Iraqi Production Is Up. So Why Is Oil So High?

Technical Outlook

BONDS (JUN) 03/09/04: With the close higher than
the pivot swing number, the market is in a slightly bullish posture. Near-term
resistance for bonds is at 115.11 and then again at 115.21, while swing support
hits at 114.10 and below there at 113.19. The market’s close above the 9-day
moving average suggests the short-term trend remains positive. Studies are
showing positive momentum, but are now in overbought territory so some caution
is warranted. The next upside target is 115.21. The 9-day RSI over 70 indicates
the market is approaching overbought levels.

T-NOTES(JUN) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
116.06. It is a mildly bullish indicator that the market closed over the pivot
swing number. 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 116.00 and then again
at 116.06, while swing support hits at 115.11 and below there at 114.28. The
market’s short-term trend is positive on a close above the 9-day moving average.
With a reading over 70, the 9-day RSI is approaching overbought levels.

 

STOCK INDICES RECAP

3/8/2004

The stock market worked lower throughout the
session after starting out higher and fading. The fact that the Oracle of Omaha
suggested that there were few stock values in the marketplace seemed to add to
the disappointment off the only US economic report of the day, the Kansas City
Fed Manufacturing Index. Significant weakness in the energy complex pulled the
NASDAQ down and could actually kick Dow Theorists into a much more negative
stance in the coming sessions. Furthermore, the economic report slate for the
coming two sessions would seem to be without significant capacity to produce a
change in current sentiment.

Technical Outlook

S&P500 (MAR) 03/09/04: The market’s close below
the 1st swing support number suggests a moderately negative setup for today.
Underlying support comes in at 1135.35 and 1130.98, with overhead resistance at
1152.05 and 1164.38. The market’s short-term trend is negative as the close
remains below the 9-day moving average. The daily stochastic’s gave a bearish
indicator with a crossover down. The next downside objective is now at 1130.98.
Daily studies pointing down suggests selling minor rallies.

S&P E-Mini (MAR): The key reversal down puts the
market on the defensive. The market made a new contract high on the rally. A
bearish signal was triggered on a crossover down in the daily stochastics. The
next downside objective is 1130.81. The close below the 1st swing support could
weigh on the market. Near-term resistance for the S&P Mini is at 1151.88 and
then again at 1164.31, while swing support hits at 1135.13 and below there at
1130.81. A positive signal for trend short-term was given on a close over the
9-bar moving average.

NASDAQ (MAR) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The close
below the 2nd swing support number puts the market on the defensive. The market
should run into resistance at 1459.50 and above there at 1493.25 with support at
1414.50 and 1403.25. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 1403.3.

MINI DOW (MAR) The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. The
market should run into resistance at 10568 and above there at 10671 with support
at 10428 and 10391. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 10391.The close under the 40-day moving
average indicates the longer-term trend could be turning down. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. Short-term indicators on the defensive. Consider selling an
intraday bounce.

 

CURRENCY MARKET RECAP

3/8/2004

The Dollar finished the session weaker but
basically without much direction. However, the Yen and Pound seemed to catch
late in the session with the Yen making a very impressive bottom. Supposedly the
BOJ was rumored to have pulled bids on the Dollar and that in turn took the
floor out from under the Dollar and quickly boosted the Yen. In short, the
economics behind the Dollar are sour and maybe the BOJ has changed its mind or
has run out of intervention capacity.

Technical Outlook

YEN (MAR): The market’s close below the 9-day
moving average is an indication the short-term trend remains negative. A
positive setup occurred with the close over the 1st swing resistance. Swing
resistance is targeted at 90.29 and above there at 90.60, with the yen finding
support around 89.38 and below there at 88.78. The close under the 40-day moving
average indicates the longer-term trend could be turning down. Momentum studies
are declining, but have fallen to oversold levels. The next downside target is
88.78. The 9-day RSI under 30 indicates the market is approaching oversold
levels.

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 1.2475. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.2301, with overhead resistance at 1.2475. The
market’s short-term trend is positive on a close above the 9-day moving average.
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

3/8/2004

The gold market gave some ground from the Friday
close and would seem to be under pressure without much direction from the
Dollar. The Dollar did manage to trade mostly higher, which leaves the trend in
the Dollar pointing higher and that in a sense undermines buying interest in
gold. London gold managed to see the afternoon fix rise and silver managed to
bounce 7 cents off its low of the day and that would seem to suggest that both
gold and silver managed to find buying interest under the market.

