How The Dollar Is Affecting Metals

Technical Outlook

BONDS (DEC) 09/23/03: The close below the 2nd swing support number puts the market on the defensive. Near-term resistance for bonds is at 109.01 and then again at 110.02, while swing support hits at 107.03 and below there at 106.06. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 110.02.

T-NOTES(DEC) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 112.30. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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 112.19 and then again at 112.30, while swing support hits at 111.21 and below there at 111.03. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

9/22/2003

A big range down probe should foster additional stop loss selling, as the funds are sure to be quick to protect quarterly profits. In fact, many traders are suggesting that a decline below 1012.10 could project a slide to 1005.50. News from the Fed that the US economic situation was improving did little to discourage the selling even with the Fed suggesting that they could leave interest rates at low levels for an extended period of time. Therefore, with the exception of the massive Dollar decline the macro economic outlook would seem to be improved.

Technical Outlook

S&P500 (DEC) 09/23/03: The market is in a bearish position with the close below the 2nd swing support number. The gap down on the day session chart is bearish with more selling pressure possible today. Underlying support comes in at 1016.80 and 1011.90, with overhead resistance at 1025.80 and 1029.90. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastic’s gave a bearish indicator with a crossover down. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 1011.90.

S&P E-Mini (DEC): The market made a new contract high on the rally. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1024.13. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1037.75 and then again at 1043.13, while swing support hits at 1028.25 and below there at 1024.13. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (DEC) The gap lower price action on the day session chart is a bearish indicator for trend. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The close below the 2nd swing support number puts the market on the defensive. The market should run into resistance at 1373.75 and above there at 1384.13 with support at 1356.25 and 1349.13. The daily stochastics have crossed over down which is a bearish indication. 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 next downside target is 1349.1.

CURRENCY MARKET RECAP

9/22/2003

Volatility looks to be extremely wild as the Dollar fell massively and the Yen and Pound exploded. It would almost seem like near term economics will have no direct impact on where prices are headed as a long term fundamental shift might be taking place. The fact that the US economy is in questionable simply adds to the downside momentum in the Dollar. However, during the session a member of the Us Fed suggested that there has been a pickup of growth and that the US jobs situation was stabilizing. Therefore, one might expect the macro economic pressure on the Dollar to subside. It might take evidence of BOJ intervention to get the markets to slow down a little as most in the trade think that the intervention is over completely.

Technical Outlook

YEN (DEC): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. 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. Swing resistance is targeted at 89.79 and above there at 90.14, with the yen finding support around 89.19 and below there at 88.94. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 90.14. The 9-day RSI over 70 indicates the market is approaching overbought levels.

EURO (DEC): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 1.1515. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.1389, with overhead resistance at 1.1515. The market’s short-term trend is positive on a close above the 9-day moving average. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

9/22/2003

After a very strong opening indication gold softened and then closed firm. The weakness in the US Dollar certainly provided the lions-share of the upward impetus but given the divergence between gold and silver it would not seem like the entire precious metals situation is firmly entrenched in the bull camp. Certainly the COT report highlights the overbought condition of the gold market but many in the trade think that the net spec long is understated by 15,000 to 18,000 contracts when compared to what the position might be as of the close Monday afternoon. Silver bulls have to be extremely disappointed with the action Monday and after the squeeze talk last week the squeeze could be a double edge sword for the bull camp.

Technical Outlook

SILVER (DEC): It is a slightly negative indicator that the close was lower than the pivot swing number. Initial support for silver is at 522.3 and below there at 518.1 with resistance likely at 529.7 and 532.8. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 529.7. The downside closing price reversal on the daily chart is somewhat negative.

GOLD (DEC): Support for gold today comes in near 383.53, while resistance is pegged at 391.73. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 391.73. The market’s close above the 2nd swing resistance number is a bullish indication. The market’s short-term trend is positive on a close above the 9-day moving average. With a reading over 70, the 9-day RSI is approaching overbought levels. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

COPPER MARKET RECAP

9/22/2003

A pattern of higher highs continues in copper but the copper market certainly finished the session significantly below the early highs. The fact that the US Dollar was falling so aggressively provide early support to copper as US copper prices were looked upon as attractive to the rest of the world. However, the sharp declines in the equity market caused copper prices to soften later in the session. The copper market would appear to be pretty expensive in light of recent concerns over the US recovery pace.

