Here’s Why Lower Oil Wasn’t Enough To Boost The Market
BOND MARKET RECAP
5/12/2005
June Bonds finished up 0-08 at 115-05, 0-03 off
the high and 0-23 up from the low.
June 10 Yr Treasury Notes finished up 0-050 at
111-210, 0-020 off the high and 0-160 up from the low.
The Treasury market certainly didn’t
respond as one would have expected following the much stronger than expected US
retail sales reading. While many players continue to fret over the direction of
the economy a look back at the last several weeks of developments would seem to
leave the economy in a much better position. In addition to crude falling $19
below the April highs, the last payroll report strong, US retail sales strong
and an improvement in the US Trade Balance would certainly seem to reduce the
duration of the soft spot. However, it seems that the market continues to fret
over the potential for major systemic problems at Ford Motor, General Motors and
United Airlines. In short, the longs in Treasuries are simply willing to stand
by their bets until proven wrong!
Technical Outlook
BONDS (JUN) 05/13/2005: The daily stochastics
gave a bullish indicator with a crossover up. Momentum studies are trending
higher from mid-range, which should support a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. The daily closing price reversal up is a positive
indicator that could support higher prices. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The near-term upside
objective is at 116-00. The next area of resistance is around 115-24 and 116-00,
while 1st support hits today at 114-27 and below there at 114-05.
TNOTES (JUN) 05/13/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
market now above the 18-day moving average suggests the longer-term trend has
turned up. The upside daily closing price reversal gives the market a bullish
tilt. The market has a slightly positive tilt with the close over the swing
pivot. The near-term upside target is at 112-070. The next area of resistance is
around 112-015 and 112-070, while 1st support hits today at 111-140 and below
there at 110-315.
Â
STOCK INDICES RECAP
5/12/2005
June S&P finished down 13.3 at 1159.2, 16 off the
high and 0.5 up from the low.
June S&P E-Mini closed down 13.5 at 1159. This
was 0.5 up from the low and 16.25 off the high.
June Dow closed down 116 at 10185. This was 4 up
from the low and 138 off the high.
The stock market fought a good battle against the
sellers early Thursday but apparently the much better than expected US economic
news wasn’t enough to play down the fears swirling over Ford Motor, General
Motors, Delta Airlines and United Airlines. We also think that hedge fund
contagion fears and disappointing Wal-Mart earnings conspired to send prices
reeling. In other words, even though the economic landscape is improving in the
face of sharply lower oil prices the market isn’t convinced that an upswing in
growth will be in time to avoid another major job exportation by the US. In
fact, with the Fed steadfastly standing by fighting inflation and a number of
huge employers drifting toward massive layoffs we can understand the desire by
investors to get out of stocks.
Technical Outlook
S&P 500 (JUN) 05/13/2005: The close below the
40-day moving average is an indication the longer-term trend has turned down. A
crossover down in the daily stochastics is a bearish signal. Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The close under the 18-day moving average
indicates the longer-term trend could be turning down. The market could take on
a defensive posture with the daily closing price reversal down. The market’s
close below the 1st swing support number suggests a moderately negative setup
for today. The next downside target is now at 1146.58. The next area of
resistance is around 1167.45 and 1179.57, while 1st support hits today at
1150.95 and below there at 1146.58.
SP EMINI (JUN) 05/13/2005: The major trend has
turned down with the cross over back below the 40-day moving average. A bearish
signal was triggered on a crossover down in the daily stochastics. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The close below the 18-day moving average is an indication the longer-term trend
has turned down. The daily closing price reversal down puts the market on the
defensive. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside target is 1146.32. The
next area of resistance is around 1167.62 and 1179.81, while 1st support hits
today at 1150.88 and below there at 1146.32.
NASDAQ (JUN) 05/13/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The major trend could be turning up with the close back above the 18-day
moving average. The daily closing price reversal down puts the market on the
defensive. The close over the pivot swing is a somewhat positive setup. The next
upside target is 1482.00. The next area of resistance is around 1469.00 and
1482.00, while 1st support hits today at 1446.00 and below there at 1436.00.
Â
CURRENCY MARKET RECAP
5/12/2005
June US Dollar finished up 57 at 8552, 10 off the
high and 62 up from the low.
June Euro finished down 0.92 at 127.18, 0.62 off
the high and 0.16 up from the low.
