Hurricane Ivan Passed. So Why Did Oil Rise?
BOND MARKET RECAP
9/17/2004
December Bonds closed down 0-19 at 111-28. This
was 0-01 up from the low and 0-23 off the high.
December 10 Yr Treasury Notes finished down 0-120
at 112-220, 0-170 off the high and 0-005 up from the low.
The Treasury market surprisingly sagged in
the face of the only scheduled economic report of the session even after the
reading came in much softer than expected. With early expectations for a gain of
1.2 points in the Michigan sentiment readings the 10 tick morning decline in the
Treasury bonds was very surprising. Some traders suggested that the Treasury
market was overbought and that the adjusted fund long position might be really
excessive and that is why some traders decided to bank some profits.
Technical Outlook
BONDS (DEC) 09/20/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. The daily closing price reversal down puts the market on
the defensive. It is a slightly negative indicator that the close was under the
swing pivot. The next upside objective is 113-00. The next area of resistance is
around 112-14 and 113-00, while 1st support hits today at 111-19 and below there
at 111-09.
TNOTES (DEC) 09/20/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. The daily closing price reversal down puts
the market on the defensive. The market’s close below the pivot swing number is
a mildly negative setup. The next upside target is 113-150. The next area of
resistance is around 113-020 and 113-150, while 1st support hits today at
112-150 and below there at 112-085.
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STOCK INDICES RECAP
9/17/2004
December S&P finished up 4.4 at 1129, 2.2 off the
high and 4.4 up from the low.
December S&P E-Mini closed up 4.5 at 1129. This
was 6.25 up from the low and 2.5 off the high.
December Dow closed up 36 at 10283. This was 33
up from the low and 32 off the high.
December Dow E-Mini finished up 37 at 10284, 30
off the high and 53 up from the low.
Following the last stage of the expiration
process on the opening one can hardly suggest that the ongoing strength in
equity prices is still the result of some mechanical issue. In other words,
buyers are coming into the fray despite all the negative international views on
the pace of the US recovery. Even in the face of rising energy prices and slack
US economic information the stock market continued to rise. The University of
Michigan sentiment readings were negative after expectations called for a rise
and the stock market still managed to rise in the face of the early morning
release!
Technical Outlook
S&P 500 (DEC) 09/20/2004: The daily stochastics
gave a bullish indicator with a crossover up. Momentum studies are trending
higher but have entered overbought levels. A positive signal for trend
short-term was given on a close over the 9-bar moving average. With the close
over the 1st swing resistance number, the market is in a moderately positive
position. The near-term upside objective is at 1135.05. The next area of
resistance is around 1132.30 and 1135.05, while 1st support hits today at
1125.70 and below there at 1121.85.
SP EMINI (SEP) 09/20/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The close above the 9-day moving average is a
positive short-term indicator for trend. Market positioning is positive with the
close over the 1st swing resistance. The next downside target is now at 1121.25.
The next area of resistance is around 1129.50 and 1131.25, while 1st support
hits today at 1124.50 and below there at 1121.25.
NASDAQ (DEC) 09/20/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The close above the 9-day moving average is a
positive short-term indicator for trend. With the close higher than the pivot
swing number, the market is in a slightly bullish posture. The next downside
objective is now at 1412.75. The next area of resistance is around 1436.50 and
1442.75, while 1st support hits today at 1421.50 and below there at 1412.75.
MINIDOW (DEC) 09/20/2004: Momentum studies are
trending lower from high levels which should accelerate a move lower on a break
below the 1st swing support. 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. The next
downside target is 10195. The next area of resistance is around 10324 and 10360,
while 1st support hits today at 10242 and below there at 10195.
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CURRENCY MARKET RECAP
9/17/2004
December US Dollar finished up 11 at 8910, 22 off
the high and 18 up from the low.
December Euro finished down 0.08 at 121.74, 0.38
off the high and 0.24 up from the low.
December Euro Dollar closed down 0.04 at 97.785.
This was 0.005 up from the low and 0.05 off the high.
December Canadian Dollar closed down 0.39 at
76.96. This was 0.46 up from the low and 0.03 off the high.
December British Pound finished down 0.09 at
178.07, 0.43 off the high and 0.35 up from the low.
December Swiss closed down 0.1 at 79.04. This was
0.24 up from the low and 0.18 off the high.
December Japanese Yen closed down 0.34 at 91.36.
This was 0.29 up from the low and 0.09 off the high.
