Is Crude Demand Being Called Into Question?
BOND MARKET RECAP
4/8/2005
June Bonds finished unchanged at 111-11, 0-04 off
the high and 0-15 up from the low.
June 10 Yr Treasury Notes finished down 0-040 at
109-110, 0-040 off the high and 0-070 up from the low.
A moderate downside thrust in the
Treasuries was rejected possibly because the weakness in the stock market and
possibly because the market encountered solid support on the charts. We also
think that the slide in the Dollar might have prompted some arbitrage buying in
Treasuries. It is also possible that some portfolio rotation benefited stocks as
some money might have left the stock market for the Treasury market as a result
of the increasing odds of more US corporate problems. We also think that the
Treasury markets lacked a solid reason to sustain the downside breakout on the
charts.
Technical Outlook
BONDS (JUN) 04/11/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The major trend could be turning up with the close back above
the 18-day moving average. The upside closing price reversal on the daily chart
is somewhat bullish. The market tilt is slightly negative with the close under
the pivot. The next upside objective is 111-31. The next area of resistance is
around 111-24 and 111-31, while 1st support hits today at 111-04 and below there
at 110-22.
TNOTES (JUN) 04/11/2005: Rising stochastics at
overbought levels warrant some caution for bulls. The cross over and close above
the 18-day moving average is an indication the longer-term trend has turned
positive. The market tilt is slightly negative with the close under the pivot.
The next upside target is 109-220. The next area of resistance is around 109-175
and 109-220, while 1st support hits today at 109-065 and below there at 108-315.
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STOCK INDICES RECAP
4/8/2005
June S&P finished down 11.7 at 1183.6, 11.3 off
the high and 0.6 up from the low.
June S&P E-Mini closed down 12.25 at 1183. This
was 0.25 up from the low and 12.5 off the high.
June Dow closed down 95 at 10475. This was 6 up
from the low and 100 off the high.
The US stock market came under liquidation
pressure off the combination of AIG and GM problems and that clearly shows a
different focus from the dominating attention to the energy markets. The stock
market could easily get over the isolated problems at GM and AIG with persistent
declines in energy prices over the coming sessions. It is a little surprising
that nearly a $1.00 decline in energy prices failed to inspire the broad market
to gains but with the market carving out gains for most of the week we can
understand a profit taking tilt in the action Friday.
Technical Outlook
S&P 500 (JUN) 04/11/2005: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The near-term
upside objective is at 1197.87. The next area of resistance is around 1188.94
and 1197.87, while 1st support hits today at 1177.05 and below there at 1174.08.
SP EMINI (JUN) 04/11/2005: Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The close below the 18-day moving average is an
indication the longer-term trend has turned down. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. The next
upside objective is 1198.81. The next area of resistance is around 1189.37 and
1198.81, while 1st support hits today at 1176.63 and below there at 1173.32.
NASDAQ (JUN) 04/11/2005: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Momentum studies are rising from mid-range, which could accelerate a move higher
if resistance levels are penetrated. The market now above the 18-day moving
average suggests the longer-term trend has turned up. 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 next upside objective
is 1516.75. The next area of resistance is around 1502.50 and 1516.75, while 1st
support hits today at 1482.50 and below there at 1476.75.
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CURRENCY MARKET RECAP
4/8/2005
June US Dollar finished down 47 at 8441, 69 off
the high and 3 up from the low.
June Euro finished up 0.73 at 129.46, 0.07 off
the high and 1.14 up from the low.
June Euro Dollar closed down 0.005 at 96.515.
This was 0.01 up from the low and 0.005 off the high.
June Canadian Dollar closed down 0.31 at 81.52.
This was 0.31 up from the low and 0.29 off the high.
June British Pound finished up 1.61 at 187.9,
0.02 off the high and 1.63 up from the low.
June Swiss closed up 0.63 at 83.8. This was 0.8
up from the low and 0.1 off the high.
June Japanese Yen closed up 0.28 at 92.83. This
was 0.49 up from the low and 0.09 off the high.
