 63 miles long. Weekly export inspections came in at 15.69 million
bushels as compared with 12-14 million expected. China shipped 2.19 million
bushels for the weekending March 18th. Cumulative shipments have reached 746.8
million bushels as compared with 844.1 million last year at this time. Continued
talk of lower yields for soybeans in Brazil and Argentina into the heart of
harvest has helped support the market. Dry weather in Brazil in February may
have hurt yields. In the US last summer, corn yields were near record high due
to good weather in July but soybean yields fell 21% due to 3-4 weeks of dry
weather into the key reproductive period. There is evidence of a similar set-up
in South America. In fact, the Buenos Aires Grain Exchange indicated today that
4.3% of the crop was harvested in Argentina with yields running 25% lower than
last year. Informal reports out of Argentina suggest corn yields above normal
but soybean yields off by near 20% in many of the areas which were hit with a
dry period in February and poor yields for double-cropped soybeans. Soybeans and
meal hit new contract highs with nearby soybeans reaching the highest level
since June of 1988 with the highs in 1988 at 10.99 1/2 as a technical objective
for many floor traders. Oil also hit new contract highs for the old crop
contracts. South Korea is tendering for a total of 210,000 tons of US soybeans.

Technical Outlook

#SOYBEANS (MAY) 03/23/04: A new contract high was
made on the rally. The gap upmove on the day session chart is a bullish
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 area of resistance is around 1064 1/2 and 1072 1/4,
while 1st support hits today at 1046 1/2 and below there at 1036 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
1072 1/4. The 9-day RSI over 70 indicates the market is approaching overbought
levels.

MEAL (MAY): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 332.9.
The rally brought the market to a new contract high. The gap up on the day
session chart gave a bullish indicator and more follow through could be seen
this session. First resistance comes in at 329.3, with support at 321.8. The
market’s short-term trend is positive on a close above the 9-day moving average.
The market’s close above the 2nd swing resistance number is a bullish
indication. With a reading over 70, the 9-day RSI is approaching overbought
levels.

BEAN OIL (MAY): 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 35.52. 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. A new contract high was made on the
rally. The gap upmove on the day session chart is a bullish indicator for trend.
Daily swing resistance is found at 35.19 and above there at 35.52. Support
should be encountered at 34.52 and 34.18.

 

WHEAT MARKET RECAP

3/22/2004

May wheat moved 62 3/4 cents off of the March
lows to hit a new contract high today as futures are finding support from active
fund buying (up to near 7500 contracts by mid-session), strong soybean prices
and a shift back to a warm and dry forecast for the central plains. The limit-up
close for old and new crop wheat leaves the market in a short-term overbought
condition. The market has moved from the lowest price since October, 2003 to the
highest price for nearby futures since October of 2002 in just one week. Into
the March 12th lows, the market priced in a huge world crop and good early
weather for the start of the US winter wheat crop. However, the break attracted
a significant bulge in end user buying and the weather in the US shifted to a
bit more threatening forecast. Rains are needed in Western Kansas in order to
alleviate significant subsoil shortages and a week of dry weather could leave
the topsoil drying as well. Tonight’s weekly crop progress reports will be
watched closely. News from the COT reports over the weekend that funds had
liquidated most of their net long position (as of March 16th) was seen as
supportive. In addition, there is more and more talk of planting alternative
crops in the spring wheat areas of the northern plains which has added to the
positive tone. Weekly export inspections came in at 15.2 million bushels as
compared with 22-24 million expected. Cumulative shipments have reached 901.8
million bushels as compared with 683.9 million last year at this time. China did
not ship wheat in the past week which might be seen as slightly negative.
Algeria has issued a tender to buy 50,000 tons of optional origin wheat with
talk that the country may book as much as 300,000 tons.

Technical Outlook

#WHEAT (MAY) 03/23/04: A new contract high was
made on the rally. 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. Look for near-term support at 410 1/2 and below there at 392,
with resistance levels at 435 and 441. The moving average crossover up (9 above
18) indicates a possible developing short-term uptrend. Studies are showing
positive momentum, but are now in overbought territory so some caution is
warranted. The next upside target is 441. The 9-day RSI over 70 indicates the
market is approaching overbought levels.

 

LIVE CATTLE RECAP

3/22/2004

June cattle closed higher from support due to the
massive discount of futures to cash and ideas that last weeks break was enough
to account for the bearish Cattle-on-Feed report but April cattle closed
moderately lower due to weakening near-term cash fundamentals. Weak packer
profit margins and sharply lower beef prices helped pressure. Boxed-beef cut-out
values were down $1.66 to $142.06 as compared with $143.57 last week at this
time. Talk that cash might trade $85.00 of lower this week after trading $87.00
late last week added to the bearish tone. Slaughter came in at 113,000 head as
compared with trade estimates of 112,000-117,000 head.

