Limit Down!

Technical Outlook

BONDS (MAR) 12/26/03: A positive setup occurred with the close over the 1st swing resistance. Near-term resistance for bonds is at 110.31 and then again at 111.08, while swing support hits at 109.31 and below there at 109.08. The market’s close above the 9-day moving average suggests the short-term trend remains positive. 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 109.08.

T-NOTES(MAR) 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 111.23. With the close over the 1st swing resistance number, the market is in a moderately positive position. 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 113.05 and then again at 113.12, while swing support hits at 112.10 and below there at 111.23. The market’s short-term trend is positive on a close above the 9-day moving average.

STOCK INDICES RECAP

12/24/2003

While stock prices did show periodic weakness Wednesday the fact is that the market managed to shrug off a series of potential negatives. In fact, after a weaker opening the stock market managed to climb into positive ground directly in the face of the mad cow threat and much weaker than expected US economic reports. The market could have been exceedingly undermined by the 3.1% decline in durable goods as that suggests the consumer is uninterested or out of buying fuel.

Technical Outlook

S&P500 (MAR) 12/26/03: The market’s close below the pivot swing number is a mildly negative setup. Underlying support comes in at 1090.80 and 1088.70, with overhead resistance at 1095.00 and 1097.10. 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 1097.10. 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. Rising stochastics at overbought levels warrant some caution for bulls. The next upside objective is 1098.44. The market tilt is slightly negative with the close under the pivot. Near-term resistance for the S&P Mini is at 1095.88 and then again at 1098.44, while swing support hits at 1090.13 and below there at 1086.94. A positive signal for trend short-term was given on a close over 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 1451.00 and above there at 1455.50 with support at 1442.00 and 1437.50. Studies are showing positive momentum, but are now in overbought territory so some caution is warranted. The next upside target is 1455.5.

CURRENCY MARKET RECAP

12/24/2003

While it took a combination of negative developments to finally push the Dollar down to a contract low, a fresh contract low was managed early in the action Wednesday and added to the downside through the session. The trade saw the potential economic threat from the US mad cow issue as a compounding influence in addition to the recent terrorism threat and therefore the trade had plenty of reason to attack the Dollar. It is clear that the downtrend in the Dollar is set to resume and that the developments undermining the Dollar are of a type that they might remain in place for an extended period of time. Therefore, most if not all of the currencies should be able to rise sharply against the Dollar.

Technical Outlook

YEN (MAR): The market’s close above the 9-day moving average suggests the short-term trend remains positive. A positive setup occurred with the close over the 1st swing resistance. Swing resistance is targeted at 93.57 and above there at 93.72, with the yen finding support around 93.33 and below there at 93.24. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 93.24.

EURO (MAR): 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 1.2354. The market is in a bearish position with the close below the 2nd swing support number. Swing support for the Euro comes in at 1.2354, with overhead resistance at 1.2484. 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

12/24/2003

It took a flurry of negative issues to put the Dollar down but eventually the Dollar made a fresh contract low and that served to notch up the interest in the long side of gold. While the mad cow development could end up being deflationary and negative to gold, the market didn’t seem to take the situation in that respect during the action Wednesday. We still sensed a lack of strong upside momentum in the early action Wednesday but it is clear that the bull camp still controls gold and silver even if prices gains failed to fully satisfy the bulls.

Technical Outlook

SILVER (MAR): A positive setup occurred with the close over the 1st swing resistance. Initial support for silver is at 575.8 and below there at 571.2 with resistance likely at 578.9 and 582.8. 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 578.9. 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 410.40, while resistance is pegged at 414.80. Momentum studies are trending higher, but have entered overbought levels. The near-term upside objective is at 414.80. Consider buying pull-backs since daily studies are bullish. With the close over the 1st swing resistance number, the market is in a moderately positive position. The market’s short-term trend is positive on a close above the 9-day moving average. The rally brought the market to a new contract high.

COPPER MARKET RECAP

12/24/2003

A very impressive action in copper as it managed to stay positive despite extremely negative US economic information and a slight overbought short term technical condition. Apparently the bull camp in copper was impressive with the US stock market action in the face of the poor economic numbers and for the near term the copper market seems to be capable of discounting, terrorism, slow numbers and mad cow in the US. If the stock market were down that might have give copper a completely different spin than was seen Wednesday morning.

ENERGY MARKET RECAP

12/24/2003

The energy market surprised a number of traders Wednesday as it managed to ignore a moderate build in US crude stocks to track higher on the session. With reports surfacing that some Alaskan oil facilities might be a target of the terrorists prices snapped out of a liquidation mode to close moderately higher. It is also possible that a bigger than expected natural gas draw rekindled ideas of solid winter demand and that served to give a lift to the entire complex. Countervailing the bullish crude stock declines, were moderate builds in distillate stocks at the API.

Technical Outlook

CRUDE OIL (FEB): The market’s close above the 2nd swing resistance number is a bullish indication. Support for crude is keyed on 32.34 and below there at 31.62, with resistance pegged at 33.39 and 33.72. 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 31.62.

