How The Stock Market Missed A Prime Opportunity

Technical Outlook

#BONDS (SEP) 06/17/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Near-term
resistance for bonds is at 105.08 and then again at 105.23, while swing support
hits at 104.13 and below there at 104.01. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. Positive momentum
studies in the neutral zone will tend to reinforce higher price action. The next
upside target is 105.23.

T-NOTES(SEP) 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 108.28. It is a mildly bullish
indicator that the market closed over the pivot swing number. Near-term
resistance for the T-Notes is at 108.17 and then again at 108.28, while swing
support hits at 107.30 and below there at 107.21. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

6/16/2004

The stock market missed a prime opportunity to
rally as the marketplace was fully capable of discounting the rate hike threat
following the events of the last 24 hours. However, we are not sure if the
stronger than expected Industrial production numbers or the sharply rising US
Dollar caused investors to balk and pushing prices above the recent highs. Maybe
the stock market was put off by the comments from President Bush who suggested
that violence inside Iraq might really escalate in the coming 2 weeks. Some
traders think that profit taking ruled the session into Triple witching
expiration and that the buyers might be back in play after the unwinding runs
its course.

Technical Outlook

#S&P500 (SEP) 06/17/04: The market’s close below
the pivot swing number is a mildly negative setup. Underlying support comes in
at 1130.45 and 1127.63, with overhead resistance at 1135.75 and 1138.23. 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 1127.63.

S&P E-Mini (SEP): Stochastics turning bearish at
overbought levels will tend to support lower prices if support levels are
broken. The next downside objective is 1126.25. The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for the
S&P Mini is at 1136.50 and then again at 1140.25, while swing support hits at
1129.50 and below there at 1126.25. A positive signal for trend short-term was
given on a close over the 9-bar moving average.

NASDAQ (SEP) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
market should run into resistance at 1487.00 and above there at 1493.50 with
support at 1476.00 and 1471.50. 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 1471.5.

MINI DOW (SEP) The market’s close above the 9-day
moving average suggests the short-term trend remains positive. The market should
run into resistance at 10402 and above there at 10444 with support at 10331 and
10302. 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 10302. It is a slightly negative
indicator that the close was lower than the pivot swing number.

 

CURRENCY MARKET RECAP

6/16/2004

One has to be impressed with the Dollar as it
managed to remain strong despite the fact that the market was downgrading the
chance for a series of interest rate hikes. The Dollar seemed to transition into
a market being driven by the prospect of good growth and with the US Industrial
production numbers coming in better than expected it’s understandable that money
flowed toward the Greenback. With the Euro suffering significant technical
damage some traders feared an extension of the selling in that currency, as long
term stop loss selling is certainly possible given the magnitude of the declines
in the Euro Wednesday.

Technical Outlook

#CURRENCIES 06/17/04: YEN (SEP): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. It is a slightly negative indicator that the close was lower than the
pivot swing number. Swing resistance is targeted at 91.35 and above there at
91.52, with the yen finding support around 91.03 and below there at 90.88. 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 90.88.

EURO (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 1.1905. The market is in a bearish position
with the close below the 2nd swing support number. Swing support for the Euro
comes in at 1.1905, with overhead resistance at 1.2085. The downside crossover
(9 below 18) of the moving averages suggests a developing short-term downtrend.
The major trend is down with the cross over back below the 40-day moving
average. The gap down on the day session chart is bearish with more selling
pressure possible today.

 

PRECIOUS METALS RECAP

6/16/2004

After seeing fundamental and technical conditions
come together on Tuesday the technical and fundamental conditions for gold and
silver came apart in the action Wednesday. Regardless of what other factors the
trade wants to focus on a sharply higher Dollar is difficult to discount.
Therefore, one might expect gold and silver to remain under pressure as both
market continue to hold moderately burdensome spec long positions. A number of
traders are pointing to the 90.77 level as an area of critical resistance for
the Dollar and a trade above that level could rekindle a selling wave in gold.