Technical Outlook

#CATTLE (JUN) 03/23/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 74.45. It is a slightly negative indicator that the close was lower
than the pivot swing number. Support should be encountered at 74.70 and below
there at 74.45. Market resistance is at 75.55 and then again at 76.10. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

 

LEAN HOGS RECAP

3/22/2004

April hogs traded sharply higher on the session
and moved to new contract highs for the 9th session in a row before closing 15
lower on the session and down 115 points off of the highs of the day. Steady
cash markets and bullish news from the monthly cold storage report on Friday was
enough to support the early gains, however, profit-taking emerged to help drive
the market lower when there was a lack of new buying interest after the sharply
higher opening. In addition to the bullish belly stocks news, the report also
showed total pork in cold storage at 483.6 million pounds as compared with trade
expectations at near 510 million pounds. The sweeping reversal from all-time
highs for nearby bellies and the 532 point range for May bellies could be a sign
of a near-term top. Slaughter came in at 379,000 head as compared with trade
estimates of 377,000-385,000 head.

Technical Outlook

#HOGS (JUN) 03/23/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 72.02 and 73.02 today, while support is around
70.62 and then 70.22. The rally brought the market to a new contract high. The
daily closing price reversal down puts the market on the defensive. The market’s
short-term trend is positive on a close above 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
70.22.

 

COCOA MARKET RECAP

3/22/2004

The cocoa market surprised the trade with a muted
opening that was followed by an aggressive rally. Apparently, the trade took the
COT report that was released after the close Friday and feared a massive short
covering by the funds. It seems as if many traders think that the funds are on
the hunt for any market with upside potential and or an oversold status. In
other words, given the appreciation in a number of commodity markets it is no
surprise that money is flowing to markets that appear to be undervalued. Other
traders thought that the rally in the Pound and the decline in the Dollar
provided the US cocoa market with a big advantage over the London cocoa market.

Technical Outlook

COCOA (MAY) 03/23/04 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 1514 and above there at 1532 with support at 1472
and 1448. Positive momentum studies in the neutral zone will tend to reinforce
higher price action. The next upside target is 1531.50.

 

COFFEE MARKET RECAP

3/22/2004

July coffee closed 55 higher on the session and
would seem to be in a near term bullish pattern. Origin sales apparently held
back coffee prices from even bigger gains as there seems to be a broad based
move by the funds to cover short positions in a number of markets and to extend
long positions in markets that have a minimal long position. However, the coffee
market comes into the session with a moderately long fund position and a
moderately long small spec position. It would seem like roaster buying was more
prominent than fund buying in coffee but it does seem like the market remains in
favor by the big players.

Technical Outlook

COFFEE (MAY) 3/23/04 The market has a slightly
positive tilt with the close over the swing pivot. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
objective is now at 75.50. The Coffee contract should run into resistance at
78.30 and above there at 79.10 with support at 76.5 and 75.50. The market’s
short-term trend is positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

3/22/2004

May sugar close 11 higher on the session and
moved to the highest level since August finding support from continued gains in
London and strength in commodity markets across the board. Funds were active
buyers in spite of weekend news from the CFTC in the Commitment-of-Traders
report with options that speculators increased their net long position by 83,000
contracts in just 1 week to nearly 119,000 contracts. Open interest continues to
move higher and the market is finding support from lower than expected crops
from China, Thailand and India this past year. Weather seems to be improving for
the crop in Brazil for the 2004/2005 season with more talk of a potential record
center-south crop. High world energy prices have provided underlying support as
traders hope to see a higher mix of ethanol production from the cane crop in
Brazil for the coming season.

Technical Outlook

#SUGAR (MAY) 03/23/04: The market’s close above
the 2nd swing resistance number is a bullish indication. Swing resistance comes
in at 7.00, with support found at 6.70. The market’s short-term trend is
positive on a close above the 9-day moving average. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at
7.00. With a reading over 70, the 9-day RSI is approaching overbought levels.

 

COTTON MARKET RECAP

3/22/2004

After gapping higher on the opening, July Cotton
closed 72 lower on the session and 160 off of the highs of the day as new buying
interest was absent after the opening and speculative long liquidation selling
began to pressure the market into the mid-session. Sharply lower stock market
trade and economic jitters may have added to the selling pressures after the
market had closed higher in each session last week. The surge higher in soybean
prices and the news from China attempting to limit cotton production for the
coming year failed to attract new buyers. China’s Agriculture officials are
trying to cap cotton production at 5.8 million tons this year in an attempt to
give producers an incentive to plant more grains to help offset last years poor
grain production.

Technical Outlook

#COTTON (MAY) 03/23/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. Next resistance area comes in at 68.03 and then again at 69.46,
while support is targeted at 65.98 and 65.36. Positive momentum studies in the
neutral zone will tend to reinforce higher price action. The next upside target
is 69.46. The outside day down and close below the previous day’s low is a
negative signal. The downside closing price reversal on the daily chart is
somewhat negative.