Massive Breakout!

Technical Outlook

#BONDS (SEP) 07/19/04: 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 110.05 and then again at 110.19, while swing support hits at 108.17 and
below there at 107.11. 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 110.19.
The 9-day RSI over 70 indicates the market is approaching overbought levels.

T-NOTES(SEP) The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 112.07. The
market’s close above the 2nd swing resistance number is a bullish indication.
Near-term resistance for the T-Notes is at 111.30 and then again at 112.07,
while swing support hits at 110.26 and below there at 109.31. 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

7/16/2004

The stock market showed early impressive strength
but then gave some ground into mid session as outside markets began to undermine
sentiment. In the energy complex prices supposedly firmed because of week end
terrorism threats. In the bonds the market managed the most significant rally
since the July 2nd unemployment and that suggests that the outlook for the
economy is deteriorating and that also fostered selling in stocks. We also think
that a massive decline in the US Dollar makes foreign investors unwilling to
hold US stocks! In short, outside market influences would seem to be spooking US
investors.

Technical Outlook

#S&P500 (SEP) 07/19/04: The market’s close below
the pivot swing number is a mildly negative setup. Underlying support comes in
at 1097.20 and 1092.80, with overhead resistance at 1109.00 and 1116.40. 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 1092.80. With a
reading under 30, the 9-day RSI is approaching oversold levels.

S&P E-Mini (SEP): Daily stochastics declining
into oversold territory suggest the selling may be drying up soon. The next
downside objective is 1092.13. The market tilt is slightly negative with the
close under the pivot. Near-term resistance for the S&P Mini is at 1109.25 and
then again at 1117.13, while swing support hits at 1096.75 and below there at
1092.13. 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.

NASDAQ (SEP) 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. The market
should run into resistance at 1414.00 and above there at 1437.50 with support at
1381.00 and 1371.50. 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 1371.5.

MINI DOW (SEP) The daily closing price reversal
up is positive. The market’s close below the 9-day moving average is an
indication the short-term trend remains negative. The market should run into
resistance at 10190 and above there at 10258 with support at 10085 and 10048.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 10048. It is a slightly negative indicator that the close was
lower than the pivot swing number.

 

CURRENCY MARKET RECAP

7/16/2004

With the declines Friday the Dollar falls to the
lowest level since February. In short the trade took the muted inflation report
readings to mean that the US will not be moving to hike interest rates anytime
soon. It is also clear with the upside breakout in US Treasuries that the
outlook for the US economy is suspect that also chases investors out of the
Dollar. Massive gains in the Pound would seem to suggest additional upside
potential in the Pound next week. However, it seemed like all the currencies
gained evenly against the Dollar and that also speaks of a sustained uptrend.

Technical Outlook

#CURRENCIES 07/19/04: YEN (SEP): 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 92.62 and above there at 92.95, with
the yen finding support around 91.70 and below there at 91.11. Negative momentum
studies in the neutral zone will tend to reinforce lower price action. The next
downside target is 91.11.

EURO (SEP): The daily stochastics gave a bullish
indicator with a crossover up. The near-term upside objective is at 1.2522. The
market is in a bearish position with the close below the 2nd swing support
number. Swing support for the Euro comes in at 1.2308, with overhead resistance
at 1.2522. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap down on the day session chart is bearish with more
selling pressure possible today.

 

PRECIOUS METALS RECAP

7/16/2004

The gold and silver markets certainly got a
definitive downside breakout in the Dollar to propel buyers into action. We also
think that increased macro economic anxiety provided gold with a slight lift. It
should also be noted that the energy complex was pumping up prices in an effort
to factor in the prospect of weekend terrorism developments and that could also
have given gold and silver a lift. It’s pretty impressive that gold and silver
managed to rally after seeing slack inflation readings and somewhat softer
Michigan sentiment numbers. Therefore, the metals markets seem to be capable of
finding the information to rally on.

Technical Outlook

#P-METALS 07/19/04: SILVER (SEP): With the close
higher than the pivot swing number, the market is in a slightly bullish posture.
Initial support for silver is at 664.8 and below there at 654.9 with resistance
likely at 671.9 and 680.3. 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 671.9. The 9-day RSI over 70 indicates the market is
approaching overbought levels.

GOLD (AUG): Support for gold today comes in near
402.58, while resistance is pegged at 410.38. Momentum studies are trending
higher, but have entered overbought levels. The near-term upside objective is at
410.38. 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.

 

COPPER MARKET RECAP

7/16/2004

The copper market exploded above critical
resistance at 130 and appeared to do so off intense fund buying interest. It was
also clear that a sharply lower US Dollar made US copper prices look more
attractive to international buyers and that accentuated the upside thrust. With
the fund buying this week the COT report will certainly understate the net spec
long but given the prior COT report we doubt that the copper market is
extensively overbought. The most amazing thing about copper is that the
deterioration in the macro case is having almost no impact on the bull camp.

