How The Market Dodged A Bullet

Technical Outlook

#BONDS (SEP) 6/14/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 104.05 and then again at 104.12, while swing support hits at 103.17
and below there at 103.04. A negative signal for trend short-term was given on a
close under the 9-bar moving average. Momentum studies trending lower at
mid-range could accelerate a price break if support levels are broken. The next
downside objective is 103.04.

T-NOTES(SEP) Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 107.02. It is a mildly bullish indicator that
the market closed over the pivot swing number. Near-term resistance for the
T-Notes is at 107.26 and then again at 107.31, while swing support hits at
107.11 and below there at 107.02. The downside crossover (9 below 18) of the
moving averages suggests a developing short-term downtrend.

 

STOCK INDICES RECAP

6/10/2004

After some early weakness the stock market
managed to recoil and return to the mid range of the prior sessions range. The
fact that energy prices recovered doesn’t seem to a concern to stock prices but
we have to think that the stock market dodged a bullet by the delay in the PPI
report as that report could easily have rekindled near term rate hike talk. For
the time being the market is apparently capable of discounting rate talk.
However, in looking forward traders should expect to see political uncertainty
ramp up ahead of the June 30th handover date.

Technical Outlook

#S&P500 (SEP) 6/14/2004: Market positioning is
positive with the close over the 1st swing resistance. Underlying support comes
in at 1134.60 and 1131.75, with overhead resistance at 1138.40 and 1139.35. 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
1139.35. Short-term indicators suggest buying pullbacks today.

S&P E-Mini (SEP): The daily closing price
reversal up is positive. Studies are showing positive momentum, but are now in
overbought territory so some caution is warranted. The next upside target is
1141.81. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Near-term resistance for the S&P Mini is at 1139.88
and then again at 1141.81, while swing support hits at 1132.63 and below there
at 1127.31. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

NASDAQ (SEP) A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market setup
is supportive for early gains with the close over the 1st swing resistance. The
market should run into resistance at 1492.50 and above there at 1495.50 with
support at 1480.50 and 1471.50. Stochastics turning bearish at overbought levels
will tend to support lower prices if support levels are broken. The next
downside objective is 1471.50.

MINI DOW (MAR) The close above the 9-day moving
average is a positive short-term indicator for trend. The market should run into
resistance at 10410 and above there at 10420 with support at 10375 and 10350.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The near-term upside target is at 10420.
Market positioning is positive with the close over the 1st swing resistance.
Short-term indicators suggest buying pullbacks today.

 

CURRENCY MARKET RECAP

6/10/2004

The expectation for higher interest rates
continues to provide a backdrop of support for the Dollar. The US economic
reports were mixed and with the PPI delayed we think some Dollar longs decided
to move to the sidelines. From the action Thursday it is clear that Dollar bulls
have to have a direct and constant hope for higher rates or the bottom
temporarily falls out of the Dollar.

Technical Outlook

#CURRENCIES 6/14/2004: YEN (SEP): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market setup is supportive for early gains with the close over the 1st swing
resistance. Swing resistance is targeted at 92.03 and above there at 92.19, with
the yen finding support around 91.65 and below there at 91.43. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 92.19. Daily studies suggest buying dips today.

EURO (SEP): Stochastics trending lower at
midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 1.1977. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1977, with overhead resistance at 1.2161. The
close below the 9-day moving average is a negative short-term indicator for
trend. More selling pressure is likely given yesterday’s gap lower price action
on the day session chart.

 

PRECIOUS METALS RECAP

6/10/2004

Both gold and silver snapped back after the
Dollar fell off the early highs and US economic numbers came in mixed. However,
the disjointed action between gold, silver, platinum and copper partially
discounted the early gains made by gold and silver. Since gold saw more central
bank sales talk before the opening and the inflation report was delayed are a
little surprised that some long players didn’t move to the sidelines. While the
day to day correlation between the Dollar and gold is holding pretty true it
doesn’t seem like the gold market has any additional themes to foster sustained
buying.

Technical Outlook

#P-METALS 6/14/2004: SILVER (SEP): The market
setup is supportive for early gains with the close over the 1st swing
resistance. Initial support for silver is at 571.0 and below there at 563.2 with
resistance likely at 575.9 and 582.5. A negative indicator was given with the
downside crossover of the 9 & 18 bar moving average. Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 563.2.