Technical Outlook

#P-METALS 06/17/04: SILVER (SEP): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 569.3 and below there at 562.7 with resistance
likely at 573.7 and 579.3. The market’s close below the 9-day moving average is
an indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
562.7.

GOLD (AUG): Support for gold today comes in near
381.93, while resistance is pegged at 388.93. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 381.93. The market’s close below the pivot swing number is a mildly
negative setup. The downside crossover (9 below 18) of the moving averages
suggests a developing short-term downtrend. The major trend is down with the
cross over back below the 40-day moving average.

 

COPPER MARKET RECAP

6/16/2004

The copper market fell back sharply after the
prior days gains failed to inspire Chinese buyers. It is even more disappointing
that copper was weak Wednesday in the face of favorable heavy industry readings
from the US. However, some traders were put off by the rising Dollar as that is
expected to push the Chinese buyers back from the market in the overnight
action. Just to add to the pressure in the copper market the trade noted
increased production figures from a mid sized mine late in the session
Wednesday.

 

ENERGY MARKET RECAP

6/16/2004

The energy complex is simply being deflated by
the expectation that high retail prices have dampened demand and that increased
supplies will serve to blunt the tightness concern. The API suggested that May
US gasoline demand grew by only +0.6% compared to the massive +4.2% in April and
that simply temper’s the bullish edge off the market. The weekly inventory stats
showed gasoline stocks to have declined by roughly 500,000 barrels while crude
stocks rose by a minimal amount. The market could also have been lifted by news
that President Bush expects an escalation of attacks in Iraq and that could
provide a measure of support to prices. Right now the market just doesn’t seem
to be inclined to rally off bullish information.

Technical Outlook

#ENERGIES 06/17/04: CRUDE OIL (AUG): The market’s
close below the pivot swing number is a mildly negative setup. Support for crude
is keyed on 37.34 and below there at 37.00, with resistance pegged at 37.96 and
38.24. 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 37.00.

UNLEADED GAS (AUG): Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
111.91. It is a slightly negative indicator that the close was lower than the
pivot swing number. Resistance today is at 116.11, while support should be found
around 111.91. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.

HEATING OIL (AUG): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 97.31, with resistance is at 101.11. The market’s
short-term trend is positive on a close above the 9-day moving average. The
major trend could be turning up with the close back above the 40-day moving
average. The daily stochastics gave a bullish indicator with a crossover up. The
near-term upside objective is at 101.11.

 

CORN MARKET RECAP

6/16/2004

Strength in November soybeans and higher trade in
wheat helped support some light short-covering and modest gains. Ideas that the
market is oversold and some light concerns that too much rain may dent some of
the corn acres helped to support. Export news is quiet but cash markets remain
firm due to light producer selling. China growing areas received, or are
expected to receive rains this week which should help revive crop conditions
which were hurting after recent dry and very hot weather. With production
expected near 115 million tons and usage at 131.6 million tons, it will not take
much in the way of a weather problem in China to see a shift to imports from
active exports seen in the past several years. China ending stocks are pegged at
23.9 million tons from 44.3 million this year, 64.9 million last year and 84.8
million two years ago. Weekly export sales, released before the opening, are
expected to come in near 500,000-700,000 tons as compared with 96,000 tons last
week. December corn support comes in at 284 with 289 1/2 and 292 1/2 as
resistance.

Technical Outlook

#CORN (DEC) 06/17/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 281 1/4. It is a mildly bullish indicator that the market
closed over the pivot swing number. Market resistance comes in at 291 1/4 today,
with support at 281 1/4. The market’s short-term trend is negative as the close
remains below the 9-day moving average.