June Euro Dollar closed unchanged at 96.565. This
was 0.01 up from the low and 0.005 off the high.
June Canadian Dollar closed down 0.19 at 79.99.
This was 0.11 up from the low and 0.16 off the high.
June British Pound finished down 0.45 at 186.33,
0.25 off the high and 0.57 up from the low.
June Swiss closed down 0.58 at 82.48. This was
0.2 up from the low and 0.26 off the high.
June Japanese Yen closed down 0.87 at 93.97. This
was 0.21 up from the low and 0.33 off the high.
The US Dollar managed to get more favorable
economic news and that served to fault the Dollar into a clear cut upside
breakout on the charts. Certainly seeing the retail sales come in with almost
twice as big of a rise as expected supported the Dollar especially since that
was joined by news that the US Government April surplus was 57 billion dollars!
We also think that the ongoing liquidation in the energy complex conspired to
improve the forward view for the US and that in turn added to the lift in the
Dollar. In the early action, the Euro fell to the lowest level of 2005 in the
wake of the strong US retail sales reading and that highlights the markets favor
for the Dollar, as the Euro zone numbers were supposedly a little better than
expectations.
Technical Outlook
YEN (JUN) 05/13/2005: The major trend has turned
down with the cross over back below the 40-day moving average. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The gap lower price action on the day session
chart is a bearish indicator for trend. The market is in a bearish position with
the close below the 2nd swing support number. The next downside target is now at
93.46. The next area of resistance is around 94.23 and 94.54, while 1st support
hits today at 93.70 and below there at 93.46.
EURO (JUN) 05/13/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The gap lower price action on the day session chart is a bearish
indicator for trend. The defensive setup, with the close under the 2nd swing
support, could cause some early weakness. The next downside objective is now at
126.52. With a reading under 30, the 9-day RSI is approaching oversold levels.
The next area of resistance is around 127.57 and 128.07, while 1st support hits
today at 126.79 and below there at 126.52.
Â
PRECIOUS METALS RECAP
5/12/2005
June Gold closed down 5.7 at 422.2. This was 1.3
up from the low and 4.2 off the high.
July Silver finished down 0.13 at 6.965, 0.1 off
the high and 0.035 up from the low.
Â
The Dollar action was dominating in the gold
market and with all the metals under aggressive pressure it is clear that there
is more of a deflation, stagflation or recession fear than an inflation fear.
However, the Fed looks to continue to snuff out any remaining chance of
inflation and in the process extend the soft spot in the US economy. If the soft
spot remains and the Dollar rises in the process, the metals simply are
presented with a double negative. Even the idea of a rising Chinese currency
failed to restrain the Dollar as the retail sales reading was significantly
better than expected. Furthermore, with a huge ongoing slide in energy prices it
is possible that currency traders continue to bid up the Dollar’s prospects and
that should keep gold and silver under pressure.
Technical Outlook
SILVER (JUL) 05/13/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The close under the 18-day moving average
indicates the longer-term trend could be turning down. The close below the 2nd
swing support number puts the market on the defensive. The next upside objective
is 711.6. The next area of resistance is around 703.3 and 711.6, while 1st
support hits today at 689.8 and below there at 684.7.
GOLD (JUN) 05/13/2005: Momentum studies are
declining, but have fallen to oversold levels. The close under the 18-day moving
average indicates the longer-term trend could be turning down. There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. The next downside objective is now at 417.5. The next
area of resistance is around 424.9 and 428.4, while 1st support hits today at
419.5 and below there at 417.5.
Â
COPPER MARKET RECAP
5/12/2005
June Copper closed down 5.95 at 140.80. This was
equal to the low and 3.70 off the high.
The copper market forged a massive downside
breakout as it fell below 3 1/2 month old chart support levels. However, the
copper market reportedly attracted some buying around the lows Thursday and with
the sharp rise in the Dollar we are a little surprised that the buyers ventured
into the market. It is possible that the ongoing slide in crude oil prices, the
improved retail sales readings and slightly positive economic readings from the
Euro zone should have improved the macro economic condition somewhat. Adjusted
for the recent slide in prices we suspect that the net spec and fund long
position in this Fridays COT will show the market almost completely washed out.
Â
ENERGY MARKET RECAP
5/12/2005
June Crude Oil closed down 1.91 at 48.54. This
was 0.24 up from the low and 1.16 off the high.
