Is The Selling In Bonds Justified?

Technical Outlook

#BONDS (JUN) 4/21/2004: 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 bonds is at 107.21 and then again at
108.15, while swing support hits at 106.17 and below there at 106.07. 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 106.07. More downside action may
be limited by the RSI under 20 putting the market in extremely oversold
territory.

T-NOTES(JUN) The daily stochastics gave a bearish
indicator with a crossover down. The next downside objective is now at 109.29.
The market is in a bearish position with the close below the 2nd swing support
number. Near-term resistance for the T-Notes is at 111.03 and then again at
111.24, while swing support hits at 110.06 and below there at 109.29. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. With a reading under 30, the 9-day RSI is approaching oversold
levels.

 

STOCK INDICES RECAP

4/20/2004

After some early gains the stock market fell back
on the session and did so in the face of favorable earnings reports. Certainly
the fear of the Greenspan testimony was a basis for exiting longs or banking
profits on longs ahead of the afternoon uncertainty. With Greenspan suggesting
that US Banks are prepared for higher US interest rates and that sent stock
prices down to new lows on the session. Therefore, it is clear that the stock
market is solely focused on the direction of interest rates and not the
improving pace of the economy.

Technical Outlook

#S&P500 (JUN) 4/21/2004: The defensive setup,
with the close under the 2nd swing support, could cause some early weakness. The
outside day down gives the market a bearish tilt. The daily closing price
reversal down is a negative indicator for prices. Underlying support comes in at
1102.35 and 1095.48, with overhead resistance at 1127.25 and 1145.28. 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. Stochastics trending lower at midrange will tend to reinforce a move lower
especially if support levels are taken out. The next downside objective is now
at 1095.48.

S&P E-Mini (JUN): The outside day down and close
below the previous day’s low is a negative signal. The downside closing price
reversal on the daily chart is somewhat negative. Negative momentum studies in
the neutral zone will tend to reinforce lower price action. The next downside
target is 1094.94. The close below the 2nd swing support number puts the market
on the defensive. Near-term resistance for the S&P Mini is at 1127.13 and then
again at 1145.44, while swing support hits at 1101.88 and below there at
1094.94. The market’s close above the 9-day moving average suggests the
short-term trend remains positive.

NASDAQ (JUN) The outside day down is somewhat
negative. The market could take on a defensive posture with the daily closing
price reversal down. A negative signal for trend short-term was given on a close
under the 9-bar moving average. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. The
market should run into resistance at 1460.75 and above there at 1494.63 with
support at 1414.25 and 1401.63. Momentum studies trending lower at mid-range
could accelerate a price break if support levels are broken. The next downside
objective is 1401.63. The market back below the 40-day moving average suggests
the longer-term trend could be turning down.

MINI DOW (MAR) The outside day down gives the
market a bearish tilt. The daily closing price reversal down is a negative
indicator for prices. The close below the 9-day moving average is a negative
short-term indicator for trend. The market should run into resistance at 10375
and above there at 10525 with support at 10164 and 10103. Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The next downside target is now at 10103. The close below
the 40-day moving average is an indication the longer-term trend is down. The
defensive setup, with the close under the 2nd swing support, could cause some
early weakness.

 

CURRENCY MARKET RECAP

4/20/2004

The US Dollar was strong early and held most of
those gains into the close. The US Dollar was helped put early in the session by
much weaker than expected German ZEW readings. While the Dollar partially
expected to see the Fed posture for higher interest rates we would think that
the trade is intently focused on the 91.02 level basis the June Dollar.
Considering the slide in the US stock and bond markets Tuesday one would think
that the Dollar could see some residual profit taking in the Dollar. The Dollar
now looks ahead to the US Beige Book that will be released on Wednesday
afternoon.

Technical Outlook

#CURRENCIES 4/21/2004: YEN (JUN): A negative
signal for trend short-term was given on a close under the 9-bar moving average.
The market has a slightly positive tilt with the close over the swing pivot.
Swing resistance is targeted at 92.71 and above there at 93.05, with the yen
finding support around 92.16 and below there at 91.95. 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 91.95.

EURO (JUN): 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 1.1831. The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Swing
support for the Euro comes in at 1.1831, with overhead resistance at 1.1949. 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

4/20/2004

The gold market saw moderate liquidation Tuesday,
probably because of the significant strength in the Dollar and possibly because
the market was expecting favorable economic dialogue from the US Federal Reserve
Chairman. Some traders even suggested that they were liquidating long gold and
silver positions because they expected the Fed to hint at higher interest rates.
In the end the reduction in macro economic anxiety and the fear of higher
interest rates put all the metals down sharply. Because the markets were down
sharply one also have to think that fund liquidation was prevalent in the trade.