ENERGY MARKET RECAP

9/22/2003

Ahead of the OPEC meeting the market seems to be picking up intense debate over the attendance of Iraq and the voting capacity of Iraq. Venezuela indicated that they would walk out of the meeting if Iraq attends the meeting and we are not sure how that should be seen as a supportive development. In other words, a breakdown of the cohesiveness among the producers could be deemed as major negative. The market managed to stay mostly positive during the session Monday despite circulating rumors that many forecasting agencies were beginning to predict weaker prices in 2004 as supply catches up with the market.

Technical Outlook

CRUDE OIL (NOV): It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 26.93 and below there at 26.62, with resistance pegged at 27.46 and 27.68. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 26.62. With a reading under 30, the 9-day RSI is approaching oversold levels.

UNLEADED GAS (NOV): Momentum studies are declining, but have fallen to oversold levels. The next downside target is 73.24. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Resistance today is at 75.94, while support should be found around 73.24. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The 9-day RSI under 30 indicates the market is approaching oversold levels.

HEATING OIL (NOV): It is a mildly bullish indicator that the market closed over the pivot swing number. Heating oil should encounter support around 70.41, with resistance is at 73.11. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 70.41. With a reading under 20, the 9-day RSI indicates the market is extremely oversold.

CORN MARKET RECAP

9/22/2003

Dec corn closed slightly firmer helped by solid export sales numbers and a sharply weaker dollar. Export sales came in at the high end if expectations at 915,100 tons compared to guesses between 650,00 to 1 million tons. Export inspections came in on the lower end of estimates at 31.715 million bushels vs guesses ranging between 30 to 35 million and 37.43 million bushels last week. The inspections may have limited corn’s upside progress. However, the market is getting spillover support from the sharp gains in the soybean market. News that private exporters reported a 100,000 ton sale of US corn to an undisclosed buyer is also bullish. A push through 228 1/4 and Dec corn should be able to fill the gap at 232 1/2.

Technical Outlook

CORN (DEC) 09/23/03: Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 225 1/2. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 229 today, with support at 225 1/2. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SOY COMPLEX RECAP

9/22/2003

November soybeans gapped higher to new contract highs on talk that early harvest yields out of some Midwest states was disappointing. Export sales came in above expectations at 589,300 tons compared to estimates ranging between 300,000 to 500,000 tons. The sharp decline in the dollar suggests export will stay strong for next week. Export inspections came in at 6.605 million bushels, compared to estimates between 5 to 10 million bushels and 5.147 million last week. The next upside target for Nov beans is 658 with 662 above there.

Technical Outlook

SOYBEANS (NOV) 09/23/03: A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. 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 next area of resistance is around 655 and 657 1/2, while 1st support hits today at 647 and below there at 641 1/2. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 657 1/2. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (DEC): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 195.2. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. First resistance comes in at 194.7, with support at 193.0. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close above the 2nd swing resistance number is a bullish indication. With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (DEC): The market’s close above the 9-day moving average suggests the short-term trend remains positive. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 24.24. 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. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. Daily swing resistance is found at 24.09 and above there at 24.24. Support should be encountered at 23.65 and 23.36. The 9-day RSI over 70 indicates the market is approaching overbought levels.

WHEAT MARKET RECAP

9/22/2003

Fund selling pressured Dec wheat despite solid export sales and a weaker Dollar. Export sales came in at 704,100 tons compared to estimates between 500,000 to 800,000 tons. Weekly export inspections were also strong at 36.6 million bushels. The market mood is being weighed down by recent rains in the winter wheat growing area as rain will help the crop in seeding and germination. Dec wheat filled a gap at 349 1/2 left last week, and if prices fail to hold 340, next support comes in between 336 1/2 to 332 1/2.

Technical Outlook

WHEAT (DEC) 09/23/03: The downside closing price reversal on the daily chart is somewhat negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Look for near-term support at 341 and below there at 337 1/2, with resistance levels at 349 1/2 and 354 1/2. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 354 1/2.

LIVE CATTLE RECAP

9/22/2003

Cattle closed moderately higher and near the highs of the session as the bearish Cattle-on-Feed numbers failed to provide for much in the way of new selling. The steep discount of December cattle to the cash market helped support the market on ideas that the market has already priced-in a sharp break in the cash market into December. Beef prices for Choice boxed-beef 650-700 pounds were up 19 cents to $160.53 but for select beef, prices were down 85 cents to $130.68.

