If You’re Trading Bonds, Keep This In Mind!

Technical Outlook

#BONDS (JUN) 6/9/2004: The outside day up is
somewhat positive. The daily closing price reversal up is a positive indicator
that could support higher prices. The market has a slightly positive tilt with
the close over the swing pivot. Near-term resistance for bonds is at 105.25 and
then again at 105.32, while swing support hits at 105.01 and below there at
104.16. 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 104.16.

T-NOTES(JUN) 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 108.21. It is a mildly bullish indicator that
the market closed over the pivot swing number. Near-term resistance for the
T-Notes is at 109.15 and then again at 109.20, while swing support hits at
108.31 and below there at 108.21. The market’s short-term trend is negative as
the close remains below the 9-day moving average.

 

STOCK INDICES RECAP

6/8/2004

The stock market surprisingly managed to avoid a
corrective setback after coming into the session weaker. Even after the Fed
talked about rte hikes the stock market didn’t falter significantly and that is
certainly a change of pace. From a short term perspective the stock market is
coming off a sustained upward price track and that leaves the market short term
overbought. The fact that the Richmond Fed numbers were stronger than expected
but were not too strong seemed to discourage profit taking selling in the stock
market. With energy prices weaker for another session and the EIA suggesting
that gasoline prices were beginning to trend downward the stock market seemed to
downgrade more of the energy price threat.

Technical Outlook

#S&P500 (JUN) 6/9/2004: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1138.55 and
1133.28, with overhead resistance at 1146.05 and 1148.28. 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 1148.28. The
market is becoming somewhat overbought now that the RSI is over 70.

S&P E-Mini (JUN): Studies are showing positive
momentum, but are now in overbought territory so some caution is warranted. The
next upside target is 1147.81. 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 1145.63 and then again at 1147.81, while swing support hits
at 1138.38 and below there at 1133.31. The market’s close above the 9-day moving
average suggests the short-term trend remains positive. The 9-day RSI over 70
indicates the market is approaching overbought levels.

NASDAQ (JUN) A positive signal for trend
short-term was given on a close over the 9-bar moving average. The market has a
slightly positive tilt with the close over the swing pivot. The market should
run into resistance at 1500.00 and above there at 1505.00 with support at
1486.00 and 1477.00. The market is approaching overbought levels with an RSI
over 70. Rising stochastics at overbought levels warrant some caution for bulls.
The next upside objective is 1505.00.

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 10467 and above there at 10489 with support at 10384 and 10323.
Daily stochastics have risen into overbought territory which will tend to
support reversal action if it occurs. The near-term upside target is at 10489.
The close over the pivot swing is a somewhat positive setup. The market is
becoming somewhat overbought now that the RSI is over 70.

 

CURRENCY MARKET RECAP

6/8/2004

Many in the trade are not sure if the Dollar
slide has run its course, or if the bounce Tuesday was simply a technical
recovery bounce. However, while the numbers from the US were much better than
expected the biggest impact on the Dollar seemed to come from Fed statements.
During the morning trade the market saw dialogue from the Fed Chairman that the
Fed had not ruled out aggressive rates hikes but that rally softened after the
Fed Chairman clarified his statements by suggesting that the Fed still didn’t
see the need for higher rates. In short the US economy still looks pretty solid
but the market isn’t buying into that theme in the Dollar.

Technical Outlook

#CURRENCIES 6/9/2004: YEN (JUN): A positive
signal for trend short-term was given on a close over the 9-bar moving average.
The market tilt is slightly negative with the close under the pivot. Swing
resistance is targeted at 91.35 and above there at 91.46, with the yen finding
support around 90.98 and below there at 90.72. Rising stochastics at overbought
levels warrant some caution for bulls. The next upside objective is 91.46.