The Dollar came under pressure possibly because
of the renewed corporate scandal issues at AIG and possibly because of the
deterioration in the outlook for GM. We also think that the market re-evaluated
the Thursday afternoon inflation dialogue from the Fed and came away with a
slightly different opinion. We doubted that the US had the fundamental case to
put the Dollar into an upside breakout and with the failure Friday into mid
session the technical tide has turned pretty negative toward the Dollar. The
Canadian unemployment rate declined slightly and that should have been
supportive to the Canadian but instead the currency was generally under pressure
and that is a bearish indication for the trend in the Canadian.
Technical Outlook
YEN (JUN) 04/11/2005: A bullish signal was given
with an upside crossover of the daily stochastics. The stochastics indicators
are rising from oversold levels, which is bullish and should support higher
prices. The close below the 18-day moving average is an indication the
longer-term trend has turned down. The daily closing price reversal up is a
positive indicator that could support higher prices. With the close over the 1st
swing resistance number, the market is in a moderately positive position. The
near-term upside target is at 93.31. With a reading under 30, the 9-day RSI is
approaching oversold levels. The next area of resistance is around 93.12 and
93.31, while 1st support hits today at 92.54 and below there at 92.15.
EURO (JUN) 04/11/2005: The crossover up in the
daily stochastics is a bullish signal. Daily stochastics are showing positive
momentum from oversold levels, which should reinforce a move higher if near term
resistance is taken out. The major trend has turned down with the cross over
back below the 18-day moving average. The upside daily closing price reversal
gives the market a bullish tilt. A positive setup occurred with the close over
the 1st swing resistance. The next upside target is 130.40. Daily studies
suggest buying dips today. The next area of resistance is around 130.06 and
130.40, while 1st support hits today at 128.86 and below there at 127.99.
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PRECIOUS METALS RECAP
4/8/2005
April Gold closed up 0.4 at 426.9. This was 2.1
up from the low and 0.4 off the high.
May Silver finished up 0.09 at 7.165, 0.005 off
the high and 0.145 up from the low.
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The gold and silver markets managed to show some
early signs of strength on Friday and did so after some extremely discouraging
early opening weakness. With the precious metals showing strength in the face of
patently weak US equity prices it would seem like the bull focus in gold and
silver has turned back toward the Dollar. In fact, with the Dollar falling below
a series of key support levels it is possible that gold and silver might see a
consistent flow of buy orders in the coming action. To really get some
consistent positive action going in the metals it might take a combination of a
lower Dollar, higher US stocks and renewed inflation dialogue.
Technical Outlook
SILVER (MAY) 04/11/2005: The market now above the
60-day moving average suggests the longer-term trend has turned up. Momentum
studies are rising from mid-range, which could accelerate a move higher if
resistance levels are penetrated. The market now above the 18-day moving average
suggests the longer-term trend has turned up. The daily closing price reversal
up on the daily chart is somewhat positive. With the close over the 1st swing
resistance number, the market is in a moderately positive position. The
near-term upside target is at 728.0. The next area of resistance is around 724.0
and 728.0, while 1st support hits today at 709.1 and below there at 698.1.
GOLD (APR) 04/11/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The major trend has turned down with the cross over back
below the 18-day moving average. The upside closing price reversal on the daily
chart is somewhat bullish. It is a slightly negative indicator that the close
was under the swing pivot. The next upside objective is 428.9. The next area of
resistance is around 428.1 and 428.9, while 1st support hits today at 425.7 and
below there at 424.0.
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COPPER MARKET RECAP
4/8/2005
May Copper closed up 0.10 at 150.75. This was
1.35 up from the low and 0.60 off the high.
