Here’s Why Gold Bulls Are Confident

Technical Outlook

BONDS (MAR) 12/09/03: It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for bonds is at 109.06 and then again at 109.28, while swing support hits at 108.03 and below there at 107.22. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 109.28.

T-NOTES(MAR) 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 112.13. 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 112.01 and then again at 112.13, while swing support hits at 111.15 and below there at 111.08. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

12/8/2003

One has to be very impressed with equity market action Monday as traders and investors stepped up to buy a weaker market even though US numbers were weak and energy prices were sharply higher. It is possible that a window dressing attempt is supporting prices into the end of the year but in order to discourage follow through selling after the negative information Friday is quite impressive. Some suggested that the declines off the highs last week have brought the market into technical balance but we are not so sure of that argument. Adjusting the small spec S&P position for action since the COT report would seem to leave the S&P long 50,000 contracts in the small spec category.

Technical Outlook

S&P500 (DEC) 12/09/03: With the close over the 1st swing resistance number, the market is in a moderately positive position. Underlying support comes in at 1064.55 and 1057.73, with overhead resistance at 1073.85 and 1076.33. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1076.33.

S&P E-Mini (DEC): The outside day up is somewhat positive. The market made a new contract high on the rally. The daily closing price reversal up is a positive indicator that could support higher prices. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1078.31. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1075.38 and then again at 1078.31, while swing support hits at 1063.63 and below there at 1054.81. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (DEC) The daily closing price reversal up is positive. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market should run into resistance at 1429.00 and above there at 1435.75 with support at 1407.00 and 1391.75. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1391.8. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up.

CURRENCY MARKET RECAP

12/8/2003

The Dollar managed another new contract low but wasn’t pressured significantly by the weaker than expected US economic readings released Monday morning. However, the US Dollar was supported later in the session by signs that the US equity market was finding strength. Outside economic information Monday showed very strong economic activity in the UK and that should help the Pound lead the rest of the currencies higher against the Dollar. The US Administration was out Monday suggesting that the Chinese wanted a floating currency while the BOJ suggested that pushing China toward a floating currency was wrong! In conclusion the US appears to be fostering even lower Dollar action ahead.

Technical Outlook

YEN (DEC): The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. A new contract high was made on the rally. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 93.32 and above there at 93.55, with the yen finding support around 92.90 and below there at 92.71. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 93.55.

EURO (DEC): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.2257. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2179, with overhead resistance at 1.2257. 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 market’s key reversal down is a bearish signal. The rally brought the market to a new contract high. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

12/8/2003

A new contract high keeps the bull camp happy and probably serves to pull in more speculative long interest. With the Dollar failing to show even the slightest sign of finishing its downside spiral, the bull camp should be very confident about their ability to control gold prices. Surprisingly gold prices didn’t show much of a wave of small spec buying off the Barron’s article but we suspect that the small spec investment interest will remain a key component in the gold bull market.

Technical Outlook

SILVER (MAR): A positive setup occurred with the close over the 1st swing resistance. Initial support for silver is at 550.8 and below there at 543.1 with resistance likely at 554.7 and 561.3. 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 554.7. Short-term indicators suggest buying dips today.

GOLD (FEB): Support for gold today comes in near 403.53, while resistance is pegged at 411.73. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 411.73. It is a mildly bullish indicator that the market closed over the pivot swing number. 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.

COPPER MARKET RECAP

12/8/2003

After an early rally that defied the action seen in Asian and London, US copper prices softened into the close. Surprisingly the copper market saw almost no support off the idea that a Codelco facility was moving toward a strike. It is possible that the large increase in LME stocks sparked some profit taking especially when one considers that the US floated some negative manufacturing readings. Many in the trade continue to assume that the Chinese will support the market on breaks and that is why spec buying is showing up on even minor weakness.

