Here’s Why The Pound Looks Strong

Technical Outlook

BONDS (MAR) 2/20/2004: 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. Near-term resistance for bonds is at 113.14 and then again at 113.20, while swing support hits at 112.23 and below there at 112.06. 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 113.20.

T-NOTES(MAR) The upside closing price reversal on the daily chart is somewhat bullish. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.11. The market’s close below the pivot swing number is a mildly negative setup. 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 115.06 and then again at 115.11, while swing support hits at 114.22 and below there at 114.10. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/19/2004

The stock market failed to make a new high on the session but also didn’t get much help from the US economic numbers. In fact, the Philly Fed numbers were very disappointing and with the ongoing claims jumping by more that 100,000 the old fear about the jobless recovery surfaces again. It appeared as if the S&P was going to make a new contract high but once the numbers disappointed the trade the Wal-Mart earnings seemed to forgotten.

Technical Outlook

S&P500 (MAR) 2/20/2004: The market setup is somewhat negative with the close under the 1st swing support. The outside day down gives the market a bearish tilt. The daily closing price reversal down is a negative indicator for prices. Underlying support comes in at 1140.40 and 1136.55, with overhead resistance at 1153.20 and 1162.15. The close below the 9-day moving average is a negative 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 objective is at 1162.15.

S&P E-Mini (MAR): The new contract high and close below the previous day’s low constitutes a key reversal which is a bearish signal. A new contract high was made on the rally. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1162.56. It is a slightly negative indicator that the close was lower than the pivot swing number. Near-term resistance for the S&P Mini is at 1153.38 and then again at 1162.56, while swing support hits at 1140.13 and below there at 1136.06. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (MAR) The outside day down is somewhat negative. The market could take on a defensive posture with the daily closing price reversal down. Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The market should run into resistance at 1510.00 and above there at 1539.00 with support at 1467.00 and 1453.00. 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 1539.00. The market back below the 40-day moving average suggests the longer-term trend could be turning down.

MINI DOW (MAR) The market rallied to a new contract high. The daily closing price reversal down is a negative indicator for prices. The close above the 9-day moving average is a positive short-term indicator for trend. The market should run into resistance at 10712 and above there at 10779 with support at 10615 and 10585. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 10779. It is a slightly negative indicator that the close was under the swing pivot.

CURRENCY MARKET RECAP

2/19/2004

The Dollar failed to get favorable numbers during the session Thursday but still managed to hold most of the recovery bounce from the prior session. In fact, at times the Dollar forged into significantly higher ground but didn’t seem to get stop loss buying or support from the Press to justify a continuation on the upside. The Pound looks to be the strongest trend of all currencies and it also doesn’t seem to have a background threat of intervention.

Technical Outlook

YEN (MAR): A negative signal for trend short-term was given on a close under the 9-bar moving average. The market tilt is slightly negative with the close under the pivot. Swing resistance is targeted at 93.59 and above there at 93.93, with the yen finding support around 93.02 and below there at 92.79. The market back below the 40-day moving average suggests the longer-term trend could be turning down. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 92.79. The market is approaching over sold levels on an RSI reading under 30.

EURO (MAR): 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 1.2602. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2602, with overhead resistance at 1.2772. 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

2/19/2004

The gold market failed at some key technical levels and is watching the direction of the Dollar very closely. At times Thursday the Dollar managed to climb sharply above the prior days surprise high and that has a number of gold longs concerned. In fact, considering the recent spec and fund long position in silver, the silver market might be on the verge of an aggressive stop loss-selling binge if key support is penetrated.

Technical Outlook

SILVER (MAY): The market tilt is slightly negative with the close under the pivot. Initial support for silver is at 658.2 and below there at 648.1 with resistance likely at 669.0 and 677.2. 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 669.0.

GOLD (APR): Support for gold today comes in near 406.75, while resistance is pegged at 413.95. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 413.95. It is a slightly negative indicator that the close was under the swing pivot. The close below the 9-day moving average is a negative short-term indicator for trend.

