How Chinese Demand Affects Copper

Technical Outlook

BONDS (MAR) 2/13/2004: The market tilt is slightly negative with the close under the pivot. Near-term resistance for bonds is at 112.27 and then again at 113.14, while swing support hits at 111.29 and below there at 111.18. A positive signal for trend short-term was given on a close over the 9-bar moving average. 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 113.14.

T-NOTES(MAR) Momentum studies are trending higher from mid-range which should support a move higher if resistance levels are penetrated. The near-term upside objective is at 115.00. It is a mildly bullish indicator that the market closed over the pivot swing number. The major trend is down with the cross over back below the 40-day moving average. Near-term resistance for the T-Notes is at 114.23 and then again at 115.00, while swing support hits at 114.09 and below there at 114.03. The upside crossover (9 above 18) of the moving averages suggests a developing short-term uptrend.

STOCK INDICES RECAP

2/12/2004

The stock market failed to extend the bullishness seen Wednesday and starting the session out on a weak note from the US numbers certainly didn’t help matters. In fact, without a fresh bullish lift from Greenspan the market was really left flat-footed. In short, the stock market is in a liquidating posture and the bull camp seems to be in a profit taking posture. It is possible that the stock market was hoping for something more substantial from the Chairman of the Federal Reserve and didn’t get it.

Technical Outlook

S&P500 (MAR) 2/13/2004: It is a slightly negative indicator that the close was under the swing pivot. Underlying support comes in at 1147.80 and 1145.75, with overhead resistance at 1154.60 and 1159.35. 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 objective is at 1159.35.

S&P E-Mini (MAR): 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 1159.63. 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 1154.75 and then again at 1159.63, while swing support hits at 1147.75 and below there at 1145.63. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

NASDAQ (MAR) The market could take on a defensive posture with the daily closing price reversal down. A positive signal for trend short-term was given on a close over the 9-bar moving average. The close below the 1st swing support could weigh on the market. The market should run into resistance at 1509.25 and above there at 1522.88 with support at 1490.75 and 1485.88. 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 1522.88.

MINI DOW (MAR) Stochastics are rising from over sold levels which is bullish and should support higher prices. The market should run into resistance at 10711 and above there at 10740 with support at 10664 and 10646. Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 10740. The close over the pivot swing is a somewhat positive setup.

CURRENCY MARKET RECAP

2/12/2004

The Dollar fell right down to the lows early, bounce and then returned to the downside breakout point. US economic numbers were certainly a justification for selling the Dollar as they came in worse than expectations. Furthermore, the US economy didn’t seem to get the same type of glowing praise from the Chairman of the Federal Reserve that was floated Wednesday. The Canadian Dollar ran into selling interest and that interest was generated by a pattern of soft new vehicle sales readings.

Technical Outlook

YEN (MAR): A positive signal for trend short-term was given on a close over the 9-bar moving average. The market has a slightly positive tilt with the close over the swing pivot. Swing resistance is targeted at 95.06 and above there at 95.13, with the yen finding support around 94.90 and below there at 94.81. A bullish signal was given with an upside crossover of the daily stochastics. The next upside objective is 95.13.

EURO (MAR): Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 1.2839. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Swing support for the Euro comes in at 1.2745, with overhead resistance at 1.2839. 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.

PRECIOUS METALS RECAP

2/12/2004

The gold market got an early slide in the Dollar and that was enough to set a positive early tone. Later in the session the Dollar fell back to the lows and that leaves the gold and silver bulls expecting a payoff in the coming sessions. The big risk to the bull camp is that a new low in the Dollar results in some type of intervention threat. The funds continued to show up as very interested buyers in silver and that could give silver a leadership role in the coming sessions.

Technical Outlook

SILVER (MAY): The market has a slightly positive tilt with the close over the swing pivot. Initial support for silver is at 653.0 and below there at 641.7 with resistance likely at 665.4 and 674.5. 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 665.4.

GOLD (APR): Support for gold today comes in near 409.18, while resistance is pegged at 417.38. 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 417.38. Short-term indicators suggest buying pullbacks today. Market positioning is positive with the close over the 1st swing resistance. The close above the 9-day moving average is a positive short-term indicator for trend. The cross over and close above the 40-day moving average is an indication the longer-term trend is up.