ENERGY MARKET RECAP

12/8/2003

Very impressive price action in energies Monday was attributed to cold weather in the East. We are also hearing the some traders are expecting another draw in crude stocks in the weekly report and that is prompting speculative long interest. The fact that the Iraqi Council named a replacement for a Shiite official that was murdered could mean that anxieties increase and that in turn could raise the threat level against the Iraqi oil industry. Considering the magnitude of the natural gas rally it would seem that the trade is partially accepting a seasonal demand upside for the whole complex. The small spec long in natural gas probably reached a record high level in the action Monday.

Technical Outlook

CRUDE OIL (JAN): The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 31.35 and below there at 30.38, with resistance pegged at 32.86 and 33.40. 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 33.40.

UNLEADED GAS (JAN): The daily stochastics have crossed over up which is a bullish indication. The next upside target is 90.80. 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. Resistance today is at 90.80, while support should be found around 83.00. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Short-term indicators suggest buying dips today.

HEATING OIL (JAN): The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 85.43, with resistance is at 94.53. The market’s short-term trend is positive on a close above the 9-day moving average. 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 94.53. The rally brought the market to a new contract high.

CORN MARKET RECAP

12/8/2003

March corn probed higher but didn’t manage to close higher on the session Monday. Weekly export inspections came in at 37.4 million bushels, as compared with 32-40 million expected. Cumulative exports have reached 477.7 million bushels as compared with 396.8 million last year at this time. The trade did note slowing post harvest cash movement, which in turn helped firm the basis and lend support to the futures market. In a negative note, the Press came out with a negative story suggesting that US farmers might move toward significant corn acres with some traders suggesting that an additional 1-3 million acres more corn but with soaring soybean prices that kind of shift might be overstated.

Technical Outlook

CORN (MAR) 12/09/03: 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 244 3/4. It is a mildly bullish indicator that the market closed over the pivot swing number. Market resistance comes in at 251 3/4 today, with support at 244 3/4. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily closing price reversal down puts the market on the defensive.

SOY COMPLEX RECAP

12/8/2003

The soybean market closed sharply higher on the session led by solid gains in the oil market and expectations for continued strong demand for US soybeans. The weekly export inspections came in at 35.15 million bushels as compared with 31-38 million expected. Cumulative exports have reached 389.1 million bushels as compared with 361.7 million last year at this time. Keep in mind, the USDA has an export forecast which is down 14% from last year for the entire season. The steep drop in the dollar was seen as a positive factor for demand for US soybeans and the sharply higher trade in Malaysia palm oil overnight added to the positive tone for the soybean oil market which managed new contract highs.

Technical Outlook

SOYBEANS (JAN) 12/09/03: A positive setup occurred with the close over the 1st swing resistance. The next area of resistance is around 777 and 782 1/4, while 1st support hits today at 764 and below there at 756 1/4. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 782 1/4. Short-term indicators suggest buying dips today.

MEAL (JAN): 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 229.6. First resistance comes in at 228.8, with support at 226.3. The market’s short-term trend is negative as the close remains below the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number.

BEAN OIL (JAN): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 28.45. 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 28.30 and above there at 28.45. Support should be encountered at 27.85 and 27.55.

WHEAT MARKET RECAP

12/8/2003

After a two-day corrective break, the market pushed sharply higher on Monday with news of more buying of US wheat from Egypt (170,000 tons over the weekend) and a new low for the move for the US dollar helping to keep traders optimistic on the export front. The weekly export inspections came in at 18.5 million bushels as compared with 12-24 million expected. Cumulative exports have reached 579.5 million bushels as compared with 478.4 million last year at this time. The good export pace and tightness in Eastern Europe are factors which could lead to improved demand and a tighter ending stocks forecast for the Thursday USDA Supply/Demand report.

Technical Outlook

WHEAT (MAR) 12/09/03: Short-term indicators suggest buying dips today. A positive setup occurred with the close over the 1st swing resistance. Look for near-term support at 404 1/2 and below there at 397 1/4, with resistance levels at 414 1/2 and 417 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 417 1/4.