COPPER MARKET RECAP

2/19/2004

The copper market came flashing right back after the aggressive correction and did so in the face of weak overnight Chinese price action. In other words, the US copper market forged higher without getting the go ahead from the Chinese trade. The trade was once again seeing signs of strong demand and continued evidence of falling LME stocks. The macro economic information from the US and the stock market action hardly helped the bull camp in copper on Thursday but the copper is apparently trading off its own internal fundamentals.

ENERGY MARKET RECAP

2/19/2004

The crude oil market was caught between opposing fundamentals Thursday as the weekly inventory reports showed a big build in crude stocks and a sharp decline in distillate stocks. Since the distillate situation is only critical for the coming weeks we have to think that the net result of the weekly inventory reports is slightly bearish as the build in crude stocks is closer to the heart of the bull case. In the end, US stocks remain tight enough that the market should find support but with expiration Friday one might expect to see extreme volatility ahead.

Technical Outlook

CRUDE OIL (APR): The upside daily closing price reversal gives the market a bullish tilt. The close over the pivot swing is a somewhat positive setup. Support for crude is keyed on 34.27 and below there at 33.78, with resistance pegged at 35.02 and 35.28. 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 35.28.

UNLEADED GAS (APR): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 111.82. The market tilt is slightly negative with the close under the pivot. Resistance today is at 111.82, while support should be found around 108.22. A positive signal for trend short-term was given on a close over the 9-bar moving average.

HEATING OIL (APR):It is a slightly negative indicator that the close was under the swing pivot. Heating oil should encounter support around 88.92, with resistance is at 91.32. 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 91.32.

CORN MARKET RECAP

2/19/2004

Corn opened lower on follow-through selling from the weak technical action on Wednesday, but the turn higher in soybeans helped support a strong rally into the close. July corn closed 4 3/4 cents higher on the session with a new contract high close. News from the USDA that an “unknown destination” bought 116,000 tons of US corn overnight helped provide support. Fears of an overbought condition and news from the USDA Outlook Forum meetings in Washington that corn production for the coming year could come in near a record 10.4 billion bushels helped limit the buying support. While the record production forecast was seen as a bearish development, this estimate assumes a 2.2% rise in planted acreage and record high average yields. We should also point out that usage estimates for next year were not released with the USDA news and many traders believe that usage next year will be in the 10.4-10.7 billion bushels range. Firm cash markets and tightening stocks situation into the summer provided underlying support as well. Producer selling seems to have slowed after more active selling earlier in the week which helped keep basis levels firm. Weekly export sales, released before the opening, are expected to come in near 900,000-1.1 million tons as compared with 1.18 million tons last year.

Technical Outlook

CORN (MAY) 2/20/2004: The crossover up in the daily stochastics is a bullish signal. The near-term upside target is at 296 1/4. There could be more upside follow through since the market closed above the 2nd swing resistance. Market resistance comes in at 296 1/4 today, with support at 283 1/4. The close above the 9-day moving average is a positive short-term indicator for trend. The outside day up gives the market a positive tilt. The upside daily closing price reversal gives the market a bullish tilt.

SOY COMPLEX RECAP

2/19/2004

Soybeans surged to new contract highs led by lower than expected crop production estimates from Brazil and concerns with dry weather in southern Brazil and parts of Argentina which may keep stressful conditions through the weekend. Funds were active buyers of near 8000 contracts in soybeans, 3500 in meal and 2000 contracts in oil. Commercial buying in the March contract and commercial bull spreading supported March futures as the battle for warehouse receipt ownership could begin with the delivery period ahead. Talk of stressful weather conditions for southern Brazil and parts of Argentina into early next week and lower production forecasts for soybeans out of Brazil helped support. The private forecasting firm Sparks pegged Brazil production at 57.5 million tons as compared with the recent USDA forecast at 61 million tons. The Brazil government also released their revised production forecast at 57.66 million tonnes as compared with 58.76 million tons in their December forecast. The new contract highs pulled nearby futures to a new 7-year high while the USDA Outlook Forum forecast for a possible record crop in 2004 of 2.9 billion bushels helped limit the buying. Last year’s production was 2.749 billion bushels. The tight forecast for US ending stocks, continued strong demand for soybean oil and talk of tighter import restrictions for meal added to the positive tone. Weekly export sales, released before the opening, are expected to come in near 100,000-300,000 tons for soybeans, 25,000-50,000 tons for meal and 2,000-6,000 tons for oil.

