Look Who’s Joining OPEC
BOND MARKET RECAP
9/16/2003
The bond market sagged during the session but
then recovered as the Fed took no action and suggested that the risks to the
economy were balanced. The Fed did acknowledge the risk of rising deflationary
threats but the bonds really got support from the Feds statement that the jobs
market continues to weaken. Countervailing the upside tilt following the Fed
meeting were suggestions from the Fed that consumer spending was improving. In
the end the Fed statement was almost identical to the prior months statement
suggesting that the Fed is staying the course and that course is successful. The
trade was decided to factor in some slightly weaker US economic reports to be
released on Wednesday morning.
Technical Outlook
BONDS (DEC) 9/17/2003: The market tilt is
slightly negative with the close under the pivot. Near-term resistance for bonds
is at 107.31 and then again at 108.08, while swing support hits at 107.04 and
below there at 106.18. A positive signal for trend short-term was given on a
close over the 9-bar moving average. Rising stochastics at overbought levels
warrant some caution for bulls. The next upside objective is 108.08.
T-NOTES(DEC) Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
112.20. 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 112.12 and then again
at 112.20, while swing support hits at 111.24 and below there at 111.11. The
market’s short-term trend is positive on a close above the 9-day moving average.
STOCK INDICES RECAP
9/16/2003
The stock market was certainly impressive again
on Tuesday as the Fed statement didn’t disappoint or rattle the bull camp. It
would seem that the status quo gives the market a little confidence that the
recovery is proceeding as some on the trade were concerned that the Fed would
sound the alarm on the jobs issue but apparently the Fed sees the jobs situation
worsening but they weren’t overly concerned about the issue. Even with
expectations for the economic reports Wednesday showing weak projections the
stock market managed to sustain its positive stance. We have to think that the
small spec long is now in excess of 102,000 contracts, which is a moderately
overdone, positioning.
Technical Outlook
S&P500 (DEC) 9/17/2003: There could be more
upside follow through since the market closed above the 2nd swing resistance.
Underlying support comes in at 1020.65 and 1010.18, with overhead resistance at
1034.95 and 1038.78. The close above the 9-day moving average is a positive
short-term indicator for trend. The crossover up in the daily stochastics is a
bullish signal. The near-term upside objective is at 1038.78.
S&P E-Mini (DEC): 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
1006.56. It is a slightly negative indicator that the close was lower than the
pivot swing number. Near-term resistance for the S&P Mini is at 1016.13 and then
again at 1021.06, while swing support hits at 1008.88 and below there at
1006.56. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.
NASDAQ (DEC) The market made a new contract
high on the rally. A positive signal for trend short-term was given on a close
over the 9-bar moving average. The market has a bullish tilt coming into today’s
trade with the close above the 2nd swing resistance. The market should run into
resistance at 1404.00 and above there at 1413.50 with support at 1368.00 and
1341.50. Stochastics turning bearish at overbought levels will tend to support
lower prices if support levels are broken. The next downside objective is
1341.50.
CURRENCY MARKET
RECAP
9/16/2003
It seems strange that the Dollar managed to
sustain the early gains posted Tuesday morning but the trade was evidently
impressed that the US Fed didn’t see the need to tamper with the US economy. In
other words, the Forex markets are willing to discount the weakening in the US
economy and the equally impressive improvement seen in the Euro zone economy. In
fact, before the US session opened, the euro zone and Germany specifically
produced some pretty impressive growth readings and that makes the aggressively
slide in the Euro all the more suspect.
Technical Outlook
YEN (DEC): A positive signal for trend short-term
was given on a close over the 9-bar moving average. If yesterday’s gap higher on
the day session chart holds, additional buying could develop this session. The
market has a bullish tilt coming into today’s trade with the close above the 2nd
swing resistance. Swing resistance is targeted at 86.54 and above there at
86.70, with the yen finding support around 86.14 and below there at 85.90.
Momentum studies trending lower at mid-range could accelerate a price break if
support levels are broken. The next downside objective is 85.90.