GOLD (AUG): Support for gold today comes in near
382.38, while resistance is pegged at 390.58. 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 382.38. The close over the pivot
swing is a somewhat positive setup. The close below the 9-day moving average is
a negative short-term indicator for trend.

 

COPPER MARKET RECAP

6/10/2004

With copper prices showing significant and
periodic weakness at the same time that platinum is lower suggests to us that
the trade is fearful of a Chinese tightening move. We have to think that if the
COT report is adjusted from the action since the last report was measured that
the spec position in copper will be almost totally leveled. With the copper
market seeing signs that Poland was going to supply China with some copper
supply we have to think that part of the big picture bull case in copper has
been deflated. Talk and general base metals supply tightness would seem to keep
some spec longs in play but that hasn’t kept the funds from dumping longs.

 

ENERGY MARKET RECAP

6/10/2004

The energy complex showed early strength off
several Middle East stories. In addition to the recent Iraqi pipeline explosion
the trade is also aware of the impending June 30th hand over date and the
intention to derail a democratic state in Iraq. Therefore, it would seem that
some buyers are overcoming the fear of rising near term supply and betting on
some future disruption. With the Al-Sadr militia taking a police station in
Najaf it is clear that the situation in Iraq is going to periodically support
oil prices but the question many traders seem to have is will the increased OPEC
supply begin to show up before rising demand countervails the buildup.

Technical Outlook

#ENERGIES 6/14/2004: CRUDE OIL (AUG): The cross
over and close above the 40-day moving average is an indication the longer-term
trend is up. Market positioning is positive with the close over the 1st swing
resistance. Support for crude is keyed on 38.10 and below there at 37.33, with
resistance pegged at 39.20 and 39.53. 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 37.33.

UNLEADED GAS (AUG): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 114.21. The market setup is supportive for early gains
with the close over the 1st swing resistance. Resistance today is at 119.61,
while support should be found around 114.21. A negative signal for trend
short-term was given on a close under the 9-bar moving average.

HEATING OIL (AUG): Market positioning is positive
with the close over the 1st swing resistance. Heating oil should encounter
support around 97.66, with resistance is at 104.26. Short-term indicators
suggest buying pullbacks today. The close above the 9-day moving average is a
positive short-term indicator for trend. The crossover up in the daily
stochastics is a bullish signal. The near-term upside target is at 104.26.

 

CORN MARKET RECAP

6/10/2004

December corn closed more than 20 cents lower on
the week. Weak sales numbers, bearish weather forecasts and a lack of USDA news
to slow the fund selling activity helped to trigger the sharp losses and move to
the lowest level since February 9th. The USDA pegged ending stocks for the
2003/2004 season at 806 million bushels as compared with the average trade
estimate 835 million bushels (range 806-856) and from 806 million last month.
For the new crop season, traders pegged ending stocks at 741 million bushels as
compared with the average trade estimate of 745 million bushels (range 702-791)
from 741 million last month. World ending stocks for the 2004/2005 season were
pegged at 68.86 million tons as compared with 66.8 million tons last month,
89.22 million this year, 122.15 last year and 147.97 million tons two years ago.
The US numbers were left unchanged from last month. Weekly export sales came in
at just 96,000 tonnes as compared with 600,000-800,000 tons expected. Cumulative
sales have reached 86.9% of the USDA forecast for the season as compared with
86.2% on average for this time of the year. Traders suspect a dry week next week
for the mid-west which could be seen as bearish to start with unless the
extended outlook on Monday morning shows a dry trend for the second half of
June. China corn areas have been dry and hot and dry weather is in the forecast
for the next week which may also provide some support early next week if the dry
trend persists. December corn support comes in at 287 1/2 with 298 and 300 1/2
as resistance.

