Here’s Why The Market Ignored Disappointing Economic Reports Today
BOND MARKET RECAP
4/27/2005
June Bonds finished up 0-09 at 114-11, 0-11 off
the high and 0-17 up from the low.
June 10 Yr Treasury Notes finished up 0-075 at
111-065, 0-070 off the high and 0-125 up from the low.
We were a little surprised with the
Treasury market response to the much weaker than expected durables report but
with US equities rising and energy prices falling sharply the failure to rally
was understandable. While the decline in energy prices was significant, prices
will have to stay down in order to actually improve the economic outlook and in
turn foster selling interest in bonds and notes. It also seemed like the
Treasury market completely ignored the Chicago Fed Midwest manufacturing Index
and the Richmond Fed readings, which simple reiterated the macro economic
concern generated by the durable goods report.
Technical Outlook
BONDS (JUN) 04/28/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The market has a slightly
positive tilt with the close over the swing pivot. The next upside target is
115-08. The next area of resistance is around 114-29 and 115-08, while 1st
support hits today at 114-00 and below there at 113-13.
TNOTES (JUN) 04/28/2005: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The cross over and close above the 18-day moving
average is an indication the longer-term trend has turned positive. With the
close over the 1st swing resistance number, the market is in a moderately
positive position. The next downside target is 110-175. The next area of
resistance is around 111-185 and 111-260, while 1st support hits today at
110-305 and below there at 110-175.
STOCK INDICES RECAP
4/27/2005
June S&P finished up 3.6 at 1157.3, 4.2 off the
high and 11.8 up from the low.
June S&P E-Mini closed up 3.75 at 1157.5. This
was 12.25 up from the low and 4 off the high.
June Dow closed up 33 at 10194. This was 114 up
from the low and 30 off the high.
The stock market shook off disappointing earnings
reports from Boeing and Colgate and was probably deriving most of its strength
from another steep decline in crude oil prices. With crude down as much as $2 a
barrel in the morning trade, investors saw hope of improved growth ahead and
that in turn made it possible for the stock market to ignore a series of very
disappointing US economic reports. It is also possible that favorable Verizon
earnings combined with the energy price declines to save the market from early
weakness.
Technical Outlook
S&P 500 (JUN) 04/28/2005: 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. The daily closing price reversal up is a positive
indicator that could support higher prices. The market has a slightly positive
tilt with the close over the swing pivot. The next upside target is 1171.40. The
next area of resistance is around 1165.30 and 1171.40, while 1st support hits
today at 1149.30 and below there at 1139.40.
SP EMINI (JUN) 04/28/2005: Stochastics are at
mid-range but trending higher, which should reinforce a move higher if
resistance levels are taken out. The market back below the 18-day moving average
suggests the longer-term trend could be turning down. The daily closing price
reversal up is a positive indicator that could support higher prices. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
near-term upside objective is at 1171.68. The next area of resistance is around
1165.62 and 1171.68, while 1st support hits today at 1149.38 and below there at
1139.19.
NASDAQ (JUN) 04/28/2005: The daily stochastics
gave a bearish indicator with a crossover down. Daily stochastics declining into
oversold territory suggest the selling may be drying up soon. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. It is a slightly negative indicator that the close was lower than the
pivot swing number. The next downside objective is 1404.50. The next area of
resistance is around 1437.50 and 1446.50, while 1st support hits today at
1416.50 and below there at 1404.50.
CURRENCY MARKET RECAP
4/27/2005
June US Dollar finished up 16 at 8410, 24 off the
high and 26 up from the low.
June Euro finished down 0.35 at 129.55, 0.49 off
the high and 0.19 up from the low.
June Euro Dollar closed up 0.005 at 96.58. This
was 0.01 up from the low and 0.01 off the high.
June Canadian Dollar closed down 0.31 at 80.09.
This was 0.13 up from the low and 0.46 off the high.
June British Pound finished up 0.07 at 190.2,
0.33 off the high and 0.45 up from the low.
June Swiss closed down 0.26 at 84.17. This was
0.17 up from the low and 0.43 off the high.
June Japanese Yen closed up 0.22 at 94.98. This
was 0.5 up from the low and 0.01 off the high.
The Dollar was basically saved by the sharp
decline in oil prices as the durables numbers and the Chicago Fed numbers
Wednesday could have undermined the Greenback. In fact since the market has
generally expected the US economy to suffer the most under soaring oil prices,
it is not surprising that the Dollar was bid up a little in the face of a $2
decline in crude oil. With the President pushing hard on Wednesday for even more
energy reforms, some players might even begin to buy the Dollar (as opposed to
the short covering impetus of the past week) off the idea that the drag on the
US economy is being alleviated by the current slide in oil prices.