June Heating Oil closed down 2.35 at 137.96. This
was 1.16 up from the low and 1.44 off the high.
June Unleaded Gas finished down 5.00 at 143.20,
2.50 off the high and 0.70 up from the low.
June Natural Gas finished down 0.17 at 6.51, 0.10
off the high and 0.06 up from the low.
June Propane closed down 0.03 at 0.79. This was
0.00 up from the low and equal to the high.
The oil complex remained under pressure off the
theme that demand was slackening and that supply was rising. In fact, with
another forecast of higher OPEC output floated early in the session we can
understand the ongoing liquidation. The most recent estimates suggest that OPEC
out put iin the coming 4 week period were thought to have increased by 230,000
barrels per day. It was a little surprising that the improvement in US numbers
didn’t provide the slightest inclination to temper all the negative demand
expectations. The weekly gas storage report showed an injection of 54 bcf
compared to estimates between +65 bcf to +25 bcf. Gas storage now stands at
1,509 bcf with stocks 217 bcf above year ago and 286 bcf above the 11 year
average. Gas stocks have increased by 216 bcf over the last four weeks. The
latest 6 to 10 day forecast (May 17th through May 21st) for the Northeast and
Midwest is for mostly normal temperatures.
Technical Outlook
CRUDE OIL (JUN) 05/13/2005: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies are declining,
but have fallen to oversold levels. The close below the 18-day moving average is
an indication the longer-term trend has turned down. The gap lower on the day
session chart is bearish and puts the market on the defensive. The market is in
a bearish position with the close below the 2nd swing support number. The next
downside objective is now at 47.37. The next area of resistance is around 49.23
and 50.16, while 1st support hits today at 47.84 and below there at 47.37.
UNLEADED (JUN) 05/13/2005: A crossover down in
the daily stochastics is a bearish signal. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The major trend
has turned down with the cross over back below the 18-day moving average. The
gap lower on the day session chart is bearish and puts the market on the
defensive. The close below the 2nd swing support number puts the market on the
defensive. The next downside objective is 140.45. The next area of resistance is
around 144.80 and 146.85, while 1st support hits today at 141.60 and below there
at 140.45.
HEATING OIL (JUN) 05/13/2005: Momentum studies
are declining, but have fallen to oversold levels. The close under the 18-day
moving average indicates the longer-term trend could be turning down. The gap
lower on the day session chart is bearish and puts the market on the defensive.
The market tilt is slightly negative with the close under the pivot. The next
downside target is now at 135.43. The next area of resistance is around 139.26
and 140.63, while 1st support hits today at 136.66 and below there at 135.43.
Â
CORN MARKET RECAP
5/12/2005
July Corn finished down 2 1/4 at 204 1/4, 1
1/4 off the high and 1 1/4 up from the low. December Corn closed down 2 at 222
1/4. This was 1 1/2 up from the low and 1 off the high.
The bearish news from the USDA combined with the
sell-off in soybeans and a bearish short-term weather forecast was enough to
push the market to new contract lows. Funds were noted sellers of more than
5,000 contracts into the mid-session. The USDA pegged US ending stocks for the
2004/2005 season at 2.215 billion bushels, unchanged from last months report.
For the 2005/2006 season, the USDA pegged ending stocks at 2.54 billion bushels,
up 318 million bushels from trade expectations with a range of 2.030-2.416
billion bushels. Total usage for the coming year is up by only 110 million
bushels which is well under expectations for a jump in both ethanol usage and
exports. Ethanol consumption is expected to increase by just 7%. Feed usage is
expected to drop by 150 million bushels. The USDA used an average yield of 148
bushels/acre which was adjusted higher due to the rapid plantings pace. Average
farm prices were pegged at $1.55-$1.95 for the 2005/2006 season which is well
below $2.00-$2.10 for this season and $2.42 last season. World corn ending
stocks for the 2005/2006 season were pegged at 122.1 million tonnes as compared
with 128.7 million tonnes for this season which was an upward revision from
124.68 million last month. China is expected to export 3 million tonnes as
compared with 6 million this season. Weekly export sales this morning were
reported at 1.392 million tonnes as compared with 725,000-975,000 expected.
Cumulative sales have reached 83.3% of the USDA forecast for the season as
compared with 79.9% as the 5-year average for this time of the year. Deliveries
were still hefty this morning at 598 contracts. July corn resistance comes in at
205 with 202 1/4 and 197 3/4 as next support.
