Here’s Why The Dollar Reversed

Technical Outlook

#BONDS (SEP) 7/14/2004: The close below the 1st
swing support could weigh on the market. Near-term resistance for bonds is at
108.09 and then again at 108.20, while swing support hits at 107.16 and below
there at 107.02. A positive signal for trend short-term was given on a close
over the 9-bar moving average. Stochastics turning bearish at overbought levels
will tend to support lower prices if support levels are broken. The next
downside objective is 107.02.

T-NOTES(SEP) 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 109.31. The market’s close
below the 1st swing support number suggests a moderately negative setup for
today. Near-term resistance for the T-Notes is at 110.23 and then again at
110.30, while swing support hits at 110.07 and below there at 109.31. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

7/13/2004

The stock market was mostly unchanged as the soft
US economic reports were mostly offset by favorable expectations for IBM and
good earnings from Johnson and Johnson. However, the trade was limited in its
bullish response to developments early in the session because of the Intel
earnings to be released after the close. There would also seem to be some
lingering concern toward US inflation readings which are expected out at the end
of the week. The fact that energy prices remained soft conspired to give the
stock market a minor additional lift but the market seemed to lack conclusion
interest and volume in the upside action Tuesday.

Technical Outlook

#S&P500 (SEP) 7/14/2004: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1112.65 and
1110.63, with overhead resistance at 1116.35 and 1118.03. 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 objective is now at
1110.63.

S&P E-Mini (SEP): Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 1109.00. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. Near-term resistance for the S&P Mini is at 1117.00 and then
again at 1119.00, while swing support hits at 1112.00 and below there at
1109.00. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

NASDAQ (SEP) A negative signal for trend
short-term was given on a close under the 9-bar moving average. The market has a
slightly positive tilt with the close over the swing pivot. The market should
run into resistance at 1441.75 and above there at 1449.88 with support at
1427.25 and 1420.88. Daily stochastics declining into oversold territory suggest
the selling may be drying up soon. The next downside objective is 1420.88.

MINI DOW (MAR) The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10264 and above there at 10292 with support at 10188 and 10140.
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
10140. The close over the pivot swing is a somewhat positive setup.

 

CURRENCY MARKET RECAP

7/13/2004

A massive reversal in the Dollar seemed to be
sparked by technical considerations, as the US Trade deficit expanded and US
economic numbers were soft. In other words, there was little fundamental
reasoning for the Dollar to bottom unless recent shorts decided to bank profits
rather than risk being short the Dollar into the IBM earnings Report on Thursday
or the upcoming US inflation numbers. We doubt that the Dollar is seeing fresh
speculative buying but it is possible that we are seeing short covering profit
taking. Until the market gets a look at the US inflation situation it is
possible that counter trend action will continue.

Technical Outlook

#CURRENCIES 7/14/2004: YEN (SEP): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
There could be some early pressure today given the market’s negative setup with
the close below the 2nd swing support. Swing resistance is targeted at 92.79 and
above there at 93.20, with the yen finding support around 91.78 and below there
at 91.18. Momentum studies trending lower at mid-range could accelerate a price
break if support levels are broken. The next downside objective is 91.18.

EURO (SEP): 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 1.2240. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.2240, with overhead resistance at 1.2406. The
close below the 9-day moving average is a negative short-term indicator for
trend. More selling pressure is likely given yesterday’s gap lower price action
on the day session chart.

 

PRECIOUS METALS RECAP

7/13/2004

Gold and silver prices started out weak and
really began to fall aggressively even before the US Dollar showed significant
upside action. Therefore, it would seem that a number of fund longs decided to
step aside and that left the market without close-in support on the charts. It’s
actually very surprising that gold and silver fell in the face of a worsening of
the trade deficit and ahead of the upcoming inflation readings. In fact, it
would almost seem like the trade is rushing to factor in a distinct reduction in
inflation with the action Tuesday.

Technical Outlook

#P-METALS 7/14/2004: SILVER (SEP): There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Initial support for silver is at 630.0 and below there at
619.7 with resistance likely at 640.1 and 648.5. A positive signal for trend
short-term was given on a close over the 9-bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 640.1.

GOLD (AUG): Support for gold today comes in near
398.85, while resistance is pegged at 406.05. Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 406.05. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The close above
the 9-day moving average is a positive short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.

 

COPPER MARKET RECAP

7/13/2004

The copper market started the session out firm
off reports of additional strike threats but it seemed like the aggressive
selling in gold and silver chased away some of the copper buying interest as the
session wore on. However, because Grupo Mexico expected only quick end to the
labor dispute the copper market fell victim to the general metals weakness. It
also appeared as if the bounce in the US Dollar was robbing US copper of
international buying interest and that once again resulted in the September
contract falling back from the critical 130 level.

 

ENERGY MARKET RECAP

7/13/2004

The energy complex traded mostly lower as the
support off the Norway refinery fire dissipated quickly. The market seemed to
have taken the IEA forecasts negatively as they seemed to suggest that near term
supply was rebuilding. It should be noted that the IEA forecasts also expressed
concern over US product stocks later in the year. In fact, the IEA was concerned
and nervous about heating oil stocks and that might make heating oil a small
spec favorite over the coming months. With June OPEC crude output the highest
since November of 2000 and more production expansion expected in August it is
understandable that the bear camp has control.