EURO (DEC): Daily stochastics have risen into
overbought territory which will tend to support reversal action if it occurs.
The near-term upside target is at 1.1250. The defensive setup, with the close
under the 2nd swing support, could cause some early weakness. Swing support for
the Euro comes in at 1.1068, with overhead resistance at 1.1250. 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
9/16/2003
The gold had little chance against the massive US
Dollar rise Tuesday. The market managed another new low for the move but
rejected part of the losses into the close. In fact, unless the Fed meeting
alters sentiment it would seem that the bear camp still controls the near term
outlook in gold. Not surprisingly the silver and gold continued to diverge
mostly because the silver seems to be tracking the stock market.
Technical Outlook
SILVER (DEC): The market has a slightly positive
tilt with the close over the swing pivot. Initial support for silver is at 519.8
and below there at 515.4 with resistance likely at 522.5 and 526.3. A positive
signal for trend short-term was given on a close over 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 515.4.
GOLD (DEC): Support for gold today comes in near
369.88, while resistance is pegged at 379.68. 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 369.88. 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.
COPPER MARKET RECAP
9/16/2003
The copper market forged another downside probe
but did manage to reject a portion of those losses. With the stock market
gaining ground during the session the copper market certainly had outside
support for prices. With the washout Tuesday, the small spec position in copper
should have been brought down even with the early break to reduce near term
selling pressure on prices. Apparently the pit had second thoughts about
magnitude of the downside action but many markets seemed to be factoring in a
favorable outcome to the FOMC meeting, which was played out after the copper
market closed.
ENERGY MARKET RECAP
9/16/2003
The energy complex faded under the weight of the
news that Iraq would be invited as a full member of OPEC in the September 24th
meeting. In other words, the world is beginning to consider Iraq an export force
again. Also pressuring prices Tuesday were ideas that both gasoline and crude
oil inventories are set to increase slightly in the Wednesday morning reports.
It is also likely that the track of the hurricane is shifting away from a direct
hit on the East Coast is sliding further north and weakening. Therefore, fewer
traders think that New York Harbor will see significant shipping delays.
Technical Outlook
CRUDE OIL (NOV): The defensive setup, with the
close under the 2nd swing support, could cause some early weakness. Support for
crude is keyed on 27.38 and below there at 27.12, with resistance pegged at
27.98 and 28.32. The close below the 9-day moving average is a negative
short-term indicator for trend. 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 27.12. Some caution in pressing the downside is
warranted with the RSI under 30.
UNLEADED GAS (NOV): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 75.93. Could see some early pressure today given the
market’s negative setup with the close below the 2nd swing support. Resistance
today is at 80.93, while support should be found around 75.93. The gap lower on
the day session chart is bearish and puts the market on the defensive. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The market is approaching over sold levels on an RSI reading under 30.
HEATING OIL (NOV): The market setup is somewhat
negative with the close under the 1st swing support. Heating oil should
encounter support around 73.78, with resistance is at 75.68. The close below the
9-day moving average is a negative short-term indicator for trend. 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 73.78.
Some caution in pressing the downside is warranted with the RSI under 30.
CORN MARKET RECAP
9/16/2003
Another new low for the move, leaves the trend
pointing down. With the decline Tuesday the corn market more than likely shifted
into a net short small spec and fund positioning. Argentina pegged the amount of
corn sold through September 12th to be 9.4 million metric tons compared to 7.37
million last year at this time. While the market expected the increased supply
flow from Argentina that is simply additional bear news in a downward market.
Many in the trade are suggesting that harvesting pressure or seasonal selling is
hammering prices and that could mean even more downside before the swing runs
its course. About the only support for corn prices is the idea that some corn
producers will opt to store corn instead of selling corn out of the field.
Technical Outlook
CORN (DEC) 9/17/2003: 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 221 . The defensive setup, with
the close under the 2nd swing support, could cause some early weakness. Market
resistance comes in at 229 1/2 today, with support at 221 . The close below the
9-day moving average is a negative short-term indicator for trend. Some caution
in pressing the downside is warranted with the RSI under 30.