UNLEADED GAS (FEB): Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 88.61. A positive setup occurred with the close over the 1st swing resistance. Resistance today is at 94.91, while support should be found around 88.61. The market’s close above the 9-day moving average suggests the short-term trend remains positive.

HEATING OIL (FEB):The market’s close above the 2nd swing resistance number is a bullish indication. Heating oil should encounter support around 89.44, with resistance is at 93.94. 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 89.44.

CORN MARKET RECAP

12/24/2003

March corn took the brunt of the bearish reaction to the mad cow situation on the opening and managed to close nearly 7 cents off of the lows but still down 8 cents on the session. Ideas that feed grain demand will suffer if the US cattle herd needs to be culled helped to pressure the market but a late surge in soybeans helped support. The extreme overbought condition of the market basis the fund net long position in the last COT report combined with fears that corn producers might dump inventory on the cash market in early 2004 helped to trigger the selling.

Technical Outlook

CORN (MAR) 12/26/03: Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 225 1/4. The market is in a bearish position with the close below the 2nd swing support number. Market resistance comes in at 244 1/4 today, with support at 225 1/4. The downside crossover (9 below 18) of the moving averages suggests a developing short-term downtrend. With a reading under 30, the 9-day RSI is approaching oversold levels. The gap down on the day session chart is bearish with more selling pressure possible today.

SOY COMPLEX RECAP

12/24/2003

With almost a 20 cent range, the active trade was seen as a surprise for the holiday period. “Uncertainties” as to the extent of the mad cow problems in the US contributed to the initial sharp break but commercial buying helped support the market. Some speculative buying supported the market for the mid-day bounce but weakness in corn and wheat helped limit the gains. Traders suspect that funds were net long near 42,000 contracts but the lack of aggressive selling after the opening helped to ease bearish concerns. Ideas that the mad cow case in the US could be an isolated instance helped support.

Technical Outlook

SOYBEANS (MAR) 12/26/03: The outside day up and close above the previous day’s high is a positive signal. The daily closing price reversal up is positive. Since the close was above the 2nd swing resistance number, the market’s posture is bullish and could see more upside follow-through early in the session. The next area of resistance is around 782 and 791 1/2, while 1st support hits today at 748 and below there at 723 1/2. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 723 1/2.

MEAL (MAR): The daily stochastics gave a bullish indicator with a crossover up. The near-term upside objective is at 245.1. The outside day up is a positive signal. The upside closing price reversal on the daily chart is somewhat bullish. First resistance comes in at 241.2, with support at 227.2. The market’s short-term trend is positive on a close above the 9-day moving average. The market’s close above the 2nd swing resistance number is a bullish indication. The major trend could be turning up with the close back above the 40-day moving average.

BEAN OIL (MAR): The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside target is 26.72. It is a slightly negative indicator that the close was lower than the pivot swing number. Daily swing resistance is found at 27.34 and above there at 27.50. Support should be encountered at 26.95 and 26.72.

WHEAT MARKET RECAP

12/24/2003

The market collapsed early in the session weighed down by mad cow concerns and continued long liquidation selling from speculators. March wheat moved to the lowest level since October 22nd until finding support. The 90-day cycle lows are not due until January 15th but the market is quickly in an oversold condition after a 40-cent, 4-day break. Funds were active sellers early but with a general perception that if the mad cow announcement is just an isolated case that the impact on wheat will be minimal helped ease the selling pressure towards the close. Traders also interpreted the Egypt news as bearish as Egypt bought just 60,000 tons of wheat from the US but 120,000 tons from Australia. Pakistan is tendering for 150,000 tons of optional origin wheat; their first buying tender in over 4 years.

Technical Outlook

WHEAT (MAR) 12/26/03: The swing indicator gave a moderately negative reading with the close below the 1st support number. Look for near-term support at 357 1/2 and below there at 352 1/4, with resistance levels at 368 1/2 and 374 1/4. The market’s close below the 9-day moving average is an indication the short-term trend remains negative. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 352 1/4. The 9-day RSI under 30 indicates the market is approaching oversold levels.

LIVE CATTLE RECAP

12/24/2003

The futures opened and closed limit down and never traded on the session. The pool of unfilled sell orders reached 9000 contracts for the February cattle and 5000 contracts for the February cattle. While there were very few traders willing to buy anything, there was some synthetic trade down in the February cattle at an equivalent price of near 76.00 which would be 1300 points lower on the session. Since the “uncertainty” of the situation may have peaked on Wednesday, the option trade may become more defined on Friday but given the situation, futures are unlikely to trade until Monday when the limits are likely to be expanded to 300 points. Boxed-beef cut-out values were down $1.00 at mid-session to $150.08. The top importers of US cattle (Japan, Mexico and South Korea) have already banned US beef and many other countries also reported a ban. Fears of a sharp drop in consumer demand for beef and uncertainty regarding the extent of the disease into the US herd (Is there more infected cattle?) are the two primary bearish forces and also the two most uncertain factors for the market to determine.