Technical Outlook
CORN (JUL) 05/13/2005: Momentum studies are
declining, but have fallen to oversold levels. The close below the 18-day moving
average is an indication the longer-term trend has turned down. More selling
pressure is likely given yesterday’s gap lower price action on the day session
chart. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. The next downside target is
now at 201 3/4. With a reading under 30, the 9-day RSI is approaching oversold
levels. The next area of resistance is around 205 1/2 and 206 3/4, while 1st
support hits today at 203 and below there at 201 3/4.
Â
SOY COMPLEX RECAP
5/12/2005
July Soybeans finished down 9 1/2 at 623 1/2, 12
1/2 off the high and 2 1/2 up from the low. November Soybeans closed down 8 at
619 1/2. This was 1 1/2 up from the low and 11 1/2 off the high.
July Soymeal closed down 2.6 at 192.0. This was
1.0 up from the low and 3.0 off the high.
July Soybean Oil finished down 0.29 at 22.77,
0.36 off the high and 0.02 up from the low.
The USDA news was supportive but not enough to
offset the impact of a good rain across the mid-west. Dryness in the eastern
cornbelt and the region missing out on many of the recent storm systems has
supported the market recently but rains of up to 1 1/2 inches in the western
cornbelt and 1/4 to 1/2 inch rains in the eastern cornbelt with more rain in the
forecast for the eastern cornbelt for the next two days was enough to pressure
the market. The USDA pegged US ending stocks for the 2004/2005 season at 355
million bushels, down 3 million from expectations and down 20 million from last
year. For the first estimate for the 2005/2006 season, the USDA pegged ending
stocks at just 290 million bushels which was down 78 million from the average
trade guess and below the range of estimates (295-430). The lower than expected
stocks forecast helped support the call for a 3-10 cent higher opening but fund
selling and long liquidation helped drive futures lower. Funds were noted
sellers of more than 7,000 contracts into the mid-session. The USDA raised crush
by 40 million bushels over this season and exports up by 25 million bushels
which came as a friendly surprise; especially with record world beginning
stocks. World ending stocks for the 2004/2005 season were revised lower to 51.1
million tonnes (still a record high) from 52.6 million tons last month and from
55.9 million the previous month. While the USDA lowered Brazil production down
to 53 million tonnes from 54 million last month, the Brazil official production
estimate was revised to 50.2 million tonnes from 53.1 million as the March 22nd
estimate. There were 204 lots for soybeans and 132 for oil. Weekly export sales
this morning were reported at 182,800 tonnes as compared with 175,000-425,000
expected. Cumulative sales have reached 94.8% of the USDA forecast for the
season as compared with 95% as the 5-year average for this time of the year.
Meal sales were 51,500 tonnes from 50,000-75,000 expected and oil sales were
5200 tonnes from 2,000-6,000 expected. July soybean resistance comes in at 628
with 618 and 610 1/2 as next support.
Technical Outlook
BEANS (JUL) 05/13/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down. A
crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The market setup is somewhat negative with the
close under the 1st swing support. The next downside objective is 611. The next
area of resistance is around 631 and 641, while 1st support hits today at 616
and below there at 611.
MEAL (JUL) 05/13/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
close under the 18-day moving average indicates the longer-term trend could be
turning down. The downside closing price reversal on the daily chart is somewhat
negative. The market setup is somewhat negative with the close under the 1st
swing support. The next downside objective is 188.5. The next area of resistance
is around 194.0 and 196.5, while 1st support hits today at 190.0 and below there
at 188.5.
BEANOIL (JUL) 05/13/2005: The close below the
60-day moving average is an indication the longer-term trend has turned down. A
crossover down in the daily stochastics is a bearish signal. Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market back below the 18-day moving average suggests the
longer-term trend could be turning down. The market is in a bearish position
with the close below the 2nd swing support number. The next downside target is
22.48. The next area of resistance is around 22.95 and 23.23, while 1st support
hits today at 22.58 and below there at 22.48.
Â
WHEAT MARKET RECAP
5/12/2005
July Wheat finished down 5 at 308 3/4, 4 3/4 off the high and
1 3/4 up from the low. December Wheat closed down 5 1/4 at 327 1/2. This was 1
up from the low and 5 1/2 off the high.