Technical Outlook
YEN (JUN) 04/28/2005: Momentum studies are
trending higher but have entered overbought levels. The major trend could be
turning up with the close back above the 18-day moving average. The outside day
up is a positive signal. The market setup is supportive for early gains with the
close over the 1st swing resistance. The near-term upside target is at 95.36.
The next area of resistance is around 95.23 and 95.36, while 1st support hits
today at 94.73 and below there at 94.35.
EURO (JUN) 04/28/2005: 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 market’s close below the 1st swing support number suggests
a moderately negative setup for today. The next downside objective is 128.95.
The next area of resistance is around 129.89 and 130.30, while 1st support hits
today at 129.21 and below there at 128.95.
PRECIOUS METALS RECAP
4/27/2005
June Gold closed down 4.9 at 434.1. This was 0.9
up from the low and 4.1 off the high.
July Silver finished down 0.121 at 7.181, 0.124
off the high and 0.056 up from the low.
The metals were under broad based selling
pressure on Wednesday and seemed to come under the added pressure in the
aftermath of a much weaker than expected US durable goods report. It is also
likely that strength in the US Dollar (off lower energy prices) provided the
selling pressure in gold and the rest of the metals markets simply followed gold
down. With the failures on the charts throughout the metals markets it is
possible that follow through selling is seen in the coming sessions. We would be
a little surprised to discover that the selling was the result of deflation
concerns (as a result of the soft durables) especially since the sharp decline
in oil prices discourages ongoing concern for the economy.
Technical Outlook
SILVER (JUL) 04/28/2005: The major trend has
turned down with the cross over back below the 60-day moving average. The daily
stochastics have crossed over down which is a bearish indication. Momentum
studies trending lower at mid-range should accelerate a move lower if support
levels are taken out. The close below the 18-day moving average is an indication
the longer-term trend has turned down. The market is in a bearish position with
the close below the 2nd swing support number. The next downside objective is now
at 701.8. The next area of resistance is around 727.1 and 737.8, while 1st
support hits today at 709.1 and below there at 701.8.
GOLD (JUN) 04/28/2005: The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Studies are showing positive momentum but are now in overbought territory, so
some caution is warranted. The cross over and close above the 18-day moving
average indicates the longer-term trend has turned up. The close below the 2nd
swing support number puts the market on the defensive. The near-term upside
target is at 439.9. The next area of resistance is around 436.6 and 439.9, while
1st support hits today at 431.6 and below there at 429.9.
COPPER MARKET RECAP
4/27/2005
June Copper closed down 1.05 at 145.45. This was
2.25 up from the low and 1.05 off the high.
The bull camp in copper has to be on the ropes as
the magnitude of the losses off the recent high, has been very significant. News
of increased production at a major producer, combined with ideas that the
Chinese are forward bought into the summer might have escalated the selling
pressure. Some suggest that the firm Dollar sparked some of the selling but we
suspect that the Dollar action was merely an add on to the existing liquidation
wave. Since all the metals were sharply lower we suspect that the funds were
dumping positions and that a deflationary tilt was in place off the much weaker
than expected US durable goods report.
ENERGY MARKET RECAP
4/27/2005
June Crude Oil closed down 2.59 at 51.61. This
was 0.06 up from the low and 2.49 off the high.
June Heating Oil closed down 4.08 at 147.51. This
was 0.21 up from the low and 3.99 off the high.
June Unleaded Gas finished down 8.08 at 154.95,
7.05 off the high and 0.45 up from the low.
June Natural Gas finished down 0.38 at 6.80, 0.40
off the high and 0.02 up from the low.
June Propane closed down 0.01 at 0.85. This was
equal to the low and equal to the high.
The rather surprising builds in crude oil stocks
of 5.5 million at the EIA and 4 million at the API simply trumped the slight
decline in gasoline prices. While the string of gasoline stock declines is now
two weeks (in the midst of the spring rebuilding window) the energy complex is
simply focused on the bear items. With the President pressing hard for more
energy reforms and some OPEC officials hinting at high production as long as
crude holds above $50.00 the speculative bubble is temporarily pricked. On the
other hand, a revived economy, a refinery glitch or trouble in Iraq could
quickly halt the downside momentum.
Technical Outlook
CRUDE OIL (JUN) 04/28/2005: The market back below
the 60-day moving average suggests the longer-term trend could be turning down.
