Here’s Why You Shouldn’t Expect Cold Weather To Lift Heating Oil Prices

BOND MARKET RECAP

3/7/2005

March Bonds finished up 0-11 at 114-01, 0-04 off
the high and 0-07 up from the low.

March 10 Yr Treasury Notes finished up 0-020 at
111-050, 0-035 off the high and 0-025 up from the low.

The bond market managed at times during the
session to post a half point gain before settling slightly higher on the
session. With no economic information out during the session Monday, the
Treasury market was forced to react to outside markets and with the equity
market mostly higher on the session and energy prices mostly lower we can
understand the limit put on the bull case in Treasuries during the session. In
fact, we suspect that most of the gains made since the low last Friday were
mostly the result of short covering.

Technical Outlook

BONDS (MAR) 03/08/2005: 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 major trend has turned down with the cross
over back below the 18-day moving average. The market has a slightly positive
tilt with the close over the swing pivot. The next upside objective is 114-15.
The next area of resistance is around 114-08 and 114-15, while 1st support hits
today at 113-24 and below there at 113-14.

TNOTES (MAR) 03/08/2005: 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 major trend has turned down with the cross
over back below the 18-day moving average. It is a mildly bullish indicator that
the market closed over the pivot swing number. The next upside target is
111-245. The next area of resistance is around 111-130 and 111-245, while 1st
support hits today at 110-280 and below there at 110-220.

 

STOCK INDICES RECAP

3/7/2005

March S&P finished up 1 at 1225.3, 4.5 off the
high and 2 up from the low.

March S&P E-Mini closed up 1 at 1225.25. This was
2 up from the low and 4.5 off the high.

March Dow closed down 18 at 10938. This was 7 up
from the low and 49 off the high.

The stock market showed positive follow through
action Monday, despite the fact that the Dow seemed to diverge from the sharp
gains seen in the S&P. We suspect that lower energy prices provided some of the
lift but we also think that Fund managers were pulled into the market because of
the early upside breakout. Apparently tech stocks provided the fuel for the
rally Monday and that seemed to lift the lower end of the market relative to the
upper tier stocks. Big gainers on the day were mostly tech and chip sector
related but the market also seemed to get some support from favorable bank
sector interest.

Technical Outlook

S&P 500 (MAR) 03/08/2005: 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. It is a mildly bullish
indicator that the market closed over the pivot swing number. The near-term
upside objective is at 1232.42. The next area of resistance is around 1228.55
and 1232.42, while 1st support hits today at 1222.05 and below there at 1219.43.

SP EMINI (MAR) 03/08/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. The close over the pivot swing is a somewhat positive setup. The next
upside objective is 1232.62. The next area of resistance is around 1229.00 and
1232.62, while 1st support hits today at 1222.50 and below there at 1219.63.

NASDAQ (MAR) 03/08/2005: The cross over and close
above the 40-day moving average indicates the longer-term trend has turned up.
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 has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. The
next upside objective is 1572.25. The next area of resistance is around 1559.50
and 1572.25, while 1st support hits today at 1529.50 and below there at 1512.25.

 

CURRENCY MARKET RECAP

3/7/2005

March US Dollar finished up 25 at 8278, 13 off
the high and 28 up from the low.

March Euro finished down 0.36 at 132.04, 0.2 off
the high and 0.24 up from the low.

March Euro Dollar closed unchanged at 97.0025.
This was equal to the low and 0.0025 off the high.

March Canadian Dollar closed up 0.08 at 81.33.
This was 0.37 up from the low and 0.12 off the high.

March British Pound finished down 0.98 at 191.32,
0.35 off the high and 0.22 up from the low.

March Swiss closed down 0.54 at 85.05. This was
0.11 up from the low and 0.14 off the high.

March Japanese Yen closed down 0.52 at 95.07.
This was 0.14 up from the low and 0.12 off the high.

The Dollar was moderately higher early in the
action but then gave up those gains into the close. We suspect that the slight
recovery in energy prices and the ongoing expansion of consumer credit in the US
dampened interest in the Dollar, as that is simply another deficit issue hanging
over the US. We are actually surprised that the Canadian Dollar managed to hold
in positive territory considering that the Canadian Building Permits for January
declined by 11% in a release shortly after the opening. Apparently a decline in
US New home sales reading from the NAR in January undermined the Dollar and
could have served to underpin the Canadian from its bearish housing sector
stats.

