Is The Bond Market Factoring In The Payroll Report?
BOND MARKET RECAP
7/29/2004
September Bonds closed up 0-05 at 106-31. This
was 0-22 up from the low and 0-04 off the high.
September 10 Yr Treasury Notes finished up 0-045
at 109-310, 0-015 off the high and 0-150 up from the low.
The Treasury market surprisingly fell right
after the first set of economic reports even though one might have considered
the information to be supportive. Therefore, it would seem that the market is
already beginning to factor in expectations of a strong US payroll report on
August 6th. The Help wanted Index came in down slightly and that seemed to
deflate the favorable expectations for the upcoming monthly payroll report. It
is also possible that a big jump in the ongoing claims reading Thursday morning
tempered the bearish tilt in Treasury prices.
Technical Outlook
#BONDS (SEP) 7/30/2004: The market has a slightly
positive tilt with the close over the swing pivot. Near-term resistance for
bonds is at 107.13 and then again at 107.21, while swing support hits at 106.18
and below there at 105.31. 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 105.31.
T-NOTES(SEP) 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 109.11. It is a mildly bullish indicator that
the market closed over the pivot swing number. Near-term resistance for the
T-Notes is at 110.08 and then again at 110.12, while swing support hits at
109.23 and below there at 109.11. The downside crossover (9 below 18) of the
moving averages suggests a developing short-term downtrend.
STOCK INDICES RECAP
7/29/2004
September S&P finished up 4.7 at 1100.2, 3.3 off
the high and 5.2 up from the low.
September S&P E-Mini closed up 4.75 at 1100.25.
This was 7.75 up from the low and 3.5 off the high.
September Dow closed up 11 at 10121. This was 51
up from the low and 29 off the high.
September Dow E-Mini finished up 14 at 10124, 28
off the high and 54 up from the low.
The stock market showed some early weakness but
managed to maintain a generally positive view. The Dow Chemical forward guidance
provided the market with a needed lift especially since the scheduled economic
report flow from the US was slightly disappointing. It does seem like investors
are becoming a little more optimistic toward future growth and that might be
coming off Treasury market rumors that the next payroll report is going to show
a 300,000 gain. Stock prices might also have been lifted off lower energy market
concerns as the Russian government revoked the order to freeze assets of Yukos.
Technical Outlook
#S&P500 (SEP) 7/30/2004: The close over the pivot
swing is a somewhat positive setup. Underlying support comes in at 1096.05 and
1091.28, with overhead resistance at 1104.55 and 1108.28. The close above the
9-day moving average is a positive short-term indicator for trend. Momentum
studies are rising from mid-range which could accelerate a move higher if
resistance levels are penetrated. The near-term upside objective is at 1108.28.
S&P E-Mini (SEP): Positive momentum studies in
the neutral zone will tend to reinforce higher price action. The next upside
target is 1110.31. 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
1105.63 and then again at 1110.31, while swing support hits at 1094.38 and below
there at 1087.81. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.
NASDAQ (SEP) 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 1409.75 and above there at 1416.38 with support at
1393.25 and 1383.38. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 1416.38.
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 10161 and above there at 10198 with support at 10079 and 10034.
Momentum studies are rising from mid-range which could accelerate a move higher
if resistance levels are penetrated. The near-term upside target is at 10198.
The close over the pivot swing is a somewhat positive setup.
CURRENCY MARKET RECAP
7/29/2004
September US Dollar finished up 20 at 9014, 35
off the high and 43 up from the low.
September Euro finished down 0.22 at 120.28, 0.6
off the high and 0.46 up from the low.
September Euro Dollar closed up 0.01 at 98.03.
This was 0.02 up from the low and 0.01 off the high.
September Canadian Dollar closed up 0.12 at
75.34. This was 0.61 up from the low and 0.16 off the high.
September British Pound finished down 0.7 at
180.83, 0.56 off the high and 0.73 up from the low.
September Swiss closed down 0.34 at 78.13. This
was 0.16 up from the low and 0.65 off the high.
September Japanese Yen closed down 0.35 at 89.33.
This was 0.28 up from the low and 0.39 off the high.
