Here’s Why Oil Futures Spiked Today
BOND MARKET RECAP
9/30/2003
The Treasury bond market rallied on Tuesday,
after the release of disappointing consumer confidence and other economic data
in the morning. The Conference Board’s consumer confidence index fell to 76.8 in
September versus a revised 81.7 for August and contrary to expectations of a
modest increase. December bonds closed at 112/03, up 1-24 on the day and the
highest close since mid-July. Other disappointing data included the Chicago
Purchasing Managers Index, which fell to 51.2 versus 58.9 in August and
expectations of 57.0. All this leads to ideas that recovery is still lagging and
that the Fed will postpone any rate increase, giving impetus to a bond price
increases.
Technical Outlook
BONDS (DEC) 10/1/2003: The market has a bullish
tilt coming into today’s trade with the close above the 2nd swing resistance.
Near-term resistance for bonds is at 113.09 and then again at 113.27, while
swing support hits at 111.07 and below there at 109.23. A positive signal for
trend short-term was given on a close over the 9-bar moving average. A bullish
signal was given with an upside crossover of the daily stochastics. The next
upside objective is 113.27. The market is approaching overbought levels with an
RSI over 70.
T-NOTES(DEC) The outside day up is a positive
signal. The upside closing price reversal on the daily chart is somewhat
bullish. The daily stochastics gave a bullish indicator with a crossover up. The
near-term upside objective is at 115.20. 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 115.08 and then again at 115.20, while swing support hits at
113.31 and below there at 113.01. 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.
STOCK INDICES RECAP
9/30/2003
The stock market fell today after disappointing
economic data early in the session renewed concerns that the economic recovery
is a non-starter. The Conference Board’s consumer confidence index fell to 76.8
in September versus a revised 81.7 for August and contrary to expectations of a
modest increase, and the Chicago Purchasing Managers Index fell to 51.2 versus
58.9 in August and expectations of 57.0. December S&P 500 closed 8.90 lower at
995.30, December Dow futures closed 81 lower at 9261.
Technical Outlook
S&P500 (DEC) 10/1/2003: The market setup is
somewhat negative with the close under the 1st swing support. Underlying support
comes in at 988.40 and 981.60, with overhead resistance at 1001.60 and 1008.00.
The close below the 9-day moving average is a negative short-term indicator for
trend. The close below the 40-day moving average is an indication the
longer-term trend is down. Momentum studies are still bearish, but are now at
oversold levels and will tend to support reversal action if it occurs. The next
downside objective is now at 981.60. Short-term indicators on the defensive.
Consider selling an intraday bounce.
S&P E-Mini (DEC): Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 978.19. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. The cross over and close above the 40-day moving average
indicates the longer-term trend has turned up. Near-term resistance for the S&P
Mini is at 1003.13 and then again at 1012.69, while swing support hits at 985.88
and below there at 978.19. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative.
NASDAQ (DEC) A negative signal for trend
short-term was given on a close under the 9-bar moving average. The close below
the 1st swing support could weigh on the market. The market should run into
resistance at 1316.50 and above there at 1333.75 with support at 1292.50 and
1285.75. Bearish daily studies indicate selling minor rallies this session.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The next downside objective is 1285.75. The market back below
the 40-day moving average suggests the longer-term trend could be turning down.
CURRENCY MARKET
RECAP
9/30/2003
The Dollar broke sharply this morning after
disappointing economic data reinforced concerns that the US economy remains
sluggish. The disappointing economic news sparked rallies in gold and bonds and
breaks in the dollar and the stock market. But the Bank of Japan intervened,
allowing the dollar to rebound and the Yen to break. After breaking to a
contract low 92.43 earlier in the session, the December Dollar Index closed 24
lower at 93.20, its lowest since June 16th. The December Japanese Yen closed 34
lower at 89.96 after making a new contract high.
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 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. Swing resistance is targeted at 90.66 and above there
at 91.56, with the yen finding support around 89.26 and below there at 88.76.
Rising stochastics at overbought levels warrant some caution for bulls. The next
upside objective is 91.56. The market is approaching overbought levels with an
RSI over 70.
