How Greenspan’s Comments On China Affect Energy, Metals

Technical Outlook

#BONDS (JUN) 5/7/2004: The market tilt is
slightly negative with the close under the pivot. Near-term resistance for bonds
is at 106.08 and then again at 106.23, while swing support hits at 105.17 and
below there at 105.09. A negative signal for trend short-term was given on a
close under the 9-bar moving average. Daily stochastics declining into oversold
territory suggest the selling may be drying up soon. The next downside objective
is 105.09. The market is approaching over sold levels on an RSI reading under
30.

T-NOTES(JUN) Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 109.14. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. Near-term resistance for the T-Notes is at
109.32 and then again at 110.09, while swing support hits at 109.18 and below
there at 109.14. The market’s short-term trend is negative as the close remains
below the 9-day moving average. With a reading under 30, the 9-day RSI is
approaching oversold levels.

 

STOCK INDICES RECAP

5/6/2004

The stock market finally washed out aggressively
and might have come close to factoring a rate hike but the real culprit behind
the washout might have been the disappointing dialogue from the auto industry.
The market also came under pressure from Greenspan suggestions that the Chinese
economy was set to slow and that exploding US budget deficits were a more
significant problem for the US economy than the trade imbalance. In other words,
the market saw a wave of negative news and many investors didn’t want to be long
for the monthly payroll report on Friday.

Technical Outlook

#S&P500 (JUN) 5/7/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Underlying support comes in at 1106.15 and 1098.63, with overhead resistance at
1119.85 and 1126.03. The close below the 9-day moving average is a negative
short-term indicator for trend. Momentum studies are still bearish, but are now
at oversold levels and will tend to support reversal action if it occurs. The
next downside objective is now at 1098.63.

S&P E-Mini (JUN): The daily stochastics have
crossed over down which is a bearish indication. The next downside target is
1095.88. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Near-term resistance for the S&P Mini is at
1122.00 and then again at 1130.88, while swing support hits at 1104.50 and below
there at 1095.88. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

NASDAQ (JUN) A negative signal for trend
short-term was given on a close under the 9-bar moving average. The close below
the 1st swing support could weigh on the market. The market should run into
resistance at 1429.75 and above there at 1439.13 with support at 1407.25 and
1394.13. Bearish daily studies indicate selling minor rallies this session.
Daily stochastics declining into oversold territory suggest the selling may be
drying up soon. The next downside objective is 1394.13.

MINI DOW (MAR) The close below the 9-day moving
average is a negative short-term indicator for trend. The market should run into
resistance at 10300 and above there at 10382 with support at 10145 and 10072.
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
10072. The market setup is somewhat negative with the close under the 1st swing
support. Short-term indicators on the defensive. Consider selling an intraday
bounce.

 

CURRENCY MARKET RECAP

5/6/2004

Surprisingly the Dollar managed to open firm and
hold the gains in the face of significant US equity price declines. The Dollar
certainly had strong enough economic numbers during the session to justify the
strength, especially with German economic numbers released overnight coming in
very soft. The only currency able to gain against the Dollar Thursday was the
Pound and that action was the result of the BOE rate hike. In conclusion, the
market is moving money toward economies that appear to have a chance of rising
interest rates.

Technical Outlook

#CURRENCIES 5/7/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The gap lower on the day session chart is bearish and puts the market on the
defensive. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. Swing resistance is targeted
at 91.37 and above there at 91.62, with the yen finding support around 90.99 and
below there at 90.86. The market back below the 40-day moving average suggests
the longer-term trend could be turning down. 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 91.62.

EURO (JUN): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.2139. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2009, with overhead resistance at 1.2139. The close above
the 9-day moving average is a positive short-term indicator for trend. The close
below the 40-day moving average is an indication the longer-term trend is down.
More selling pressure is likely given yesterday’s gap lower price action on the
day session chart.

 

PRECIOUS METALS RECAP

5/6/2004

The gold and silver markets were hit with several
negatives during the action Thursday the most important of which were statements
from the Chairman of the Federal Reserve that slowing Chinese growth would
result in lower commodity prices. Gold and silver were also hit by the fact that
the BOE raised interest rates and that the Dollar was higher. The gold and
silver market were holding rather burdensome small spec and fund long positions
and the violation of chart support seemed to kick up a massive wave of stop loss
selling.