COPPER MARKET RECAP

2/12/2004

The copper market managed a big upside follow through partially off physical buying and partly off fresh fund buying. The trade thinks that the funds missed out on the buying binge Wednesday and therefore they were simply playing catch-up in the action Thursday. Since the Chinese copper market was limit up ahead of the session it is clear that Chinese is still very much interested in acquiring additional supplies. Many traders now suspect that the net fund and small spec position in copper has reached a new all time high.

ENERGY MARKET RECAP

2/12/2004

The energy complex fluctuated in a tight range Thursday possibly because of the aggressive action early in the week and possibly because the market needs a fresh set of news to spark a trend. The weather is beginning to show a gradual warming trend and that could be a little more negative to natural gas than to heating oil. The weekly natural gas inventory report showed a draw of 224 bcf and that was in the upper half of the expected range and should not have fostered the type of gains seen in the natural gas during the session Thursday.

Technical Outlook

CRUDE OIL (APR): The close over the pivot swing is a somewhat positive setup. Support for crude is keyed on 32.67 and below there at 32.36, with resistance pegged at 33.12 and 33.26. 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 33.26.

UNLEADED GAS (APR): Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 106.69. The market has a slightly positive tilt with the close over the swing pivot. Resistance today is at 106.69, while support should be found around 104.09. A positive indicator was given with the upside crossover of the 9 & 18 bar moving average.

HEATING OIL (APR):The close over the pivot swing is a somewhat positive setup. Heating oil should encounter support around 84.16, with resistance is at 86.56. 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 86.56.

CORN MARKET RECAP

2/12/2004

News that the bird flu may have spread to New Jersey and confirmation from the USDA of a case found in Pennsylvania helped to trigger long liquidation selling in the corn market with July down 2 3/4 cents into the close. While the lack of poultry exports for the US poultry industry could weaken profits and cause weakness in the other meat markets, the loss of demand theory for feedgrains is certainty a stretch. So far, near 82,000 birds have been destroyed and USDA officials seem confident that measures are being taken to avoid a significant spread of the disease. In order to feed 1 million birds, we estimate corn usage of near 3200 tons of corn in the US. Weekly export sales came in at 1.18 million tons as compared with trade expectations at 700,000 to 900,000 tons and 682,100 tons necessary each week to reach the USDA projection. Cumulative sales have reached 60.1% of the USDA forecast for the season as compared with 56.4% on average for this time of the year.

Technical Outlook

CORN (MAY) 2/13/2004: Daily stochastics have risen into overbought territory which will tend to support reversal action if it occurs. The near-term upside target is at 294 1/2. It is a slightly negative indicator that the close was under the swing pivot. Market resistance comes in at 294 1/2 today, with support at 281 1/2. The close above the 9-day moving average is a positive short-term indicator for trend. The daily closing price reversal down is a negative indicator for prices.

SOY COMPLEX RECAP

2/12/2004

The market closed sharply lower on the session for soybeans led by a collapse in meal. Weak export sales news and confirmation of bird flu in Pennsylvania and rumors of flu in New Jersey helped to pressure the market and trigger long liquidation selling. Demand fears of the flu continues to spread and concerns for poor profitability for poultry operators helped drag the market down. While the lack of poultry exports for the US poultry industry could weaken profits and cause weakness in the other meat markets, the loss of demand theory for feedgrains is certainty a stretch. So far, near 82,000 birds have been destroyed and USDA officials seem confident that measures are being taken to avoid a significant spread of the disease. In order to feed 1 million birds, we estimate corn usage of near 1000 tons of meal in the US. Weekly export sales came in at 166,300 tons as compared with trade expectations at 100,000 to 300,000 tons. Old crop sales 146,100 tons as compared with 64,500 tons necessary each week to reach the USDA projection. Cumulative sales have reached 92.2% of the USDA forecast for the season as compared with 78% on average for this time of the year. News that China cancelled 108,000 tons of old crop soybean sales and “unknown destination” cancelled 121,000 tons kept the export news with a bearish tilt. China still has 1.113 million tons for old crop soybeans on the books but not yet shipped. Meal sales on the week showed cancellations of 93,700 tons for the old crop season.