Technical Outlook

#P-METALS 4/21/2004: SILVER (MAY): There could be
some early pressure today given the market’s negative setup with the close below
the 2nd swing support. Initial support for silver is at 686.0 and below there at
679.3 with resistance likely at 698.0 and 703.0. 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 679.3. The market is approaching over
sold levels on an RSI reading under 30. The gap lower on the day session chart
is bearish and puts the market on the defensive.

GOLD (JUN): Support for gold today comes in near
394.83, while resistance is pegged at 401.43. 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 394.83. Short-term indicators
on the defensive. Consider selling an intraday bounce. The market setup is
somewhat negative with the close under the 1st swing support. The close below
the 9-day moving average is a negative short-term indicator for trend. More
selling pressure is likely given yesterday’s gap lower price action on the day
session chart.

 

COPPER MARKET RECAP

4/20/2004

The copper market came under significant pressure
Tuesday after the overnight trade documented increased Chinese selling. Later in
the session the market came under more significant pressure on the news that a
Freeport was restarting the Grasberg facility in Chile and that certainly
promises to alleviate some of the tightness concerns. The fact that the US
equity market was weak and the funds appeared to be dumping a number of
commodities added to the downside momentum in copper.

 

ENERGY MARKET RECAP

4/20/2004

The energy complex faded aggressively Tuesday,
possibly because the trade feared another big crude stocks build in the weekly
inventory report. With the US Energy Secretary indicating Tuesday that the
gasoline waiver decision would be made by the EPA, we are not sure if the
decision will come sooner or later but the decision should be very important to
near term prices. The US Energy Secretary could have supported prices Tuesday
with reconfirmation that the US would continue to fill the SPR but prices didn’t
respond to that information! The US Administration thinks that the process of
filling the SPR is a minimal impact on prices while others in the trade think
the process is exaggerating the supply tightness.

Technical Outlook

#ENERGIES 4/21/2004: CRUDE OIL (JUN): It is a
slightly negative indicator that the close was under the swing pivot. Support
for crude is keyed on 36.23 and below there at 35.94, with resistance pegged at
36.78 and 37.04. The close below the 9-day moving average is a negative
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 37.04.

UNLEADED GAS (JUN): Rising stochastics at
overbought levels warrant some caution for bulls. The next upside objective is
116.81. The market tilt is slightly negative with the close under the pivot.
Resistance today is at 116.81, while support should be found around 113.41. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.

HEATING OIL (JUN): It is a slightly negative
indicator that the close was under the swing pivot. Heating oil should encounter
support around 91.13, with resistance is at 93.73. The close below the 9-day
moving average is a negative short-term indicator for trend. A crossover down in
the daily stochastics is a bearish signal. Momentum studies trending lower from
overbought levels is a bearish indicator and would tend to reinforce lower price
action. The next downside target is now at 91.13.

 

CORN MARKET RECAP

4/20/2004

Talk that the record pace of plantings could lead
to a 1-3 million acre increase in planted acreage from the March intentions
report helped to trigger additional long liquidation selling from speculators.
As recent as 2000, planted acreage jumped 1.698 million acres from the March
intentions report to the June acreage report. The biggest jump in history was
1971 when acreage went up by 3.17 million acres. In the past 39 years, there has
been only 6 years in which plantings have increased by more than 1 million
acres. The market found some support from news that 133,000 tons of US corn was
sold for export to unknown destination. Corn is now 20% planted as compared with
6% last week and 12% last year. The 14-year average is at 9% planted for this
time of the year. Short-term support for July corn comes in at 310 1/2 with 319
and 323 as resistance.

Technical Outlook

#CORN (JUL) 4/21/2004: Stochastics trending lower
at midrange will tend to reinforce a move lower especially if support levels are
taken out. The next downside target is now at 311 3/4. The market setup is
somewhat negative with the close under the 1st swing support. Market resistance
comes in at 318 3/4 today, with support at 311 3/4. The close below the 9-day
moving average is a negative short-term indicator for trend. Short-term
indicators on the defensive. Consider selling an intraday bounce.

 

SOY COMPLEX RECAP

4/20/2004

November soybeans rallied to nearly 9 cents
higher on the session shortly after the opening as traders see the perfect
weather for corn pulling acres away from soybeans. However, futures ended lower
on the session. Forecasts for much needed rain across the Midwest generated a
more bearish tone in the grain markets in general which added to the early
pressure for old crop soybeans and the long liquidation trend from speculators
was active into the close. July Soybean Meal closed at the lowest level since
March 15th in spite of expectations for new guidelines or rules from the US Food
and Drug Administration which may expand the feeding restrictions further in an
attempt to stop the spread of mad cow disease. The “uncertainty” associated with
this potential announcement and also a potential announcement from the USDA on
measures to control Asian rust are factors which might provide some support.
Short-term support for July soybeans comes in at 948 3/4 and 932 1/2 with 972
and 979 1/2 as resistance.