The Dollar managed an impressive rally to start
the session but then the Dollar gave up the gains in the wake of non-descript
economic readings from the US. However the Dollar did manage to fight back to
positive ground around mid session and could have been lifted by the soaring US
stock market. The Canadian Dollar showed the most promise against the Dollar as
it rejected a significant failure early in the session and managed to post a
mostly positive days action. The Canadian managed the positive action even in
the wake of a decline in Industrial prices for the month of June and that can
sometime point to a soft economy.
Technical Outlook
#CURRENCIES 7/30/2004: YEN (SEP): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The close below the 1st swing support could weigh on the market. Swing
resistance is targeted at 89.67 and above there at 90.03, with the yen finding
support around 89.00 and below there at 88.69. The market back below the 40-day
moving average suggests the longer-term trend could be turning down. Daily
stochastics declining into oversold territory suggest the selling may be drying
up soon. The next downside objective is 88.69. The market is approaching over
sold levels on an RSI reading under 30.
EURO (SEP): 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 1.1926. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1926, with overhead resistance at 1.2138. 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. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart.
PRECIOUS METALS RECAP
7/29/2004
October Gold closed down 2 at 388.4. This was 2.4
up from the low and 3.3 off the high.
September Silver finished down 0.018 at 6.355,
0.055 off the high and 0.12 up from the low.
October Platinum closed up 18.9 at 817.7. This
was 9.7 up from the low and 4.3 off the high.
The metals markets were lucky to have avoided
sustained selling as the Dollar started the session out extremely strong but
then faded after early US numbers failed to impress. It would seem as if the
gold market is getting fundamental support from gold company information as Gold
Fields threatened to begin some shaft closings unless the South African currency
firmed up. It should also be noted that a number of gold producers recent
reported lower production or the threat of lower production and that should also
provide the markets with an underpin. Significant strength in copper and
platinum would seem to give gold and silver some addition support especially
since that action is thought to be the result of improved demand expectations
for China.
Technical Outlook
#P-METALS 7/30/2004: SILVER (SEP): The market has
a slightly positive tilt with the close over the swing pivot. Initial support
for silver is at 626.8 and below there at 616.4 with resistance likely at 635.6
and 644.3. A negative indicator was given with the downside crossover of the 9 &
18 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 616.4. The market could take on a defensive posture with the daily
closing price reversal down.
GOLD (OCT): Support for gold today comes in near
382.93, while resistance is pegged at 394.33. 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 382.93. It is a slightly
negative indicator that the close was under the swing pivot. The close below the
9-day moving average is a negative short-term indicator for trend. The daily
closing price reversal down is a negative indicator for prices.
COPPER MARKET RECAP
7/29/2004
September Copper finished up 2.25 at 129.35, 0.15
off the high and 2.65 up from the low.
The Copper market managed a strong rally and did
so along with the platinum market. Many times a rally in platinum and copper
comes off improved Chinese demand expectations and that would seem to be the
case in the action Thursday. The copper market saw reports of a fire at a
Noranda facility that could have reduced output by 35,000 to 40,000 tons and
that added into the Chinese benefit. The fact that the Dollar gave up early
gains also allowed copper to extend its gains and the ultra strong action in the
US stock market probably gave the bulls a little additional lift.
ENERGY MARKET RECAP
7/29/2004
September Crude Oil closed down 0.15 at 42.75.
This was 0.65 up from the low and 0.23 off the high.
September Heating Oil closed down 0.84 at 114.62.
This was 1.52 up from the low and 0.78 off the high.
September Unleaded Gas finished down 1.28 at
127.90, 0.70 off the high and 1.90 up from the low.
September Natural Gas finished up 0.04 at 6.18,
0.04 off the high and 0.08 up from the low.
September Propane closed up 0.45 at 78.75. This
was equal to the low and equal to the high.
Energy prices certainly had the edge taken off
with the decision to allow Yukos to continue pumping. The Yukos CEO was talking
positively on the company’s prospects but that entire situation is extremely
fluid. With oil prices reaching up to a 21 year high recently and the market
catching a series of supply disruptions the market was overbought but it is a
difficult process to expect conditions to remain quiet for an extended period of
time. The OPEC basket price also hit a 14 year high which is another indication
that bullish developments are running pretty hot. The weekly natural gas
injection was 70 bcf which is another slightly below expectation figure but the
trade wasn’t move to buy off the reading.
Technical Outlook
#ENERGIES 7/30/2004: CRUDE OIL (SEP): The close
over the pivot swing is a somewhat positive setup. Support for crude is keyed on
42.31 and below there at 41.77, with resistance pegged at 43.19 and 43.53. 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 target is at 43.53.
