Here’s Why Oil Spiked
BOND MARKET RECAP
9/24/2003
The bonds soared as the US stock market caved in
and the St. Louis Fed President (speaking from Moscow) indicated that he didn’t
consider the recent slide in the Dollar to be a sharp drop. In other words, the
trade thinks that the Dollar might be headed significantly lower, which in turn
might lay the groundwork for more Japanese intervention. The trade was also
supported by forecasts for weak regularly scheduled economic information
Thursday morning. We have to think that the biggest decline in stock prices
since August 5th contributed significantly to the rise in Treasuries.
Technical Outlook
BONDS (DEC) 09/25/03: A positive setup occurred
with the close over the 1st swing resistance. Near-term resistance for bonds is
at 110.18 and then again at 111.05, while swing support hits at 108.28 and below
there at 107.25. 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 111.05. Short-term indicators suggest buying dips today.
T-NOTES(DEC) The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 113.30. It
is a mildly bullish indicator that the market closed over the pivot swing
number. 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 113.16 and then again at
113.30, while swing support hits at 112.11 and below there at 111.19. The
market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
9/24/2003
The stock market deteriorated throughout the
session, as the Dollar decline seemed to upset investors. It also appeared that
economists were worrying about soaring energy prices and seeing sharp gains in
the bond market also had the effect of pushing some money away from stocks and
into fixed income investments. The stock market also reported seeing aggressive
stop loss selling, as fund managers were fearful of giving up solid quarterly
gains into the end of the quarter. In conclusion, stocks found a number of minor
negatives to arrive at a moderately bearish situation.
Technical Outlook
S&P500 (DEC) 09/25/03: The market is in a bearish
position with the close below the 2nd swing support number. Underlying support
comes in at 996.50 and 990.70, with overhead resistance at 1017.90 and 1033.50.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. Momentum studies trending lower at mid-range should accelerate a
move lower if support levels are taken out. The next downside objective is now
at 990.70.
S&P E-Mini (DEC): Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. The
next downside objective is 1015.44. The market has a slightly positive tilt with
the close over the swing pivot. Near-term resistance for the S&P Mini is at
1030.13 and then again at 1033.94, while swing support hits at 1020.88 and below
there at 1015.44. A positive signal for trend short-term was given on a close
over the 9-bar moving average.
NASDAQ (DEC) 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. The
market should run into resistance at 1364.50 and above there at 1403.75 with
support at 1311.50 and 1297.75. Negative momentum studies in the neutral zone
will tend to reinforce lower price action. The next downside target is 1297.8.
CURRENCY MARKET
RECAP
9/24/2003
The Fed’s Poole suggested that recent declines in
the dollar aren’t what he considered to be sharp declines and that seemed to
apply new pressure to the Greenback. The fact that the stock market was
significantly lower and energy prices were soaring could begin to create
significant concern toward the US economy and that could be yet another reason
for the Dollar to fall even further. The Dollar also seemed to drift lower right
after the market saw forecasts for the Thursday morning US economic reports.
Technical Outlook
YEN (DEC): The market’s close above the 9-day
moving average suggests the short-term trend remains positive. A new contract
high was made on the rally. A positive setup occurred with the close over the
1st swing resistance. Swing resistance is targeted at 90.21 and above there at
90.48, with the yen finding support around 89.61 and below there at 89.28.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 90.48. The 9-day RSI over
70 indicates the market is approaching overbought levels.
EURO (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 1.1508.
The market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.1390, with overhead resistance
at 1.1508. 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 down on the day session chart is bearish with more selling
pressure possible today.
PRECIOUS METALS
RECAP
9/24/2003
The gold market managed to close firm after
mostly lackluster action early in the session. Apparently comments from a Fed
official (suggesting that the Dollar decline thus far hadn’t been a sharp drop)
insinuates that the Dollar might be allowed to fall a long way. In the event
that the Dollar falls sharply we have to think that the Yen is going to explode
and that could bring the BOJ back off the bench. It should also be noted that a
sharply falling Dollar and sharply rising energy prices will result in the US
balance of payments exploding and seeing the US trade deficit shoot to the moon
has historically been very supportive.