After an initial probe into a new low for the
move, the Dollar rebounded and did so in the wake of patently bearish US
economic information. In other words, the Dollar isn’t undermined by softer than
expected readings on its economy. The Canadian was undermined during the session
by significantly hotter than expected inflation readings. The Canadian even
managed to slide in the face of a decently strong leading indicator report and
that suggests the Canadian is vulnerable.
Technical Outlook
YEN (DEC) 09/20/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The market’s close below the 9-day moving average is an indication
the short-term trend remains negative. The market’s close below the 1st swing
support number suggests a moderately negative setup for today. The next downside
target is now at 90.93. The next area of resistance is around 91.55 and 91.69,
while 1st support hits today at 91.17 and below there at 90.93.
EURO (DEC) 09/20/2004: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The daily closing price reversal down
puts the market on the defensive. The market has a slightly positive tilt with
the close over the swing pivot. The next upside target is 122.39. The next area
of resistance is around 122.05 and 122.39, while 1st support hits today at
121.43 and below there at 121.16.
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PRECIOUS METALS RECAP
9/17/2004
December Gold closed up 1.1 at 407.6. This was
2.6 up from the low and 1.4 off the high.
December Silver finished down 0.03 at 6.288,
0.037 off the high and 0.078 up from the low.
October Platinum closed up 0.8 at 843.1. This was
7.1 up from the low and 0.4 off the high.
Continued divergence early in the session seemed
to give way to outright weakness in silver and platinum into mid session. It
seems that the Dollar won’t go down even in the face of weak economic numbers
and that has robbed the gold market of a supporting argument. The silver and
platinum markets surprisingly showed weakness in the wake of all the favorable
Chinese copper demand talk and that is surprising. Some traders suggested that
the Dollar impact could switch from a general positive for gold to a general
negative with a Dollar rise above 89.48.
Technical Outlook
SILVER (DEC) 09/20/2004: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The market’s close below
the pivot swing number is a mildly negative setup. The near-term upside
objective is at 639.3. The next area of resistance is around 634.6 and 639.3,
while 1st support hits today at 623.1 and below there at 616.3.
GOLD (DEC) 09/20/2004: Positive momentum studies
in the neutral zone will tend to reinforce higher price action. The market’s
short-term trend is positive on the close above the 9-day moving average. The
market has a slightly positive tilt with the close over the swing pivot. The
near-term upside target is at 411.3. The next area of resistance is around 409.6
and 411.3, while 1st support hits today at 405.6 and below there at 403.3.
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COPPER MARKET RECAP
9/17/2004
December Copper finished up 0.05 at 130.20, 0.50
off the high and 1.20 up from the low.
Once again the copper market showed strength but
failed to extend the rise. We continue to note that copper is mostly ignoring
the weak economic setup but some traders think that the main driving force
behind the copper rally is the relatively strong pattern of Chinese demand. In
fact Chinese copper prices surged overnight ahead of the US session off reports
of tightening supplies but yet Shanghai copper stocks managed another weekly
increase! Therefore, copper seems to be selectively embracing fundamental
information.
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ENERGY MARKET RECAP
9/17/2004
October Crude Oil closed up 1.71 at 45.59. This
was 1.29 up from the low and 0.21 off the high.
October Heating Oil closed up 3.09 at 126.41.
This was 2.81 up from the low and 0.54 off the high.
October Unleaded Gas finished up 4.40 at 127.03,
0.27 off the high and 3.98 up from the low.
October Natural Gas finished up 0.39 at 5.11,
0.16 off the high and 0.33 up from the low.
October Propane closed up 0.01 at 0.78. This was
equal to the low and equal to the high.
The energy complex just won’t be defeated as the
passing of the hurricane threat resulted in the energy complex rotating its
focus back to the Yukos situation. In other words, the market is still bullishly
biased and is capable of finding what it needs to keep prices firm. Some traders
suggested that another storm is flirting with the US Coast already and Tropical
Storm Karl is strengthening off the African Coast and the trade is willing to
see support off even distant weather. Reports that Yeltsin warned Putin against
violating the Russian Constitution could also have provided energy prices with
support especially since Russian supply flow remains critical and suspect.
Technical Outlook
CRUDE OIL (OCT) 09/20/2004: The upside crossover
of the 9 & 18 bar moving average is a positive signal. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. A positive signal for trend short-term was given on a
close over the 9-bar moving average. The gap upmove on the day session chart is
a bullish indicator for trend. There could be more upside follow through since
the market closed above the 2nd swing resistance. The near-term upside objective
is at 46.82. The next area of resistance is around 46.34 and 46.82, while 1st
support hits today at 44.84 and below there at 43.82.