EURO (DEC): Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. The next downside target is now at 1.1523. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1523, with overhead resistance at 1.1755. 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.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart.
PRECIOUS METALS
RECAP
9/30/2003
Disappointing economic data this morning sparked
further gains in gold as investors fled equities and the dollar. The Conference
Board’s consumer confidence index fell to 76.8 in September versus a revised
81.7 for August and contrary to expectations of a modest increase. The Chicago
Purchasing Managers Index fell to 51.2 versus 58.9 in August and expectations of
57.0. December gold settled at 386.10, up 2.90 on the day after trading as high
as 389.40 earlier in the session. December silver closed strong at 514.2, up 6.7
but stayed within yesterday’s range.
Technical Outlook
SILVER (DEC): The market now above the 40-day
moving average suggests the longer-term trend is up. The market has a slightly
positive tilt with the close over the swing pivot. Initial support for silver is
at 509.5 and below there at 504.7 with resistance likely at 515.2 and 519.0. A
negative indicator was given with the downside crossover of the 9 & 18 bar
moving average. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 504.7.
GOLD (DEC): Support for gold today comes in near
382.38, while resistance is pegged at 390.98. Stochastics trending lower at
midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 382.38. Market positioning is
positive with the close over the 1st swing resistance. The close above the 9-day
moving average is a positive short-term indicator for trend.
COPPER MARKET RECAP
9/30/2003
Copper closed weaker after the disappointing
economic data earlier this morning. Unexpectedly weak consumer confidence
numbers and purchasing managers data did little to inspire confidence in the
economy and thus did little to inspire bullishness among copper traders.
December copper closed 55 lower at 81.85 after trading as low as 81.45
mid-session.
ENERGY MARKET RECAP
9/30/2003
Oil futures closed sharply higher today, buoyed
by short covering into the expiration of the October unleaded and heating oil
contracts as well as continued bullish attitude after OPEC lowered its
production targets last week. Firmer cash markets for gasoline in the gulf were
also supportive.The Nigeria Labor Congress has called for a meeting on October 6
to consider resuming a strike over energy prices. Heating oil prices gained
support from cooler Autumn-like weather in the eastern part of the US.
Expectations for Wednesday’s API report are as follows: crude oil stocks +1.13
million barrels, distillate stocks +900,000 barrels and gasoline stocks +2.0
million barrels.
Technical Outlook
CRUDE OIL (NOV): There could be more upside
follow through since the market closed above the 2nd swing resistance. Support
for crude is keyed on 28.75 and below there at 28.17, with resistance pegged at
29.65 and 29.97. 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 29.97.
UNLEADED GAS (NOV): 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 82.94. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance.
Resistance today is at 82.94, while support should be found around 76.94. A
positive signal for trend short-term was given on a close over the 9-bar moving
average.
HEATING OIL (NOV): There could be more upside
follow through since the market closed above the 2nd swing resistance. Heating
oil should encounter support around 75.35, with resistance is at 81.15. 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
81.15.
CORN MARKET RECAP
9/30/2003
The corn market broke sharply lower to close 5
3/4 lower on the session and at the lowest close since prior to the August USDA
report. Fund selling was active (neat 7000 contracts) and end-of-the month and
end-of-the quarter selling from funds could have been a factor. The USDA Grain
Stocks report triggered the sharply lower opening. The USDA pegged September 1st
stocks at 1.086 billion bushels as compared with trade expectations at 1.020
billion bushels (range 955-1.052). Last years stocks were 1.596 billion and
1.009 is the current USDA forecast for ending stocks. Brazil analyst suggest
that Brazil may be able to export 3.0-3.5 million tons of corn for the 2003/04
season due to strong demand from Europe and the smaller US crop. Brazil exported
near 2.5 million this year.
Technical Outlook
CORN (DEC) 10/1/2003: The daily stochastic’s gave
a bearish indicator with a crossover down. The next downside target is now at
216 1/4. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. Market resistance comes in at 226 1/4 today, with
support at 216 1/4. The close below the 9-day moving average is a negative
short-term indicator for trend. Some caution in pressing the downside is
warranted with the RSI under 30.
