Is The Dollar Bottoming?

Technical Outlook

BONDS (MAR) 01/15/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. Near-term resistance for bonds is at 112.25 and then again at 113.05, while swing support hits at 111.25 and below there at 111.05. 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 113.05. The 9-day RSI over 70 indicates the market is approaching overbought levels.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.06. 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 114.29 and then again at 115.06, while swing support hits at 114.06 and below there at 113.25. 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

1/14/2004

The stock market seemed to like the fact that the Dollar might be bottoming, as that appeared to attract international buyers to U.S. stocks. European stocks that export to the U.S. were also in favor, while gold stocks seemed to be falling from favor. The market also appeared to be cheered on by the prospect of merger talks in the communication and telephone sectors and by the prospect of Intel earnings. In general, the stock market performance this week is fairly impressive considering the weak scheduled numbers it has been forced to digest.

Technical Outlook

S&P500 (MAR) 01/15/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Underlying support comes in at 1126.40 and 1119.75, with overhead resistance at 1136.00 and 1138.95. The market’s short-term trend is positive on a close above the 9-day moving average. 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 1119.75. With a reading over 70, the 9-day RSI is approaching overbought levels.

S&P E-Mini (MAR): The market made a new contract high on the rally. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1115.19. The market setup is supportive for early gains with the close over the 1st swing resistance. Near-term resistance for the S&P Mini is at 1137.63 and then again at 1141.69, while swing support hits at 1124.38 and below there at 1115.19. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market is approaching overbought levels with an RSI over 70.

NASDAQ (MAR) The market’s close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. The market should run into resistance at 1545.00 and above there at 1550.50 with support at 1529.00 and 1518.50. The 9-day RSI over 70 indicates the market is approaching overbought levels. 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 1518.5.

CURRENCY MARKET RECAP

1/14/2004

After an aggressive early rally, the Dollar fell back, managed to bounce into mid session and then seemed to hover just under technical breakout points on the charts. Apparently the stock market would like to see a stronger Dollar and that might be something that prompts the Bush administration to talk a little more favorably about the Greenback. In the near term, it would appear as if the market is prepared to test the resolve of the Bank Japan by keeping the yen right at the upside breakout point on the charts. It is unclear if the ECB is prepared to intervene right away, but that theory could be tested soon.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Swing resistance is targeted at 94.59 and above there at 94.71, with the yen finding support around 94.32 and below there at 94.17. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 94.71.

EURO (MAR): Momentum studies trending lower at mid-range should accelerate a move lower if support levels are taken out. The next downside objective is now at 1.2552. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2552, with overhead resistance at 1.2756. 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.

PRECIOUS METALS RECAP

1/14/2004

With the U.S. Dollar showing early strength, the gold and silver markets came under early selling pressure. However, the dollar fell back from highs and both gold and silver then managed to reject a portion of their early selling. In the end, the London afternoon gold fix was down by $2 and gold mining shares on the New York Stock Exchange were also soft, which suggests that concern for gold prices is becoming a little more broad based. The 86.47 level in the March Dollar index will remain a critical pivot point for gold, as a move above that level could speak of a key Dollar low and in the process began to force out what continues to be a massive fund and small spec long position in gold. The monthly PPI readings from the U.S. showed a minor up tick in inflation but inflation issued will probably not be an issue that impacts prices.

Technical Outlook

SILVER (MAR): The close below the 2nd swing support number puts the market on the defensive. Initial support for silver is at 632.8 and below there at 624.6 with resistance likely at 647.2 and 653.3. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 624.6.

GOLD (APR): Support for gold today comes in near 417.25, while resistance is pegged at 427.25. 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 417.25. Daily studies pointing down suggests selling minor rallies. The market’s close below the 1st swing support number suggests a moderately negative setup for today. 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.

COPPER MARKET RECAP

1/14/2004

After a mid day probe lower, copper prices managed to rise above the prior day’s close. Apparently 94% of the union membership at the Highland Valley Mine voted to strike and that provided support to copper prices. The union will have to give 72 hours’ notice of an actual strike and negotiations are thought to be ongoing. Just highlight the strength of demand, the U.S. reportedly exported 8.2 million kilograms of copper in November compared to just 295,000 kilograms a year ago. Therefore, demand outside of China is improving but the Chinese demand hope remains a key component of the bull trend. While Chinese demand is key recent labor issues have driven prices just as aggressively.