The daily stochastics gave a bearish indicator with a crossover down. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The major trend has turned down with the cross over back below the 18-day moving
average. The close below the 2nd swing support number puts the market on the
defensive. The next downside objective is now at 49.67. The next area of
resistance is around 52.88 and 54.76, while 1st support hits today at 50.34 and
below there at 49.67.
UNLEADED (JUN) 04/28/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
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. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. The next upside objective is 164.10. The next area of
resistance is around 158.69 and 164.10, while 1st support hits today at 151.20
and below there at 149.10.
HEATING OIL (JUN) 04/28/2005: The close under the
40-day moving average indicates the longer-term trend could be turning down.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. 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 near-term upside target is at 152.65. The next area of
resistance is around 149.60 and 152.65, while 1st support hits today at 145.41
and below there at 144.26.
CORN MARKET RECAP
4/27/2005
July Corn finished down 4 3/4 at 217, 5 1/4
off the high and 3/4 up from the low. December Corn closed down 3 1/2 at 234
1/4. This was 1 up from the low and 4 off the high.
A slowdown in producer selling helped firm the
cash basis levels this morning and a lack of bearish news helped support the
firm trade early. However, a turn lower in the CRB index after reaching a
16-session peak helped trigger selling pressure across a wide spectrum of
commodities. The weather outlook is mixed with continued planting delays
expected in the southern and Eastern Midwest through next week but a drier than
normal trend for the western and northern cornbelt could allow for planting
progress to resume. South Korea bought 52,000 tonnes of US corn overnight and
other export news in quiet. For the weekly export sales report, released before
the opening, traders are looking for sales near 700,000-1.0 million tonnes as
compared with 680,100 tonnes last week. Support for July corn comes in at 216
with resistance at 220 1/4 and 222 1/4.
Technical Outlook
CORN (JUL) 04/28/2005: The market back below the
60-day moving average suggests the longer-term trend could be turning down.
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 is an indication the longer-term trend has turned positive. The
market is in a bearish position with the close below the 2nd swing support
number. The near-term upside objective is at 224. The next area of resistance is
around 220 and 224, while 1st support hits today at 214 and below there at 212
1/4.
SOY COMPLEX RECAP
4/27/2005
July Soybeans finished down 9 3/4 at 633 3/4, 8
1/4 off the high and 2 3/4 up from the low. November Soybeans closed down 7 1/4
at 623 1/2. This was 3 up from the low and 6 1/2 off the high.
July Soymeal closed down 3.6 at 195.5. This was
0.4 up from the low and 3.1 off the high.
July Soybean Oil finished down 0.12 at 22.67,
0.05 off the high and 0.15 up from the low.
The market remains in a choppy and
consolidation-type trade with focus on fund positioning at this time of the year
and on longer-term demand factors. South America weather is having less and less
impact on the market as the harvest activity slows and US weather is just
beginning to be a factor. Midwest weather is mixed as areas of central and
southern Indiana and Ohio have been hit with significant rain in the past week
and a wet trend in the forecast for the next week should keep corn planting
progress slow. On the other hand, a drier trend is developing for the northern
and western areas of the cornbelt which could enhance fieldwork. Soybean values
were lower at the China exchange overnight and palm was down slightly. For the
US Census March crush report for release before the opening Thursday morning,
traders are looking for March crush near 148.7 million bushels from 137.7
million last month and 129.6 million bushels in March of 2004. Oil stocks are
expected near 1.779 billion pounds with meal stocks near 317,000 tonnes. Selling
intensified on the move under yesterday’s lows and a lack of interest from fund
buyers seems to be the biggest reason for the sell-off today. For the weekly
export sales report, released before the opening, traders are looking for
soybean sales near 200,000-400,000 tonnes as compared with 268,400 tonnes last
week. Meal sales are thought to be near 50,000-125,000 tonnes with oil sales
near 1,000-6,000 tonnes. July soybean support comes in at 633 1/2 and 628 with
resistance at 642 and 649 1/2.
Technical Outlook
BEANS (JUL) 04/28/2005: The market back below the
40-day moving average suggests the longer-term trend could be turning down.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The major trend could be turning up with the close back above the
18-day moving average. The close below the 2nd swing support number puts the
market on the defensive. The near-term upside objective is at 646. The next area
of resistance is around 639 1/4 and 646, while 1st support hits today at 628 1/4
and below there at 624 1/4.
