If You’re Short The Dollar, Watch Out For This…

Technical Outlook

BONDS (MAR) 02/09/04: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 113.04 and then again at 113.20, while swing support hits at 111.12 and below there at 110.04. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 113.20. Short-term indicators suggest buying dips today.

T-NOTES(MAR) The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 115.03. The market’s close above the 2nd swing resistance number is a bullish indication. 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 114.23 and then again at 115.03, while swing support hits at 113.13 and below there at 112.16. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

2/6/2004

The stock market deserved to rally Friday, as the expectations for the non-farm payroll report were obviously overstated. Some analysts suggested the report was a
Goldilocks report, with the readings not too hot and not too cold. Therefore status quo of ongoing growth continues and the odds of a rate hike remain unchanged. The stock market had a series of optimistic corporate earnings news for the week, and it deserved to rally Friday especially when one considers the corrective tilt seen since the January high. In conclusion, the stock market was certainly in good technical standing to rally. Unless the weekend Press really tears down sentiment on the economic reports released Friday morning, we would expect a positive bias to continue.

Technical Outlook

S&P500 (MAR) 02/09/04: The market’s close above the 2nd swing resistance number is a bullish indication. Underlying support comes in at 1131.50 and 1121.75, with overhead resistance at 1146.50 and 1151.75. The market’s short-term trend is positive on a close above 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 1121.75.

S&P E-Mini (MAR): The market made a new contract high on the rally. Momentum studies trending lower at mid-range could accelerate a price break if support levels are broken. The next downside objective is 1119.25. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Near-term resistance for the S&P Mini is at 1147.50 and then again at 1153.25, while swing support hits at 1130.50 and below there at 1119.25. A negative signal for trend short-term was given on a close under the 9-bar moving average.

NASDAQ (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 market should run into resistance at 1509.25 and above there at 1519.63 with support at 1479.75 and 1460.63. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1460.6. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up.

MINI DOW (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. The market should run into resistance at 10627 and above there at 10667 with support at 10495 and 10403. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 10667. 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.

CURRENCY MARKET RECAP

2/6/2004

Because the U.S. economic reports did not live up to lofty expectations, the Dollar was due a considerable sell off. However the market is not totally accepting of the view that the US economy
is failing and therefore aggressive Dollar-selling might be misplaced. It’s pretty surprising that the Dollar fell as aggressively as it did Friday, as the weekend G-7 meeting could cause extreme volatility on the opening Monday morning. In fact, those that got short the Dollar around lows in the action Friday could be susceptible to significant opening adversity, if the G-7 talks aggressively against the Dollar slide over the weekend.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily closing price reversal up is positive. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 95.46 and above there at 95.88, with the yen finding support around 94.18 and below there at 93.32. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 95.88. Short-term indicators suggest buying dips today.

EURO (MAR): 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 1.2842. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2454, with overhead resistance at 1.2842. 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

2/6/2004

With a sharp decline in the U.S. Dollar, both gold and silver were justified in the sharp gains posted Friday. However it is very clear that the metals markets sole driving force, is perpetual declines in the Dollar. From our analysis, the economic readings from the U.S. Friday were not weak enough to justify a perpetual sell off of the dollar. In fact one could conclude that the U.S. economy is still moving toward recovery and that the Dollar will have trouble getting below the last months consolidation lows. With the weekend G-7 meeting and the dollar finishing weak Friday, one might expect dialogue against Dollar weakness to be increased noticeably over the weekend. However, gold and silver might maintain an upper track, as the Dollar works itself toward chart support.

Technical Outlook

SILVER (MAR): 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. Initial support for silver is at 605.1 and below there at 581.5 with resistance likely at 631.6 and 650.6. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 631.6. The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive.

GOLD (APR): Support for gold today comes in near 390.08, while resistance is pegged at 417.48. 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 near-term upside objective is at 417.48. 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. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish.

COPPER MARKET RECAP

2/6/2004

After some early weakness the copper market managed to right the ship and close firm. During the session, the trade learned about yet another potential production problem in Indonesia, which could serve to cramp production further. Also overnight there was an earthquake around the Grasberg mine and while that did not hinder production, the event was another element of surprise. While the U.S. non-farm payroll report created concern for the pace of recovery in the U.S., the numbers were good enough to assume ongoing expansion of copper consumption. In other words the U.S. economy is not going to be a drag on the world economy and slow down copper consumption.

ENERGY MARKET RECAP

2/6/2004

The energy complex remains generally weakened and is of flirting with critical chart support levels. With the OPEC meeting next week, some traders might be afraid press prices this low in the recent trading range. The Algerian oil Minister continues to hint that many OPEC producing countries are at maximum output levels and that would seem to leave almost no room for error in the current supply flow. However OPEC appears to go into the coming meeting with a staunch decision not to cut production and that has left prices soft. Weather in U.S. will stay cold in the Midwest, which is supportive, but milder weather in the east is a partial countervailing force to the high consumption being seen in the Midwest. More down but OPEC might become more supportive if prices slide all the way into the February 10th meeting.