Technical Outlook

#P-METALS 5/7/2004: SILVER (JUL): There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Initial support for silver is at 570.5 and below there at
561.3 with resistance likely at 588.8 and 595.5. A negative signal for trend
short-term was given on a close under the 9-bar moving average. Rising from over
sold levels, daily momentum studies would support higher prices especially on a
close above resistance. The next upside objective is 588.8. The market is
approaching over sold levels on an RSI reading under 30. The gap lower on the
day session chart is bearish and puts the market on the defensive.

GOLD (JUN): Support for gold today comes in near
384.25, while resistance is pegged at 393.45. 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 393.45. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. The
close below the 9-day moving average is a negative short-term indicator for
trend.

 

COPPER MARKET RECAP

5/6/2004

The copper market felt the brunt of the slowing
Chinese economy theory and was also hindered by slightly negative talk about US
auto sales. The fact that the US Federal Reserve Chairman specifically suggested
that commodity prices were set to fall due to the anticipated slowing in China
hits right at the heart of the bull market in copper. Even after the ICSG
indicated that the world copper market was in a deficit of 181,000 tons in the
first two months of the year, the market showed no sign of sending prices higher
off the tightness theme.

 

ENERGY MARKET RECAP

5/6/2004

The energy complex wasn’t immune from the talk of
a slower Chinese economy and anticipated Chinese energy demand is a major
component of the bull market. However, it has yet to be decided if the Chinese
slow down is going to take place and with the US economy chugging along we are
not sure that the energy complex should break aggressively off demand fears. If
there is a sign that OPEC might move to expand production that would certainly
be a major change in fundamentals. The Press has been circulating talk that OPEC
might be pressured into hiking production but a hike in production into the
summer demand window might not correct the shortage of supply. The Iranian oil
minister suggested that OPEC is still concerned about a second quarter supply
buildup but that comment probably wasn’t taken seriously.

Technical Outlook

#ENERGIES 5/7/2004: CRUDE OIL (JUL): The market
rallied to a new contract high. The daily closing price reversal down is a
negative indicator for prices. The close over the pivot swing is a somewhat
positive setup. Support for crude is keyed on 38.77 and below there at 38.44,
with resistance pegged at 39.57 and 40.04. The close above the 9-day moving
average is a positive short-term indicator for trend. Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The near-term upside target is at 40.04. The market is becoming somewhat
overbought now that the RSI is over 70.

UNLEADED GAS (JUL): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
129.24. The market has a slightly positive tilt with the close over the swing
pivot. Resistance today is at 129.24, while support should be found around
124.44. 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. A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market is approaching overbought levels with an RSI over 70.

HEATING OIL (JUL): The close over the pivot swing
is a somewhat positive setup. Heating oil should encounter support around 98.43,
with resistance is at 101.43. 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 101.43. The market is becoming somewhat
overbought now that the RSI is over 70. The market rallied to a new contract
high.

 

CORN MARKET RECAP

5/6/2004

The perfect weather forecast for the freshly
planted crop and more active fund selling helped to pressure futures with funds
noted sellers of near 6000 contracts by noon. While export sales and domestic
usage demand information continues to come in with a bullish tilt, the perfect
weather in the forecast has kept the market in a long liquidation mode. After
another several days of excellent planting weather, traders are looking for good
rains across the Midwest for next week which should get the crop off to a fast
start. Weekly export sales came in at 1.165 million tons as compared with
800,000-1.0 million tons expected. Old crop sales were 1.093 million tons as
compared with 480,100 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 83.3% of the USDA forecast for the season as
compared with 77.1% on average for this time of the year. Deliveries of 264 lots
this morning helped to pressure the market along with speculative selling based
on the wet Midwest weather forecast. Support levels for December corn include
302 1/2 and 297 1/2 with 307 and 310 as resistance.

Technical Outlook

#CORN (JUL) 5/7/2004: The daily stochastic’s gave
a bearish indicator with a crossover down. The next downside target is now at
304 3/4. The defensive setup, with the close under the 2nd swing support, could
cause some early weakness. Market resistance comes in at 318 3/4 today, with
support at 304 3/4. The close below the 9-day moving average is a negative
short-term indicator for trend. The close below the 40-day moving average is an
indication the longer-term trend is down.