Technical Outlook

#ENERGIES 7/14/2004: CRUDE OIL (AUG): It is a
slightly negative indicator that the close was under the swing pivot. Support
for crude is keyed on 39.05 and below there at 38.62, with resistance pegged at
39.84 and 40.20. The close above the 9-day moving average is a positive
short-term indicator for trend. Daily stochastics have risen into overbought
territory which will tend to support reversal action if it occurs. The near-term
upside target is at 40.20.

UNLEADED GAS (AUG): 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 125.58. The market tilt is slightly
negative with the close under the pivot. Resistance today is at 131.68, while
support should be found around 125.58. A positive signal for trend short-term
was given on a close over the 9-bar moving average.

HEATING OIL (AUG): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 103.19, with resistance is at 108.99. The close below the 9-day
moving average is a negative short-term indicator for trend. 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 103.19. The
upside daily closing price reversal gives the market a bullish tilt.

 

CORN MARKET RECAP

7/13/2004

The weaker trade was limited to inside of the
range set on Monday reversal day which means there was no follow-through to
confirm the reversal low and there was also no violation of the reversal lows.
Weakness in the soybean complex along with improving crop conditions and
favorable weather forecast for the mid-west helped to pressure the market. Trade
is quiet with a small range as fund traders are on the sidelines and there were
no new surprises in the crop progress reports. The weekly crop progress report
showed that crops rated in good to excellent condition came in at 74% this week,
up 1% from last week and up from 67% as the 14-year average for this time of the
year. South Korea passed on optional origin tenders for corn overnight but
bought 52,500 tons of feedwheat. Deliveries were 393 lots. Commercial buyers
were active yesterday and helped forge a near-term low and with the market in an
oversold technical condition and experiencing a reversal to the upside yesterday
(new lows/higher close/close above the opening) there is a slightly improved
tone to the market. December corn support comes in at 251 and 250 with
resistance at 263 and 267 1/2.

Technical Outlook

#CORN (DEC) 7/14/2004: Stochastics are rising
from over sold levels which is bullish and should support higher prices. The
near-term upside target is at 255 1/4. It is a slightly negative indicator that
the close was under the swing pivot. Market resistance comes in at 255 1/4
today, with support at 249 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

7/13/2004

A little drier forecast for the next week and
hints that the weather could turn hot again helped boost November soybeans late
in the session but other months were hit with long liquidation selling. News
that a key merchant delivered more than 1 million bushels to the July contract
helped to trigger aggressive long liquidation selling in old crop soybean
futures. This was the first delivery against the July futures which go off the
board tomorrow. Improving crop conditions and good weather in the forecast for
the next week added to the bearish tone. Oil was lower due to weakness in palm
futures overnight with new 9-month lows. There were also 77 oil delivered. Crops
are now rated at 68% in good to excellent condition, up 1% for the week. Midwest
cash basis varies from 10 cents lower to 5 cents higher. November soybean
support comes in at 629 and 605 1/2 with resistance at 642 1/2 and 649.

Technical Outlook

#SOYBEANS (NOV) 07/14/04 The market has a
slightly positive tilt with the close over the swing pivot. The next area of
resistance is around 649 and 657, while 1st support hits today at 633 and below
there at 625. A negative signal for trend short-term was given on a close under
the 9-bar moving average. Daily stochastics declining into oversold territory
suggest the selling may be drying up soon. The next downside objective is 625.

MEAL (DEC): 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 195.1. The upside daily closing price
reversal gives the market a bullish tilt. First resistance comes in at 205.7,
with support at 199.2. The close below the 9-day moving average is a negative
short-term indicator for trend. The close over the pivot swing is a somewhat
positive setup.

BEAN OIL (DEC): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 22.24. It is a slightly negative
indicator that the close was lower than the pivot swing number. Daily swing
resistance is found at 23.03 and above there at 23.48. Support should be
encountered at 22.41 and 22.24.

 

WHEAT MARKET RECAP

7/13/2004

Weakness in the soybean market and a jump in crop
conditions for the spring wheat crop helped to pressure the market in spite of
the improved technical look of the market after yesterday’s strong close. The
winter wheat crop is 69% harvested as compared with 60% last week. Jordan bought
100,000 of optional origin wheat this morning and the trade was not too
surprised to see none of the wheat coming from the US as the trade believes the
wheat was sourced from Eastern Europe. Deliveries were 70 lots this morning.
Spring wheat crops rated in good to excellent condition came in at 71% from 66%
last week and 66% as the 14-year average for this time of the year. Support for
September wheat comes in at 342 and 340 1/2 with 346 1/2 and 349 as resistance.

Technical Outlook

#WHEAT (DEC) 7/14/2004: The close below the 1st
swing support could weigh on the market. Expect near-term support around 348 2/4
and below there at 346 1/4, with resistance levels at 356 2/4 and 362 1/4. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. Rising from over sold levels, daily momentum studies would support
higher prices especially on a close above resistance. The next upside objective
is 362 1/4.