ENERGY MARKET RECAP

1/14/2004

The weekly inventory report showed a moderate rebuilding of distillate stocks and that served to undermine heating oil prices. However the Department of Energy also showed a 5 million barrel decline in crude stocks and that countervailed the distillate stock build. It should also be noted that refinery operating rates declined in the report and that might be a sign of slack demand expectations. While temperatures have cooled off as the week has progressed, it would not seem as if unusual demand is anticipated off the weather. It should also be noted that the API continues to suggest that the buildup of the SPR isn’t causing prices to rise.

Technical Outlook

CRUDE OIL (MAR): The market’s close below the pivot swing number is a mildly negative setup. Support for crude is keyed on 33.51 and below there at 33.23, with resistance pegged at 34.08 and 34.37. 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 33.23.

UNLEADED GAS (MAR): 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 96.72. It is a slightly negative indicator that the close was lower than the pivot swing number. Resistance today is at 101.12, while support should be found around 96.72. The gap lower price action on the day session chart is a bearish indicator for trend. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (MAR):The market’s close below the 1st swing support number suggests a moderately negative setup for today. Heating oil should encounter support around 93.19, with resistance is at 97.69. Daily studies pointing down suggests selling minor rallies. 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. 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 93.19.

CORN MARKET RECAP

1/14/2004

The corn market posted a volatile session Wednesday with the Soybean market leading the way up and down. However, it would appear that corn is beginning to show more consistent strength. Corn export sales expectations call for 600,000 to 800,000 metric tons, versus 468,400 metric tons last week. It was clear that new crop corn was beginning to gain against old crop corn possibly because the trade is beginning to focus the world situation instead of the domestic situation. Mexico apparently passed an extension of the 20% tax on the use of fructose which in turn favors the use of domestic cane sugar and that is a negative to corn demand but not a new or surprising item. Argentine weather is turning a little friendlier but will need at least two weeks of dry and hot to really become a major issue. Subsoil moisture is ok now but the pattern is drying out!

Technical Outlook

CORN (MAR) 01/15/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 271 3/4. The market’s close above the 2nd swing resistance number is a bullish indication. Market resistance comes in at 271 3/4 today, with support at 264 1/4. 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.

SOY COMPLEX RECAP

1/14/2004

News that China was switching 404,000 tons of US soybeans from 2003/2004 delivery to 2004/2005 delivery caused the market to slide early but the market managed to reject those declines and close firmer. There is still no confirmation on the rumor that the FDA will move to change the rules on the use of cattle blood in animal feeds and that is something that the market has been banking on. Soybean export sales expectations call for 200,000 to 400,000 metric tons, compared to 218,5000 metric tons last week. The market did note that US imports of soybeans from Brazil so far, were only Food-grade type shipments, which means that overall soybean supplies in the US are still widely available or that Brazilian supplies were non competitive.

Technical Outlook

SOYBEANS (MAR) 01/15/04: With the close higher than the pivot swing number, the market is in a slightly bullish posture. The next area of resistance is around 852 and 860 1/2, while 1st support hits today at 831 and below there at 818 1/2. 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 860 1/2. The 9-day RSI over 70 indicates the market is approaching overbought levels.

MEAL (MAR): Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 266.9. The rally brought the market to a new contract high. First resistance comes in at 264.0, with support at 255.0. The market’s short-term trend is positive on a close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. With a reading over 70, the 9-day RSI is approaching overbought levels.

BEAN OIL (MAR): 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 30.31. The swing indicator gave a moderately negative reading with the close below the 1st support number. Daily swing resistance is found at 30.06 and above there at 30.31. Support should be encountered at 29.63 and 29.45.

WHEAT MARKET RECAP

1/14/2004

While Liffe wheat prices were down on long liquidation, US wheat prices managed a rise for the session. The trade could have been a little negative on news that Mexican wheat prospects improved off recent rains and US weather doesn’t seem to be providing much in the way of uncertainty. However, with demand for cash wheat in Europe slackening off slightly, it would seem that wheat is left to track the direction of soybean and corn market action. Wheat export sales expectations call for 400,000 to 700,000 metric tons compared to 145,200 metric tons last week.

Technical Outlook

WHEAT (MAR) 01/15/04: The daily closing price reversal up is positive. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Look for near-term support at 389 and below there at 381 1/2, with resistance levels at 401 and 406 . The market’s close below the 9-day moving average is an indication the short-term trend remains negative. The cross over and close above the 40-day moving average indicates the longer-term trend has turned up. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 406 .