UNLEADED GAS (SEP): Momentum studies trending
lower at mid-range could accelerate a price break if support levels are broken.
The next downside objective is 125.00. The market tilt is slightly negative with
the close under the pivot. Resistance today is at 130.20, while support should
be found around 125.00. A positive signal for trend short-term was given on a
close over the 9-bar moving average.
HEATING OIL (SEP): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 112.14, with resistance is at 116.74. 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 target is at 116.74.
CORN MARKET RECAP
7/29/2004
September Corn finished unchanged at 218
1/2, 4 off the high and 1/2 up from the low. December Corn closed up 1/4 at 227.
This was 1/2 up from the low and 4 1/2 off the high.
Strong export sales and ideas that the market is
oversold from a technical perspective helped to support the market with
short-covering seen after the higher opening. Weekly export sales came in at
942,300 tons as compared with 500,000-800,000 tons expected. Old crop sales were
378,800 tons as compared with 138,400 tons necessary each week to reach the USDA
projection. Cumulative sales have reached 98.4% of the USDA forecast for the
season as compared with 97.4% on average for this time of the year. Gulf basis
was steady to firm this morning and the higher than expected export sales news
came as a surprise to traders who were leaning toward weak exports "if" end
users are confident in lower prices ahead due to bumper crop prospects. The
International Grain Council raised their world production forecast for coarse
grains to a record 948 million tons for the 2004/2005 season which is up by 6
million tons from last month and up from 908 million tons last year. Global
consumption is pegged at 951 million tons from 940 million last year. Support
for December corn comes in at 225 1/2 and 221 3/4 with 233 1/2 and 237 as
resistance.
Technical Outlook
#CORN (DEC) 7/30/2004: The daily stochastic’s
gave a bearish indicator with a crossover down. The next downside target is now
at 223. It is a slightly negative indicator that the close was under the swing
pivot. Market resistance comes in at 233 today, with support at 223. The close
below the 9-day moving average is a negative short-term indicator for trend.
Selling may soon dry up since the RSI is under 20 indicating the market is
extremely oversold.
SOY COMPLEX RECAP
7/29/2004
August Soybeans finished down 2 1/2 at 624 1/2,
21 1/2 off the high and 6 1/2 up from the low. November Soybeans closed up 9 at
584 3/4. This was 4 3/4 up from the low and 11 1/4 off the high.
August Soymeal closed up 1.3 at 200.1. This was
2.6 up from the low and 4.4 off the high.
August Soybean Oil finished down 0.42 at 22.83,
0.89 off the high and 0.08 up from the low.
The rain forecast for the next week was
downgraded slightly and there is still hot air moving into the Midwest for parts
of the first and second weeks of August. Export sales news was also better than
expected, which helped support new buying and some short covering in soybeans
and products. Weekly export sales came in at 130,100 tons as compared with
0-75,000 tons expected. Old crop sales showed cancellations of 37,800 tons as
compared with 31,500 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 99.3% of the forecast for the season as compared
with 102.8% on average for this time of the year. Weekly export sales for meal
were 82,400 tons from 20,000-40,000 expected. Old crop sales were 18,900 tons as
compared with 10,100 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 97.3% of the forecast for the season as compared
with 93.9% on average for this time of the year. Oil sales were 4600 tons from
expectations of 1,000-4,000 tons. For the Census Crush report, released this
morning, June crush was pegged at 109.36 million bushels as compared with trade
expectations of 109.25 million bushels which is down from 117.5 million bushels
in May. Oil stocks were pegged at 1.524 billion pounds vs. trade expectations of
1.58 billion pounds, up slightly from last month and down from 1.64 billion
pounds last year. Meal stocks were pegged at 314,934 tons as compared with trade
expectations of 404,000 tons. Traders expected to see mill stocks of soybeans at
near 70 million bushels but stocks were almost 76 million bushels. China prices
were higher overnight. Registrations for CBOT soybeans late Wednesday were at
just 2 lots, unchanged from the previous forecast. Meal registrations were also
unchanged on the day at 57 lots while oil registrations came down to 3770 lots
from 3980 lots the previous session. Friday is first notice day for August
contracts. November soybean support comes in at 580 and 575 with 600 and 610 3/4
as resistance.
