Is The Dollar Headed Significantly Lower?

Technical Outlook

BONDS (MAR) 01/12/04: 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. Near-term resistance for bonds is at 112.17 and then again at 113.06, while swing support hits at 110.05 and below there at 108.14. The market’s close above the 9-day moving average suggests the short-term trend remains positive. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 113.06.

T-NOTES(MAR) Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 115.08. The market’s close above the 2nd swing resistance number is a bullish indication. 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 114.25 and then again at 115.08, while swing support hits at 113.03 and below there at 111.28. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

1/9/2004

The stock market should have corrected Friday considering the disappointment from the US payroll numbers Friday morning. However, the stock market was cheered on by the downgrade in the US Terrorist threat rating. In the end the numbers were bad enough that the pace of the US recovery is thrown back into question. The stock market was probably due a correction after the significant rally off the November lows.

Technical Outlook

S&P500 (MAR) 01/12/04: The market is in a bearish position with the close below the 2nd swing support number. The outside day down is a negative signal. The daily closing price reversal down puts the market on the defensive. Underlying support comes in at 1114.50 and 1111.10, with overhead resistance at 1125.90 and 1133.90. 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 1111.10.

S&P E-Mini (MAR): The key reversal down puts the market on the defensive. The outside day down is somewhat negative. The market made a new contract high on the rally. The market could take on a defensive posture with the daily closing price reversal down. A bearish signal was triggered on a crossover down in the daily stochastics. Stochastics turning bearish at overbought levels will tend to support lower prices if support levels are broken. The next downside objective is 1110.63. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Near-term resistance for the S&P Mini is at 1126.25 and then again at 1134.63, while swing support hits at 1114.25 and below there at 1110.63. A positive signal for trend short-term was given on a close over the 9-bar moving average.

NASDAQ (MAR) A new contract high was made on the rally. 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 swing indicator gave a moderately negative reading with the close below the 1st support number. The market should run into resistance at 1536.25 and above there at 1555.88 with support at 1505.75 and 1494.88. The 9-day RSI over 70 indicates the market is approaching overbought levels. 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 1494.9.

CURRENCY MARKET RECAP

1/9/2004

Another big probe down in the Dollar left the Greenback into fresh contract lows and is apparently headed significantly lower. In fact, with the exception of the Yen, the Dollar was down aggressively against all the major commodities. The trade assumes that the BOJ is throwing everything but the kitchen sink at the market to keep the Yen from rising in the wake of the Dollar slide. Considering the surprising weakness in the US payroll numbers, it will be difficult to think that the Fed is going to hike rates and that might be necessary to turn the Dollar around.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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. Swing resistance is targeted at 94.46 and above there at 94.63, with the yen finding support around 93.89 and below there at 93.49. 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 93.49.

EURO (MAR): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 1.2936. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2658, with overhead resistance at 1.2936. 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. The market’s key reversal down is a bearish signal. The rally brought the market to a new contract high. The gap down on the day session chart is bearish with more selling pressure possible today.

PRECIOUS METALS RECAP

1/9/2004

The Dollar slide sparked renewed interest in the gold and silver markets. In fact, with the Dollar falling into new low ground and US economic readings coming in very disappointing, some traders suggested that macro economic uncertainty was fueling flight to quality buying. The London gold fix was higher which suggests that bullishness was not just concentrated in the futures pits. Some in the trade pointing ahead to the February 6th G7 meeting suggesting that could bring forth intervention talk against the Dollar.

Technical Outlook

SILVER (MAR): 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. Initial support for silver is at 636.0 and below there at 616.5 with resistance likely at 646.7 and 663.5. The market’s close above the 9-day moving average suggests the short-term trend remains positive. The daily stochastics have crossed over up which is a bullish indication. The next upside target is 646.7. The 9-day RSI over 70 indicates the market is approaching overbought levels. A new contract high was made on the rally.

GOLD (FEB): Support for gold today comes in near 419.03, while resistance is pegged at 432.43. The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 432.43. 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. With a reading over 70, the 9-day RSI is approaching overbought levels.

COPPER MARKET RECAP

1/9/2004

While the copper market banked some profits in the action Friday it still posted a massive gain on the week and must be considered significantly overbought. The market is certainly being driven by fears that the Canadian strike might be lengthy. However, with US economic numbers much weaker than expected Friday morning it is understandable that some longs decided to move to the sidelines. In short, basic supply and demand factors haven’t change but the strike does add a volatility element to near term prices.