Technical Outlook

YEN (MAR) 03/08/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The close under the 18-day moving average indicates the longer-term trend could
be turning down. The market tilt is slightly negative with the close under the
pivot. The next downside objective is now at 94.81. The next area of resistance
is around 95.20 and 95.32, while 1st support hits today at 94.94 and below there
at 94.81.

EURO (MAR) 03/08/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. 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 pivot swing number is a mildly negative setup. The next downside
objective is now at 131.59. The next area of resistance is around 132.26 and
132.47, while 1st support hits today at 131.82 and below there at 131.59.

 

PRECIOUS METALS RECAP

3/7/2005

April Gold closed up 0.7 at 435.8. This was 2.5
up from the low and 0.5 off the high.

March Silver finished up 0.01 at 7.359, 0.031 off
the high and 0.069 up from the low.

 

Both gold and silver managed to recover from
early losses but seemed to manage the bounce off fund buying. Certainly the
Dollar came back down off intraday highs and that gave the metals a slight lift
but with the Dollar higher on the day, stocks higher and energy prices weaker
there was hardly a flight to quality of inflation lift operating in the metals.
We suspect that the early weakness in metals Monday morning was the delayed
reaction to the weekly COT report which displayed the ongoing spec and fund long
positioning.

Technical Outlook

SILVER (MAY) 03/08/2005: Negative momentum
studies in the neutral zone will 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. The market has a slightly positive tilt with the
close over the swing pivot. The next downside objective is now at 729.7. The
next area of resistance is around 744.3 and 748.6, while 1st support hits today
at 734.8 and below there at 729.7.

GOLD (APR) 03/08/2005: 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 market now above the
18-day moving average suggests the longer-term trend has turned up. The market
has a slightly positive tilt with the close over the swing pivot. The next
downside objective is 432.3. The next area of resistance is around 437.3 and
438.3, while 1st support hits today at 434.3 and below there at 432.3.

 

COPPER MARKET RECAP

3/7/2005

March Copper closed up 0.25 at 149.45. This was
1.25 up from the low and 0.65 off the high.

The copper market attempted another rally Monday
but barely managed to remain positive into the close. Once again the Press
reported fund buying to be behind the rally and with that we assume that the
spec and fund long is creeping closer to the old record spec long of 61,000
contracts. With corporate buyout news on WMC flowing in the headlines Monday, we
suspect that some small spec buyers were also pulled into the fray. Some traders
suspect that the stronger Dollar dampened the upside action Monday as arbitrage
buyers might have been discouraged from paying up for copper above 150 in
addition to the unfavorable currency adjustment.

 

ENERGY MARKET RECAP

3/7/2005

April Crude Oil closed up 0.11 at 53.89. This was
0.98 up from the low and 0.06 off the high.

April Heating Oil closed up 0.16 at 148.50. This
was 2.70 up from the low and 0.25 off the high.

April Unleaded Gas finished down 0.36 at 150.53,
0.87 off the high and 2.73 up from the low.

April Natural Gas finished down 0.03 at 6.71,
0.01 off the high and 0.08 up from the low.

April Propane closed down 0.01 at 0.82. This was
equal to the low and equal to the high.

The energy complex slumped Monday in an apparent
profit taking slide. Saudi Arabia continues to suggest that there is no crude
oil supply shortage and that prices are managing to hold at levels that are
unrealistic. The Saudi’s also suggested that they will meet the need of their
customers and that would seem to suggest that price is no longer a governing
issue. In other words, OPEC continues to shift their focus toward day’s supply
and away from price, which in a sense allows them to entrench higher prices than
might have been allowed before. In short, entities like the IEA and the EIA will
have less to confront OPEC with if the cartel manages to shift the attention of
the market to the number of days supply. While the heating oil market showed
signs of running up off the colder weather forecast it was clear that buyers
were unwilling to hold onto those positions into the close. In fact, unless US
weather becomes very, very cold and remains cold for an extended period of time,
one should not expect the weather to lift energy prices consistently.