Technical Outlook

#CORN (DEC) 6/14/2004: 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 283 3/4. The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 300 3/4 today, with support at 283 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

6/10/2004

November soybeans closed near 34 cents lower on
the week. The lack of adjustments for the old crop situation, fears that next
years South American crops could trigger a surge in world soybean stocks to new
record highs and speculative selling helped drive the market lower. In addition,
traders view the weather as bearish. The USDA pegged 2003/2004 ending stocks at
115 million bushels as compared with the average trade estimate at 107 million
bushels (range 97-115) and 115 million last month. For the new crop season,
ending stocks were pegged at 220 million bushels as compared with trade
estimates at 202 million bushels (range 180-256) and 190 million last month.
Exports and crush were lowered. For the World supply/demand report, world ending
stocks were pegged at 33.01 million tons from 31.72 million tons last month and
39.81 million tons last year (previous record high). For the 04/05 season,
ending stocks were pegged at 46.69 million tons due to a forecast for a 25% jump
in Brazil soybean production and a 14.7% surge in Argentina production. World
oilseed production for the 2004/2005 season was pegged at a record 378.32
million tons, up 42.6 million tons from this year. Weekly export sales came in
at just 8,000 tons as compared with 25,000-50,000 tons expected. Cumulative
sales have reached 98.1% of the USDA forecast for the season as compared with
97.1% on average for this time of the year. Weekly export sales for soybean meal
came in at 95,400 tons as compared with 20,000-50,000 tons expected. Cumulative
sales have reached 94.1% of the USDA forecast for the season as compared with
84.6% on average for this time of the year. Resistance for November soybeans
comes in at 665 and 674 with 659 1/2 and 640 1/2 as support levels.

Technical Outlook

#SOYBEANS (NOV) 06/14/04 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. The next area of resistance is around 670 2/4 and 677,
while 1st support hits today at 656 and below there at 648. 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 648.

MEAL (DEC): 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 201.7. More selling pressure is
likely given yesterday’s gap lower price action on the day session chart. First
resistance comes in at 207.3, with support at 203.3. 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.

BEAN OIL (DEC): A positive indicator was given
with the upside crossover of the 9 & 18 bar moving average. Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
next downside objective is 24.03. The close below the 2nd swing support number
puts the market on the defensive. The gap lower on the day session chart is
bearish and puts the market on the defensive. Daily swing resistance is found at
24.54 and above there at 24.73. Support should be encountered at 24.19 and
24.03.

 

WHEAT MARKET RECAP

6/10/2004

September wheat closed nearly 20 cents lower on
the week. The USDA Crop Production and Supply/Demand report did not have enough
bullish supply news to hold off more active fund selling and a downside
break-out to move to the lowest level since December 26th. Ending stocks for the
2004/2005 season came in at 495 million bushels as compared with the average
trade estimate of 478 million bushels and 499 million last month. Winter wheat
production came in at 1.531 billion bushels as compared with the average trade
estimate of 1.518 billion bushels (1.497-1.538 range) and 1.550 billion bushels
projected last month and 1.707 billion last year. All wheat production came in
at 2.061 billion bushels vs. trade estimates at 2.055 billion bushels
(2.027-2.086 range) and 2.080 billion bushels projected last month and 2.337
billion last year. For the world report, ending stocks were pegged at 126.43
million tons for the 2004/2005 season as compared with 123.26 last month, 128.75
million this year and 167.07 last year. The production was slightly higher than
expectations and exports for the old crop season were revised lower. Heavy
losses in the corn and soybeans added to the bearish tone and attracted
additional selling pressures. Weekly export sales came in at 386,200 tonnes as
compared with 300,000-400,000 tons expected. Cumulative sales have reached 22.5%
of the USDA forecast for the season as compared with 8.8% on average for this
time of the year. September wheat resistance comes in at 365 and 368 355 and 350
1/2 as next technical swing objectives on the downside.

Technical Outlook

#WHEAT (DEC) 6/14/2004: 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. Expect near-term support around 368 2/4 and below there
at 366 2/4, with resistance levels at 375 1/4 and 380. 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 366 2/4.

 

LIVE CATTLE RECAP

6/10/2004

August cattle pushed sharply lower on the session
and closed sharply lower on the week. The weekly reversal after a contract high
on Monday is a bearish technical signal and could attract technical selling on
Monday. Traders were looking for cash markets to trade $92.00-$93.00 this week
but when cash markets traded at $90.00, speculative selling intensified. Early
weakness was triggered by commercial sellers. Talk that South Korea will
continue to ban US beef and concerns with the hefty net long position of fund
traders added to the bearish tone. Boxed-beef cut-out values were down $.34 to
$156.81 as compared with $150.82 last week at this time.

Technical Outlook

#CATTLE (AUG) 6/14/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 85.50. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. Support should be encountered at 86.20 and below there at 85.50. Market
resistance is at 88.30 and then again at 89.70. A negative signal for trend
short-term was given on a close under the 9-bar moving average.