EURO (JUN): A crossover down in the daily
stochastics is a bearish signal. 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 1.2207. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.2207, with overhead resistance at 1.2331. The close above
the 9-day moving average is a positive 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

6/8/2004

Gold and silver weakened under a slight bounce in
the US Dollar. After the Richmond Fed readings all came in stronger than
expected and the US Fed Chairman said that the Fed hadn’t ruled out aggressive
rate hikes, the Dollar rebounded sparking the metals into a wave of profit
taking. Considering that the Dollar has been down rather aggressively over the
past week some gold longs discounted the bounce in the Dollar as purely
technical in nature. The silver market seemed to come under greater liquidation
than gold even though the Dollar action hasn’t seemed to impact silver as much
as gold over the last week!

Technical Outlook

#P-METALS 6/9/2004: SILVER (JUL): There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Initial support for silver is at 566.8 and below there at
560.1 with resistance likely at 582.7 and 587.3. 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 560.1. The outside day down is somewhat
negative. The market could take on a defensive posture with the daily closing
price reversal down.

GOLD (AUG): Support for gold today comes in near
388.00, while resistance is pegged at 397.20. 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 388.00. Short-term indicators on
the defensive. Consider selling an intraday bounce. The market setup is somewhat
negative with the close under the 1st swing support. The close below the 9-day
moving average is a negative short-term indicator for trend. The outside day
down gives the market a bearish tilt. The daily closing price reversal down is a
negative indicator for prices.

 

COPPER MARKET RECAP

6/8/2004

Copper prices came under aggressive liquidation
in what seemed to be a knee jerk reaction to news yesterday that the Chinese
government was set to delivery some physical copper supply to the Chinese copper
exchange. In other words, that move seemed to deflate the near term supply
tightness and that in turn caused US specs in copper to dump positions rather
than wait for the overnight Chinese market reaction. The CEO of a Mining company
predicted growth in copper demand by 5% to 7% in the current year and by
slightly lesser amounts next year but the copper market was uninterested the
positive demand stories in the action Tuesday.

 

ENERGY MARKET RECAP

6/8/2004

Considering the price action of the last two
months the recent trade has been extremely quiet. However, with the market
encountering weekly inventory readings Wednesday and several strong demand
stories floated recently we have to think that the bull camp is still capable
even though they have been put off balance by OPEC promises. With several
private groups calling for strong demand growth into the end of the year it will
be very critical for the market to see the weekly implied gasoline demand
readings from the reports. With distillate demand apparently posting a new
record in May it is clear that demand for the products remains strong but yet
supplies continue to be very tight.

Technical Outlook

#ENERGIES 6/9/2004: CRUDE OIL (AUG): The close
below the 40-day moving average is an indication the longer-term trend is down.
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. Support for
crude is keyed on 36.58 and below there at 36.12, with resistance pegged at
38.28 and 39.52. 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 36.12.

UNLEADED GAS (AUG): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 110.66. The close below the 1st swing support could weigh
on the market. Resistance today is at 120.26, while support should be found
around 110.66. The market could take on a defensive posture with the daily
closing price reversal down. A negative signal for trend short-term was given on
a close under the 9-bar moving average. Bearish daily studies indicate selling
minor rallies this session.

HEATING OIL (AUG): The market setup is somewhat
negative with the close under the 1st swing support. Heating oil should
encounter support around 93.97, with resistance is at 100.97. Short-term
indicators on the defensive. Consider selling an intraday bounce. 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. 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 93.97.