SOY COMPLEX RECAP
9/16/2003
The soybean market opened near 2 cents higher and
closed near 8 cents lower and began to ease into the gap area left after the
USDA report. Concerns with a seasonal rise in producer selling into the heart of
harvest and a lack of near-term demand for export helped pressure. Basis levels
at the gulf were lower on increased flow of new crop soybeans and a slow line-up
for exports. News of deteriorating crop conditions in Illinois due to charcoal
rot disease (normally found in the far southern US in years of heat) failed to
provide much support and either did deteriorating crop conditions. Anticipation
of harvest pressures is keeping the market down as bullish news (such as news of
lower than expected yields) will not happen until harvest progresses.
Technical Outlook
SOYBEANS (NOV) 09/17/03 Could see some early
pressure today given the market’s negative setup with the close below the 2nd
swing support. The next area of resistance is around 617 and 625 1/2, while 1st
support hits today at 604 1/2 and below there at 600 1/2. The market’s close on
the 9-day moving average is neutral. 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 600 1/2.
MEAL (DEC): 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 179.3. First resistance comes in
at 187.4, with support at 181.5. 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.
BEAN OIL (DEC): A positive signal for trend
short-term was given on a close over the 9-bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The next upside
objective is 22.62. The swing indicator gave a moderately negative reading with
the close below the 1st support number. Daily swing resistance is found at 22.42
and above there at 22.62. Support should be encountered at 22.14 and 22.06. The
market is approaching overbought levels with an RSI over 70.
WHEAT MARKET RECAP
9/16/2003
Wheat inched lower in choppy trade as weakness in
the other grains and a lack of new speculative interest helped pressure. The
market opened higher on news that Jordon was tendering for 136,000 tons of US
wheat but the market rolled-over to the downside when soybeans pushed lower.
Improving crop conditions for planting of the winter wheat crop and more
speculative long liquidation helped pressure. Russian wheat exports in July fell
to the lowest level since February 2002 which imports are on the rise.
Technical Outlook
WHEAT (DEC) 9/17/2003: The market could take on a
defensive posture with the daily closing price reversal down. The market tilt is
slightly negative with the close under the pivot. Expect near-term support
around 350 and below there at 347 1/4, with resistance levels at 357 and 361
1/4. A negative signal for trend short-term was given on a close under the 9-bar
moving average. Rising from over sold levels, daily momentum studies would
support higher prices especially on a close above resistance. The next upside
objective is 361 1/4.
LIVE CATTLE RECAP
9/16/2003
After a successful test of the contract highs for
December cattle, the active selling late in the session drove futures to close
nearly 100 lower on the day. Strong beef prices and tightness in the supply of
market-ready cattle had traders believing that packers would need to pay $90-$92
for live inventory this week. News that cash traded at $89 in the panhandle came
as a major disappointment to the bulls. The trade is $1.00 above last week’s
action but well below expectations. For Friday’s cattle-on-Feed report, traders
are looking for on-feed supplies near 96.3% (range 95.7-98.8), placements at
104.2% (100.4-113) and marketings in August at 97.6% (range 95.7-100).
Technical Outlook
CATTLE (DEC) 9/17/2003: Stochastics turning
bearish at overbought levels will tend to support lower prices if support levels
are broken. The next downside objective is 82.05. The market tilt is slightly
negative with the close under the pivot. Support should be encountered at 82.52
and below there at 82.05. Market resistance is at 84.27 and then again at 85.55.
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.
LEAN HOGS RECAP
9/16/2003
The outside-day down for December hogs after a
higher opening is a bearish technical development. The downgrade of the
hurricane to category 2 and declining fears of a disruption to hog marketings
helped pressure the market. Higher pork values this week and stronger belly
prices helped support. The technical overbought condition of the market and a
failure in cattle helped pressure. Cash hogs were steady to $1.00 lower after
traders expected a steady trade.