UNLEADED (OCT) 09/20/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. The gap up on the day session chart gave a bullish
indicator and more follow through could be seen this session. The market has a
bullish tilt coming into today’s trade with the close above the 2nd swing
resistance. The next upside objective is 130.35. The next area of resistance is
around 129.15 and 130.35, while 1st support hits today at 124.91 and below there
at 121.86.
HEATING OIL (OCT) 09/20/2004: Rising stochastics
at overbought levels warrant some caution for bulls. The market’s close above
the 9-day moving average suggests the short-term trend remains positive. The
close over the pivot swing is a somewhat positive setup. The next upside
objective is 129.19. The next area of resistance is around 128.08 and 129.19,
while 1st support hits today at 124.74 and below there at 122.50.
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CORN MARKET RECAP
9/17/2004
December Corn finished down 1 at 215 1/4, 2
1/4 off the high and 1/4 up from the low. March Corn closed down 1 at 225 1/4.
This was 1/4 up from the low and 2 1/4 off the high.
The oversold condition of the market and ideas
that the harvest activity could slow for early next week in the western cornbelt
helped to support the market early in the session but speculative selling turned
active late. December corn closed 7 cents lower on the week hitting contract
lows for 6 sessions in a row. Talk of higher than expected yields contributed to
the speculative selling after the higher opening and the December futures
managed another new contract low into the mis-session. News that US exporters
sold 110,000 tons of corn to unknown destination helped to trigger some buying
support near the opening but the focus of attention continues to shift to the
excellent September weather and the big crop potential if the weather continues
to allow for an extended growing season in the northern cornbelt. The next
technical support for December corn is thought to be near 213 1/4 and 210 1/2
with resistance at 219 1/2 and 224.
Technical Outlook
CORN (DEC) 09/20/2004: The sell-off took the
market to a new contract low. Momentum studies are still bearish but are now at
oversold levels and will tend to support reversal action if it occurs. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. It is a slightly negative indicator that the close was lower
than the pivot swing number. The next downside target is now at 213 1/4. Some
caution in pressing the downside is warranted with the RSI under 30. The next
area of resistance is around 216 1/2 and 218 1/4, while 1st support hits today
at 214 and below there at 213 1/4.
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SOY COMPLEX RECAP
9/17/2004
November Soybeans finished down 4 1/4 at 553, 8
1/2 off the high and 3/4 up from the low. January Soybeans closed down 4 3/4 at
560 1/2. This was 1/2 up from the low and 8 1/2 off the high.
December Soymeal closed down 0.3 at 165.4. This
was 1.1 up from the low and 2.3 off the high.
December Soybean Oil finished down 0.29 at 21.89,
0.4 off the high and 0.05 up from the low.
The outlook for warm and dry weather for the
weekend contributed to the early weakness but the move to the lowest level since
August 11th was met with a lack of new selling interest from speculators which
contributed to the bounce to the highs. November soybeans closed 19 cents lower
on the week with December meal down $2.40 and December oil down 147 points on
the week. Talk of wet weather in the western cornbelt for next week helped to
bring about ideas of a slowdown in harvest activity but the outlook for warm
temperatures to continue has kept the bears believing that crops in the north
are pushing closer to maturity before a significant frost ends the growing
season. Talk of high soybean yields continues to pressure the market with ideas
that the market is too oversold helping to provide support. Palm oil futures
were down sharply in Malaysia overnight which may have helped pressure the
soybean oil market while December meal is under some selling pressure after
closing at the lowest level since October 20th of 2003. Meal basis levels were
under pressure form the advancing harvest and talk in the country that the
soybean crop size may be revised higher in the October production report.
Short-term resistance for November soybeans is thought to be near 563 1/2 and
566 with support at 552 and 541.
Technical Outlook
BEANS (NOV) 09/20/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. 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
under the swing pivot. The next downside target is now at 545 3/4. Some caution
in pressing the downside is warranted with the RSI under 30. The next area of
resistance is around 557 1/2 and 564, while 1st support hits today at 548 1/2
and below there at 545 3/4.
MEAL (DEC) 09/20/2004: Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close below the 9-day moving average is a negative short-term
indicator for trend. It is a slightly negative indicator that the close was
under the swing pivot. The next downside objective is now at 162.3. The next
area of resistance is around 167.0 and 169.1, while 1st support hits today at
163.7 and below there at 162.3.
BEANOIL (DEC) 09/20/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. It is a slightly negative indicator that the close was under the
swing pivot. The next downside target is 21.53. The next area of resistance is
around 22.11 and 22.42, while 1st support hits today at 21.67 and below there at
21.53.