Technical Outlook

SILVER (MAY): With the close higher than the
pivot swing number, the market is in a slightly bullish posture. Initial support
for silver is at 690.0 and below there at 680.5 with resistance likely at 700.3
and 708.0. The market’s close above the 9-day moving average suggests the
short-term trend remains positive. Studies are showing positive momentum, but
are now in overbought territory so some caution is warranted. The next upside
target is 700.3. A new contract high was made on the rally.

GOLD (APR): Support for gold today comes in near
398.18, while resistance is pegged at 403.18. 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 403.18. It is a mildly
bullish indicator that the market closed over the pivot swing number. The
market’s short-term trend is positive on a close above the 9-day moving average.

 

COPPER MARKET RECAP

3/8/2004

The copper market mounted a massive correction
Monday partly because of the overbought technical condition of the market and
partly because the macro economic case for US demand is deteriorating. It is
also possible that evidence of some cash tender sales undermined sentiment as
that clearly sends a signal that the extremely high price is pulling supply out
from under the rug and onto the market place. With the Chinese apparently
pulling back from a number of commodity purchases the copper market capitulated
and subsequently ran a number of sell stop levels on the charts.

 

ENERGY MARKET RECAP

3/8/2004

The energy complex faltered Monday partly because
of its excessive overbought technical condition and partly because of the
realization that Iraqi exports were beginning to rise. While Iraqi production
and exports were on the rise the February totals were slightly less than
expected and therefore the full negative impact of the output gains is
mitigated. However, the market is generally aware that Iraq output is rising
right into the anticipated seasonal demand slide. The Qatar Oil Minister also
contributed to the downside action by suggesting that there was no shortage of
oil in the world market. However, the market should have been supported by the
idea that the Qatar Oil Minister reiterated that many producers are still
committed to cutting production as previously agreed.

Technical Outlook

CRUDE OIL (APR): The market’s key reversal down
is a bearish signal. The outside day down is a negative signal. The rally
brought the market to a new contract high. The daily closing price reversal down
puts the market on the defensive. The market is in a bearish position with the
close below the 2nd swing support number. Support for crude is keyed on 35.99
and below there at 35.59, with resistance pegged at 37.15 and 37.91. The
market’s short-term trend is positive on a close above the 9-day moving average.
The daily stochastic’s gave a bearish indicator with a crossover down. 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
35.59.

UNLEADED GAS (APR): Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 104.23. The close below the 2nd swing support number puts the market
on the defensive. Resistance today is at 114.63, while support should be found
around 104.23. The outside day down and close below the previous day’s low is a
negative signal. The downside closing price reversal on the daily chart is
somewhat negative. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative.

HEATING OIL (APR):The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 86.30, with resistance is at 94.70. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The major trend is down with the cross over back below the 40-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 86.30.

 ^next^

CORN MARKET RECAP

3/8/2004

The market collapsed under the weight of
aggressive speculative selling as futures followed soybeans lower with May corn
closing under the 20-day moving average for the first time this year. The market
moved to the lowest level since February 20th. Traders remain fearful of an
overbought condition and the potential for more aggressive long liquidation
selling ahead after the daily and weekly closing price reversals of last week.
The Commitment-of-Traders report with options showed the market in a very
overbought condition with large speculators (as of March 2nd) holding a record
net long position of 167,966 contracts. Funds were noted sellers of near of near
4200 contracts. Weekly export inspections were reported at 53.6 million bushels
as compared with 30-36 million expected. Cumulative shipments have reached 965.6
million bushels as compared with 762.2 million last year at this time. Traders
are looking for ending stocks on Wednesday morning to come in near 901 million
bushels (range 841-951) as compared with 901 million bushels last month. Bird
flu reported in Maryland and in Japan over the weekend has traders a bit nervous
over the longer-term demand factors for corn as well. Deliveries this morning
totaled 166 contracts.

Technical Outlook

CORN (MAY) 03/09/04: 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 289 . The market is in a bearish
position with the close below the 2nd swing support number. Market resistance
comes in at 296 today, with support at 289 . The market’s short-term trend is
negative as the close remains below the 9-day moving average. The gap down on
the day session chart is bearish with more selling pressure possible today.