The copper market showed signs of failing Friday
in the wake of moderate declines in the equity market, but since the US equity
losses were mostly inspired by isolated corporate issues we suspect that lower
energy prices helped the copper put a positive spin on prices into the close. We
suspect that the early losses in copper were mostly inspired by the 5,800 ton
increase in Shanghai copper stocks but in the end the Shanghai stocks remain
tight enough to support prices around the old contract highs. In the event that
oil prices continue to decline we suspect that the world economic outlook will
once again rev up and that could serve to push copper prices into new high
ground. While the market didn’t make too much out of the news from the
International Copper Study Group prediction of a 20,000 ton January deficit we
would think that figure is a little disappointing consider where the deficit was
at times over the last two years.
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ENERGY MARKET RECAP
4/8/2005
May Crude Oil closed down 0.79 at 53.32. This was
0.62 up from the low and 0.58 off the high.
May Heating Oil closed down 3.11 at 149.72. This
was 2.22 up from the low and 2.18 off the high.
May Unleaded Gas finished down 3.14 at 153.66,
2.34 off the high and 2.66 up from the low.
May Natural Gas finished down 0.12 at 7.24, 0.12
off the high and 0.03 up from the low.
May Propane closed down 0.02 at 0.86. This was
equal to the low and equal to the high.
The energy complex continued to slide and the
duration of the slide is certainly starting to erode the confidence of the bull
camp. Certainly the rising supply threat is behind the slide as is a profit
taking incentive. It is surprising that the recent EIA demand projections and
the projections of a significant narrowing of the excess supply capacity failed
to diffuse the slide in prices but with the market still unsure on the direction
of the global economy it is possible that demand is actually being called into
question. For the time being the market is apparently capable of embracing the
inventory rebuilding theme and that could continue unless there is a fresh
supply development.
Technical Outlook
CRUDE OIL (MAY) 04/11/2005: 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 should accelerate a move lower if
support levels are taken out. The major trend has turned down with the cross
over back below the 18-day moving average. The market tilt is slightly negative
with the close under the pivot. The next downside objective is 52.11. The next
area of resistance is around 53.92 and 54.51, while 1st support hits today at
52.72 and below there at 52.11.
UNLEADED (MAY) 04/11/2005: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The market back below the 18-day moving average suggests the longer-term
trend could be turning down. The market tilt is slightly negative with the close
under the pivot. The next downside objective is now at 148.58. The next area of
resistance is around 156.16 and 158.58, while 1st support hits today at 151.16
and below there at 148.58.
HEATING OIL (MAY) 04/11/2005: Stochastics
trending lower at midrange will tend to reinforce a move lower especially if
support levels are taken out. The close below the 18-day moving average is an
indication the longer-term trend has turned down. It is a slightly negative
indicator that the close was under the swing pivot. The next downside objective
is now at 145.31. The next area of resistance is around 151.92 and 154.11, while
1st support hits today at 147.52 and below there at 145.31.
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CORN MARKET RECAP
4/8/2005
May Corn finished down 1 1/2 at 204, 1 1/2
off the high and 1 up from the low. December Corn closed down 1 at 229 1/2. This
was 1 1/4 up from the low and 3/4 off the high.
The demand news from the supply/demand report was
negative and triggered more long liquidation selling from funds. The USDA pegged
US ending stocks for the 2004/2005 season at 2.215 billion bushels as compared
with the average trade estimate 2.165 billion bushels (range 2.086-2.275) and
compared with 2.055 billion bushels last month. Exports were revised lower by 50
million bushels and feed usage down by 75 million and industrial usage down by
35 million bushels. World corn ending stocks for the 2004/2005 season were
revised higher to 124.68 million tons from 122.04 last month and 98.12 million
tons last year. The market is also under pressure from warm and relatively dry
weather across the Midwest and the warm weather into the weekend has traders
nervous over increased planting progress. The USDA also announced a sale of
120,000 tonnes of US corn to unknown destination but with all of the other
bearish demand news, there is little support down to the contract low for May
corn at 201 3/4. Resistance comes in at 205 and 207.