Technical Outlook

CRUDE OIL (APR) 03/08/2005: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The major trend could be turning up with the close back above the
18-day moving average. The market has a slightly positive tilt with the close
over the swing pivot. The next downside target is 52.62. The 9-day RSI over 70
indicates the market is approaching overbought levels. The next area of
resistance is around 54.41 and 54.70, while 1st support hits today at 53.37 and
below there at 52.62.

UNLEADED (APR) 03/08/2005: 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. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The next upside objective is 153.66. The 9-day RSI over 70 indicates the
market is approaching overbought levels. The next area of resistance is around
152.33 and 153.66, while 1st support hits today at 148.73 and below there at
146.47.

HEATING OIL (APR) 03/08/2005: Momentum studies
are trending lower from high levels which should accelerate a move lower on a
break below the 1st swing support. The cross over and close above the 18-day
moving average is an indication the longer-term trend has turned positive. The
daily closing price reversal up is a positive indicator that could support
higher prices. With the close higher than the pivot swing number, the market is
in a slightly bullish posture. The next downside target is 144.94. With a
reading over 70, the 9-day RSI is approaching overbought levels. The next area
of resistance is around 149.97 and 150.83, while 1st support hits today at
147.03 and below there at 144.94.

 

CORN MARKET RECAP

3/7/2005

May Corn finished down 3 3/4 at 213 1/4, 4
1/4 off the high and 1/2 up from the low. December Corn closed down 3 1/2 at 234
3/4. This was 1/4 up from the low and 3 1/2 off the high.

The selling emerged as long liquidation when the
other grains worked lower into the mid-session. Weekly export inspections,
released during the session, came in at 33.5 million bushels as compared with
trade expectations of 27-30 million. Cumulative export shipments have reached
44.1% of the USDA forecast for the season as compared with 48.9% on average for
this time of the year. The export news failed to spark much support with traders
worried about competition from Argentina and China. Funds were noted sellers of
near 6,000 contracts into the mid-session. Taiwan is tendering for 40,000-60,000
tonnes of US or Argentina corn. Deliveries dipped down to 314 lots this morning
from over 1200 late last week. For the Monthly Supply/demand report on Thursday,
traders are looking for corn ending stocks to increase by about 50 million
bushels from the February report estimate of 2.01 billion bushels. Support for
May corn comes in at 210 3/4 with resistance at 217 1/4 and 219.

Technical Outlook

CORN (MAY) 03/08/2005: Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The cross over and close above the 18-day moving average is an indication the
longer-term trend has turned positive. The close below the 2nd swing support
number puts the market on the defensive. The next downside target is 209 1/2.
The next area of resistance is around 215 1/2 and 218 3/4, while 1st support
hits today at 211 and below there at 209 1/2.

 

SOY COMPLEX RECAP

3/7/2005

May Soybeans finished down 13 3/4 at 616, 14 off
the high and 1 up from the low. November Soybeans closed down 8 1/4 at 610 1/2.
This was 2 up from the low and 11 off the high.

May Soymeal closed down 3.2 at 180.6. This was
0.5 up from the low and 3.9 off the high.

March Soybean Oil finished down 0.28 at 22.84,
0.31 off the high and 0.09 up from the low.

The lack of rain in the forecast for southern
Brazil for much of this week was a bullish surprise this morning and the market
was called 3-4 cents higher on the opening but ideas that the crop harvest in
Brazil is accelerating and that further crop damage will be limited after this
week helped trigger long liquidation selling after the steady opening. Funds
were noted sellers of near 4000 contracts into the mid-session. Weekly export
inspections, released during the session, came in at 25.7 million bushels as
compared with trade expectations of 25-28 million. Cumulative export shipments
have reached 78.9% of the USDA forecast for the season as compared with 72.9% on
average for this time of the year. A lower close on the session after hitting
the highest level since early September might be seen as a bearish technical
development. For the Monthly Supply/demand report on Thursday, traders are
looking for soybean ending stocks to fall by about 10 million bushels from the
February report estimate of 440 million bushels. Resistance for May soybeans
comes in at 629 3/4 and 632 with support back at 618 and 610 3/4.

Technical Outlook

BEANS (MAY) 03/08/2005: The daily stochastics
gave a bearish indicator with a crossover down. 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 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 next
downside objective is 604 1/4. The next area of resistance is around 623 1/2 and
634 1/4, while 1st support hits today at 608 1/2 and below there at 604 1/4.