 

SOY COMPLEX RECAP

6/16/2004

November soybeans held support and managed a
solid gain on the session with a focus on the weather. The correction of the
July/November spread was a key feature early in the session as continued
concerns with China demand helped to trigger weakness in old crop while too much
rain in the forecast helped support a bounce in November. Too much rain is
making it difficult to plant the last of the new crop as only 93% of the crop
was planted as of Sunday. Traders are beginning to correlate the current weather
pattern with the 1993 pattern when heavy rains continued into the early summer
and into early July to drown out significant acreage and lower yields on the
crop for the season. Weekly export sales, released before the opening, are
expected to come in near 0-50,000 tons for soybeans, 15,000-45,000 tons for meal
and 0-5,000 tons for oil. Weakness in Malaysia palm overnight to a new 8 1/2
month low added to the bearish tone in oil with December closing lower on the
session and near the lows of the day. Resistance for November soybeans comes in
at 669 and 677 with 654 1/2 and 642 1/2 as support levels.

Technical Outlook

#SOYBEANS (NOV) 06/17/04: A positive setup
occurred with the close over the 1st swing resistance. The next area of
resistance is around 677 and 687, while 1st support hits today at 658 and below
there at 649. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. Momentum studies are declining, but have
fallen to oversold levels. The next downside target is 649.

MEAL (DEC): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
202.1. First resistance comes in at 210.3, with support at 204.8. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. With the close over the 1st swing resistance number, the market is in a
moderately positive position.

BEAN OIL (DEC): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 23.98. It is a slightly negative indicator that the close was
lower than the pivot swing number. Daily swing resistance is found at 24.37 and
above there at 24.52. Support should be encountered at 24.10 and 23.98.

 

WHEAT MARKET RECAP

6/16/2004

More rain into the Ohio River Valley and rains in
southern Illinois and Indiana overnight has traders concerned with disease
problems for the soft red winter wheat crop. The market also received a boost
when Egypt bought 60,000 tons of US wheat and none from France or Australia
overnight. Harvest delays in Kansas are also a concern with more rain and cooler
weather in the forecast into the weekend with the crop needing warm and dry
weather for harvest. While planting progress is ahead of a normal schedule, the
rain and cooler weather in the forecast is a concern and should at least slow
the harvest and the associated commercial selling over the near-term. In
addition, with the crop ripe and ready to harvest, traders are concerned that
harvest delays and further rain and humidity could cause wheat heads to sprout
in certain areas which would cause sprouted wheat to be available for livestock
feed only. Weekly export sales, released before the opening, are expected to
come in near 450,000-550,000 tons as compared with 385,200 tons last week.
Futures are also considered oversold after recent sharp losses. September wheat
support comes in at 364 and 360 1/2 with 373 1/2 and 378 1/2 as resistance.

Technical Outlook

#WHEAT (DEC) 06/17/04: The downside closing price
reversal on the daily chart is somewhat negative. It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 367 and below there at 364 3/4, with resistance levels at
374 and 378 3/4. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 364
3/4.

 

LIVE CATTLE RECAP

6/16/2004

The market attempted a significant short-covering
bounce but further weakness in the beef market and concerns with the potential
for hefty placements in Friday’s Cattle-on-Feed report helped to pressure the
market late in the day and fund long liquidation selling emerged to push the
market lower. August cattle found late support from the discount to the cash
market. A Reuters survey of livestock traders revealed an average trade estimate
for June 1st Cattle-on-Feed Inventory at 100.2% of last year (range 99-101.5).
Placements during May were pegged at 100.7% of last year (98-104.3) and
marketings at 91.5% of last year (89.7-93). Last years placements were hefty so
matching last years placements is seen as a bearish factor. Boxed beef cut-out
vales (for choice 600-750lbs) dropped $.43 to $148.16 at mid-session as compared
with $157.15 last week at this time.

Technical Outlook

#CATTLE (AUG) 06/17/04: Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
84.65. With the close higher than the pivot swing number, the market is in a
slightly bullish posture. Support should be encountered at 85.37 and below there
at 84.65. Market resistance is at 86.47 and then again at 86.85. The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative.

 

LEAN HOGS RECAP

6/16/2004

Traders anticipated lower cash markets but with a
steady tone in the cash market, futures pushed sharply higher on the session.
The market failed to hold onto the gains as the market seemed to lack good
reason for the surge higher accept the discount of futures to cash. Strength in
the belly market in spite of a bearish weekly cold storage report added to the
positive tone early in the session but July bellies broke 195 points off of the
early highs into the mid-session. Weekly average weights for Iowa/Minnesota for
the week ending June 12th came in at 263.6 pounds as compared with 264.8 pounds
the previous week and 262.8 pounds last year. The 2-day lean index for the
period ending June 14th was 79.20, up 34 cents from the previous session and up
from 77.50 one week previous.