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WHEAT MARKET RECAP
9/17/2004
December Wheat finished down 5 at 333 1/4, 8 1/4 off the high
and 2 1/4 up from the low. March Wheat closed down 5 at 343 3/4. This was 2 1/4
up from the low and 7 1/2 off the high.
News that Egypt bought 295,000 tons of wheat
overnight with 115,000 coming from the US helped to support the early trade but
fears that rallies will cause US wheat to become less competitive on the world
market helped to limit the buying support. Part of the early pressure yesterday
was triggered by news that Australia sold 800,000 tons of wheat to Iraq but
Australia officials said this morning that they had not signed a deal to export
the wheat. A senior official at the Iraq trade ministry this morning indicated
that Iraq bought 500,000 tons of US wheat. December wheat closed ¼ cent lower on
the week. Closing lower on the week after hitting the highest level since July
23rd early may been seen as a bearish technical development. New contract lows
in London may have added to the bearish tone late in the session. Rain is
expected to hit North Dakota for the first half of next week so traders will be
interested to see the harvest progress this week as cold and wet weather has
hampered the tail end of harvest. Canadian wheat areas turn colder next week
with rains expected to develop in eastern areas for early in the week. There
were 250 deliveries against the expired September contract. Support for December
wheat comes in at 329 and 325 ¼ with resistance at 335 ½ and 339 ¾.
Technical Outlook
WHEAT (DEC) 09/20/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. A positive signal for trend short-term was given on a close over the
9-bar moving average. The daily closing price reversal down puts the market on
the defensive. The market setup is somewhat negative with the close under the
1st swing support. The near-term upside target is at 345 1/4. The next area of
resistance is around 338 1/2 and 345 1/4, while 1st support hits today at 328
and below there at 324 1/4.
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LIVE CATTLE RECAP
9/17/2004
October Live Cattle closed down 0.97 at 85.45.
This was 0.65 up from the low and 0.50 off the high.
October Feeder Cattle finished down 0.65 at
111.90, 0.22 off the high and 0.30 up from the low.
The cattle market pushed sharply lower early in
the session with traders disappointed that the cash market had not traded yet
this week and a lack of confirmation of yesterday’s rumors that cash traded
higher in Nebraska. The early break drove the December contract to the 40-day
moving average at 87.40 before the market closed at 88.67. December cattle
closed 57 higher on the week. Slaughter on Friday came in at 122,000 head as
compared with trade expectations at 117,000-123,000 head. For the week,
slaughter came in at 655,000 head as compared with 541,000 head last week and
733,000 head last year at this time. Boxed-beef cutout values (600-750 choice)
were down $.22 on the day at mid-session to $134.97 as compared with $129.91
last week at this time. The USDA Cattle-On-Feed report will be released this
afternoon. The average trade estimate for September 1st on-feed supply is at
103% (range 101-104.3), August placements at 93.5% (range 86-98.1) and August
marketings at 91% (range 87-94.3).
Technical Outlook
CATTLE (OCT) 09/20/2004: Momentum studies are
trending higher but have entered overbought levels. The close above the 9-day
moving average is a positive short-term indicator for trend. The close below the
1st swing support could weigh on the market. The next upside objective is
86.550. The next area of resistance is around 86.020 and 86.550, while 1st
support hits today at 84.870 and below there at 84.270.
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LEAN HOGS RECAP
9/17/2004
October Lean Hogs closed up 2.00 at 72.00. This
was 1.75 up from the low and equal to the high.
February Pork Bellies finished up 3.00 at 99.07,
equal to the high and 2.87 up from the low.
October hogs and February bellies closed limit up
and December hogs scored new contract highs for the third session in a row.
December hogs closed 502 higher on the week. The surge in pork product prices
led by a jump in loin and cash belly prices this week helped support higher cash
prices late in the week. With futures still holding a discount to the cash
market, the futures found active buying support from continued strength in pork
on Thursday afternoon. Live cash markets were higher with Peoria up $.50.
Slaughter on Friday came in at 386,000 head as compared with trade expectations
at 390,000-394,000 head. For the week, slaughter came in at 2.093 million head
from 1.855 million head last week and 1.966 million head last year. The CME
2-Day Lean index for the period ending September 15th was up 55 cents to 73.02
which leaves the Index up 59 cents since the end of August. Cash hogs typically
break during this time frame but solid exports and strong packer demand has
supported the higher trade in spite of hefty pork production. This has helped
support the surge in futures which were trading at a huge discount to the cash
index at the end of August.