MEAL (JUL) 04/28/2005: Momentum studies are
rising from mid-range, which could accelerate 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 market is in a bearish position with the close
below the 2nd swing support number. The near-term upside target is at 199.6. The
next area of resistance is around 197.2 and 199.6, while 1st support hits today
at 193.8 and below there at 192.7.
BEANOIL (JUL) 04/28/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market back below the 18-day moving average suggests
the longer-term trend could be turning down. The market tilt is slightly
negative with the close under the pivot. The next upside target is 22.84. The
next area of resistance is around 22.77 and 22.84, while 1st support hits today
at 22.57 and below there at 22.45.
WHEAT MARKET RECAP
4/27/2005
July Wheat finished down 4 1/4 at 329 1/4, 6 1/4 off the high
and 2 3/4 up from the low. December Wheat closed down 3 1/2 at 346 1/2. This was
2 up from the low and 6 off the high.
Early support stemmed from a lower production
forecast in Europe and light speculative buying but a turn lower in many
commodity markets along with increased selling in soybeans helped to pressure
the market into the mid-session. Trade volume was light after the initial break.
The market has found some support this week on weather uncertainties as traders
monitor potential hot spots which could develop. A 3-5 day hot streak in China
as the crop is in the heading stage could cause some yield problems but it would
take more threatening weather after this period to raise crop concerns.
Basically, crops in China, India and the US are in good shape but western China
crops will be watched closely. Some dryness problems could develop in the
southern and western areas of the US plains and there are a few dry spots
developing in France as well. Good rains in Germany recently alleviated fears of
lower plantings. For the weekly export sales report, released before the
opening, traders are looking for sales near 300,000-500,000 tonnes as compared
with 436,800 tonnes last week. July wheat support comes in at 325 1/2 with 335
and 343 1/2 as resistance.
Technical Outlook
WHEAT (JUL) 04/28/2005: The close under the
60-day moving average indicates the longer-term trend could be turning down.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The market’s close below
the 1st swing support number suggests a moderately negative setup for today. The
next upside target is 339. The next area of resistance is around 333 3/4 and
339, while 1st support hits today at 324 3/4 and below there at 321 1/4.
LIVE CATTLE RECAP
4/27/2005
June Live Cattle finished down 1.50 at 85.62,
1.72 off the high and 0.27 up from the low.
May Feeder Cattle closed down 0.75 at 108.00.
This was 0.47 up from the low and 0.85 off the high.
The sharply lower close after a contract high for
August cattle is a technical sign of a major top. The sweeping key reversal
could attract more technical selling over the short-term. A stiff discount for
June cattle to the cash market should help provide underlying support. Ideas
that the beef market will reach a peak soon and that the cash market may not
spend much time at the recent lofty levels helped trigger some long liquidation
selling. Boxed beef cutout values at mid session were up $.65 to $162.44 as
compared with $158.31 one week ago. Initial support for August cattle comes in
at 84.70 and 85.37 for June.
Technical Outlook
CATTLE (JUN) 04/28/2005: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The cross over and close above the 18-day moving average is an
indication the longer-term trend has turned positive. The outside day down and
close below the previous day’s low is a negative signal. The close below the 2nd
swing support number puts the market on the defensive. The near-term upside
objective is at 87.970. The next area of resistance is around 86.620 and 87.970,
while 1st support hits today at 84.650 and below there at 84.020.
LEAN HOGS RECAP
4/27/2005
June Lean Hogs finished up 0.17 at 76.92, 0.42
off the high and 0.82 up from the low.
May Pork Bellies closed up 0.45 at 81.95. This
was 0.80 up from the low and 0.10 off the high.
June hogs managed to push higher on the session
in spite of weakness in cattle and weakness in many other commodity markets. The
market saw follow-through technical buying from yesterday’s sharply higher trade
and from higher cash markets. Most terminals were $1.00 or more higher on the
session with Peoria hogs up $1.50. Higher pork values and better than expected
demand from packers helped to support. Traders believe that slaughter levels
will taper off into May which should support a gradual uptrend in the cash
market. The 2-day lean index for the period ending April 25th came in at 70.45,
up 18 cents for the day and up from 69.98 last week. Support for June hogs comes
in at 76.55 and 76.05 with 77.37 and 78.30 as resistance.
Technical Outlook
HOGS (JUN) 04/28/2005: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The close below
the 18-day moving average is an indication the longer-term trend has turned
down. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. The near-term upside target is at 78.070. The next
area of resistance is around 77.520 and 78.070, while 1st support hits today at
76.320 and below there at 75.600.