Technical Outlook

SOYBEANS (MAY) 02/13/04 There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. The next area of resistance is around 836 1/2 and 851 1/4, while 1st support hits today at 809 1/2 and below there at 797 1/4. A negative signal for trend short-term was given on a close under the 9-bar moving average. A bearish signal was triggered on a crossover down in the daily stochastics. The next downside objective is 797 1/4.

MEAL (MAY): 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 237.4. First resistance comes in at 246.2, with support at 239.9. The close below the 9-day moving average is a negative short-term indicator for trend. The defensive setup, with the close under the 2nd swing support, could cause some early weakness. The close below the 40-day moving average is an indication the longer-term trend is down.

BEAN OIL (MAY): 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 32.53. The swing indicator gave a moderately negative reading with the close below the 1st support number. The market made a new contract high on the rally. The market could take on a defensive posture with the daily closing price reversal down. Daily swing resistance is found at 32.06 and above there at 32.53. Support should be encountered at 31.33 and 31.07.

WHEAT MARKET RECAP

2/12/2004

May wheat closed slightly lower on the session as bird flu problems in the US helped trigger weakness in the other grains. This slowed the buying support in wheat from solid export sales news, hopes of China buying US wheat next week and continued dryness in western Kansas. In the weekly sales report, China was a noted buyer of 100,000 tons of soft red winter wheat for delivery after June 1st (new crop). Weekly export sales came in at 476,600 tons as compared with trade expectations at 400,000 to 600,000 tons. Old crop sales were 340,300 tons as compared with 318,900 tons necessary each week to reach the USDA projection. Cumulative sales have reached 83.1% of the USDA forecast for the season as compared with 75.8% on average for this time of the year.

Technical Outlook

WHEAT (MAY) 2/13/2004: The market tilt is slightly negative with the close under the pivot. Expect near-term support around 390 and below there at 387 , with resistance levels at 396 1/2 and 400 . A positive signal for trend short-term was given on a close over the 9-bar moving average. 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 400 .

LIVE CATTLE RECAP

2/12/2004

After opening at the highest level since January 29th, April cattle closed 35 lower on the session and down 140 points from the highs of the day. Confirmation of bird flu in Pennsylvania and rumors of flu in New Jersey helped to pressure the market and trigger more selling. Demand fears if the flu continues to spread and concerns for poor profitability for poultry operators and a longer period of time in which poultry exports will be banned from many countries helped to trigger the selling. Weakness in boxed-beef values and fears that the beef will need to compete with increasing supplies of total meat on the domestic market until poultry or beef exports resume helped to drive the market lower. Strength in the cash market supported the February contract. Boxed-beef cut-out values were down $1.44 to $125.17 as compared with $128.47 last week at this time.

Technical Outlook

CATTLE (APR) 2/13/2004: Rising from over sold levels, daily momentum studies would support higher prices especially on a close above resistance. The next upside objective is 74.45. The market tilt is slightly negative with the close under the pivot. Support should be encountered at 71.67 and below there at 71.12. Market resistance is at 73.32 and then again at 74.45. The market could take on a defensive posture with the daily closing price reversal down. A negative signal for trend short-term was given on a close under the 9-bar moving average.

LEAN HOGS RECAP

2/12/2004

April hogs closed 180 lower on the session while February hogs were up 37 and to new contract highs. Confirmation of bird flu in Pennsylvania and rumors of flu in New Jersey helped to pressure the market and trigger long liquidation selling. Demand fears if the flu continues to spread and concerns for poor profitability for poultry operators and a longer period of time in which poultry exports will be banned from many countries helped to trigger the selling. The CME 2-day Lean Index for the period ending February 10th was up to $62.50 as compared with $57.96 at the end of January and this news helped support the February contract. Weakness in pork cut-out values and fears that the pork will need to compete with increasing supplies of total meat on the domestic market until poultry or beef exports resume helped to drive the market lower.