Technical Outlook
CORN (MAY) 04/11/2005: 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 18-day moving average is an indication the
longer-term trend has turned down. The swing indicator gave a moderately
negative reading with the close below the 1st support number. The next downside
target is now at 201 3/4. The 9-day RSI under 30 indicates the market is
approaching oversold levels. The next area of resistance is around 205 1/4 and
206 1/2, while 1st support hits today at 202 3/4 and below there at 201 3/4.
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SOY COMPLEX RECAP
4/8/2005
May Soybeans finished down 11 1/2 at 612, 8 off
the high and 3 1/2 up from the low. November Soybeans closed down 6 3/4 at 606
1/2. This was 2 1/2 up from the low and 5 1/2 off the high.
May Soymeal closed down 2.8 at 185.5. This was
0.8 up from the low and 2.2 off the high.
May Soybean Oil finished down 0.41 at 22.27, 0.26
off the high and 0.11 up from the low.
Weakness in the other grains and expectations for
bigger cuts in stocks helped trigger the selling pressure for early in the
session. Continued long liquidation from speculators and funds pressured the
market late and the market closed at the lowest level since February 25th. The
USDA pegged US ending stocks for the 2004/2005 season at 375 million bushels as
compared with the average trade estimate at 366 million bushels (range 350-385)
as compared with 410 million bushels last month. Exports were revised higher by
35 million bushels which supported the lower ending stocks forecast. Brazil
production was revised down to 54 million tons from 59 million last month which
pushed world ending stocks down to 52.59 million tons from 55.98 million last
month and 37.45 million tons last year. The previous record high world ending
stocks was 40.65 million tons. Record high Brazil production and record high
ending stocks helped to keep the supply tone bearish and the speculator in a
long liquidation mode. While leaving the crush estimate unchanged from last
month, the USDA did raise soyoil ending stocks by 50 million pounds which was
seen as a bearish development. May soybean support comes in at 593 with 616 and
628 as resistance.
Technical Outlook
BEANS (MAY) 04/11/2005: The daily stochastics
gave a bearish indicator with a crossover down. Momentum studies are still
bearish but are now at oversold levels and will tend to support reversal action
if it occurs. The close under the 18-day moving average indicates the
longer-term trend could be turning down. The market is in a bearish position
with the close below the 2nd swing support number. The next downside target is
now at 601 3/4. The next area of resistance is around 617 3/4 and 624 1/2, while
1st support hits today at 606 1/4 and below there at 601 3/4.
MEAL (MAY) 04/11/2005: Rising from oversold
levels, daily momentum studies would support higher prices, especially on a
close above resistance. The major trend has turned down with the cross over back
below the 18-day moving average. The defensive setup, with the close under the
2nd swing support, could cause some early weakness. The next upside objective is
188.8. The next area of resistance is around 187.0 and 188.8, while 1st support
hits today at 184.0 and below there at 182.9.
BEANOIL (MAY) 04/11/2005: The market back below
the 40-day moving average suggests the longer-term trend could be turning down.
Daily stochastics are trending lower but have declined into oversold territory.
The market back below the 18-day moving average suggests the longer-term trend
could be turning down. The gap lower on the day session chart is bearish and
puts the market on the defensive. The close below the 2nd swing support number
puts the market on the defensive. The next downside target is 21.94. The next
area of resistance is around 22.45 and 22.67, while 1st support hits today at
22.09 and below there at 21.94.
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WHEAT MARKET RECAP
4/8/2005
May Wheat finished down 4 1/4 at 310, 4 3/4 off the high and 2
1/2 up from the low. July Wheat closed down 4 1/2 at 320. This was 3 1/4 up from
the low and 4 off the high.
Weakness in the other grains and ideas that China
will not be in the market for imports for months ahead helped to trigger more
selling pressure this morning in spite of the tighter ending stocks estimate.
The late break pushed the market to a new low for the week with May wheat moving
to the lowest level since February 22nd. The USDA pegged US ending stocks for
the 2004/2005 season at 541 million bushels as compared with the average trade
estimate 548 million bushels (range 533-560) and compared with 553 million
bushels last month. The market may need a continued flow of bearish news to
rationalize continued weakness into the primary growing season ahead. World
wheat ending stocks were revised slightly higher to 147.68 million tons from
146.78 million last month and 131.28 million tons last year. May wheat
resistance comes in at 313 1/2 and 315 with 306 1/4 and 301 3/4 as next support.