 

SOY COMPLEX RECAP

3/8/2004

The market pushed sharply lower and to the lowest
level since February 24th as the break-out below last weeks lows seems to have
attracted additional technical selling from speculators. The lack of new news
from Brazil regarding the weather and bird flu cases reported in Japan and
Maryland over the weekend helped to trigger active long liquidation selling
early in the session. Funds were noted sellers of near 5200 contracts in
soybeans, 2200 meal and 6600 contracts in oil. Weakness in palm oil and heavy
speculative selling drove oil futures to the lowest level since February 19th.
Weekly export inspections were reported at 13 million bushels as compared with
16-21 million expected. Cumulative shipments have reached 715.6 million bushels
as compared with 796.0 million last year at this time. Traders are looking for
ending stocks on Wednesday morning to come in near 121 million bushels (range
105-125) as compared with 125 million bushels last month. Ideas that China
demand is still slow due to poor crush margins and the Commitment-of-Traders
report with options which showed the market in an overbought condition added to
the bearish tone. The move under last weeks lows helped to fuel increased
selling from speculators. The COT report with options showed that as of March
2nd, speculators were holding a net long position of near 80,000 contracts in
soybeans, 97,000 in oil and 47,000 contracts in meal. Deliveries against the
March soybeans were 73 contracts this morning, March Meal at 3 and March Oil at
8.

Technical Outlook

SOYBEANS (MAY) 03/09/04: The close below the 2nd
swing support number puts the market on the defensive. The next area of
resistance is around 927 and 938 , while 1st support hits today at 906 1/2 and
below there at 897 . The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. 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
897 .

MEAL (MAY): 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 273.7. First resistance
comes in at 282.4, with support at 276.4. The market’s short-term trend is
negative as the close remains below the 9-day moving average. The market is in a
bearish position with the close below the 2nd swing support number.

BEAN OIL (MAY): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Negative momentum studies in the neutral zone will tend to reinforce lower price
action. The next downside target is 31.36. The swing indicator gave a moderately
negative reading with the close below the 1st support number. Daily swing
resistance is found at 32.40 and above there at 32.80. Support should be
encountered at 31.68 and 31.36. Short-term indicators on the defensive. Consider
selling an intraday bounce.

 

WHEAT MARKET RECAP

3/8/2004

July wheat closed near the February lows but the
move to new lows for the year for new crop Kansas City wheat leaves the market
vulnerable to increased selling (long liquidation) on weakness. News that Egypt
cancelled an optional origin tender over the weekend helped to start the market
off with a negative tone this week. The USDA announced a switch of 100,000 tons
of wheat sold to unknown destination to China. This provided some underlying
support but was not seen as new news. Continued talk of good weather last week
in the plains which could improve crop conditions as the crop comes out of
dormancy helped to add to the bearish tone and contributed to the long
liquidation selling. Large traders were noted as holding a hefty net long
position (as of March 2nd) in the Commitment-of-Traders report with options with
a net long of 29,853 lots. This leaves futures vulnerable to long liquidation
selling with the market at a new low for the year. There was only 1 contract
delivered against the March contract this morning. Weekly export inspections
were reported at 20.4 million bushels as compared with 18-26 million expected.
Cumulative shipments have reached 858.7 million bushels as compared with 659.1
million last year at this time. Traders are looking for ending stocks on
Wednesday morning to come in near 533 million bushels (range 509-555) as
compared with 534 million bushels last month. The focus of attention, however,
seems to be shifting to the more bearish new crop situation for the 2004/2005
season with a general perception that world production may increase by 42-48
million tons for the coming year.

Technical Outlook

WHEAT (MAY) 03/09/04: The gap lower price action
on the day session chart is a bearish indicator for trend. The close below the
2nd swing support number puts the market on the defensive. Look for near-term
support at 364 1/2 and below there at 362 , with resistance levels at 370 1/2
and 374 . 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 362 .

 

LIVE CATTLE RECAP

3/8/2004

April cattle closed 17 lower on the session and
down 105 points from the highs of the day. Cash markets were quiet with a lack
of new packer bids due to active cash trade and high numbers moving last week.
Cattle slaughter came in at 123,000 head as compared with trade expectations at
116,000-123,000 head. At noon, boxed beef cutout values were down $.30 to
$141.28 and up from $137.44 last week at this time.

Technical Outlook

CATTLE (APR) 03/09/04: 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
78.20. It is a slightly negative indicator that the close was lower than the
pivot swing number. Support should be encountered at 78.50 and below there at
78.20. Market resistance is at 79.60 and then again at 80.40. The downside
closing price reversal on the daily chart is somewhat negative. 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.