LIVE CATTLE RECAP

12/8/2003

February cattle closed 22 lower on the session but the market managed to recover 72 points off of the lows into the close. The weekly reversal and continued weakness in the beef market are bearish forces and so is the expectation for lower cash markets this week. Some snow and colder weather in the plains helped support but the weather does not look to threatening towards the feedlot areas this week. Slaughter came in at just 109,000 head as compared with 110,000-118,000 expected. The lower slaughter is a function of weaker demand from the packer which is a negative demand indicator. Boxed-beef prices were down 35 cents at mid-session to $156.82.

Technical Outlook

CATTLE (FEB) 12/09/03: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 90.52. It is a slightly negative indicator that the close was lower than the pivot swing number. Support should be encountered at 91.12 and below there at 90.52. Market resistance is at 92.10 and then again at 92.47. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

12/8/2003

February hogs closed 60 higher on the session and up 172 from the lows of the session as the lows from Thursday and Friday held on expectations that the pork supply could gradually decline in the weeks ahead. The 2-day lean index was up 22 points to 50.05 as compared with 49.27 one week ago. Cash hogs were steady at Peoria which was a bullish surprise with traders expecting a weaker market. Slaughter came in near capacity at 395,000 head as compared with 392,000 to 394,000 head.

Technical Outlook

HOGS (FEB) 12/09/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 55.27 and 55.75 today, while support is around 53.55 and then 52.30. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 55.75.

COCOA MARKET RECAP

12/8/2003

A new high for the move in cocoa highlights the ongoing anxiety present at the Ivory Coast. Cocoa prices reached the highest level since the September 25th gap and appeared to do so off mostly small spec buying and in the face of continued origin selling. The surprising thing is that cocoa prices continued to rise despite confirmation that arrivals are beginning to rise, as one would expect into harvest. It would seem that year over year arrivals are lagging significantly behind and that could be partly because of smuggling to other ports or a contrived effort to support prices but we don’t think the delays suggest lower production!

Technical Outlook

COCOA (MAR)12/09/03 The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1647 and above there at 1662 with support at 1599 and 1566. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1662.00. Short-term indicators suggest buying dips today.

COFFEE MARKET RECAP

12/8/2003

The coffee market streaked sharply higher and managed to hold most of the gap up move into the close. Apparently fund buyers were the main source of long interests, which probably comes off the downward revision of the world 2003-2004 coffee crop last week. Brazilian production was lowered and that leaves the market a little concerned about the relatively cheap historical pricing of coffee. We think that a portion of the gains off the lows have been simple short covering and not fresh position buying.

Technical Outlook

COFFEE (MAR)12/9/03 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. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 68.40.The Coffee contract should run into resistance at 67.40 and above there at 68.40 with support at 65.5 and 64.60. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

12/8/2003

The gap higher opening to start the week and quick move to the highest level since August 27th looked impressive early in the day but the weak close and short-term overbought condition of the market leaves futures vulnerable to a more significant pull-back before finding some stability. Thailand sugar premiums were steady against last week with March-May shipment premiums hovering near 35-55 points premium. Traders are hopeful of more import news soon with the Thailand harvest in full swing with good demand expected from Indonesia and Japan soon and steady demand from South Korea and Malaysia. The weather has been favorable for the harvest. The Indonesia government is expected to issue licenses this week for the import of 350,000 tons of white sugar.

Technical Outlook

SUGAR (MAR) 12/09/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.80, with support found at 6.54. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 6.80. With a reading over 70, the 9-day RSI is approaching overbought levels.

COTTON MARKET RECAP

12/8/2003

March cotton opened slightly higher and closed sharply lower and managed to fill all of the gap left on December 1st before closing near 115 points off of the lows of the session. The market also closed above the support at the 69.70 level which was somewhat supportive. The lack of new buying support after the higher opening triggered another round of long liquidation selling from the speculator which helped pressure the market but trade houses provided support.

Technical Outlook

COTTON (MAR) 12/09/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. Next resistance area comes in at 71.49 and then again at 73.10, while support is targeted at 68.59 and 67.30. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 73.10.