MEAL (MAY) 03/08/2005: The daily stochastics gave
a bearish indicator with a crossover down. 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 cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. The
defensive setup, with the close under the 2nd swing support, could cause some
early weakness. The next downside target is now at 180.1. The next area of
resistance is around 185.8 and 188.8, while 1st support hits today at 181.5 and
below there at 180.1.

BEANOIL (MAY) 03/08/2005: 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 indicates the
longer-term trend has turned up. The swing indicator gave a moderately negative
reading with the close below the 1st support number. The near-term upside
objective is at 23.52. The next area of resistance is around 23.22 and 23.52,
while 1st support hits today at 22.72 and below there at 22.52.

 

WHEAT MARKET RECAP

3/7/2005

May Wheat finished down 4 3/4 at 332 1/4, 5 1/4 off the high
and 2 up from the low. July Wheat closed down 5 1/2 at 338. This was 1 1/2 up
from the low and 6 off the high.

News that Egypt bought French wheat over the
weekend and continued concerns with a slowdown in exports helped to pressure the
market early in the session and weakness in soybeans added to the bearish tone.
Weekly export inspections, released during the session, came in at 11.3 million
bushels as compared with trade expectations of 22-24 million. Cumulative export
shipments have reached 80.4% of the USDA forecast for the season as compared
with 76.9% on average for this time of the year. Egypt tendered for
30,000-60,000 tons of optional origin wheat over the weekend and bought 60,000
tons from France. Deliveries were up to 165 lots this morning as compared with
13 contracts on Friday which was seen as a bearish factor for the cash market.
The director of the State Grain Administration in China on Sunday said that
China will import little wheat this year. While traders were not expecting a
surge in China demand this year after the country imported almost 10 million
tons last year in order to re-stock reserves, traders were hoping for at least 1
million tons for the coming season. For the Monthly Supply/demand report on
Thursday, traders are looking for wheat ending stocks to fall by about 5 million
bushels from the February report estimate of 558 million bushels. May wheat
support comes in at 326 3/4 with resistance at 337 and 338 3/4.

Technical Outlook

WHEAT (MAY) 03/08/2005: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. The major trend could be turning up with the close
back above the 18-day moving average. The close below the 1st swing support
could weigh on the market. The next downside target is 326. Short-term
indicators on the defensive. Consider selling an intraday bounce. The next area
of resistance is around 335 3/4 and 340 1/4, while 1st support hits today at 328
3/4 and below there at 326.

 

LIVE CATTLE RECAP

3/7/2005

April Live Cattle finished down 0.12 at 88.90,
0.60 off the high and 0.15 up from the low.

March Feeder Cattle closed up 0.42 at 103.10.
This was 0.35 up from the low and 0.10 off the high.

The market closed moderately higher for the June
contract but April futures opened higher and closed lower as active fund rolling
of long positions helped drive the spread. With the pipeline mostly empty before
this week, commercial traders were forced to cover needs in the cash or futures
markets with fewer cattle and less beef than expected. In addition, packers are
threatening to cut-back on slaughter due to tight supply. Boxed-beef cut-out
values at mid-session were up $2.44 to $146.33 as compared with $140.59 last
week. Slaughter came in at 117,000 head from trade expectations for
110,000-116,000 head. The higher than expected slaughter could be a sign of
strong packer demand.

Technical Outlook

CATTLE (APR) 03/08/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
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 slightly negative indicator that the close was lower than the
pivot swing number. The near-term upside target is at 89.750. The next area of
resistance is around 89.270 and 89.750, while 1st support hits today at 88.550
and below there at 88.270.

 

LEAN HOGS RECAP

3/7/2005

April Lean Hogs finished down 0.15 at 75.50, 1.07
off the high and 0.45 up from the low.

March Pork Bellies closed up 0.17 at 88.97. This
was 0.97 up from the low and 0.32 off the high.

April hogs opened 65 higher on the session and
closed 15 lower as the stiff premium of futures to the cash market and ideas
that the higher production pace this week might slow the aggressive packer
demand of the past few weeks helped to pressure. The market bounced last week on
news of less Canadian cattle to compete with pork and hopes that export news
continues strong. The 2-day lean index for the period ending March 3rd came in
at 70.42, up.15 on the session but down from 70.49 last week. Slaughter came in
at 391,000 head from trade expectations for 382,000-395,000 head.