 

LEAN HOGS RECAP

6/10/2004

July hogs closed moderately higher on the session
but lower on the week. The surge in nearby belly futures helped to provide
support. In addition, the market saw short-covering after a new low for the week
early in the session failed to generate new selling interest. Cash hogs were
mostly lower with Peoria down $1.00 from Wednesday. Weakness in pork cut-out
values and higher average weights along with a slowdown in slaughter over the
past few sessions helped to illicit talk of weaker demand from packers. The
2-day lean index for the period June 8th came in at 77.50, up 66 cents from the
previous session and up from 76.14 last week.

Technical Outlook

#HOGS (AUG) 6/14/2004: Market positioning is
positive with the close over the 1st swing resistance. Resistance levels comes
in at 76.90 and 77.25 today, while support is around 75.55 and then 74.55. The
close above the 9-day moving average is a positive short-term indicator for
trend. Momentum studies trending lower from overbought levels is a bearish
indicator and would tend to reinforce lower price action. The next downside
target is now at 74.55.

 

COCOA MARKET RECAP

6/10/2004

The cocoa market had another tight range with a
weaker close. The fact that Ivory Coast violence remains a big question mark
also means that some spec longs are unwilling to hold over a long weekend. We
have to think that a major decline in the Pound makes the London cocoa market
look a little more attractive than the US cocoa. Continued origin selling has
seemingly kept commercial buyers from covering forward needs and that is
apparently a sign that the near term trend is pointing down.

Technical Outlook

COCOA (SEP) 06/14/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1369 and above there at 1378 with support at 1352 and 1344. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1343.75.

 

COFFEE MARKET RECAP

6/10/2004

September coffee closed 25 higher on the session
but only 35 higher on the week as the market fell 170 points off of the early
highs. Fears of changes in the weather forecast in Brazil which may take place
before Monday morning helped to trigger active fund buying in London and a move
to the highest level in 15 months for the nearby July contract in London. This
sparked the early surge in New York but the market lacked the new news to see
follow-through buying and traders saw some light long liquidation selling into
the close.

Technical Outlook

COFFEE (SEP) 6/14/04 The market has a slightly
positive tilt with the close over the swing pivot. 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 objective
is now at 83.35. The Coffee contract should run into resistance at 86.80 and
above there at 88.25 with support at 84.35 and 83.35. The market’s short-term
trend is positive on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

6/10/2004

October sugar closed 13 lower on the session and
down 30 points for the week as the higher opening failed to attract new buying
interest. Trade houses did not support the market like they did on Wednesday and
long liquidation selling from speculators drove futures to the lowest level
since May 26th. Iran postpones their tender for 40,000 tons of raw imports. A
lack of new demand news and prospects for increased harvest activity in Brazil
into next week helped trigger light long liquidation selling from funds.

Technical Outlook

#SUGAR (OCT) 6/14/2004: The outside day down
gives the market a bearish tilt. The daily closing price reversal down is a
negative indicator for prices. The defensive setup, with the close under the 2nd
swing support, could cause some early weakness. Swing resistance comes in at
7.50, with support found at 7.00. 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 7.00.

 

COTTON MARKET RECAP

6/10/2004

The higher close after bullish news from the USDA
caused December cotton to close higher on the week after hitting new contract
lows early in the week. The weekly reversal combined with the hefty net short
position of the fund trader could attract significant short-covering next week
if there is any weather reason for light concern. The USDA kept their
supply/demand numbers for the US situation unchanged from last month with ending
stocks still pegged at 3.9 million bales. Traders were looking for a decline in
the export estimate for the 2004/2005 season but exports were left unchanged at
11.5 million bales which helped spark the early buying. In addition, world
ending stocks for the 2004/2005 season were pegged at 35.35 million bales which
was down from 36.46 million bales last months but still up from 32.03 million
bales for this season. Weekly export sales came in at 259,100 bales as compared
with 200,000-300,000 bales expected. Cumulative sales have reached 101.4% of the
USDA forecast for the season as compared with 105.1% on average for this time of
the year.

Technical Outlook

#COTTON (OCT) 6/14/2004: 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 59.05 and then again at 59.43,
while support is targeted at 58.15 and 57.63. A bullish signal was given with an
upside crossover of the daily stochastics. The next upside objective is 59.43.
If yesterday’s gap higher on the day session chart holds, additional buying
could develop this session.