Technical Outlook

CRUDE OIL (MAR): The daily closing price reversal down puts the market on the defensive. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Support for crude is keyed on 32.02 and below there at 31.70, with resistance pegged at 32.95 and 33.56. 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 31.70. Daily studies pointing down suggests selling minor rallies.

UNLEADED GAS (MAR): The daily stochastics have crossed over down which is a bearish indication. The next downside target is 92.31. The close below the 2nd swing support number puts the market on the defensive. Resistance today is at 102.01, while support should be found around 92.31. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

HEATING OIL (MAR):The market’s close below the 1st swing support number suggests a moderately negative setup for today. Heating oil should encounter support around 84.23, with resistance is at 89.23. 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 84.23. With a reading under 30, the 9-day RSI is approaching oversold levels.

CORN MARKET RECAP

2/6/2004

The residual of strong export sales, combined with minor expected changes in the upcoming USDA report, provided the corn with an additional upward bias Friday. Expectations for use in corn are 10.23 billion, with a slightly lower World production reading possible. Considering recent gains in an ethanol production, and overall gains in industrial use of corn, we suspect that the USDA will have to continue revising demand up in a stepwise fashion, which in turn serves to lower U.S. and world ending stock readings. According to private analysts the USDA will project ethanol use for corn to increase by 13 percent over last year. Another story released Friday suggests that ethanol use has reduced greenhouse gases by 5.7 million tons in 2003 which is the same as removing 853,000 vehicles from the road.

Technical Outlook

CORN (MAR) 02/09/04: 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 275 1/2. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 281 1/2 today, with support at 275 1/2. The market’s short-term trend is positive on a close above the 9-day moving average.

SOY COMPLEX RECAP

2/6/2004

A number stories Friday seemed to continue to fuel soybean prices higher in the action Friday. In addition to an Iowa Republican proposing to limit or ban of Brazilian and Argentine soybean and soy product imports, the market also fretted over the issue of rust. Apparently some traders are concerned that U.S. soybean farmers do not yet have full access to rust resistance soybean varieties and therefore U.S. production might be susceptible some of the problems being seen in isolated areas of South America. Strong basis action in the U.S. also provided support to prices as in the previous session, but the transportation issues did not look to be a sustainable far into the future.

Technical Outlook

SOYBEANS (MAR) 02/09/04: The gap upmove on the day session chart is a bullish indicator for trend. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 844 1/2 and 849 1/4, while 1st support hits today at 835 and below there at 830 1/4. 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 849 1/4.

MEAL (MAR): 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 253.2. 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 258.4, with support at 255.2. The market’s short-term trend is positive on a close above the 9-day moving average. With the close over the 1st swing resistance number, the market is in a moderately positive position.

BEAN OIL (MAR): The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 31.37. With the close higher than the pivot swing number, the market is in a slightly bullish posture. A new contract high was made on the rally. The downside closing price reversal on the daily chart is somewhat negative. Daily swing resistance is found at 30.99 and above there at 31.37. Support should be encountered at 30.34 and 30.07.

WHEAT MARKET RECAP

2/6/2004

While European and New crop wheat prices rose off some forward buying, the U.S. old crop markets remained weak, mostly because of recent precipitation events. According to some sources, recent precipitation totals have not corrected dryness in many Plains areas. The wheat market might be concerned about typical seasonal weakness at this time of the year, but with the French grain intervention Board lowering soft wheat ending stocks, the market would not appear to have far to go on the downside. In fact, many traders are pointing to critical support in the July wheat just under the market at 373. Indirectly, a sharp decline in the world coarse grains ending stocks and a sharp decline in the US Dollar could begin to underpin wheat prices.

Technical Outlook

WHEAT (MAR) 02/09/04: 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 373 1/2 and below there at 369 3/4, with resistance levels at 383 1/2 and 389 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 369 3/4.

LIVE CATTLE RECAP

2/6/2004

April cattle closed 22 higher on the session but still down 32 points on the week. Cattle slaughter for the week was 601,000 head from 602,000 last week and 651,000 last year. Traders believe that slaughter would be higher if the packer demand was better but packer profit margins are deep in the red. Boxed-beef cut-out values were down 16 cents to $128.31 as compared with $136.84 last week at this time. Cash markets were quiet with packer bids at $75.00, down $5.00 from last week but feedlots passed on bids with offers at $77.00.