Technical Outlook
WHEAT (MAY) 04/11/2005: Daily stochastics
declining into oversold territory suggest the selling may be drying up soon. The
market back below the 18-day moving average suggests the longer-term trend could
be turning down. The market is in a bearish position with the close below the
2nd swing support number. The next downside target is now at 303 1/2. The 9-day
RSI under 30 indicates the market is approaching oversold levels. The next area
of resistance is around 313 1/2 and 317 3/4, while 1st support hits today at 306
1/2 and below there at 303 1/2.
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LIVE CATTLE RECAP
4/8/2005
April Live Cattle finished up 0.50 at 88.27, 0.52
off the high and 0.32 up from the low.
May Feeder Cattle closed up 0.87 at 104.80. This
was 1.05 up from the low and 0.50 off the high.
June cattle closed sharply higher on the session
finding support from the stiff discount of futures to the cash market and from
expectations for steady cash markets next week. Strength in the hog market and
news this week that Taiwan bought US beef for the fist time since December of
2003 added to the positive tone. Cash cattle in the panhandle traded at $90.00,
down $2.00 from last week. Boxed-beef cut-out values at mid-session were down
$.57 to $154.04 as compared with $152.66 last week.
Technical Outlook
CATTLE (APR) 04/11/2005: The cross over and close
above the 60-day moving average is an indication the longer-term trend has
turned positive. Negative momentum studies in the neutral zone will tend to
reinforce lower price action. The major trend has turned down with the cross
over back below the 18-day moving average. The market setup is supportive for
early gains with the close over the 1st swing resistance. The next downside
target is 87.500. The next area of resistance is around 88.700 and 89.150, while
1st support hits today at 87.870 and below there at 87.500.
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LEAN HOGS RECAP
4/8/2005
April Lean Hogs finished up 1.70 at 68.22, 0.25
off the high and 0.82 up from the low.
May Pork Bellies closed up 1.05 at 93.80. This
was 1.05 up from the low and 0.52 off the high.
The market pushed sharply higher on the session
with positive news on pork export projections and from ideas that cash hogs will
rally next week. Ideas that the market is oversold after the sharp break of the
past week helped to provide support as well. The CME 2-day lean index for the
period ending April 6th was up 29 cents to 68.08 as compared with 67.03 the
previous week. The USDA raised their estimate for 2005 pork exports to 2.53
billion pounds from 2.285 billion the previous year.
Technical Outlook
HOGS (APR) 04/11/2005: The daily stochastics gave
a bullish indicator with a crossover up. Daily stochastics are showing positive
momentum from oversold levels, which should reinforce a move higher if near term
resistance is taken out. The major trend has turned down with the cross over
back below the 18-day moving average. If yesterday’s gap higher on the day
session chart holds, additional buying could develop this session. 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 near-term
upside target is at 69.150. The next area of resistance is around 68.750 and
69.150, while 1st support hits today at 67.700 and below there at 67.020.
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COCOA MARKET RECAP
4/8/2005
May Cocoa finished up 13 at 1565, 3 off the high
and 27 up from the low.
An inside day, with a slightly positive close was
probably inspired in part by the weak Dollar. We suspect that the bear tilt
remains in place as some analysts were out Friday floating ideas of a slight
increase in parts of the Nigerian mid crop production. We also think that the
upside will continue to be limited in the wake of the recent Peace agreement. We
have to continue to think that consolidation is likely considering the limited
potential for significant changes in supply and demand in the coming weeks. Some
traders suggest that slightly lower violence concerns should prompt ongoing long
liquidation.
Technical Outlook
COCOA (MAY) 04/11/2005: The daily stochastics
gave a bullish indicator with a crossover up. The stochastics indicators are
rising from oversold levels, which is bullish and should support higher prices.