 

LIVE CATTLE RECAP

7/13/2004

August cattle was higher with other contracts
lower into the mid-session as the discount of futures to the cash market and a
lack of cash trade for direction kept the trade choppy. Liquidation of bear
spreads helped support August. With weak margins from the packer, traders expect
cash markets to trade near $84.00 this week, down $2.00 from last week but a
bounce in beef prices may have provided some support. Boxed-beef cut-out values
at mid-session were up 61 cents to $141.66 as compared with $141.74 last week at
this time. The top 7 retail chicken chains indicate that sales are up 3.8% in
spite of recent increases in commodity prices, according to the National Chicken
Council press release.

Technical Outlook

#CATTLE (AUG) 7/14/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 83.20. The market has a slightly positive tilt with
the close over the swing pivot. Support should be encountered at 83.52 and below
there at 83.20. Market resistance is at 84.27 and then again at 84.70. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.

 

LEAN HOGS RECAP

7/13/2004

August hogs opened higher but pushed lower on the
day and spent most of the session moderately lower. The outlook for weaker cash
markets and soft pork product markets helped to pressure the market. Cash hogs
were steady at Peoria, Illinois but many traders believe that as the
temperatures moderate later this week that producer marketings could increase.
Profit margins from the packer, however, remain high and packers seem interested
in moving all the hogs they can get their hands on. Pork values are higher from
last week and the recent weight data would suggest that producers are current
with marketings. The 2-day lean index for the period ending July 9th was down
.09 to 79.09 as compared with 79.71 one week previous.

Technical Outlook

#HOGS (AUG) 7/14/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Resistance levels comes in at 76.20 and 77.22 today, while support is around
74.80 and then 74.42. The close below the 9-day moving average is a negative
short-term indicator for trend. 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 74.42.

 

COCOA MARKET RECAP

7/13/2004

Cocoa prices continued to waffle in the recent
consolidation. So far the market has seen only fleeting support from the recent
European grind figures but those grind figures were only minimally supportive.
The US grind is expected later this week but with the key grinds expected to be
in the low single digits one hardly sees enough information to countervail good
African production totals. In looking into the US cocoa import figures, the May
tally did manage to rise 3.6% but the May import tally declined 29% from April
in a sign that some users were still working off excess coverage from all the
African political concerns. With the recent rain we have to continue to question
the markets recent bull tilt.

Technical Outlook

COCOA (SEP) 07/14/04 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1452 and above there at 1462 with support at 1423 and 1404.
Studies are showing positive momentum, but are now in overbought territory so
some caution is warranted. The next upside target is 1462.25.

 

COFFEE MARKET RECAP

7/13/2004

September coffee closed 10 lower on the session
and down 155 from the highs of the day as the early jump failed to attract
follow-through buying. Funds were light buyers early in the session but weakness
in other soft and metal markets and the sharp drop in the CRB Index helped to
pressure. Declining concerns with cold weather and liquidation of long positions
are seen as short-term bearish forces. The Monthly US Green Coffee stocks report
for Thursday is expected to show stocks up 50,000-100,000 bags from last month
as compared with May 31st stocks of 5.836 million bags. The Commerce Department
indicated that coffee imports in May totaled 115,964 tons as compared with
96,325 tons last year and 105,165 tons the previous month.

Technical Outlook

COFFEE (SEP) 7/14/04 The downside closing price
reversal on the daily chart is somewhat negative. 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 68.95. The
Coffee contract should run into resistance at 71.50 and above there at 72.75
with support at 69.6 and 68.95. The market’s short-term trend is negative as the
close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

7/13/2004

October sugar closed 22 lower on the session
after the London futures were under heavy selling pressures from fund traders
before the New York opening. The gap lower opening was met with a lack of new
buying interest from the trade and long liquidation selling from funds. August
futures in London gave back half of the July gains in just one session. Taiwan
bought two 35,000 ton cargoes of raw sugar but this news failed to support.
Weakness in the metals and a sharp break in many commodities added to the
bearish tone and helped trigger fund selling for much of the session.

Technical Outlook

#SUGAR (OCT) 7/14/2004: More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. The
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. Swing resistance comes in at 8.31, with support found at 7.95.
The close above the 9-day moving average is a positive short-term indicator for
trend. A crossover down in the daily stochastics is a bearish signal. 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 7.95.

 

COTTON MARKET RECAP

7/13/2004

The early bounce in cotton was triggered by
oversold ideas but general weakness in commodity markets led by a collapse in
precious metals helped to turn the market lower. The market is still attempting
to absorb an array of bearish news items from the USDA supply demand report
which showed hefty crops in the US and China and a sharp rise in world
production. The downward revision in China import demand and improving crop
conditions for the US crop added to the bearish tone.

Technical Outlook

#COTTON (OCT) 7/14/2004: A negative signal for
trend short-term was given on a close under 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 47.15 and then again at 47.73, while support is
targeted at 46.05 and 45.53. A bullish signal was given with an upside crossover
of the daily stochastics. The next upside objective is 47.73. More downside
action may be limited by the RSI under 20 putting the market in extremely
oversold territory.