 

CORN MARKET RECAP

6/8/2004

Futures remain under pressure from the forecast
for excellent growing conditions for the next week across much of the cornbelt.
The inside day and close near the lows leaves the technical set-up slightly
negative. There are some light concerns for too much rain for the northern Iowa
region into the weekend as the forecast for 1-3 inches of rain across the
northern half of the cornbelt includes near 3 inches for this region which
absorbed heavy rains in May. A 5-7 day period of little or no rain ahead of the
rain may have been enough time for soils to firm. The weekly crop progress
report showed that crops rated in good to excellent condition at 68%, unchanged
on the week. However, ideal growing weather in the forecast suggests that crop
conditions should improve in the next few weeks. Positioning ahead of the USDA
Supply/demand report helped to provide some light support to the July contract
early. In export news, Thailand officials approved of import permits for 500,000
tons of corn due to possible internal shortages. A Reuter’s survey of traders
showed an average trade estimate for ending stocks for the 2003/2004 season at
835 million bushels from 806 million last month. For the new crop season,
traders look for ending stocks at 745 million bushels from 741 million last
month. December corn support comes in at 298 and 294 3/4 with 305 1/2 and 308
1/2 as resistance.

Technical Outlook

#CORN (DEC) 6/9/2004: The daily stochastic’s gave
a bearish indicator with a crossover down. The next downside target is now at
295 2/4. The market setup is somewhat negative with the close under the 1st
swing support. Market resistance comes in at 304 today, with support at 295 2/4.
The close below the 9-day moving average is a negative short-term indicator for
trend. Short-term indicators on the defensive. Consider selling an intraday
bounce. The close below the 40-day moving average is an indication the
longer-term trend is down.

 

SOY COMPLEX RECAP

6/8/2004

Expectations for a tight balance sheet for old
crop futures in Thursday morning’s supply/demand report along with commercial
support in July and the bull spreads helped provide support to July soybeans to
the higher close in spite of the late session break. Traders are looking for
downward revisions in the Brazil and Argentina crop production estimates for the
USDA report. November soybeans closed lower but jumped more than 10 cents off of
the lows into the close. Weakness was triggered by the forecast for warm and wet
weather into the weekend. The USDA weekly crop progress report showed that 65%
of the crop is in good to excellent conditions and 1-3 inches of rain over the
next week would likely improve the crop conditions further in the next few
weeks. Iowa processors have boosted basis bids by 7 cents this morning in an
attempt to increase the producer selling into the cash market as old crop
supplies tighten. Oil World, the German newsletter, lowered their production
forecast to 50.2 million tons for Brazil as compared with last months USDA
forecast of 53.5 million tons. A Reuter’s survey of traders showed an average
trade estimate for ending stocks for the 2003/2004 season at 107 million bushels
from 115 million last month. For the new crop season, traders look for ending
stocks at 202 million bushels from 190 million last month. Support for November
soybeans comes in at 682 1/4 and 677 1/2 with 689 and 694 1/2 as resistance.

Technical Outlook

#SOYBEANS (NOV) 06/09/04 The market tilt is
slightly negative with the close under the pivot. The next area of resistance is
around 692 and 699 1/4, while 1st support hits today at 675 2/4 and below there
at 666 1/4. A negative signal for trend short-term was given on a close under
the 9-bar moving average. A bearish signal was triggered on a crossover down in
the daily stochastics. The next downside objective is 666 1/4.

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 207.0. The daily closing price
reversal down is a negative indicator for prices. First resistance comes in at
215.9, with support at 209.9. 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.

BEAN OIL (DEC): A negative signal for trend
short-term was given on a close under the 9-bar moving average. Stochastics are
at mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 25.40. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Daily swing resistance is found at 25.05 and above there at
25.40. Support should be encountered at 24.55 and 24.40.

 