COCOA MARKET RECAP
4/27/2005
July Cocoa finished up 24 at 1500, 11 off the
high and 15 up from the low.
We are a little surprised that the cocoa market
managed the bounce off the type of violence seen at the Ivory Coast. However,
some specs might suggest that violence against foreign farm workers or
foreigners in general might make it difficult to harvest future crops. While we
get the sense that the recent violence was unrelated to rebel/Ivory Coast army
conflict the market was moderately oversold and in need of a corrective bounce.
It is a little surprising that the higher Dollar didn’t hold back the gains in
cocoa on Wednesday.
Technical Outlook
COCOA (JUL) 04/28/2005: Daily stochastics are
trending lower but have declined into oversold territory. The close below the
18-day moving average is an indication the longer-term trend has turned down.
The market setup is supportive for early gains with the close over the 1st swing
resistance. The next downside target is now at 1473. The next area of resistance
is around 1513 and 1525, while 1st support hits today at 1487 and below there at
1473.
COFFEE MARKET RECAP
4/27/2005
July Coffee closed up 0.90 at 133.35. This was
2.55 up from the low and 1.65 off the high.
July Coffee closed firmer which keeps the market
in an uptrend with the n ext target at 140. Technical indicators are becoming
over bought, but speculative buying has been easily absorbing producer sales.
Brazil’s 2005/06 harvest begins next month, but supplies will be tight until the
new crop hits the marketplace. Although some areas are receiving rain, generally
dry conditions in Brazil & Vietnam could impact the quality of the beans. Due to
dry conditions during the fall season, a Brazil meteorologists is warning that
there is a greater risk of a freeze event this winter.
Technical Outlook
COFFEE (JUL) 04/28/2005: A positive indicator was
given with the upside crossover of the 9 & 18 bar moving average. Momentum
studies are trending higher but have entered overbought levels. The market now
above the 18-day moving average suggests the longer-term trend has turned up. It
is a mildly bullish indicator that the market closed over the pivot swing
number. The near-term upside target is at 137.30. The next area of resistance is
around 135.40 and 137.30, while 1st support hits today at 131.30 and below there
at 128.95.
SUGAR MARKET RECAP
4/27/2005
July Sugar closed up 0.08 at 8.60. This was 0.05
up from the low and 0.07 off the high.
Talk of increased purchases from Russia and China
on the recent break helped to support solid gains for sugar in spite of a sharp
break in the CRB Index. The drop in sugar prices came at the same time that
freight rates declined and cash dealers believe China import activity is on the
rise. London rallied early in the session but ended lower. A WTO ruling set for
release later this week regarding EU exports could impact. Some traders believe
that the WTO will rule that quota C sugar exports are illegal which might force
the EU to dispose of the sugar internally. In the long run, less EU exports
and/or production might leave a bullish tilt to the ruling. Fund short-covering
and speculative buying was noted in the pit.
Technical Outlook
SUGAR (JUL) 04/28/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market now above the 18-day moving average suggests
the longer-term trend has turned up. The gap up on the day session chart gave a
bullish indicator and more follow through could be seen this session. It is a
mildly bullish indicator that the market closed over the pivot swing number. The
near-term upside objective is at 8.72. The next area of resistance is around
8.66 and 8.72, while 1st support hits today at 8.54 and below there at 8.49.
COTTON MARKET RECAP
4/27/2005
July Cotton finished down 1.06 at 56.41, 1.18 off
the high and 0.15 up from the low.
July cotton closed slightly weaker as position
adjustments ahead of the May expiration triggered some light profit taking.
Prices however, were able to hold above support at 56. The market has been
rallying on expectations of greater export demand for cotton due to the weaker
US dollar making US cotton more competitive globally and also USDA expectations
for greater cotton demand from China. Weekly export sales for cotton released
Thursday morning range between 250,000 to 600,000 bales. Cotton merchant
Dunavant is speculated to be exporting a large amount of cotton which may show
up in this week’s sales report. However, given the market’s recent rally, a
lower than expected sales number could pressure July cotton under support at
56.00. On a strong sales report, the next upside target for July is at 58.10 and
for Dec cotton at 60.17.
Technical Outlook
COTTON (JUL) 04/28/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The market now above the
18-day moving average suggests the longer-term trend has turned up. The market
could take on a defensive posture with the daily closing price reversal down.
The close below the 1st swing support could weigh on the market. The near-term
upside target is at 57.99. The next area of resistance is around 57.07 and
57.99, while 1st support hits today at 55.75 and below there at 55.34.