Technical Outlook
SILVER (DEC): A positive setup occurred with the
close over the 1st swing resistance. Initial support for silver is at 525.8 and
below there at 519.4 with resistance likely at 530.9 and 536.3. 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 530.9. Short-term indicators suggest
buying dips today.
GOLD (DEC): Support for gold today comes in near
384.95, while resistance is pegged at 390.55. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
390.55. 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.
COPPER MARKET RECAP
9/24/2003
The sharp slide off the highs in copper was
partially inspired by the drop in equities and partly because copper prices have
had trouble adding to gains above the 83.15 level in the December contract.
Supposedly prices were initially driven higher by reports of labor conflict at a
Peru mine but in the end the market simply failed to stir up enough buyers to
sustain early gains against even might selling pressure. Sharply lower US dollar
prices are thought to be providing underlying support to US copper prices in the
arbitrage market.
ENERGY MARKET RECAP
9/24/2003
OPEC tossed a surprise into the equation before
the opening as they looked to remove 900,000 barrels per day from their
production ceiling. In addition to the surprise cut, OPEC also indicated that
they would demand non-OPEC producers participate in a specific fashion. Seeing
Russia basically agree to a $22 to $26 banding mechanism seems to hint at
cooperation from Russia and that was also a supportive development. The IEA was
disappointed in the cuts but probably won’t show any backbone to the producers.
The IEA also suggested that global energy stocks have remained substantially
below historical norms and the North American winter is directly ahead.
Technical Outlook
CRUDE OIL (NOV): The gap up on the day session
chart gave a bullish indicator and more follow through could be seen this
session. The market’s close above the 2nd swing resistance number is a bullish
indication. Support for crude is keyed on 27.82 and below there at 27.37, with
resistance pegged at 28.66 and 29.05. The market’s short-term trend is positive
on a close above the 9-day moving average. Daily momentum studies are on the
rise from low levels and should accelerate a move higher on a push through the
1st swing resistance. The near-term upside objective is at 29.05.
UNLEADED GAS (NOV): The daily stochastics have
crossed over up which is a bullish indication. The next upside target is 81.23.
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 81.23, while support should be found around 74.83. The
gap upmove on the day session chart is a bullish indicator for trend. The
market’s close above the 9-day moving average suggests the short-term trend
remains positive.
HEATING OIL (NOV): The market’s close above the
2nd swing resistance number is a bullish indication. Heating oil should
encounter support around 72.88, with resistance is at 77.48. The market’s
short-term trend is positive on a close above the 9-day moving average. Daily
momentum studies are on the rise from low levels and should accelerate a move
higher on a push through the 1st swing resistance. The near-term upside
objective is at 77.48. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session.
CORN MARKET RECAP
9/24/2003
Expectations for the weekly export sales in corn
call for 800,000 to 1.1 million tons compared to 915,100 tons. Outside markets
continue to be a big influence on corn prices but it was also clear that corn
was weak early because of reports of good yields. Some suggested that the market
was oversold around the lows and some harvest delays were being seen because of
rain. Some traders also think talk that the US Dollar could be headed
significantly lower might question Chinese export capacity in the coming year.
Technical Outlook
CORN (DEC) 09/25/03: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 220 . The market’s close below the pivot swing number is a
mildly negative setup. Market resistance comes in at 227 1/2 today, with support
at 220 . The market’s short-term trend is negative as the close remains below
the 9-day moving average. The upside closing price reversal on the daily chart
is somewhat bullish.
SOY COMPLEX RECAP
9/24/2003
The market closed slightly higher in quiet,
two-sided trade. The early break was triggered by follow-through selling from
the reversal yesterday but the selling dried up quickly and the market bounced
to the upside on continued reports of disappointing early yields and continued
strong buying from importers. December Oil closed sharply higher and into new
contract highs and the market has closed higher for the 6th session in a row.