The USDA forecast for wheat production was a
little higher than expected but the key to the bearish ending stocks forecast
was a sharp drop in usage. Funds were noted sellers of more than 3,500 contracts
into the mid-session. The USDA pegged the winter wheat crop at 1.591 billion
bushels which was up 35 million from the average trade estimate (range
1.471-1.600) and up 92 million bushels from last year. Soft red winter wheat was
pegged at 302 million bushels, down 4 million from expectations (range 298-320)
and down 78 million bushels from last year. All wheat production for the
2005/2006 season is pegged at 2.185 billion bushels which was up 18 million
bushels from trade estimates (range 2.113-2.225) and up 27 million bushels from
this year. World wheat ending stocks for the 2005/2006 season were pegged at
147.4 million tonnes as compared with 149.6 million tonnes this season.
Production jumped 2 million tonnes from China and from India and both of these
estimates could be revised lower without good weather. World trade was pegged at
108.17 million tonnes which is an improvement from 106.3 million this year but
still down from 109.5 million tonnes for the 2003/2004 season. US ending stocks
for the new crop season were pegged at 678 million bushels which was up 104
million bushels from the average trade estimate and up 137 million bushels from
this season. The range of estimates was 491 to 682 million bushels. Old crop
ending stocks were left unchanged at 541 million bushels. A sharp revision lower
in total usage for the coming year due to a drop in exports (down 100 million
from this year) and feed usage (down 15 million) forced stocks higher. Weather
watchers still see a chance of rain for the drier areas of the southern plains
and even a chance for some rain in western Kansas. Weekly export sales this
morning were reported at 365,300 tonnes as compared with 225,000-375,000
expected. Cumulative sales have reached 96.6% of the USDA forecast for the
season as compared with 91.8% as the 5-year average for this time of the year.
Deliveries came in at 106 contracts. July wheat resistance comes in at 312 with
302 1/4 and 299 1/2 as next support.
Technical Outlook
WHEAT (JUL) 05/13/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
major trend has turned down with the cross over back below the 18-day moving
average. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. The next downside objective is 303. The
next area of resistance is around 312 and 316, while 1st support hits today at
305 1/2 and below there at 303.
Â
LIVE CATTLE RECAP
5/12/2005
June Live Cattle finished up 0.35 at 86.80, 0.25
off the high and 0.35 up from the low.
May Feeder Cattle closed down 0.07 at 111.50.
This was 0.35 up from the low and 0.02 off the high.
June cattle closed higher for the forth session
in a row finding support from a steady flow commercial buying and small
speculator short-covering as June remains at a discount to the cash market.
Boxed-beef cut-out values were down $1.55 at mid session today to $153.58 as
compared with $160.33 one week ago. Slaughter came in at 124,000 head as
compared with trade expectations of 120,000-125,000 head. Slaughter for the week
has reached 477,000 head as compared with 481,000 last week and 521,000 last
year.
Technical Outlook
CATTLE (JUN) 05/13/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The cross over and close above the 18-day moving average
indicates the longer-term trend has turned up. With the close higher than the
pivot swing number, the market is in a slightly bullish posture. The next upside
target is 87.370. The next area of resistance is around 87.100 and 87.370, while
1st support hits today at 86.520 and below there at 86.200.
Â
LEAN HOGS RECAP
5/12/2005
June Lean Hogs finished up 0.27 at 76.50, 0.70
off the high and 0.10 up from the low.
May Pork Bellies closed down 1.25 at 81.17. This
was 0.32 up from the low and 1.52 off the high.
June hogs closed 27 higher on the session but
near the lows of the day. The surge higher in pork cut-out values this week
helped support much improved packer profit margins and this has led to ideas
that cash market will work higher next week. The jump in cash bellies and
further advance in loin prices helped keep the market tone bullish in spite of
the jump in average weights which could push pork production moderately higher
in the weeks ahead. The CME 2-Day lean Index for the period ending May 10th came
in at 78.24 which was down.11 from the previous session and up from 74.97 the
previous week. Slaughter came in at 373,000 head as compared with trade
expectations of 372,000-380,000 head. Slaughter for the week has reached 1.438
million head which is down 50,000 head from last weeks pace and down 44,000 head
from last years pace.