The close under the 18-day moving average indicates the longer-term trend could
be turning down. With the close higher than the pivot swing number, the market
is in a slightly bullish posture. The near-term upside target is at 1589. The
next area of resistance is around 1580 and 1589, while 1st support hits today at
1550 and below there at 1529.
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COFFEE MARKET RECAP
4/8/2005
May Coffee closed down 5.10 at 116.85. This was
2.10 up from the low and 4.95 off the high.
July coffee moved under the 50-day moving average
for the first time since November 3rd which triggered massive fund and
speculative long liquidation selling and a sharp break to the lowest level since
mid-February. With a break of near 1400 points off of Wednesday’s peak, futures
are already oversold. However, traders will monitor the COT reports this
afternoon to see the extent of the speculative long position. The Mexico Coffee
Council pegged March exports at 189,061 bags as compared with 343,462 bags last
year. For the October to March time frame, exports have reached 792,906 bags
which is down 29.8% from last year. With little or no rain in the 10-day
forecast for the key producing state of Minas Gerais in Brazil there is some
light concerns that continued dryness could begin to cause some tree stress
after March rainfall was below normal.
Technical Outlook
COFFEE (MAY) 04/11/2005: The market back below
the 60-day moving average suggests the longer-term trend could be turning down.
Daily stochastics are trending lower but have declined into oversold territory.
The major trend has turned down with the cross over back below the 18-day moving
average. There could be some early pressure today given the market’s negative
setup with the close below the 2nd swing support. The next downside target is
now at 110.55. The next area of resistance is around 120.35 and 124.60, while
1st support hits today at 113.35 and below there at 110.55.
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SUGAR MARKET RECAP
4/8/2005
May Sugar closed down 0.18 at 8.48. This was 0.01
up from the low and 0.24 off the high.
May sugar opened 5 higher on the session and
collapsed to close 18 lower on the day and down 4 on the week. The market
remains in a well defined downtrend off of the January 26th peak in spite of
continued talk of bullish fundamentals for the market. With the record harvest
in Brazil picking up steam and less than expected demand from India and China
this season, it may take lower prices to incite better demand or else a weather
problem from key producers. The stronger demand for cane for energy reasons
should help provide underlying support but for now there is still no sign that
the long liquidation trend of the speculator is over.
Technical Outlook
SUGAR (MAY) 04/11/2005: Daily stochastics are
showing positive momentum from oversold levels, which should reinforce a move
higher if near term resistance is taken out. The close below the 18-day moving
average is an indication the longer-term trend has turned down. 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 upside target is 8.78. The next
area of resistance is around 8.60 and 8.78, while 1st support hits today at 8.36
and below there at 8.29.
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COTTON MARKET RECAP
4/8/2005
May Cotton finished up 0.99 at 53.21, 0.19 off
the high and 1.69 up from the low.
The cotton market pushed moderately higher led by
strength in the May contract as the early break failed to attract new selling
interest. The USDA news was considered neutral to bearish but trade house buying
emerged on the early break. The USDA left the US supply/demand numbers unchanged
from last month but world production was revised higher to 119.22 million bales
from 117.71 million last month. The biggest jump came from India. World usage
was also revised higher to 107.05 million bales from 106.16 million last month.
World ending stocks for the 2004/2005 season are now pegged at 47.83 million
bales from 35.62 million last year and 38.13 million bales 2 years ago.
Technical Outlook
COTTON (MAY) 04/11/2005: A bullish signal was
given with an upside crossover of the daily stochastics. Momentum studies are
trending higher from mid-range, which should support a move higher if resistance
levels are penetrated. The major trend could be turning up with the close back
above the 18-day moving average. The outside day up is somewhat positive. The
market setup is supportive for early gains with the close over the 1st swing
resistance. The near-term upside objective is at 54.71. The next area of
resistance is around 54.15 and 54.71, while 1st support hits today at 52.27 and
below there at 50.96.