Technical Outlook

CATTLE (FEB) 12/26/03: Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 89.17. The close below the 2nd swing support number puts the market on the defensive. Support should be encountered at 89.17 and below there at 89.17. Market resistance is at 89.17 and then again at 89.17. The gap lower price action on the day session chart is a bearish indicator for trend. The market’s close below the 9-day moving average is an indication the short-term trend remains negative.

LEAN HOGS RECAP

12/24/2003

The market came under heavy selling pressure on the limit-down trade in cattle and concerns that red meat demand will suffer after the mad cow announcement. The holiday delayed the release of Iowa/Minnesota average weights and the weekly reading will be released on Friday. With record high average rates reported last week, traders will watch this number closely to see if weights have at least peaked which would be expected at this time of the year. Pork cut-pout values were reported late Tuesday at $54.99, down 32 cents on the session but up 39 cents from last weeks price. The ability of the pork market to hold mostly steady during a period of hefty supply is seen as somewhat supportive. In addition, lower beef demand could help support improving pork demand.

Technical Outlook

HOGS (FEB) 12/26/03: The market is in a bearish position with the close below the 2nd swing support number. Resistance levels comes in at 51.97 and 53.05 today, while support is around 50.45 and then 50.00. The gap down on the day session chart is bearish with more selling pressure possible today. The market’s short-term trend is negative as the close remains below the 9-day moving average. 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 53.05.

COCOA MARKET RECAP

12/24/2003

The cocoa market managed to reject a fresh new low for the move and finish back up in the upper end of the weekly trading range. Cocoa warehouse stocks have been on a moderate rise lately and with harvest progressing, it is certainly possible that some supply is finding its way into the exchange warehouse. Fresh stats put the Ivory Coast export total 9% below year ago levels but we suspect that the deficit is set to narrow or has already narrowed.

Technical Outlook

COCOA (MAR)12/29/03 The daily closing price reversal up is positive. The market setup is supportive for early gains with the close over the 1st swing resistance. Cocoa should run into resistance at 1571 and above there at 1578 with support at 1547 and 1530. Momentum studies are declining, but have fallen to oversold levels. The next downside target is 1529.50.

COFFEE MARKET RECAP

12/24/2003

The coffee market drifted down to the lowest level of the week and would seem to be negatively biased. Apparently talk of delayed export shipments of coffee from Colombia wasn’t enough of an issue to turn off the bear track this week. We continue to see the weather as a slight negative to coffee prices and since overall uncertainty is pretty low, the trend should favor the bear camp. The market will be closed for action until December 29th due to holiday closings.

Technical Outlook

COFFEE (MAR)12/29/03 The market tilt is slightly negative with the close under the pivot. Negative momentum studies in the neutral zone will tend to reinforce lower price action. The next downside objective is now at 62.40.The Coffee contract should run into resistance at 63.80 and above there at 64.50 with support at 62.75 and 62.40. The market’s short-term trend is negative as the close remains below the 9-day moving average.

SUGAR MARKET RECAP

12/24/2003

The market pushed slightly higher in quiet trade on Wednesday ahead of the first of two 4-day weekends for sugar. A report from the China Sugar Organization indicating that demand could rise to near 11 million tons for the 2003/2004 season was seen as supportive. Increased demand from the processed food and beverage industry was the primary factor to boost demand and the Organization is in the process of adjusting production forecasts lower but there is no forecast yet. Sugar traders believe the crop could be down near 9.5 million tons. Strength in the London market added to the positive tone.

Technical Outlook

SUGAR (MAR) 12/29/03: It is a mildly bullish indicator that the market closed over the pivot swing number. Swing resistance comes in at 6.01, with support found at 5.83. The market’s short-term trend is negative as the close remains below the 9-day moving average. Daily stochastics are trending lower, but have declined into oversold territory. The next downside objective is now at 5.83. With a reading under 30, the 9-day RSI is approaching oversold levels.

COTTON MARKET RECAP

12/24/2003

March cotton closed slightly higher but maintained a tight trading range. Some might suggest that the cotton market is mounting a slightly higher coiling pattern that points to more upside. However, the trade is still not certain how much the Chinese will still need to buy and if the world recovery is going to gather momentum. Recent durable goods reports showed a decline and that might hint at lower apparel sales and weaker demand for cotton. The cotton was called lower to open the session Wednesday which means that some in the cotton trade are concerned about a slackening of the economy!

Technical Outlook

COTTON (MAR) 12/29/03: 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. Next resistance area comes in at 71.24 and then again at 71.60, while support is targeted at 70.41 and 69.94. Positive momentum studies in the neutral zone will tend to reinforce higher price action. The next upside target is 71.60. ORANGE JUICE (MAR)12/29/03 The sell-off took the market to a new contract low. Could see 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 69.00 and above there at 70.20 with support at 67.30 and 66.80. 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 66.8.