Technical Outlook
HOGS (JUN) 05/13/2005: A bullish signal was given
with an upside crossover of the daily stochastics. Momentum studies are rising
from mid-range, which could accelerate a move higher if resistance levels are
penetrated. The major trend has turned down with the cross over back below the
18-day moving average. It is a mildly bullish indicator that the market closed
over the pivot swing number. The next upside target is 77.450. The next area of
resistance is around 76.900 and 77.450, while 1st support hits today at 76.120
and below there at 75.870.
Â
COCOA MARKET RECAP
5/12/2005
July Cocoa finished down 19 at 1472, 17 off the
high and 6 up from the low.
July cocoa was pressured by the on-gong strength
in the Dollar, as well as, weakness in several soft commodity markets. The
fundamentals for cocoa remain somewhat negative as there are no major supply
problems in world growing areas and a peaceful disarmament in the Ivory Coast
would further ease any political anxiety. Therefore, reports that Ivory Coast
bean arrivals so far this season (Oct, 2004 and April 30th, 2005) were down
nearly 11% from the previous year had little supportive impact.
Technical Outlook
COCOA (JUL) 05/13/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close below the 18-day moving average is an indication the
longer-term trend has turned down. More selling pressure is likely given
yesterday’s gap lower price action on the day session chart. The close below the
2nd swing support number puts the market on the defensive. The next upside
objective is 1497. The next area of resistance is around 1483 and 1497, while
1st support hits today at 1461 and below there at 1452.
Â
COFFEE MARKET RECAP
5/12/2005
July Coffee closed down 2.25 at 122.50. This was
1.20 up from the low and 3.00 off the high.
July coffee closed lower under general weakness
in several commodities including the CRB Index and strength in the Dollar. Very
little cash activity was cited as both producers and roasters appear to be on
the sidelines for now. With Arabica coffee prices relatively high, Reuters is
reporting that European roasters are buying robusta coffee if anything as
rosters appear to be well supplies right now. Technically, July coffee continues
to hold above key support at 120 and with Brazil’s winter approaching,
speculators may not want to push prices too low.
Technical Outlook
COFFEE (JUL) 05/13/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close below the 18-day moving average is an indication
the longer-term trend has turned down. 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. The next downside objective is 118.75.
The next area of resistance is around 124.60 and 127.15, while 1st support hits
today at 120.45 and below there at 118.75.
Â
SUGAR MARKET RECAP
5/12/2005
July Sugar closed down 0.23 at 8.26. This was
0.01 up from the low and 0.24 off the high.
Speculative profit taking pressured July sugar
with the market close to testing the critical support zone between 8.20 and
8.13. While Thursday’s price decline hurt the market’s technical setup, the
fundamentals could improve soon if there is confirmation of Russian sugar
imports as the country is expected to need a significant amount of sugar this
year. News that Iran was tendering to buy 30,000 tonnes of Brazil raw sugar did
little to support prices.
Technical Outlook
SUGAR (JUL) 05/13/2005: The downside crossover (9
below 18) of the moving averages suggests a developing short-term downtrend.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. The major trend has turned down with the cross over
back below the 18-day moving average. The outside day down and close below the
previous day’s low is a negative signal. The market is in a bearish position
with the close below the 2nd swing support number. The next downside target is
now at 8.07. The next area of resistance is around 8.38 and 8.56, while 1st
support hits today at 8.14 and below there at 8.07.
Â
COTTON MARKET RECAP
5/12/2005
July Cotton finished down 1.72 at 55.08, 1.07 off
the high and 0.28 up from the low.
July cotton closed lower for the first time in
five sessions, mostly on a disappointing export sales report this morning.
Weekly export sales showed net cancellations of 55,550 for old and new crop
combined versus expectations of 200,000-300,000 net sales. Shipments totaled
285,900 versus 300,000-400,000 expected. Turkey showed net cancellations of
151,300 metric tons, while China’s new purchases of 165,000 were offset by
cancellations of 167,800 tons of previous purchases. Reaction to the USDA
Supply/Demand report was limited. World cotton production for 2005/06 was
forecasted at 107 million metric tons and world consumption at 111.50 million.
China is expected to be a net importer of close to 15 million bales in 2005/06
versus 8 million in 2004/05.
Technical Outlook
COTTON (JUL) 05/13/2005: Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The
major trend has turned down with the cross over back below the 18-day moving
average. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The next upside target is 56.62. The next area of
resistance is around 55.75 and 56.62, while 1st support hits today at 54.41 and
below there at 53.93.