 

SOY COMPLEX RECAP

5/6/2004

The excellent start to the growing season with
rain in the forecast for the mid-west after active planting progress of the past
few weeks helped to trigger another round of active long liquidation selling.
Weakness in the CRB and statements from Greenspan regarding a potential slowdown
in China economic growth and the possible bearish influence on world commodity
prices has helped trigger long liquidation from speculators. The strong US
dollar and ideas that grain weather in the Midwest is near perfect added to the
bearish tone. Weekly export sales came in at 253,700 tons as compared with
100,000-200,000 tons expected. Old crop sales were 133,700 tons as compared with
25,500 tons necessary each week to reach the USDA projection. Cumulative sales
have reached 98.2% of the USDA forecast for the season as compared with 92.3% on
average for this time of the year. Old crop sales for meal hit 22,500 tons as
compared with 18,600 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 89.3% of the USDA forecast for the season as
compared with 76.6% on average for this time of the year. The lack of deliveries
for soybeans and meal along with only 5 lots in oil this morning may help to
stabilize. July soybean support comes in at 997 1/4 and 898 1/4 with resistance
at 1011 1/2 and 1016. Support for November soybeans comes in at 766 3/4 and 758
3/4 with 775 1/4 and 777 as resistance.

Technical Outlook

#SOYBEANS (JUL) 05/07/04 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 1010 and 1023 2/4,
while 1st support hits today at 991 and below there at 985 2/4. A negative
signal for trend short-term was given on a close under the 9-bar moving average.
Rising stochastics at overbought levels warrant some caution for bulls. The next
upside objective is 1023 2/4.

MEAL (JUL): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 325.9. First resistance comes in at 321.9,
with support at 316.2. The close above the 9-day moving average is a positive
short-term indicator for trend. The defensive setup, with the close under the
2nd swing support, could cause some early weakness.

BEAN OIL (JUL): 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 32.21. The swing indicator gave a moderately negative reading with
the close below the 1st support number. Daily swing resistance is found at 32.88
and above there at 33.25. Support should be encountered at 32.36 and 32.21. The
market back below the 40-day moving average suggests the longer-term trend could
be turning down. Short-term indicators on the defensive. Consider selling an
intraday bounce.

 

WHEAT MARKET RECAP

5/6/2004

Weakness in the other grains and perceptions that
the export market will quiet down into the new crop season helped trigger the
weakness. A general perception that China demand for world commodities is
weakening helped to pressure a wide variety of commodity markets with Greenspan
commenting that China economic growth could slow. The forecast for 100 degree
temperatures in Garden City Kansas for today has failed to provide much support
and 5-7 days of warm and dry weather could impact the crop size, especially if
the dry trend continues into the later part of next week. Stressful conditions
during the jointing and heading stage could hurt yields. The Kansas crop was 28%
heading as of Sunday and temperatures hit 99 degrees in Hill City Kansas
yesterday. Weekly export sales came in at 402,700 tons as compared with
200,000-350,000 tons expected. Old crop sales were 280,700 tons as compared with
210,000 tons necessary each week to reach the USDA projection. Cumulative sales
have reached 97% of the USDA forecast for the season as compared with 91.2% on
average for this time of the year. China shipped 123,100 tons of wheat and the
country still has 626,400 tons of wheat on the books. News that China switched
50,000 tons of soft red wheat to spring wheat was seen as negative to Chicago
and positive to Minneapolis wheat. For Friday’s Stats Canada grain stocks
report, traders are looking for March 31st stocks near 13-16 million tons which
would be up near 30% from last year. There were no deliveries this morning as
compared with 383 contracts yesterday and 562 contracts the previous day. A lack
of confirmation of China buying this week and weakness in other grains has added
to the negative tone. July wheat support comes in at 402 3/4 and 400 1/2 with
resistance at 408 and 419 1/2.

Technical Outlook

#WHEAT (JUL) 5/7/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 398 and below there at 394 2/4, with resistance levels at 408 and 414
2/4. 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 414 2/4.

 

LIVE CATTLE RECAP

5/6/2004

The sweeping reversal from a contract high is a
technical signal of a potential significant top pattern. Profit-taking after the
recent surge higher helped to trigger the break and when futures moved lower o
the session, significant spec long liquidation selling and stop activation
helped drive the market lower into the close. This weeks strength in the cash
market and the futures discount to the cash market helped support the sharp
gains early in the session but weakness in the beef market helped pressure.
Boxed-beef cut-out values were down 94 cents to $159.61 as compared with $157.52
last week at this time. Ideas that the buying for Memorial Day weekend is now
past helped to pressure the market late in the session.

Technical Outlook

#CATTLE (JUN) 5/7/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
88.82. The market tilt is slightly negative with the close under the pivot.
Support should be encountered at 83.52 and below there at 82.25. Market
resistance is at 86.82 and then again at 88.82. 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. A positive signal for trend short-term was given on
a close over the 9-bar moving average. The market is approaching overbought
levels with an RSI over 70.