Technical Outlook

HOGS (APR) 03/08/2005: 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. The daily
closing price reversal down puts the market on the defensive. The market’s close
below the pivot swing number is a mildly negative setup. The next upside target
is 77.170. The next area of resistance is around 76.250 and 77.170, while 1st
support hits today at 74.750 and below there at 74.150.

 

COCOA MARKET RECAP

3/7/2005

May Cocoa finished up 16 at 1776, 6 off the high
and 51 up from the low.

The cocoa market managed another new high for the
move and appears to be poised to retest the last significant high up above
$1,800. Once again the market seemed to be getting ongoing support from fund
buying but as noted in the recent COT report, the cocoa market in all likelihood
continues to expand its record spec and fund long positioning. In other words,
the market is becoming quite overbought and we suspect that origin sellers are
beginning to be enticed by the higher price structure.

Technical Outlook

COCOA (MAY) 03/08/2005: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. 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 next upside target is 1821. The
9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 1804 and 1821, while 1st support hits today at
1748 and below there at 1708.

 

COFFEE MARKET RECAP

3/7/2005

May Coffee closed up 6.15 at 130.20. This was
5.20 up from the low and 0.40 off the high.

A major upside extension in coffee was once again
partially inspired by aggressive fund buying but it is also possible that
soaring prices have forced some commercial players to pay up and secure some
forward coverage. News that Brazilian coffee exports for February were up 8.1%
should have discouraged some buying but in the end the market continues to look
far forward to future fundamentals instead of near term supply and demand
issues. Some trader’s have suggested that dry weather conditions in Brazil might
have sparked the rally but we think that the less than expected spec long in the
COT report might have surprised traders and in turn pulled in buyers.

Technical Outlook

COFFEE (MAY) 03/08/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average indicates the longer-term trend has turned up. The
market’s close above the 2nd swing resistance number is a bullish indication.
The next upside objective is 134.55. The market is becoming somewhat overbought
now that the RSI is over 70. The next area of resistance is around 133.00 and
134.55, while 1st support hits today at 127.45 and below there at 123.45.

 

SUGAR MARKET RECAP

3/7/2005

May Sugar closed down 0.09 at 8.78. This was 0.02
up from the low and 0.15 off the high.

As opposed to other soft commodity markets, the
sugar market saw fund selling instead of fund buying. We suspect that consistent
technical failure on the charts inspired the big downside washout and with the
recent COT report showing a net fund and small spec long of 138,000 contracts
it’s clear that there are plenty of longs to be forced out of position. We
suspect that a lack of ongoing physical demand news gave some players the
courage to press the short side of the market despite the fact that sugar prices
are now significantly below the January and February highs.

Technical Outlook

SUGAR (MAY) 03/08/2005: Momentum studies are
still bearish but are now at oversold levels and will tend to support reversal
action if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. It is a slightly negative indicator
that the close was lower than the pivot swing number. The next downside
objective is now at 8.65. With a reading under 30, the 9-day RSI is approaching
oversold levels. The next area of resistance is around 8.86 and 8.98, while 1st
support hits today at 8.70 and below there at 8.65.

 

COTTON MARKET RECAP

3/7/2005

May Cotton finished down 0.79 at 50.44, 1.06 off
the high and 0.04 up from the low.

The cotton market failed to make a new high for
the move and in the end finished significantly below the prior days close and
pretty much on the lows of the day. The trade reported heavy producer or hedge
selling interest which is a sign of a defensive condition. In fact, considering
the inability to get above the recent consolidation highs around 56.00 cents in
the December contract it is possible that producers have become undermined by
the fear of even lower prices ahead. With the combined net spec long in cotton
at 42,000 contracts there is certainly the potential for additional stop loss
selling in the days ahead.

Technical Outlook

COTTON (MAY) 03/08/2005: The daily stochastics
have crossed over down which is a bearish indication. Momentum studies trending
lower from overbought levels is a bearish indicator and would tend to reinforce
lower price action. The market now above the 18-day moving average suggests the
longer-term trend has turned up. The daily closing price reversal down is a
negative indicator for prices. The close below the 1st swing support could weigh
on the market. The next downside target is now at 49.60. The next area of
resistance is around 50.99 and 51.79, while 1st support hits today at 49.89 and
below there at 49.60.