Technical Outlook

HOGS (APR) 2/13/2004: The defensive setup, with the close under the 2nd swing support, could cause some early weakness. Resistance levels comes in at 59.35 and 60.72 today, while support is around 57.40 and then 56.82. 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 56.82.

COCOA MARKET RECAP

2/12/2004

While the Press suggests that a lack of origin selling fueled prices sharply higher we have to think that the funds also backed away from the short side of the market. In fact, with the upside breakout the cocoa market probably signals a near term technical buy and therefore the funds will probably hold off on fresh sales until prices reach the top of the consolidation up at $1,600. It is also thought that Ivory Coast supply flow is slowing and that made industry buyers nervous.

Technical Outlook

COCOA (MAY)02/13/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Cocoa should run into resistance at 1575 and above there at 1588 with support at 1537 and 1512. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 1587.50.

COFFEE MARKET RECAP

2/12/2004

July coffee held support from a lower opening due to a weaker market in London the close 85 points higher on the session and up 175 points off of the lows. Funds were noted as buyers but not in big numbers. A lack of significant origin selling seemed to leave a void above the market and the light buying helped drive the market higher. Talk of slow exports from Brazil and a tighter supply in Brazil helped support. Brazil exports for the 1st 10 days of the month totaled 239,018 bags as compared with 339,041 bags sold in January 1-10. Traders are looking for a drawdown of near 100,000 bags in next weeks Monthly US Green Coffee stocks report. CSCE daily exchange stocks were up 1,785 bags to 4.449 million with 38,779 bags pending review.

Technical Outlook

COFFEE (MAY)2/13/04 The market setup is supportive for early gains with the close over the 1st swing resistance. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 79.80.The Coffee contract should run into resistance at 78.85 and above there at 79.80 with support at 76.35 and 74.80. The market’s short-term trend is positive on a close above the 9-day moving average. Consider buying pull-backs since daily studies are bullish.

SUGAR MARKET RECAP

2/12/2004

The move to a new contract low and close above the opening is a technical sign of a near-term low. While open interest fell sharply in the March contract (down 11,270 contracts to 102,377), open interest was up more than 11,000 contracts in the May. Long liquidation drove March sugar to the downside objective of 527 before trade house buying turned very active and supported the bounce of 13 points to close unchanged on the session and up 5 points from the opening. The key reversal could attract some technical buying from fund traders who have been holding a hefty net short position. The reversal may also attract some end user buyers in the cash market who have been waiting for a sign of a low or a better freight price in order to book sugar.

Technical Outlook

SUGAR (MAY) 2/13/2004: It is a slightly negative indicator that the close was under the swing pivot. Swing resistance comes in at 5.78, with support found at 5.50. 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 target is now at 5.50. Some caution in pressing the downside is warranted with the RSI under 30.

COTTON MARKET RECAP

2/12/2004

Cotton closed sharply higher on the session led by news of solid export sales and hopes of an improving world economy ahead. Weekly export sales came in at 717,300 bales as compared with 350,000-600,000 expected. China was a noted buyer of 363,200 bales which led to the highest weekly sales total since October and the 2nd highest total for the marketing year. Export shipments for the week were 348,400 bales as compared with expectations of 300,000-330,000 bales. The surge in sales news was enough to trigger a sharply higher opening but the May contract may need to move over 70.47 in order turn the trend from down to up and in order to slow the long liquidation tendency seen recently. Cumulative export sales have now reached 81.6% of the USDA forecast for the season as compared with 83.9% on average for this time of the year.

Technical Outlook

COTTON (MAY) 2/13/2004: A negative signal for trend short-term was given on a close under the 9-bar moving average. The market setup is supportive for early gains with the close over the 1st swing resistance. Next resistance area comes in at 69.61 and then again at 70.46, while support is targeted at 67.71 and 66.66. Daily stochastics declining into oversold territory suggest the selling may be drying up soon. The next downside objective is 66.66. ORANGE JUICE (MAR)2/13/04 The market setup is supportive for early gains with the close over the 1st swing resistance. Orange Juice should run into resistance at 61.95 and above there at 62.60 with support at 60.40 and 59.50. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 62.6.