Technical Outlook
HOGS (DEC) 9/17/2003: The market setup is
somewhat negative with the close under the 1st swing support. Resistance levels
comes in at 57.65 and 58.80 today, while support is around 55.95 and then 55.40.
The daily closing price reversal down is a negative indicator for prices.
Short-term indicators on the defensive. Consider selling an intraday bounce. The
close below the 9-day moving average is a negative short-term indicator for
trend. 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 55.40.
COCOA MARKET RECAP
9/16/2003
More downside action was seen in cocoa Tuesday,
with a chart failure propagating additional stop-loss selling. Apparently small
specs still held long positions and were being forced out, as the funds seem to
be pressing the market aggressively. Predictions of the Ivory Coast main crop
were for an 860,000 to 900,000 metric ton harvest which almost exactly straddles
the prior projected range. The important thing to remember is that Ivory Coast
officials think that the coming crop will be smaller than the prior crop and
that could help to put a bottom under the market once the liquidation has run
its course.
Technical Outlook
COCOA (DEC)09/17/03 The close below the 1st swing
support could weigh on the market. Cocoa should run into resistance at 1489 and
above there at 1516 with support at 1451 and 1440. 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 target is
1440.00.
COFFEE MARKET RECAP
9/16/2003
Fund traders continued to be aggressive sellers
of coffee futures driving the Dec contract nearly back to the August lows.
Forecasts for more rain in Brazil’s coffee growing regions this week was the
principal reason behind the sell off and switch to a more bearish outlook. Green
Coffee Association showed stocks as of August at 6.227 million bags, down from
6.365 million bags in July. The decline was within expectations. The weakened
chart structure in the Dec contract suggests a break to 61 cents is possible.
Technical Outlook
COFFEE (DEC)9/17/03 Could see some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. Negative momentum studies in the neutral zone will tend to reinforce
lower price action. The next downside objective is now at 59.40.The Coffee
contract should run into resistance at 64.70 and above there at 67.60 with
support at 60.6 and 59.40. The market’s short-term trend is negative as the
close remains below the 9-day moving average. The major trend is down with the
cross over back below the 40-day moving average.
SUGAR MARKET RECAP
9/16/2003
The reversal from an 8-month low suggests a loss
in downside momentum for the sugar market. Early weakness was triggered by more
speculative selling but when the selling slowed from the speculator the market
bounced. With producer selling slowing to a trickle, the market is now void of
new selling interest until Brazil millers turn more active. The Brazil harvest
is near 2/3rds complete. At the last three new lows for March sugar, the RSI
readings have come in with slightly higher readings. This divergence is also a
technical reading of a loss in downside momentum. The 4th German beet test
showed a strong sugar content over 2% higher than a year ago.
Technical Outlook
SUGAR (MAR) 9/17/2003: The upside daily closing
price reversal gives the market a bullish tilt. The close over the pivot swing
is a somewhat positive setup. Swing resistance comes in at 6.40, with support
found at 6.00. The close below the 9-day moving average is a negative short-term
indicator for trend. 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 6.00.
COTTON MARKET RECAP
9/16/2003
Dec cotton ran in to some profit taking after
last week’s sharp rally off a bullish USDA world production report and concerns
over hurricane Isabel. Given last week’s rally, the correction in Dec cotton has
been shallow with good trade buying on dips. Now it looks like hurricane Isabel
will hit land around North Carolina which will affect less of the cotton crop
than if the hurricane hit land around Georgia. However, the path of the
hurricane is still uncertain, so until any actual damage to the cotton crop is
known, any further downside correction should be limited.
Technical Outlook
COTTON (DEC) 9/17/2003: A positive signal for
trend short-term was given on a close over the 9-bar moving average. The close
below the 1st swing support could weigh on the market. Next resistance area
comes in at 64.91 and then again at 65.68, while support is targeted at 63.86
and 63.58. 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 63.58.