WHEAT MARKET RECAP

6/8/2004

The early move under Monday’s lows failed to
attract new selling interest and the market pushed higher on the day. Upside
momentum also ran dry and the market closed unchanged on the session. The
perception of an oversold condition for the market, possible slowdown in harvest
pressures into later this week and positioning ahead of the USDA Crop Production
report for Thursday morning helped support the bounce. Australia official’s
overnight pegged production at 23.2 million tons from 21.9 million tons previous
forecast. The winter wheat crop is now 12% harvested and rains in the forecast
for the eastern portions of the southern plains into the weekend could slow
harvest. Temperatures into the northern plains soared to the mid-90’s yesterday
which helped dry down the crop in preparation of harvest. The winter wheat crop
was rated 42% in good to excellent condition as compared with 55% last year.
Canadian weather looks to improve into the weekend. A Reuter’s survey of traders
showed an average trade estimate for ending stocks for the 2003/2004 season at
525 million bushels from 526 million last month. For the new crop season,
traders look for ending stocks at 478 million bushels from 499 million last
month. Winter wheat production is expected to fall to 1.518 billion bushels
(1.497-1.538 range) as compared with 1.550 billion bushels projected last month
and 1.707 billion last year. July wheat support comes in at 361 1/2 with
resistance at 366 1/4 and 372.

Technical Outlook

#WHEAT (DEC) 6/9/2004: The market could take on a
defensive posture with the daily closing price reversal down. The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 380 and below there at 376 2/4, with resistance levels at 387 and 390
2/4. 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 376 2/4.

 

LIVE CATTLE RECAP

6/8/2004

Cattle futures pushed sharply lower with August
down 222 points as the higher opening failed to attract new buying and the move
under Monday’s lows attracted sell-stops and long liquidation selling. The
market had already priced-in a rally of $2.00-$3.00 in the cash market this week
and traders were having second thoughts as to the actual trade this week.
Boxed-beef cut-out values were up 94 cents to $155.08 as compared with $147.73
last week at this time. While packer profit margins have improved due to the
higher beef market, traders are less convinced that cash cattle will trade
sharply higher on the week.

Technical Outlook

#CATTLE (AUG) 6/9/2004: A bearish signal was
triggered on a crossover down in the daily stochastics. Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 86.95. 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 87.62 and below there at 86.95.
Market resistance is at 90.17 and then again at 92.05. A negative signal for
trend short-term was given on a close under the 9-bar moving average.

 

LEAN HOGS RECAP

6/8/2004

July hogs closed lower (down 125 to 76.20) for
the third session in a row after experiencing a reversal top from a contract
high on Friday. Follow-through selling helps confirm a top from a technical
perspective and the overbought condition helped trigger long liquidation sales.
Cash markets were sharply higher at some locations but traders are growing
fearful that the demand surge is just temporary and that once the 4th of July
bookings are complete from retailers, demand could slacken during a period of
hefty pork production. Slaughter came in at 381,000 head compared with trade
estimates at 380,000-386,000 head. The CME 2-day Lean Index for the period
ending June 4th came in at 76.18, up 37 cents from the previous session but down
from 78.16 the previous session.

Technical Outlook

#HOGS (AUG) 6/9/2004: The defensive setup, with
the close under the 2nd swing support, could cause some early weakness.
Resistance levels comes in at 76.45 and 77.60 today, while support is around
74.85 and then 74.40. The close above the 9-day moving average is a positive
short-term indicator for trend. A crossover down in the daily stochastics is a
bearish signal. 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 74.40.

 

COCOA MARKET RECAP

6/8/2004

The cocoa market came bounding back but failed to
hold all of the gains on the session as the market wasn’t sure how much emphasis
to put on the renewed political tensions. As expected the government reacted to
the injuries sustained by Peace keeping forces and the net result was over 20
deaths! In addition to the typical spec buying off the Ivory Coast news, the
funds were also noted buyers and that gave the market a little extra buying
incentive. Apparently the recent flare in violence at the Ivory Coast was the
most severe in over a year and that might have prompted a wave of fresh buyers
to enter the fray in cocoa.

Technical Outlook

COCOA (SEP) 06/09/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Cocoa
should run into resistance at 1387 and above there at 1412 with support at 1350
and 1338. Negative momentum studies in the neutral zone will tend to reinforce
lower price action. The next downside target is 1337.75.