 

LEAN HOGS RECAP

5/6/2004

June hogs closed sharply lower in spite of early
sharp gains which brought June futures over 75.00 for the third time this month
but talk of weaker packer demand and possibly lower pork prices for next week
helped turn the market lower. The key reversal from a contract high for July
hogs is a technical signal that a near-term top may be in place. August bellies
also experienced a key reversal. Ideas that packer demand is slipping and that a
lower slaughter pace could cause a back-up in hogs helped pressure. Hog
slaughter came in at 366,000 head as compared with trade estimate of
370,000-376,000 head and 380,000 head last year. Slaughter so far this week hit
1.464 million head as compared with 1.529 million head as last weeks pace.

Technical Outlook

#HOGS (JUN) 5/7/2004: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 74.42 and 75.77 today, while support is around 72.62 and then 72.17.
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
75.77.

 

COCOA MARKET RECAP

5/6/2004

The cocoa market tried to rally early but then
gave up every bit of the early gains. The fact that origin selling continues to
surface periodically might be weighing on the market as the commercial buyers
might be less inclined to buy if they think supply is readily available. We
continue to think that cocoa is vulnerable because the fundamental outlook is
very thin, demand is slack and supply is flowing. The final negative in cocoa is
that the trade continues to document fund selling interest even on lower price
action.

Technical Outlook

COCOA (JUL) 05/07/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1376 and above there at 1397 with support at 1346 and 1337. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 1337.00.

 

COFFEE MARKET RECAP

5/6/2004

July coffee pushed moderately lower as light
commercial and trade house selling emerged after the market could not take out
Wednesday’s highs. The technical failure and the fact that the cold weather
season is still weeks away say the market with only limited interest from new
speculative buyers. Colombia production in April was 783,000 bags as compared
with 1.078 million last year. For the year, the Colombia National Federation of
Coffee Growers believes that coffee production will be near 10.5 million bags as
compared with 11.5 million tons last year. Favorable weather in Brazil and hefty
and growing stocks in the US helped to keep a bearish tone for the market.

Technical Outlook

COFFEE (JUN) 5/7/04 The close below the 1st swing
support could weigh on the market. 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 73.30. The Coffee
contract should run into resistance at 72.10 and above there at 73.30 with
support at 70.2 and 69.50. The market’s short-term trend is positive on a close
above the 9-day moving average.

 

SUGAR MARKET RECAP

5/6/2004

July sugar closed moderately higher with an
inside trading session as the market failed to take out Wednesday’s lows early
in the session and trade house buying helped support. Traders expect that the
week ahead of the key industry meeting (Wednesday) is a strong seasonal time
frame for a rally. Cash traders believe there is near 100,000 tonnes of Cuba
sugar in the Black Sea awaiting a buyer as sellers are not too comfortable in
trying to compete with new crop Brazil sugars which will hit the market soon.
There was also talk that Syria has bought near 80,000 tons of Brazil sugar for
trans-shipment to Iraq. Talk that Russian buyers may get more active if the
price is right added to the positive tone. Short-term resistance comes in at 687
and it will take a close over 696 to assume a turn back higher in the trend.

Technical Outlook

#SUGAR (JUL) 5/7/2004: Market positioning is
positive with the close over the 1st swing resistance. Swing resistance comes in
at 6.92, with support found at 6.58. The close below the 9-day moving average is
a negative 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. 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 6.58.

 

COTTON MARKET RECAP

5/6/2004

The cotton market helped support and closed firm
in spite of weakness in many other commodity markets based on expectations for
slowing growth out of China. Weekly export sales came in at 156,700 bales as
compared with 75,000-150,000 bales expected. Old crop sales were 130,000 bales
as compared with 29,200 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 96.8% of the USDA forecast for the season as
compared with 99.8% on average for this time of the year. China was the largest
buyer at 32,600 bales. Shipments for the week were at 281,000 bales as compared
with trade estimates ranging between 275,000 and 300,000 bales. The CotLook A
Index was unchanged at 69.50. Traders continue to watch the delivery situation
closely and if there is any sign that the hefty deliveries might be de-certified
and that there is a home for the cotton, short-covering could emerge. Funds were
holding a hefty net short position in recent COT reports.

Technical Outlook

#COTTON (JUL) 5/7/2004: 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 62.42 and then again at 62.73,
while support is targeted at 61.17 and 60.23. 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 62.73.