Technical Outlook

#SOYBEANS (JUL) 04/21/04 The close below the 1st
swing support could weigh on the market. The next area of resistance is around
959 2/4 and 974 1/4, while 1st support hits today at 938 2/4 and below there at
932 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 932
1/4. Bearish daily studies indicate selling minor rallies this session.

MEAL (JUL): 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 290.4. First resistance comes in at
299.2, with support at 292.2. The close below the 9-day moving average is a
negative short-term indicator for trend. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. The close below
the 40-day moving average is an indication the longer-term trend is down.

BEAN OIL (JUL): A positive signal for trend
short-term was given on a close over the 9-bar moving average. Stochastics are
at mid-range, but trending higher which should reinforce a move higher if
resistance levels are taken out. The next upside objective is 32.82. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The market could take on a defensive posture with the daily closing
price reversal down. Daily swing resistance is found at 32.33 and above there at
32.82. Support should be encountered at 31.63 and 31.42.

 

WHEAT MARKET RECAP

4/20/2004

The early break was triggered by forecasts for
good rains in the forecast across the winter wheat belt for this week. The
market found support from the crop conditions report which showed winter wheat
crops at 46% good to excellent as compared with 48% last week, 51% last year and
the 14 year moving average for conditions at this time of the year is at 56% in
good to excellent condition. Crops rated in poor to very poor condition came in
at 23% vs. 21% last week, 16% last year and 14% of the crop in poor to very poor
condition as the 14-year moving average for this time of the year. Private
forecasters believe that after some rain this week, the plains look hot and dry
on the 6-10 day outlook. There seems to be more concern for freeze damage from
last week which is providing support. Just before the hard freeze, crops in the
jointing stage (susceptible to damage) had reached 93% in Oklahoma, 49% in
Kansas and 18% in Colorado. The spring wheat crop is 32% planted as compared
with 16% last week and 16% on average for this time of the year. Taiwan is
tendering for 43,000 tons of US wheat. Short-term support for July Wheat comes
in at 404 with 409 1/4 and 141 1/4 as resistance.

Technical Outlook

#WHEAT (JUL) 4/21/2004: The market has a slightly
positive tilt with the close over the swing pivot. Expect near-term support
around 400 2/4 and below there at 393 3/4, with resistance levels at 411 and 414
3/4. 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 393
3/4.

 

LIVE CATTLE RECAP

4/20/2004

June cattle closed sharply higher on the session
and August and deferred contracts pushed into new contract highs. Funds were
active buyers to help offset cash connected selling as the persistence of the
fund buyers was enough to break-out above last weeks highs. The discount to the
cash market and talk that cash could trade steady to higher this week from
$86.00 last week helped support with offers at $88.00 early this week.
Boxed-beef cut-out values were up 28 cents to $162.28 as compared with $162.11
last week at this time. Slaughter came in at 130,000 head as compared with trade
expectations at 124,000-130,000 head. The higher than expected slaughter is an
indication of strong demand from packers for live animals.

Technical Outlook

#CATTLE (JUN) 4/21/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. The next downside objective is 75.80. The market has a bullish tilt
coming into today’s trade with the close above the 2nd swing resistance. Support
should be encountered at 77.02 and below there at 75.80. Market resistance is at
78.82 and then again at 79.40. A positive signal for trend short-term was given
on a close over the 9-bar moving average.

 

LEAN HOGS RECAP

4/20/2004

June hogs closed 7 lower on the session but down
180 from the highs of the day. The market found support from Monday nights jump
in pork cut-out values and from strength in the pork belly market but fund
selling on the bounce helped push futures lower into the close. Cash markets
were firm. The CME 2-Day lean Index was up 95 cents to $65.32 as compared with
62.81 last week at this time. The weekly cold storage report tonight is expected
to show little net movement on the week but Wednesday afternoon’s monthly cold
storage report is expected belly stocks at 50.7 million pounds (range 48.3-52.0)
as compared with 57 million pounds last month and 43 million pounds last year. A
6.3 million pound drawdown in stocks would be a record for the month on March.
In the past 14 years, there has been only 1 year in which stocks fell more than
1 million pounds and that was in 2001 when stocks fell 1.714 million pounds. In
9 of the 14 years, stocks have increased by more than 3 million pounds with 6
years showing a jump in excess of 8 million pounds. Slaughter came in at 390,000
head as compared with expectations at 388,000 to 392,000 head.