ENERGY MARKET RECAP

1/9/2004

The fresh wrinkle in the energy complex Friday seemed to be fears that demand was rising in Europe and the US off the weather and therefore traders were pricing a quickening of the supply draw. The trade was also supported by ideas that Brent crude output was declining and that also whipped up concerns of a supply shortage in the coming months. In the near term it would seem that the market has forgotten about the 2nd quarter supply glut!

Technical Outlook

CRUDE OIL (MAR): The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session. It is a mildly bullish indicator that the market closed over the pivot swing number. Support for crude is keyed on 33.83 and below there at 33.69, with resistance pegged at 34.23 and 34.49. 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 34.49.

UNLEADED GAS (MAR): Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 104.61. 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. Resistance today is at 104.61, while support should be found around 98.81. A new contract high was made on the rally. The gap upmove on the day session chart is a bullish indicator for trend. 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.

HEATING OIL (MAR):The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 96.61, with resistance is at 100.21. 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 100.21. With a reading over 70, the 9-day RSI is approaching overbought levels. The rally brought the market to a new contract high. The gap up on the day session chart gave a bullish indicator and more follow through could be seen this session.

CORN MARKET RECAP

1/9/2004

The corn market closed slightly weaker as the trade was unsure of what position to assume prior to the critical USDA report Monday morning. The trade circulated rumors that production was going to be pushed higher by the USDA in the report Monday morning. On the other hand, some traders suggested that corn demand would be raised by the USDA in the report Monday morning, which would then countervail the rising supply threat. There was also a concern that the corn market was extensively overbought and with the COT report released after the close Friday showing a net fund long of 81,105 contracts, that argument holds water. The average trade estimate is for ending stocks to come in near 1.252 billion bushels (range 1.317-1.150) as compared with 1.299 billion bushels
as last months USDA forecast.

Technical Outlook

CORN (MAR) 01/12/04: Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 253 3/4. The market’s close below the pivot swing number is a mildly negative setup. Market resistance comes in at 253 3/4 today, with support at 248 3/4. The market’s short-term trend is positive on a close above the 9-day moving average.

SOY COMPLEX RECAP

1/9/2004

The trade was back and forth Friday, as the trade could not commit to a direction ahead of what might be one of the most critical USDA reports of the modern era. The USDA report Monday sets the stage for an intense focus on South American weather. If the USDA tightens supply that means the risk and reward of the South American production expands rapidly. The COT report released after the close showed the fund and small spec long in beans (Using options and futures) to 88,000 contracts and that is a rather hefty total. The trade is really concerned about the stocks report and that looks to be the focal point. The average trade estimate is for ending stocks to come in near 111 million bushels (range 125-83) as compared with 125 million bushels as last
Month’s USDA forecast.

Technical Outlook

SOYBEANS (MAR) 01/12/04: The downside closing price reversal on the daily chart is somewhat negative. It is a slightly negative indicator that the close was lower than the pivot swing number. The next area of resistance is around 797 1/2 and 804 , while 1st support hits today at 788 and below there at 785 . The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 804 .

MEAL (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 234.9. First resistance comes in at 240.3, with support at 236.3. The market’s short-term trend is negative as the close remains below the 9-day moving average. The market’s close below the 1st swing support number suggests a moderately negative setup for today. Daily studies pointing down suggests selling minor rallies.

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 28.77. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Daily swing resistance is found at 28.70 and above there at 28.77. Support should be encountered at 28.41 and 28.19.

WHEAT MARKET RECAP

1/9/2004

The wheat market closed marked weaker and below several critical chart support points. Apparently the trade saw aggressive fund selling in the action Friday. The weekly COT report showed the small specs and funds adding to long positions in both Chicago and Kansas City wheat. The USDA attach‚ pegged the Peru 2003-2004 wheat imports to be 1.4 million metric tons Friday afternoon. The average trade estimate for December 1st stocks was 1.509 billion bushels (range 1.479-1.530) as compared with 1.320 billion last year. The USDA will also release the winter wheat Seedings report with an average trade estimate for the report at 45.83 million acres (range 45.5-46.175) as compared with 44.945 million last year.

Technical Outlook

WHEAT (MAR) 01/12/04: The close below the 2nd swing support number puts the market on the defensive. Look for near-term support at 379 1/4 and below there at 376 , with resistance levels at 391 1/2 and 400 1/2. The moving average crossover up (9 above 18) indicates a possible developing short-term uptrend. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 400 1/2.

LIVE CATTLE RECAP

1/9/2004

April cattle closed firmer for the third session in a row on firm wholesale beef sales, expectations for retailers to feature beef over pork and indications that the Mad Cow incident did little to deter US beef consumption. April cattle were also supported by trader expectations that the Cattle-on-Feed report would show higher placements than a year ago with estimates ranging between 106% and 109.7% of last year.