Weekly export sales, released before the opening, are expected to come in near
500,000-800,000 tons for soybeans, 75,000-150,000 tons for meal and
10,000-20,000 tons for oil.
Technical Outlook
SOYBEANS (NOV) 09/25/03: The daily closing price
reversal up is positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next area of resistance is around
659 and 664 3/4, while 1st support hits today at 646 1/2 and below there at 639
3/4. 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 664
3/4. The 9-day RSI over 70 indicates the market is approaching overbought
levels.
MEAL (DEC): Momentum studies are trending higher,
but have entered overbought levels. The near-term upside objective is at 196.4.
First resistance comes in at 195.1, with support at 191.8. The market’s
short-term trend is positive on a close above the 9-day moving average. The
market’s close below the pivot swing number is a mildly negative setup.
BEAN OIL (DEC): 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 24.72. A positive setup occurred with
the close over the 1st swing resistance. A new contract high was made on the
rally. Daily swing resistance is found at 24.46 and above there at 24.72.
Support should be encountered at 23.85 and 23.50. The 9-day RSI over 70
indicates the market is approaching overbought levels.
WHEAT MARKET RECAP
9/24/2003
December wheat closed sharply higher on the
session (up more than 8 cents) and to the highest level in 6 trading sessions as
selling from better weather in the plains for next years crop has slowed and
buying has increased due to the improving export pace. Egypt tendered for 60,000
tons of optional origin wheat but bought 120,000 tons of soft red and 55,000
tons of hard red wheat from the US and 60,000 tons of wheat from Australia. In
addition, Taiwan was an active buyer of US wheat. The active export sales pace
of the past several weeks should cause shipments of US wheat to rise which
should also help boost cash prices. Active buying from importers suggests that
US wheat is in a bullish set-up.
Technical Outlook
WHEAT (DEC) 09/25/03: 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
347 1/2 and below there at 339 3/4, with resistance levels at 358 1/2 and 361
3/4. The market’s close above the 9-day moving average suggests the short-term
trend remains positive. Daily stochastics are showing positive momentum from
oversold levels which should reinforce a move higher if near-term resistance is
taken out. The next upside target is 361 3/4.
LIVE CATTLE RECAP
9/24/2003
December cattle pushed higher early in the
session and managed a new contract high before the selling slowed. Long
liquidation and weaker beef prices at mid-session helped push the market into
negative territory into the close which was nearly 100 points off of the highs
of the day. Boxed-beef cut-out values for choice beef 650-700 pounds were down
$1.60 to $163.15 as compared with $163.49 last week. The reversal from contract
highs could attract some technical selling and traders will watch the cash
market activity closely this week to see if the lower beef impacts packer demand
for live inventory.
Technical Outlook
CATTLE (DEC) 09/25/03: The daily stochastics have
crossed over up which is a bullish indication. The next upside target is 85.97.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. Support should be encountered at 84.10 and below there at
83.67. Market resistance is at 85.25 and then again at 85.97. A new contract
high was made on the rally. The downside closing price reversal on the daily
chart is somewhat negative. The market’s close above the 9-day moving average
suggests the short-term trend remains positive.
LEAN HOGS RECAP
9/24/2003
The hog market pushed sharply lower in active
trade as the weakness in the pork product market during a period of lower
slaughter of the past week has raised concerns over what might happen to pork
values once the North Carolina slaughter plants are back on line. Cash markets
were $.50-$1.50 lower and are called lower again tomorrow. Weekly average
weights from Iowa/Minnesota for the week ending September 20th were released
during the session and showed that average slaughter weights jumped to 260
pounds from 257.9 pounds the previous week and 257.5 pounds last year. Weights
have remained above year ago levels for much of the summer and the recent jump
was ahead of the hurricane induced slow-down in slaughter. The data suggests
that producers held back hogs last week and there could be some “extra” hogs at
heavier weights headed to market over the near-term.