Technical Outlook
#SOYBEANS (NOV) 07/30/04 The market has a
slightly positive tilt with the close over the swing pivot. The next area of
resistance is around 592 2/4 and 602 1/4, while 1st support hits today at 576
2/4 and below there at 570 1/4. 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 570 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 177.1. First resistance comes in at
183.2, with support at 179.2. The close below the 9-day moving average is a
negative short-term indicator for trend. Market positioning is positive with the
close over the 1st swing resistance.
BEAN OIL (DEC): 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 21.25. It is a slightly negative
indicator that the close was lower than the pivot swing number. Daily swing
resistance is found at 21.83 and above there at 22.11. Support should be
encountered at 21.40 and 21.25.
WHEAT MARKET RECAP
7/29/2004
September Wheat finished down 2 at 312 3/4, 6 3/4 off the high
and 1/2 up from the low. December Wheat closed down 1 1/4 at 326 1/4. This was
3/4 up from the low and 6 1/4 off the high.
While traders continue to harp on the non
competitiveness of US wheat, the export news continues to show that US exporters
are active and that the current sales pace is better than trade expectations.
Weekly export sales came in at 599,200 tons as compared with 350,000-450,000
tons expected and 383,300 tons necessary each week to reach the USDA projection.
Cumulative sales have reached 35.2% of the forecast for the season as compared
with 23.2% on average for this time of the year. In addition, Taiwan bought
42,500 tons of US wheat overnight and South Korea bought 14,000 tons of US
wheat. At their weekly tender, Japan bought 101,000 tons, 61,000 of the total
from the US. The International Grain Council raised their world production
forecast by 4 million tons from last month to 606 million tons for the 2004/2005
season as compared with 554 million tons last year. Global consumption is pegged
at 604 million tons from 588 million last year. Support for September wheat
comes in at 314 1/2 and 303 1/4 with 321 1/2 and 325 as short-term resistance.
Technical Outlook
#WHEAT (DEC) 7/30/2004: The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 322 2/4 and below there at 320 2/4, with resistance levels at 329 2/4 and
334 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 320
2/4. The market is approaching over sold levels on an RSI reading under 30.
LIVE CATTLE RECAP
7/29/2004
October Live Cattle closed down 0.90 at 89.45.
This was 0.20 up from the low and 0.90 off the high.
October Feeder Cattle finished down 0.92 at
113.07, 0.67 off the high and 0.37 up from the low.
The market pushed moderately lower for the second
day in a row as traders remain uncertain over the ability of the cash market to
rally this week due to uneven trade in Nebraska. Lower than expected cattle
slaughter also was a significant concern as traders see the slower slaughter
pace as a sign of weak demand. The rally early in the week "priced-in" a $2.00
higher trade in the cash market this week but there is still no trade in the
panhandle. Boxed beef cutout values came in at $.68 higher to $143.59 as
compared with $136.86 one week ago. With a lower showlist, a surge in beef and
the resulting surge in packer profit margins, the bulls are looking for a higher
slaughter pace and higher cash this week to help confirm the futures premium to
the cash market. ‘
Technical Outlook
#CATTLE (OCT) 7/30/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
90.72. 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 88.90 and below there at 88.52. Market resistance is at 90.00 and then again
at 90.72. A positive signal for trend short-term was given on a close over the
9-bar moving average.
LEAN HOGS RECAP
7/29/2004
October Lean Hogs closed up 1.20 at 69.85. This
was 1.20 up from the low and 0.25 off the high.
February Pork Bellies finished up 1.50 at 94.00,
equal to the high and 3.75 up from the low.
The funds buyers returned to drive the market
sharply higher as strength in the cash market (up $1.00 at Peoria) and solid
gains in pork product prices on the week leave traders uncomfortable in assuming
that October hogs will stay at a stiff discount to the cash market. Lower
average weights this week from Iowa/Minn along with lower than expected hog
marketings from the region suggests that producers are current with marketings
and this added to the positive tone. In addition, traders feel that Japan import
demand will remain fairly strong in spite of the import tariffs which go into
effect on August 1st. The CME 2-day lean index for the period ending July 27th
came in at 78.71, down .05 from the previous session and down from 79.09 one
week ago.
Technical Outlook
#HOGS (OCT) 7/30/2004: There could be more upside
follow through since the market closed above the 2nd swing resistance.