 

LEAN HOGS RECAP

3/8/2004

April hogs closed 72 lower on the session and
down nearly 150 points from the highs as a late sell-off in cattle and hogs was
tied to growing concerns for the lack of poultry exports from the US if more and
more bird flu is reported around the country. Maryland is the fifth state to
report bird flu and the first larger producing state. News that Mexico is moving
to lift its ban on US poultry helped to pressure the market late under the logic
that Mexico pork demand for US pork might decline. A weaker tone for the cash
market or Tuesday and ideas that the market is overbought after the recent surge
added to the bearish tone. Hog slaughter came in at 371,000 head as compared
with trade expectations at 376,000-382,000 head. The CME 2-day Lean index for
the period ending March 4th came in at 64.72, up 73 from the previous session
and up from 61.73 last week at this time.

Technical Outlook

HOGS (APR) 03/09/04: The market’s close below the
pivot swing number is a mildly negative setup. Resistance levels comes in at
62.02 and 63.15 today, while support is around 60.40 and then 59.90. The daily
closing price reversal down puts the market on the defensive. 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
59.90.

 

COCOA MARKET RECAP

3/8/2004

The cocoa market finished a tick higher on the
day and just barely managed to hold above the prior session low. However, with
the cocoa market now down nearly $100 since the last COT report and the COT
report showing a net fund short of 7,064 contracts we would expect the market to
avoid aggressive long liquidation. The major crush of harvest should be abating
but without some supply uncertainty or increased demand the cocoa market might
not have the fundamental basis to bottom quickly.

Technical Outlook

COCOA (MAY)03/09/04 The market tilt is slightly
negative with the close under the pivot. Cocoa should run into resistance at
1475 and above there at 1489 with support at 1450 and 1439. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
1438.75.

 

COFFEE MARKET RECAP

3/8/2004

July coffee closed 30 ticks higher in a quiet
trade as traders position for the April option expiration this Friday. The cash
market is quiet right now with roaster apparently working down supplies and
giving futures little direction. Nicaragua reported February exports rose 34%
compared to last year. The market’s technical setup has improved with prices
filling the gap from last week. Next resistance for July is around 78. CSCE
Stocks were up 13,285bags to 4.549 million bags with 77,591 bags pending review.

Technical Outlook

COFFEE (MAY)3/9/04 The market has a slightly
positive tilt with the close over the swing pivot. Daily stochastics are showing
positive momentum from oversold levels which should reinforce a move higher if
near-term resistance is taken out. The near-term upside objective is at
76.50.The Coffee contract should run into resistance at 75.90 and above there at
76.50 with support at 74.55 and 73.80. The market’s short-term trend is positive
on a close above the 9-day moving average.

 

SUGAR MARKET RECAP

3/8/2004

The market inched higher into the close with the
market spending much of the session Monday in quiet two-sided trade with May
closing at 622, up 3 from Friday. Weakness in the CRB Index and talk that funds
were mostly out of their net short position helped provide underlying support.
In addition, the strength in London with the market pushing to the highest level
since August added to the positive tone in New York. Cash market news remains
very slow to develop with high freight rates and hefty stocks at many consuming
countries helping to keep activity slow. Russian buyers are funding a tough time
in making money from imports until the internal price rallies sharply. For
example, freight charges from Brazil into Russia Black Sea are estimated near
$65/tonne as compared with near $25/tonne last year at this time.

Technical Outlook

SUGAR (MAY) 03/09/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Swing resistance
comes in at 6.27, with support found at 6.13. 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 6.27.

 

COTTON MARKET RECAP

3/8/2004

May cotton closed sharply lower, down 2.47, on
speculative sales ahead of Wednesday’s USDA supply/demand report. The trade is
looking for a slight upward revision in US exports and domestic consumption and
an increase in the USDA’s estimate for China production. China recently
increased their import rate quota by 1 million metric tons which has raised
speculation that the USDA will raise the export number. The Chinese government
released their estimate of 2003/04 cotton crop at 22.36 million bales, down 1%
from the previous year. Support for May cotton comes in just above 66.

Technical Outlook

COTTON (MAY) 03/09/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
Short-term indicators on the defensive. Consider selling an intraday bounce. The
swing indicator gave a moderately negative reading with the close below the 1st
support number. Next resistance area comes in at 68.06 and then again at 69.43,
while support is targeted at 65.96 and 65.23. Momentum studies are declining,
but have fallen to oversold levels. The next downside target is 65.23. ORANGE
JUICE (MAY)3/9/04 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 63.55 and above there at 64.80 with support at 61.60 and 60.90.
The market’s short-term trend is negative as the close remains below the 9-day
moving average. Daily stochastics are showing positive momentum from oversold
levels which should reinforce a move higher if near-term resistance is taken
out. The near-term upside objective is at 64.8.