Technical Outlook

CATTLE (DEC) 09/23/03: Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 81.80. A positive setup occurred with the close over the 1st swing resistance. Support should be encountered at 82.65 and below there at 81.80. Market resistance is at 83.92 and then again at 84.35. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

9/22/2003

The market closed slightly lower with an inside trading session as some strength in the cash market was not enough to offset the bearish cold storage report and the lack of a rally in the pork cut-out late last week in spite of the lower marketings from the hurricane. If the slow-down in the slaughter pace was going to support the market, it would have helped support pork cut-out values but values were down on Friday and down for the week. Cash markets were $1.00-$1.50 higher at most locations.

Technical Outlook

HOGS (DEC) 09/23/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 58.40 and 58.75 today, while support is around 57.70 and then 57.35. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending lower from high levels which should accelerate a move lower on a break below the 1st swing support. The next downside objective is now at 57.35.

COCOA MARKET RECAP

9/22/2003

Once again the cocoa market saw industry buying around the lows and that continues to suggest a fundamental value at that level. However, the market continues to see small spec stop loss selling, which suggests to us that the technical condition of cocoa is still vulnerable. Some traders suggest that the consolidation since the middle of September is firming up support and is making some would be sellers afraid to press prices.

Technical Outlook

COCOA (DEC)09/23/03 The downside closing price reversal on the daily chart is somewhat negative. The market tilt is slightly negative with the close under the pivot. Cocoa should run into resistance at 1527 and above there at 1554 with support at 1480 and 1460. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1460.25.

COFFEE MARKET RECAP

9/22/2003

December coffee rebounded as the market appears to have put in at least a temporary bottom at 62 cents. Reports that cumulative green coffee roastings as of Sept 13th are running slightly ahead of last year suggest demand remains solid. Weather forecasts for Brazil calling for basically no rain and hot temperatures this week is bullish since the new crop is entering the critical bloom stage of development. Next resistance for Dec coffee is at 65 then 66.

Technical Outlook

COFFEE (DEC)9/23/03 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Momentum studies are declining, but have fallen to oversold levels. The next downside objective is now at 62.50.The Coffee contract should run into resistance at 65.70 and above there at 66.20 with support at 63.85 and 62.50. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

9/22/2003

While the trade continues to discuss the longer-term bearish set-up for the sugar market, futures seem to be oversold and in a correction mode following the reversal on Thursday and solid follow-through buying support TODAY WITH March up 15 points. Talk of building stocks in Brazil due to slow sales and a bumper crop failed to add to the downside momentum of the market. Traders believe the market is oversold and the traders report, due for delayed release on Monday afternoon, will help indicate the extent of the oversold condition. Gains were seen as technical in nature after lows last week were in conjunction with “higher lows” for RSI readings which indicate a loss of downside momentum.
in the way of follow-through buying from Thursday’s reversal.

Technical Outlook

SUGAR (MAR) 09/23/03: The market’s close above the 2nd swing resistance number is a bullish indication. Swing resistance comes in at 6.47, with support found at 6.13. The market’s short-term trend is positive on a close above the 9-day moving average. 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 6.47.

COTTON MARKET RECAP

9/22/2003

December cotton traded weaker Monday despite a strong export sales report and the likelihood that tonight’s crop conditions report will show a further deterioration in the crop. Funds and speculators are already holding a huge net long position which raises the question how much further future prices can rally? The market has been trading sideways the last 3 session to try and correct the over bought position. However, given that hurricane Isabel and a hail storm in west Texas is likely to have damage crop quality, the downside looks limited as the world cotton situation continues to tighten. Export sales came in much higher than estimates at 117,800 bales compared to guesses between 30,000 to 50,000 bales with China being a key buyer showing demand for cotton remains strong. The weakness in the US dollar against the Yen will further help perpetuate demand from Asia.

Technical Outlook

COTTON (DEC) 09/23/03: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. It is a slightly negative indicator that the close was lower than the pivot swing number. Next resistance area comes in at 65.75 and then again at 66.50, while support is targeted at 64.70 and 64.40. 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 next downside target is 64.40.