Technical Outlook
HOGS (DEC) 09/25/03: The market’s close below the
1st swing support number suggests a moderately negative setup for today.
Resistance levels comes in at 57.55 and 58.45 today, while support is around
56.00 and then 55.35. Daily studies pointing down suggests selling minor
rallies. The market’s short-term trend is negative as the close remains below
the 9-day moving average. Momentum studies trending lower at mid-range should
accelerate a move lower if support levels are taken out. The next downside
objective is now at 55.35.
COCOA MARKET RECAP
9/24/2003
The incendiary commentary between Ivory Coast
officials and ex-government officials (who were formally rebels) continued with
Ivory Coast officials suggesting that the rebels were simply children with guns.
If the type of dialogue sparks actual violence at the Ivory Coast that could
really begin to spark aggressive buying. Once again the trade noted interested
trade and commercial buyers with the small spec longs coming into the fray after
the rally was well underway. In other words, political developments continued to
pull in buyers from a number of sectors and that could keep prices in a bull
mode.
Technical Outlook
COCOA (DEC)09/25/03 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1682 and above there at 1709 with support at 1592 and 1529.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 1708.50.
COFFEE MARKET RECAP
9/24/2003
The market closed higher as the outlook for
scattered rains into the weekend before the weather turns dry next week was not
enough to keep the market down for long. London moved from moderately lower to
close higher and at a 7-session high which helped support. Active buying from
speculators of far out call options added to the positive tone and helped
support as well. The southern growing areas are expected to get some decent
coverage of rain on the weekend but other areas look spotty before dry weather
returns on Sunday. CSCE exchange stocks were up 200 bags to 4.413 million with
51,436 bags pending review. While the market faces the first world production
deficit in years (8-12 million bags) for this season, favorable weather in
Brazil in the next 6 weeks would likely result in another significant world
production surplus for next year. With excellent weather, Brazil production
could increase by near 20 million bags.
Technical Outlook
COFFEE (DEC)9/25/03 The daily closing price
reversal up is positive. The market setup is supportive for early gains with the
close over the 1st swing resistance. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 63.00.The
Coffee contract should run into resistance at 66.40 and above there at 67.20
with support at 64.3 and 63.00. The market’s short-term trend is positive on a
close above the 9-day moving average. The major trend could be turning up with
the close back above the 40-day moving average.
SUGAR MARKET RECAP
9/24/2003
After taking out Monday’s lows, the market failed
to find new selling interest and the close was just slightly lower on the
session but 11 points off of the lows. The market seems to be absorbing some
increase in cash buying near current world prices but the buying is likely to
dry up before sellers are done with moving an ample near-term supply of
exportable surplus. The world lacks a strong new buyer and unless internal
prices in Russia begin to move higher, other routine buyers do not seem to be in
any hurry to book more sugar. The International Sugar Organization anticipates a
record crop from China for 2003 of near 11 million tons from 10.6 million last
year.
Technical Outlook
SUGAR (MAR) 09/25/03: The market’s close below
the pivot swing number is a mildly negative setup. Swing resistance comes in at
6.38, with support found at 6.10. 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 6.38.
COTTON MARKET RECAP
9/24/2003
Fund buying drove Dec cotton to new contract & 5
year highs early in the session, before producer selling nearly wiped out all
the market’s gains. A strong commercial stopper taking all deliverable lots on
the October contract also helped to boost prices early in the session. Thursday
morning’s export sales report will give the market early direction. Export sales
estimates range between 50,000 to 100,000 bales and shipments between 120,000 to
150,000 bales. The sales number could be above expectations if China is once
again a big buyer. High internal cotton prices in China and a poor crop have
made china a key buyer of US cotton this year. Dec cotton has near-term support
at 66.
Technical Outlook
COTTON (DEC) 09/25/03: 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. Next resistance area comes in at 67.04 and then again at 67.93,
while support is targeted at 65.81 and 65.47. 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
65.47. The 9-day RSI over 70 indicates the market is approaching overbought
levels. A new contract high was made on the rally.