Technical Outlook

SOYBEANS (MAY) 02/20/04 The market made a new contract high on the rally. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. The next area of resistance is around 892 1/2 and 902 1/4, while 1st support hits today at 860 1/2 and below there at 838 1/4. The market’s close on the 9-day moving average is neutral. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 902 1/4. The market is approaching overbought levels with an RSI over 70.

MEAL (MAY): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 273.9. First resistance comes in at 271.6, with support at 262.6. The upside crossover of the 9 & 18 bar moving average is a positive signal. There could be more upside follow through since the market closed above the 2nd swing resistance.

BEAN OIL (MAY): 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 33.29. 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. The market made a new contract high on the rally. Daily swing resistance is found at 33.00 and above there at 33.29. Support should be encountered at 31.88 and 31.05. The market is approaching overbought levels with an RSI over 70.

WHEAT MARKET RECAP

2/19/2004

May wheat closed 7 1/2 cents higher on the session but remained with an inside trading session. Rumors that China bought 500,000 tons of US spring wheat helped support the jump in futures and recovery from yesterday’s weak action. March Minneapolis wheat closed 12 1/4 higher on the session and within 5 cents of the contract highs on the rumors. Strength in the other grains added to the more positive tone. The China wheat delegation is visiting the CBOT today and news that China has already sent ships to move US wheat purchases to China for April to June shipment added to the buying support after yesterday’s talk that old crop purchases would be rolled or cancelled. News that Taiwan bought 43,000 tons of US wheat and is tendering for 42,150 tons tonight and that South Korea bought 20,000 tons of US wheat and is also tendering for 21,800 tons tonight also supported the market. Rain forecasts for the central and western plains and fears of huge world crops helped to limit the gains. Weekly export sales, released before the opening, are expected to come in near 350,000-550,000 tons as compared with 476,600 tons last week.

Technical Outlook

WHEAT (MAY) 2/20/2004: The market setup is supportive for early gains with the close over the 1st swing resistance. Expect near-term support around 374 1/2 and below there at 368 1/4, with resistance levels at 384 1/2 and 388 1/4. 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 368 1/4.

LIVE CATTLE RECAP

2/19/2004

February cattle closed sharply higher with April cattle closing near unchanged on the session in a choppy trading range. February is strong from expectations for firm cash cattle markets but feedlot bids were still $74.00 with offers at $80.00. Slaughter came in at 117,000 head as compared with trade expectations at 122,000-129,000 head. The Cattle-on-Feed report for Friday is expected to show on-feed supplies at 105% of last year (range 104-107.2%) with placements during January at 83.9% (78.9-95.2) and Marketings at 89.2% (86-8-92.1). The Monthly cold storage report is also released Friday and is expected to show a bulge in frozen supplies due to the lack of exports for late December and all of January. Boxed-beef cut-out values were down 60 cents to $128.10 as compared with $125.29 last week at this time. Japanese officials met with Kansas beef producers and USDA officials in an attempt to convince the Japanese to ease their import bans on US beef. Bird flu was reported in a farm in Canada.

Technical Outlook

CATTLE (APR) 2/20/2004: 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 73.55. The close equal to the pivot swing number is a neutral directional indicator. Support should be encountered at 72.40 and below there at 71.95. Market resistance is at 73.20 and then again at 73.55. A positive signal for trend short-term was given on a close over the 9-bar moving average.