Technical Outlook

CATTLE (APR) 02/09/04: Momentum studies are declining, but have fallen to oversold levels. The next downside target is 71.87. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 72.57 and below there at 71.87. Market resistance is at 73.62 and then again at 73.95. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

2/6/2004

February hogs moved to within 80 points of the contract high after gaining nearly 500 points on the week as bullish weather has kept producer marketings light. Peoria cash markets were $2.50 higher which helped spark the early rally. April hogs closed near the highs of a 90-point range and 37 higher on the session. Support was limited from fears that hogs may back up in the country after several weeks of poor weather. The continued solid gains in pork values for the week has traders wondering if exports are picking up. The CME 2-day lean index for the period ending February 4th was up 51 cents to $59.41, up from $57.67 one week previous. Slaughter for the week was 1.929 million head, up .4% from the previous week and up 2.3% from last year. May bellies closed limit up and gained 840 points on the week to new contract highs.

Technical Outlook

HOGS (APR) 02/09/04: It is a mildly bullish indicator that the market closed over the pivot swing number. Resistance levels comes in at 61.30 and 61.55 today, while support is around 60.40 and then 59.75. The market’s short-term trend is positive on a close above the 9-day moving average. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 61.55. With a reading over 70, the 9-day RSI is approaching overbought levels.

COCOA MARKET RECAP

2/6/2004

The cocoa market fell sharply Friday after attempting an upside breakout early in the week. The fact that gains early in the week, appeared to be mostly speculative in nature, probably resulted in the bottom falling out of the market Friday. A significant decline in U.S. Dollar and rise in the British Pound could’ve made the London cocoa market very unattractive, which in turn set a negative tone for the U.S. cocoa market. For some reason, the cocoa market is not that concerned about the slowing of the arrival rate into Ivory Coast ports.

Technical Outlook

COCOA (MAR)02/09/04 There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Cocoa should run into resistance at 1575 and above there at 1622 with support at 1511 and 1494. The daily stochastics have crossed over down which is a bearish indication. The next downside target is 1493.50.

COFFEE MARKET RECAP

2/6/2004

May coffee closed 75 lower on the session and down 340 points on the week as the early bounce failed to attract new buyers. There was some roaster buying on the break but not near enough to believe that buyers were urgent to get coverage on the break. The higher close in London failed to help support New York as the market seemed to remain in a long liquidation sell-off. CSCE Exchange stocks were up 1,927 bags to 4.437 million bags with 20,287 bags pending review. The steady rise in exchange stocks recently and good rains this week in Brazil and more in the forecast for the weekend were seen as bearish forces which encouraged the long liquidation sell-off.

Technical Outlook

COFFEE (MAR)2/9/04 The downside closing price reversal on the daily chart is somewhat negative. 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 70.40.The Coffee contract should run into resistance at 72.70 and above there at 74.00 with support at 70.9 and 70.40. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

2/6/2004

After a gap lower opening, March sugar closed 13 lower on the session and down to new contract lows and to the lowest level for the nearby contract since July of 2002. Long liquidation selling from speculators helped to pressure the market as end user buying has been slow to develop on the break. The move to record high freight rates have left the total cost to the end user in an uptrend in the past several months so the lower flat price has not stimulated new demand. In addition, weather conditions remain favorable for a record crop in Brazil for the 2004/2005 season and Brazil is expected to carry significant stocks into the new season. Alcohol stocks are also high in Brazil and prices weak which leaves the supply of sugar available for the export market on the rise. The China Sugar Association trimmed their forecast for 2003/2004 production to 9.5 million tons from 9.87 million previous. The news was anticipated and failed to provide much support. Private firms in China are still waiting for import licenses and the trade believes the country will import near 1 million tons with near 400,000 from Cuba as part of the import total.

Technical Outlook

SUGAR (MAR) 02/09/04: The market was pushed to a new contract low. The gap lower price action on the day session chart is a bearish indicator for trend. The market is in a bearish position with the close below the 2nd swing support number. Swing resistance comes in at 5.59, with support found at 5.35. 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 5.35. With a reading under 30, the 9-day RSI is approaching oversold levels.

COTTON MARKET RECAP

2/6/2004

The cotton forged an early break but managed to reject the slide into the close and close above the prior sessions close. Apparently local selling still drove the market down early but with the upcoming USDA report some shorts might have decided to bank profits. It is possible that some export projections will be raised as other export totals seem to be in a constant state of upward revision. It is also possible that the favorable US stock market reaction to the US payroll report fostered some economic optimism toward cotton. The trade does not expect the production number in the USDA report to be changed.

Technical Outlook

COTTON (MAR) 02/09/04: The market’s close below the 9-day moving average is an indication the short-term trend remains negative. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Next resistance area comes in at 69.94 and then again at 70.47, while support is targeted at 68.20 and 66.99. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 66.99. The daily closing price reversal up is positive. ORANGE JUICE (MAR)2/9/04 The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Orange Juice should run into resistance at 63.85 and above there at 64.25 with support at 62.40 and 61.35. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 64.25.