Technical Outlook

#HOGS (AUG) 06/17/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Resistance levels
comes in at 76.00 and 76.75 today, while support is around 74.60 and then 73.95.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. 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 73.95.

 

COCOA MARKET RECAP

6/16/2004

Apparently the small spec traders stepped forward
to buy cocoa Wednesday but we have to wonder if the sharp rise in the US Dollar
will foil the markets ability to extend the upside on the back of the US cocoa
market. Supposedly the trade notice less origin selling interest and that might
remove some of the overhead resistance. However, the market still doesn’t make a
strong fundamental case to move out of the recent consolidation range.

Technical Outlook

COCOA (SEP) 06/17/04 The market setup is
supportive for early gains with the close over the 1st swing resistance. Cocoa
should run into resistance at 1392 and above there at 1416 with support at 1348
and 1328. Momentum studies are declining, but have fallen to oversold levels.
The next downside target is 1327.50.

 

COFFEE MARKET RECAP

6/16/2004

September Coffee closed unchanged in choppy,
two-sided trade as futures lacked new news to find direction. Technically, the
market managed to hold support at the 50% correction point of the May rally on a
closing basis which helped supply some light speculative buying but a lack of
threatening weather on the horizon leaves futures vulnerable to more speculative
selling if support levels are violated. Private forecasters call for dry weather
and no threatening cold weather fronts through the end of the month which is
ideal weather for harvest.

Technical Outlook

COFFEE (SEP) 6/17/04 The market tilt is slightly
negative with the close under the pivot. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside
objective is now at 78.85. The Coffee contract should run into resistance at
81.50 and above there at 82.25 with support at 79.8 and 78.85. The market’s
short-term trend is negative as the close remains below the 9-day moving
average.

 

SUGAR MARKET RECAP

6/16/2004

The market surge higher on light trade house
buying which activiated buy stops above the market to fuel a run at the June 2nd
contract highs. A lack of new news on the Brazil harvest and light buying from
routine end users helped support the bounce. Algeria is said to have bought near
70,000 tons of Brazil raw sugar in the past few days which helped provide some
support. The upside break0out leaves support at 742 with 785 as next upside
objective if the June highs are penetrated. August sugar in London closed $3.80
higher at $216.50 but this is no where near the contract highs which were posted
on April 28th at $235.20.

Technical Outlook

#SUGAR (OCT) 06/17/04: The market’s close above
the 2nd swing resistance number is a bullish indication. Swing resistance comes
in at 7.85, with support found at 7.17. The market’s short-term trend is
positive on a close above the 9-day moving average. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at
7.85.

 

COTTON MARKET RECAP

6/16/2004

The cotton market collapsed for the second
session in a row with July cotton down as much as 808 points in just 3 trading
sessions. Concerns with China demand and a lack of concern for old crop
tightness due to expectations for bumper crops from key world producers for the
coming year helped to pressure the market. NY cotton certified stocks declined
on June 15th to 224,887 bales, down just one bales from the previous session and
down from 305,725 bales on June 9th. Weekly export sales, released before the
opening, are expected to come in near 175,000-275,000 bales from 278,500 bales
last week. Shipments are expected at 225,000-300,000 bales vs. 278,500 bales
last week. China total purchases for the season have reached 4.845 million bales
from 1.756 million last year at this point in the marketing year.

Technical Outlook

#COTTON (OCT) 06/17/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
The swing indicator gave a moderately negative reading with the close below the
1st support number. Next resistance area comes in at 54.75 and then again at
56.08, while support is targeted at 52.75 and 52.08. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
52.08. The 9-day RSI under 30 indicates the market is approaching oversold
levels. The sell-off took the market to a new contract low.