LEAN HOGS RECAP

2/19/2004

April hogs closed sharply higher on active fund buying and short-covering triggered by the large discount to the cash market. Cash markets were mostly steady with a few locations slightly lower. However, with the 2-day Lean Index hovering near $64.00 this week, new selling was hard to find and light buying from funds triggered active short-covering. Cash hogs are called steady for Friday and strength in the bellies added to the positive tone. Traders are looking for Friday’s cold storage to show belly stocks near the highest end-of-January stocks in 5 years with the range of estimates between 58.5-64.7 million pounds which is up from 35.4 million pounds last year. Slaughter came in at 383,000 head as compared with trade expectations at 385,000-390,000 head.

Technical Outlook

HOGS (APR) 2/20/2004: Market positioning is positive with the close over the 1st swing resistance. Resistance levels comes in at 60.52 and 61.22 today, while support is around 58.87 and then 57.92. The close above the 9-day moving average is a positive 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 57.92.

COCOA MARKET RECAP

2/19/2004

The cocoa market failed significantly as arrival rates continue to hold together and origin selling seems to swamp the market on a daily basis. Therefore, the cocoa market looks to forge a series of lows until the market has factored the period of highest supply off the Ivory Coast harvest. With origin and fund selling active Thursday it would seem that the market has downside momentum. The idea that March cocoa was going to cause some delivery uncertainty is now fully washed out of play.

Technical Outlook

COCOA (MAY)02/20/04 The gap lower price action on the day session chart is a bearish indicator for trend. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1485 and above there at 1512 with support at 1447 and 1436. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1435.50.

COFFEE MARKET RECAP

2/19/2004

The technical failure Thursday would seem to set the market up for most declines. However, the Press did report some fund buying around the lows and that might give the bear’s pause. Certainly the market is vulnerable and with the last COT report showing 35,000 contracts as of February 10th there might be plenty of stop loss fuel in the event that the market opens lower Friday morning. So far the market isn’t seeing much of a weather threat or a demand hope to stop the current pattern of weak prices.

Technical Outlook

COFFEE (MAY)2/20/04 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 70.75.The Coffee contract should run into resistance at 73.40 and above there at 74.15 with support at 71.7 and 70.75. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/19/2004

Unless the trade can force the market to new lows soon, the technical structure of the market looks set to drive shorts out as the open interest corrects from the recent bulge. May Sugar closed 6 lower on the session but up 7 from the lows of the day. Mexico production for the 2003/2004 season is expected to come in near 5.205 million tons which is near the high end of expectations and compares with 4.9 million tons last year. Late last season, Mexico was forced to import some sugar to meet industry needs. The Cuba harvest is moving along at a faster pace than last year with expectations near 2.4-2.5 million tonnes (all but 700,000 to be exported) as compared with 2.2 million tonnes last year. Open interest has been building and reached another new high of 282,066 contracts as of Wednesday. New fundamental news is lacking and traders await some type of fresh news to impact prices ahead. The bearish longer-term fundamentals in the market are well known and well advertised, but the inability of the market to move significantly under the December lows and the weekly closing price reversal for the nearby futures for the week ending February 13th may be turning the technical picture from bearish to bullish.

Technical Outlook

SUGAR (MAY) 2/20/2004: The market setup is somewhat negative with the close under the 1st swing support. Swing resistance comes in at 5.92, with support found at 5.64. 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 5.92.

COTTON MARKET RECAP

2/19/2004

May cotton closed 140 higher on the session and to a new 6-day high with active trade house and speculative buying based on expectations for solid export sales news for the weekly report. Traders look for sales near 300,000-500,000 bales as compared with 703,100 bales last week. Shipments are expected to come in near 300,000-400,000 bales as compared with 348,400 bales last week. The Cotlook A Index was down 85 cents to 73.35. At the USDA Outlook Conference, Cotton production was pegged at 18.3 million bales, about the same as last year’s 18.2 million bales.

Technical Outlook

COTTON (MAY) 2/20/2004: A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Next resistance area comes in at 70.41 and then again at 70.78, while support is targeted at 69.16 and 68.28. 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 70.78. ORANGE JUICE (MAR)2/20/04 The market tilt is slightly negative with the close under the pivot. Orange Juice should run into resistance at 61.60 and above there at 62.00 with support at 60.80 and 60.40. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The near-term upside objective is at 62.