SOY COMPLEX RECAP
9/30/2003
November soybeans closed 6 cents lower on the
session and down 13 3/4 cents from the highs of the day. The lower close after a
contract high could attract technical selling and long liquidation selling as
speculators react to the overbought condition and the reversal. The USDA Stocks
report was bearish but the market surged to new 5 1/2 year highs for the nearby
contract supported by continued talk of lower production, low yields and
possible frost damage to the crops which were planted late in Indiana and Ohio.
The USDA pegged September 1st stocks at 169 million bushels as compared with
trade expectations at 146 million bushels (range 133-175). Last years stocks
were 208 million.
Technical Outlook
SOYBEANS (NOV) 10/01/03 The market made a new
contract high on the rally. 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 area of resistance is around 685 1/2 and 696
3/4, while 1st support hits today at 668 1/2 and below there at 662 3/4. The
market’s close on the 9-day moving average is neutral. A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 662 3/4. The market is approaching
overbought levels with an RSI over 70.
MEAL (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 207.9. The market rallied to a new contract
high. The daily closing price reversal down is a negative indicator for prices.
First resistance comes in at 204.0, with support at 197.6. The close above the
9-day moving average is a positive short-term indicator for trend. It is a
slightly negative indicator that the close was under the swing pivot. The market
is becoming somewhat overbought now that the RSI is over 70.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. A bullish signal
was given with an upside crossover of the daily stochastics. The next upside
objective is 25.28. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The market made a new contract high on
the rally. Daily swing resistance is found at 25.01 and above there at 25.28.
Support should be encountered at 24.31 and 23.88. The market is approaching
overbought levels with an RSI over 70.
WHEAT MARKET RECAP
9/30/2003
December wheat closed moderately higher on the
session as the bearish news from the USDA Crop Production report was offset by
bullish news from the stocks report. Since the crop production news is “older”
than the stocks news, the market took its clue from the stocks report and when
soybeans did not collapse, the market experienced solid new buying support. The
USDA Grain Stocks report and Crop Production reports were mixed. The USDA pegged
September 1st stocks at 2.036 billion bushels as compared with trade
expectations at 2.078 billion bushels (range 2.017-2.125). Last years stocks
were 1.751 billion. The USDA pegged all wheat production at 2.337 billion
bushels as compared with the average trade estimate at 2.288 billion bushels
(range 2.240-2.320). The August forecast was 2.292 billion bushels.
Technical Outlook
WHEAT (DEC) 10/1/2003: Daily studies suggest
buying dips today. The market setup is supportive for early gains with the close
over the 1st swing resistance. Expect near-term support around 355 1/2 and below
there at 349 3/4, with resistance levels at 365 and 368 3/4. A positive signal
for trend short-term was given on a close over the 9-bar moving average.
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 368 3/4.
LIVE CATTLE RECAP
9/30/2003
December cattle closed 40 higher on the session
in quiet trade but the settlement was actually the second highest in the life of
the contract. Slaughter this week is running 252,000 head as compared with
264,000 last year at this point. Packer profit margins are poor but they still
need cattle and green cattle have been discounted enough for the producer to
pull under-finished cattle from the showlist this week. As a result, the
showlist is tight and there is still some hope that cash will trade firm this
week. Beef prices at mid-session were up 35 cents to $160.58 for choice cattle
and down 6 cents to $125.16 for select beef.
Technical Outlook
CATTLE (DEC) 10/1/2003: A bullish signal was
given with an upside crossover of the daily stochastics. The next upside
objective is 85.60. The market has a slightly positive tilt with the close over
the swing pivot. Support should be encountered at 84.55 and below there at
84.00. Market resistance is at 85.35 and then again at 85.60. A positive
indicator was given with the upside crossover of the 9 & 18 bar moving average.
LEAN HOGS RECAP
9/30/2003
December hogs closed just 25 points lower on the
session with a wide range of trade (135 points). The market failed to find new
buying support on the surge higher to test Monday’s highs. While the cash
fundamentals remain weak, the market is beginning to find some support from the
discount of futures to the cash market and from ideas that producer marketings
could slip as harvest gets more active. The CME 2-day Lean Index was down 82
points to 60.32 and the October futures found some fundamental support when the
market dipped under 55.00. Cash markets were mostly $1.00 lower and the
downtrend is likely to continue this week as packers seem to have already
purchased a bulk of their needs for the week. Slaughter came in at 389,000 head
which brings the two-day total to 776,000 head from 731,000 head last week.