Resistance levels comes in at 70.57 and 71.07 today, while support is around
69.12 and then 68.17. The market rallied to a new contract high. The upside
crossover of the 9 & 18 bar moving average is a positive signal. Daily
stochastics have risen into overbought territory which will tend to support
reversal action if it occurs. The near-term upside target is at 71.07. With a
reading over 70, the 9-day RSI is approaching overbought levels.
COCOA MARKET RECAP
7/29/2004
September Cocoa finished up 5 at 1663, 9 off the
high and 31 up from the low.
The cocoa market moved to another new high for
the move off the regional dryness problem but prices might become limited if the
talk about lower production translates into expectations that the crop from the
dry regions will simply be late! In the near term the bull camp seems to
maintain control and without the benefit of increased rainfall the upward bias
looks to control. The professional trade is reportedly selling into the gains in
cocoa and that is apparently limiting the magnitude of the upside. Traders are
now beginning to talk up the concern that many technicals are extremely
overbought.
Technical Outlook
COCOA (SEP) 07/30/04 The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1683 and above there at 1698 with support at 1643 and 1618. The
9-day RSI over 70 indicates the market is approaching overbought levels. Studies
are showing positive momentum, but are now in overbought territory so some
caution is warranted. The next upside target is 1697.50.
COFFEE MARKET RECAP
7/29/2004
September Coffee closed down 0.30 at 67.65. This
was 0.15 up from the low and 0.75 off the high.
The coffee market inched lower in quiet trade.
Brazil cash differentials have firmed up but the strength seems to be coming
from a lack of interest in producer selling as compared to new demand. Roaster
buying seems very slow as coverage seems high. The Brazil crop is though to be
near 62% harvested. A lack of threatening weather has kept fund sellers active.
Technical Outlook
COFFEE (SEP) 7/30/04 The market tilt is slightly
negative with the close under the pivot. The 9-day RSI under 30 indicates the
market is approaching oversold levels. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 66.90. The
Coffee contract should run into resistance at 68.10 and above there at 68.70
with support at 67.2 and 66.90. The market’s short-term trend is negative as the
close remains below the 9-day moving average.
SUGAR MARKET RECAP
7/29/2004
October Sugar closed up 0.05 at 8.28. This was
0.11 up from the low and 0.01 off the high.
The sugar market closed slightly higher in quiet
trade with trade house bull spreading and a firm tone in cash markets helping to
support. The early break found good speculative buying support and when London
pushed higher on the session, New York futures firmed. The lack of seasonal
weakness in prices in Brazil helped to support the market as cash dealers
expected weakness with the center-south harvest bringing in new crop supply.
Demand for Brazil sugar is a bit higher than expected with July exports expected
to be near 1.4 million tons from 1.0 million last year. Ethanol prices in Brazil
are also on the rise in recent weeks from strong demand. The burst in
international crude oil prices this past week could help support firm demand for
cane. October sugar support moves up to 823 with 860 as next objective.
Technical Outlook
#SUGAR (OCT) 7/30/2004: The close over the pivot
swing is a somewhat positive setup. Swing resistance comes in at 8.38, with
support found at 8.14. 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 target is at 8.38.
COTTON MARKET RECAP
7/29/2004
October Cotton finished down 0.72 at 43.73, 1.67
off the high and 0.23 up from the low.
The slow export sales numbers triggered the lower
opening in cotton but the failure to follow-through to the downside triggered a
surge to more than 100 higher on the session. Trade house selling came in the
stop the rally but the positive action with weak fundamental news could be an
indication the downside momentum is slowing. Weekly export sales came in at
117,900 bales as compared with 250,000-325,000 expected. Old crop sales were
just 28,700 bales. Cumulative sales have reached 109.3% of the forecast for the
season as compared with 109.6% on average for this time of the year.
Technical Outlook
#COTTON (OCT) 7/30/2004: A negative signal for
trend short-term was given on a close under the 9-bar moving average. The close
below the 1st swing support could weigh on the market. Next resistance area
comes in at 44.68 and then again at 45.99, while support is targeted at 42.78
and 42.19. Daily stochastics declining into oversold territory suggest the
selling may be drying up soon. The next downside objective is 42.19. The market
is approaching over sold levels on an RSI reading under 30. The market could
take on a defensive posture with the daily closing price reversal down.