Technical Outlook

#HOGS (JUN) 4/21/2004: It is a slightly negative
indicator that the close was under the swing pivot. Resistance levels comes in
at 71.50 and 72.77 today, while support is around 69.70 and then 69.17. The
daily closing price reversal down is a negative indicator for prices. The
downside crossover of the 9 & 18 bar moving average is a negative signal. The
close below the 40-day moving average is an indication the longer-term trend is
down. 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 69.17.

 

COCOA MARKET RECAP

4/20/2004

So much for the potential bottoming in cocoa, as
the market returned to the selling with a vengeance Tuesday. Once again a
soaring Dollar appeared to be the culprit behind the selling but with physical
supplies abundant in the short term and demand documented to be mild, the bears
see little risk in implementing fresh shorts. In short the cocoa is factoring in
even higher production and steady to slightly higher demand.

Technical Outlook

COCOA (JUL) 04/21/04 The sell-off took the market
to a new contract low. The close below the 1st swing support could weigh on the
market. Cocoa should run into resistance at 1353 and above there at 1376 with
support at 1321 and 1312. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 1311.50. Short-term indicators on
the defensive. Consider selling an intraday bounce.

 

COFFEE MARKET RECAP

4/20/2004

July Coffee closed 55 lower on the session and
down 195 off of the highs of the day. Local buying and ideas that futures were
oversold helped to trigger the early rally but there was no new buying interest
on the rally but commercial sellers turned active. CSCE exchange stocks were up
5,444 bags to 4.786 million bags with 103,240 bags pending review. The surge in
“bags pending” suggests increases in exchange stocks ahead. The lack of any news
which would indicate poor crop conditions and continued good weather in Brazil
growing regions helped to trigger the weakness. The fact that funds hold a hefty
net long position along with the market trading at the low end of a 3-month
trading range leaves the market vulnerable to more long liquidation selling.

Technical Outlook

COFFEE (JUL) 4/21/04 The downside closing price
reversal on the daily chart is somewhat negative. The close below the 1st swing
support could weigh on the market. Momentum studies are declining, but have
fallen to oversold levels. The next downside objective is now at 70.25. The
Coffee contract should run into resistance at 72.85 and above there at 74.35
with support at 70.8 and 70.25. The market’s short-term trend is negative as the
close remains below the 9-day moving average. Daily studies pointing down
suggests selling minor rallies.

 

SUGAR MARKET RECAP

4/20/2004

July sugar opened lowed and closed slightly
higher but the market ran into hefty selling overhead and closed 9 points off of
the highs of the day. Trader houses were bull spreading the May/July which
helped support. Egypt is tendering for 160,000 tons of raw sugar for May-July
shipment. Bangladesh plans a tender in May for 100,000 tons of white sugar and
the country plans to import at least 1/2 million tons this season. Russian
Agriculture officials indicated that beet plantings this year should be 881,400
hectares this year, down nearly 5% from last year. Production is expected near
1.75-1.85 million metric tons from 1.93 million tons in processed production
last year. News that India is unlikely to import sugar this season helped to
quiet bullish enthusiasm. India production this year is near 15.5 million tons
with annual consumption near 18 million tons. However, stocks are near 10
million tons so the top Food Minister indicated that imports are unlikely. A
drought in Cuba is expected to trigger a drop in production to near 2.1-2.3
million tons from 2.6 million originally expected.

Technical Outlook

#SUGAR (JUL) 4/21/2004: The upside daily closing
price reversal gives the market a bullish tilt. It is a slightly negative
indicator that the close was under the swing pivot. Swing resistance comes in at
7.08, with support found at 6.68. The close below the 9-day moving average is a
negative 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 7.08.

 

COTTON MARKET RECAP

4/20/2004

The cotton market continued to see price erosion
as speculative long liquidation continued to depress prices. The market
continues to react poorly to bullish demand news and supportive macro-economic
news but any sign of potential supply for new crop has helped to trigger
selling. The CotLook A Index was unchanged on the session. Cotton planting
progress is well ahead of a normal pace and traders see the good moisture in the
soil in Texas as a bearish set-up. Talk of a shift away from soybeans and cotton
planted acreage and towards corn plantings failed to provide support.

Technical Outlook

#COTTON (JUL) 4/21/2004: 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 62.19 and then again at 62.62, while support is targeted at 61.49
and 61.22. Stochastics are at mid-range, but trending higher which should
reinforce a move higher if resistance levels are taken out. The next upside
objective is 62.62.