Technical Outlook
HOGS (OCT) 09/20/2004: A new contract high was
made on the rally. Momentum studies are trending higher but have entered
overbought levels. The market’s close above the 9-day moving average suggests
the short-term trend remains positive. The market has a bullish tilt coming into
today’s trade with the close above the 2nd swing resistance. The next upside
objective is 73.300. The market is becoming somewhat overbought now that the RSI
is over 70. The next area of resistance is around 72.870 and 73.300, while 1st
support hits today at 71.150 and below there at 69.820.
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COCOA MARKET RECAP
9/17/2004
December Cocoa finished up 8 at 1461, 7 off the
high and 9 up from the low.
The cocoa market started the session out inside
the prior days range but still generally exhibited a weak posture. It was a
little surprising that cocoa prices showed early weakness considering the
favorable dialogue flowing from London. It seems that London traders were seeing
both spec and Industry buying and that would seem to hint that prices have
reached a value zone in the mind of professional users. It is also possible that
a sagging Dollar is providing the US cocoa market with some support but the US
market continues to hover around extremely critical levels on the charts.
Technical Outlook
COCOA (DEC) 09/20/2004: Momentum studies are
declining, but have fallen to oversold levels. The close below the 9-day moving
average is a negative short-term indicator for trend. The close over the pivot
swing is a somewhat positive setup. The next downside target is 1445. The next
area of resistance is around 1469 and 1476, while 1st support hits today at 1453
and below there at 1445.
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COFFEE MARKET RECAP
9/17/2004
December Coffee closed up 0.30 at 78.75. This was
0.45 up from the low and 1.40 off the high.
Even more surprising than the run Thursday is the
continuation of the coffee rally on Friday morning as the market no longer had
the benefit of the hurricane threat. Some traders suggested that December coffee
would violate critical support with a slide back below 78.00 on a close basis
and that is especially true if the recent rally pulled in a large number of
small spec longs. Even the London market set back off the highs into it close
when it saw the reversal in the New York coffee market. News that 92% of the
Brazilian harvest is complete might have brought home the fact that there is
little threat to supply left in the Brazil production area.
Technical Outlook
COFFEE (DEC) 09/20/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s close above the
9-day moving average suggests the short-term trend remains positive. With the
close higher than the pivot swing number, the market is in a slightly bullish
posture. The next upside objective is 80.80. The 9-day RSI over 70 indicates the
market is approaching overbought levels. The next area of resistance is around
79.65 and 80.80, while 1st support hits today at 77.85 and below there at 77.15.
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SUGAR MARKET RECAP
9/17/2004
October Sugar closed down 0.07 at 7.59. This was
0.01 up from the low and 0.13 off the high.
A major failure on the charts in sugar is doubly
negative as the market continues to be overly long in the spec category and has
made the failure after an extensive broadening top pattern. With corn prices
falling and the cash sugar market failing to see increased physical business the
ultra high price level of futures is not being justified. Apparently the funds
were beginning to be forced from long positions Friday and that could mean
extensive follow through next week. The trade tried to support prices early in
the session but then those buyers probably ended up pitching those purchases for
losses. In the end the sugar market appears to be losing its bullish bias.
Technical Outlook
SUGAR (MAR) 09/20/2004: The close below the
40-day moving average is an indication the longer-term trend has turned down.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. A negative signal for trend short-term was given on a
close under the 9-bar moving average. The outside day down is a negative signal.
The market is in a bearish position with the close below the 2nd swing support
number. The next downside objective is 8.28. The next area of resistance is
around 8.51 and 8.63, while 1st support hits today at 8.33 and below there at
8.28.
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COTTON MARKET RECAP
9/17/2004
October Cotton finished up 1.24 at 50.21, 0.29
off the high and 1.11 up from the low.
After moving right down to a downside breakout
point on the charts, the December cotton contract managed a surprising reversal
and that is probably because the market re-evaluated the potential damage off
the recent storm track. Supposedly South Carolina suffered extensive flooding,
but we have to wonder if the aftermath of this hurricane is going to live up to
the early bullish expectation. With the rejection of the early low Friday some
shorts might be a little less interested in pressing cotton prices in the coming
week.
Technical Outlook
COTTON (DEC) 09/20/2004: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative. The close over the pivot swing is a somewhat positive
setup. The next downside objective is now at 47.06. The next area of resistance
is around 49.06 and 49.59, while 1st support hits today at 47.80 and below there
at 47.06.