 

COFFEE MARKET RECAP

6/8/2004

The market inched higher with a quiet, inside
trading session as speculators seem to be holding tight to long positions in
spite of the lack of threatening cold weather on the short-term forecast for
Brazil coffee areas. After a few dry days, rain is expected to return to Brazil
coffee areas on Friday with 1-2 inches expected in some regions. Brazil markets
are closed on Thursday for holiday and New York futures are closed Friday. As a
result, traders seem to be positioning for any changes which might occur in the
weather forecast for the second half of June when dealers return to work for
Monday morning. There is another Brazil coffee auction for 200,000 bags of
coffee left over from last years producer put-option program on Wednesday but
unlike the first three auctions, Brazil exporter demand looks weak for this
weeks auction as prices are high and demand seems a bit weak due to recent price
surge and due to lack of new interest from international roasters for additional
bookings. Vietnam cash trade is also slow.

Technical Outlook

COFFEE (SEP) 6/9/04 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 82.75. The Coffee contract should run into resistance at 84.55 and
above there at 85.05 with support at 83.4 and 82.75. The market’s short-term
trend is negative as the close remains below the 9-day moving average.

 

SUGAR MARKET RECAP

6/8/2004

October sugar closed sharply lower on the session
and near the low end of the recent 6-session consolidation. Futures are still
under the negative influence of the June 2nd reversal from a contract high. The
center-south region of Brazil has a few more days of dry weather for harvesting
activities until more rain arrives in some of the region for Friday and the
early weekend which could slow harvest again for a few days. The weather seems
to be just a short-term bullish factor as increased harvest of a record crop in
Brazil is likely to loosen up the tight cash situation and weakness could also
spark some long liquidation selling from speculators. Keep in mind, as of June
1st, large and small speculators combined were net long near 120,000 contracts.
Indonesia importers have been slow to buy more sugar even though permits were
issued in May to buy 192,600 tons of raw sugar. The rupiah has lost near 10% of
its values since the start of the year and millers have relied more on the
domestic market. Russia has imported 82,600 tons of white sugar this year vs.
45,800 last year at this point but only 18,500 tons from non-CIS countries which
compares with 16,400 tons last year. Traders believe that drought conditions in
Cuba this year could negatively impact next years harvest with expectations for
a decline from the small crop of just 2.52 million tons this year.

Technical Outlook

#SUGAR (OCT) 6/9/2004: The market setup is
somewhat negative with the close under the 1st swing support. Swing resistance
comes in at 7.60, with support found at 7.22. The close below the 9-day moving
average is a negative short-term indicator for trend. A crossover down in the
daily stochastics is a bearish signal. 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 7.22. Short-term indicators on the
defensive. Consider selling an intraday bounce.

 

COTTON MARKET RECAP

6/8/2004

The inside trading session after a contract low
on Monday might indicate a loss of downside momentum for the December cotton
contract but traders continue to search for news which might support a
turn-around in the steep downtrend. The crop is off to a good start, world
production is expected to swell and there is still a concern for China’s buying
buyer in a tighter credit environment. In Australia, the government pegged
2004/2005 cotton lint production at 498,000 tonnes, up 59% from this year.
Australia is traditionally the world’s third largest exporter of cotton lint.
The US production outlook is seen as a bearish development with 62% of the crop
in good to excellent condition as compared with 47% last year and 52% as the
14-year average for this time of the year. Certified deliverable stocks
increased to 351,068 bales as of June 7th from 329,309 bales the previous
session. For Thursday mornings USDA Supply/demand report, the focus of attention
will be on the China production and demand outlook for the coming year. For the
2003/2004 season, China has bought 4.823 million bales from 1.727 million bales
last year.

Technical Outlook

#COTTON (OCT) 6/9/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The market
tilt is slightly negative with the close under the pivot. Next resistance area
comes in at 56.70 and then again at 57.05, while support is targeted at 55.90
and 55.45. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 55.45. The market
is approaching over sold levels on an RSI reading under 30. The market made a
new contract low on the break.