Technical Outlook

CATTLE (FEB) 01/12/04: Daily stochastics are showing positive momentum from oversold levels which should reinforce a move higher if near-term resistance is taken out. The next upside target is 77.05. With the close higher than the pivot swing number, the market is in a slightly bullish posture. Support should be encountered at 75.42 and below there at 75.10. Market resistance is at 76.40 and then again at 77.05. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

LEAN HOGS RECAP

1/9/2004

April hogs closed slightly weaker pressured by lower pork cut-out values this past week and indications that retailers may begin to feature beef since prices have dropped so dramatically. A series of lower highs this week and technical indicators at over bought levels could further pressure hog prices Monday.

Technical Outlook

HOGS (FEB) 01/12/04: The market’s close below the pivot swing number is a mildly negative setup. Resistance levels comes in at 54.17 and 54.67 today, while support is around 53.35 and then 53.02. 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 53.02.

COCOA MARKET RECAP

1/9/2004

Cocoa prices exploded in what the trade thought was industry, spec and fund buying. In other words, almost all parties were buying in the market and we have to think that the buying simply overcame the origin selling pressure. However, the gains Friday appeared to be more than simple buying they were big enough to assume that some political violence was behind the gains. Sometimes it takes a couple days to determine what really happened inside the Ivory Coast.

Technical Outlook

COCOA (MAR)01/12/04 The gap upmove on the day session chart is a bullish indicator for trend. The market has a bullish tilt coming into today’s trade with the close above the 2nd swing resistance. Cocoa should run into resistance at 1692 and above there at 1716 with support at 1650 and 1632. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 1716.00.

COFFEE MARKET RECAP

1/9/2004

March coffee continues to consolidate after the market’s recent run up. Producer selling was light Friday and the weak dollar combined with a general rise in commodity prices gave coffee a boost. However, the market remains below resistance between 70 and 75 cents. Brazil is expected to receive scattered showers over the weekend which may help ease dryness concerns.

Technical Outlook

COFFEE (MAR)1/12/04 The market has a slightly positive tilt with the close over the swing 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 69.80 and above there at 70.80 with support at 67.9 and 67.00. The market’s short-term trend is positive on a close above the 9-day moving average.

SUGAR MARKET RECAP

1/9/2004

Fund selling eased up to allow a rebound in March sugar, which recaptured nearly all of Thursday’s losses. There was very little fresh fundamental news with technical signals providing most of the motivation for trading. Industry sources estimate that Thailand’s 2003/04 cane production could be as much as 10.5% lower than the official forecast of 74.85 million tons. Despite Friday’s rebound, the market is still vulnerable to further selling especially if the COT tonight shows the funds increasing their net short position. Also, the market will have to contend with producer sales, which will likely become more aggressive near the 6 cent level.

Technical Outlook

SUGAR (MAR) 01/12/04: With the close over the 1st swing resistance number, the market is in a moderately positive position. Swing resistance comes in at 6.07, with support found at 5.71. The market’s short-term trend is positive on a close above the 9-day moving average. Daily momentum studies are on the rise from low levels and should accelerate a move higher on a push through the 1st swing resistance. The near-term upside objective is at 6.07. Consider buying pull-backs since daily studies are bullish.

COTTON MARKET RECAP

1/9/2004

March cotton closed weaker ahead of Monday’s USDA crop report as traders adjust positions. The market has seen strong gains on better than expected purchases from China and generally higher exports helped by a weaker dollar. There is some expectation that China’s crop will be revised lower and imports revised higher in the USDA report. While prices may be technically over bought, any weaker price action off the USDA report is likely to be short lived since the fundamental outlook for cotton remains bullish.

Technical Outlook

COTTON (MAR) 01/12/04: 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 74.84 and then again at 75.84, while support is targeted at 73.50 and 73.16. 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 73.16. The downside closing price reversal on the daily chart is somewhat negative. ORANGE JUICE (MAR)1/12/04 The gap lower price action on the day session chart is a bearish indicator for trend. There could be some early pressure today given the market’s negative setup with the close below the 2nd swing support. Orange Juice should run into resistance at 64.60 and above there at 65.25 with support at 63.55 and 63.15. The 9-day RSI under 30 indicates the market is approaching oversold levels. The market’s short-term trend is negative as the close remains below the 9-day moving average. The daily stochastics have crossed over down which is a bearish indication. The next downside objective is now at 63.15.