Technical Outlook
HOGS (DEC) 10/1/2003: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 54.27 and 54.95 today, while support is around 52.92 and then 52.25.
The close below the 9-day moving average is a negative short-term indicator for
trend. Momentum studies are still bearish, but are now at oversold levels and
will tend to support reversal action if it occurs. The next downside target is
now at 52.25. With a reading under 30, the 9-day RSI is approaching oversold
levels.
COCOA MARKET RECAP
9/30/2003
Cocoa gapped higher on reports of fighting
breaking out between Ivory Coast rebel factions but market lacked significant
upside follow through. The latest skirmish between rebel groups suggests
leadership is breaking down, and this opens the door for more political turmoil.
December cocoa failed to fill the gap at 1656 with the market losing some upward
momentum when rebel in-fighting was reported to be sporadic. Dec cocoa did
manage to close 21 higher at 1626 after trading up to 1458 earlier in the
session.
Technical Outlook
COCOA (DEC)10/01/03 The gap upmove on the day
session chart is a bullish indicator for trend. The market setup is supportive
for early gains with the close over the 1st swing resistance. Cocoa should run
into resistance at 1643 and above there at 1662 with support at 1610 and 1596.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 1661.75. Short-term indicators suggest
buying dips today.
COFFEE MARKET RECAP
9/30/2003
December coffee opened higher and closed lower as
the market remains in a long liquidation mode with fund traders the best sellers
on minor corrections. Rains seem to be slowing down with some forecasters
looking for mostly dry and hot weather for the next week but there is still
concern that the pattern is shifting to more normal weather and another cold
front next week might bring more widespread rains. CSCE Exchange stocks were up
4364 bags to 4.427 million bags with 45,626 bags pending review.
Technical Outlook
COFFEE (DEC)10/1/03 The market tilt is slightly
negative with the close under the pivot. Momentum studies are declining, but
have fallen to oversold levels. The next downside objective is now at 61.90.The
Coffee contract should run into resistance at 63.60 and above there at 64.50
with support at 62.3 and 61.90. The market’s short-term trend is negative as the
close remains below the 9-day moving average.
SUGAR MARKET RECAP
9/30/2003
March futures worked into the gap area from
August 29th and closed at the highest level since August 28th which has the
shorts second guessing their position. Traders were looking for deliveries
against October sugar at near 6000-7000 contracts. There was fairly active trade
and producer selling early in the session which drove March sugar to 14 lower on
the session and the close which was 4 higher is technically supportive. The
recent sharp gains come after a steep downtrend off of the August 5th highs and
with funds thought to be net short near 24,000 contracts (as of September 23rd)
which suggests that short-covering could carry the market a long way.
Technical Outlook
SUGAR (MAR) 10/1/2003: The outside day up gives
the market a positive tilt. 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 6.63, with support found at 6.19. The upside
crossover of the 9 & 18 bar moving average is a positive signal. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The near-term upside target is at 6.63.
COTTON MARKET RECAP
9/30/2003
December cotton closed 26 higher on the session
and into new contract highs but the close had a bit of a “toppy” feeling with
futures closing below the opening and nearly 70 points off of the highs of the
day. Open interest hit a new all-time record high for cotton futures. Trade
house and producer selling was active as harvest is coming soon and short=-term
weather factors look negative. In addition, export sales are running well behind
a normal pace and domestic demand continues to suffer as textile operations in
the US seem to be a loosing proposition. The market is extremely overbought and
due for at least some type of correction.
Technical Outlook
COTTON (DEC) 10/1/2003: A positive signal for
trend short-term was given on a close over 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 68.76 and then again at 69.48, while support is
targeted at 67.26 and 66.48. Rising stochastics at overbought levels warrant
some caution for bulls. The next upside objective is 69.48. The market is
approaching overbought levels with an RSI over 70. The market made a new
contract high on the rally.