LIVE CATTLE RECAP

1/14/2004

Feb cattle closed up limit and April cattle closed only 3 ticks off the limit as prices rose sharply on surprising strength in the cash market. Cash cattle prices rose $5 this week to $80 compared to last week’s prices so futures will need to play catch up suggesting another strong move in cattle is likely during Thursday’s session. Box beef (600 to 750 lbs) prices also increased sharply up $2.59 to $137.39 vs $128.86 last week. There are indications that retailers will begin featuring beef soon so packers are scrambling to increase beef production, which was cited as the reason behind the move in the cash market.

Technical Outlook

CATTLE (APR) 01/15/04: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 76.85. 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. Support should be encountered at 75.40 and below there at 74.55. Market resistance is at 76.55 and then again at 76.85. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

1/14/2004

April hogs closed firmer following cattle’s strong lead. Cash hogs held firm and there are ideas that Saturday’s slaughter could be big since profit margins for packers seem to be improving. A move back over 57.20 would improve short-term technical indicators for April hogs and may begin to force some short covering by fund and small traders who are net short the market. Weekly average weight for Iowa/S.Minn week ending Jan 10th was 265.3lb vs 267.4 week ago and 266.1 lb year ago. The sharp drop is a positive factor and suggests producers are more current with marketings.

Technical Outlook

HOGS (APR) 01/15/04: The market’s close above the 2nd swing resistance number is a bullish indication. Resistance levels comes in at 57.27 and 57.57 today, while support is around 56.25 and then 55.52. 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 55.52.

COCOA MARKET RECAP

1/14/2004

The cocoa market managed a gap down trade but did manage to recover half of the losses into the close. Once again, the Press noted origin selling around highs of the session and industry buying around the lows. Therefore, it is clear that the market is working supply out of the Ivory Coast interior and pushing that supply out to the world market. For the first time in several sessions, the cocoa market was not reminded of ongoing ethnic violence at the Ivory Coast. Slightly weaker U.S. cocoa bean import totals were released and that is a slight negative influence on the market, but demand really hasn’t been a critical issue driving prices.

Technical Outlook

COCOA (MAR)01/15/04 The gap lower price action on the day session chart is a bearish indicator for trend. The close below the 1st swing support could weigh on the market. Cocoa should run into resistance at 1625 and above there at 1638 with support at 1592 and 1572. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1638.25.

COFFEE MARKET RECAP

1/14/2004

Origin sales and a lack of roaster buying up at these high prices pressured March coffee with prices closing lower. Hedge selling was primarily from Brazil and Colombian producers. The market has been driven higher on the tightening supply theme, but now needs some fresh bullish news to attract new buyers. Fund traders have recently become net long. However, if March coffee fails to hold 68.18, funds could begin to exit positions with the next support at 67. For the US Green Coffee monthly stocks report (for end of December) due on Thursday afternoon, traders are looking for stocks in the 5.370-5.828 range as compared with 5.678 million bags at the end of November.

Technical Outlook

COFFEE (MAR)1/15/04 The market tilt is slightly negative with the close under the pivot. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The near-term upside objective is at 70.80.The Coffee contract should run into resistance at 70.10 and above there at 70.80 with support at 68.55 and 67.70. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/14/2004

March sugar closed lower as another failed attempt to break above 6.00 cents brought on speculative selling. The market had shown improving technicals after making a low on Dec 31st, and it appeared there was enough momentum for prices to retrace back to the 6.09 – 6.10 area. However, the supply burden in this market suggests any up move would be temporary unless new physical demand emerged. A close back under 5.80 would turn the short term technical indicators negative again.

Technical Outlook

SUGAR (MAR) 01/15/04: The market’s close below the 1st swing support number suggests a moderately negative setup for today. Swing resistance comes in at 6.05, with support found at 5.71. The market’s close on the 9-day moving average is neutral. 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 6.05.

COTTON MARKET RECAP

1/14/2004

March cotton was pressured by speculative sales as there was a lack of fresh news to motivate new buying and as traders adjust positions ahead of the weekly export sales report. The monthly USDA world supply/demand report was a slight disappointment since China’s numbers were not revised and the market could come under some additional selling if weekly exports are on the low side of expectations. Export sales estimates range between 100,000 to 150,000 bales vs 103,500 bales the previous week and shipments are expected to be between 150,000 to 175,000 bales compared to 147,300 last week.

Technical Outlook

COTTON (MAR) 01/15/04: 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. Next resistance area comes in at 74.02 and then again at 74.66, while support is targeted at 73.12 and 72.86. 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 72.86.
ORANGE JUICE (MAR)1/15/04 The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. 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 66.30 and above there at 66.95 with support at 64.40 and 63.15. The market’s short-term trend is positive on a close above the 9-day moving average. The daily stochastics have crossed over up which is a bullish indication. The near-term upside objective is at 66.95.