 

ENERGY MARKET RECAP

7/16/2004

The energy complex showed some divergent action
Friday but seemed to be lifted by concerns of a weekend terrorism event.
However, the market did see some selling pressure off the story that Saudi
Arabia might be producing as much as 9.4 million barrels of oil per day. The
heating oil contract showed relative strength Friday and that would seem to
suggest that some buyers were play up the potential tightness for US products
late in the year. The trade cited concern for production problems in Nigeria and
Iraq for the gains Friday.

Technical Outlook

#ENERGIES 07/19/04: CRUDE OIL (SEP): The outside
day up is a positive signal. The rally brought the market to a new contract
high. The upside closing price reversal on the daily chart is somewhat bullish.
With the close over the 1st swing resistance number, the market is in a
moderately positive position. Support for crude is keyed on 40.60 and below
there at 39.85, with resistance pegged at 42.00 and 42.65. 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 42.65. Consider buying pull-backs since daily studies are
bullish.

UNLEADED GAS (SEP): 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
123.42. The swing indicator gave a moderately negative reading with the close
below the 1st support number. Resistance today is at 132.62, while support
should be found around 123.42. The new contract high and close below the
previous day’s low constitutes a key reversal which is a bearish signal. The
outside day down and close below the previous day’s low is a negative signal. 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.

HEATING OIL (SEP): It is a mildly bullish
indicator that the market closed over the pivot swing number. Heating oil should
encounter support around 106.87, with resistance is at 115.17. 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 115.17. The rally brought the market to a new contract
high. The daily closing price reversal down puts the market on the defensive.

 

CORN MARKET RECAP

7/16/2004

December corn lost 5 cents on the week. The crop
continues to receive perfect weather for pollination and weakness in nearby
soybeans and continued fund selling helped drive the market to a new low for the
year. The market bottomed last year in the third week of July and traders are
still seeing a bit drier weather ahead as a possibly disruptive factor for new
crop soybeans, however, in spite of the poor weather in August last year, and
poor soybean yields, corn yields reached a record high. The market is oversold
basis traditional technical indicators but there is still no technical sign of a
low. Gulf basis was steady with producer selling seen as light as producers
watched in shock as soybean basis collapsed this week. December corn support
comes in at 247 and 240 1/2 with 249 with 252 1/4 as resistance.

Technical Outlook

#CORN (DEC) 07/19/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 245 1/2. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. Market resistance comes
in at 250 today, with support at 245 1/2. 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. The gap down on the day
session chart is bearish with more selling pressure possible today.

 

SOY COMPLEX RECAP

7/16/2004

Old crop soybeans continued to collapse today
with weakness in cash basis levels overnight and significant long liquidation
helping to pressure. Processors continue to back away and pulled basis bids
lower. In Peoria, Illinois, bids fell from $1.50 over On Monday to 50 cents over
on Thursday with some processors not even bidding today. Commercials were noted
sellers in August soybeans along with speculative long liquidation. On the other
hand, November soybeans found early support from ideas that the break yesterday
may have been overdone and from uncertain weather outlook into early August.
While there are light, scattered rains in the forecast for the Midwest over
today and into the eastern cornbelt tomorrow, amounts are uncertain and the next
chance of rain will be some light rains on Wednesday before some heat enters the
mid-west late next week. Weather maps on Monday morning will have a significant
impact on pricing for next week. Rumors that the USDA may need to lower their
soybean export projection for the old crop season by 25-30 million bushels
because of miscalculations added to the bearish tone for August soybeans. Delta
producers of soybeans are expected to begin harvesting soybeans in mid-August.
December Oil rallied sharply on spread liquidation and experienced a weekly
closing price reversal. The meal/oil spread liquidation supported oil while
nearby meal moved to the lowest level since February. August closed $1.07 lower
on the week. November soybeans closed 5 1/4 cents lower on the week. November
soybean support comes in at 640 and 635 with 656 1/2 and 664 as resistance.

Technical Outlook

#SOYBEANS (NOV) 07/19/04: It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next area of resistance is around 649 and 660 1/2, while 1st support hits today
at 632 and below there at 626 1/2. The market’s close below the 9-day moving
average is an indication the short-term trend remains negative. The daily
stochastics have crossed over down which is a bearish indication. The next
downside target is 626 1/2.

MEAL (DEC): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
194.6. First resistance comes in at 201.2, with support at 196.2. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The market’s close below the pivot swing number is a mildly negative
setup.

BEAN OIL (DEC): 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 24.76. A positive setup occurred with the close over
the 1st swing resistance. Daily swing resistance is found at 24.16 and above
there at 24.76. Support should be encountered at 23.16 and 22.76. Short-term
indicators suggest buying dips today.

 

WHEAT MARKET RECAP

7/16/2004

The market opened into new 8 1/2 month lows but
there was a lack of new selling interest with mixed trade in soybeans and ideas
that the market is oversold as factors which helped support a bounce. After
challenging last weeks close at 338, September wheat settled back from the highs
to close 4 1/2 lower on the week. The market remains in a decisive downtrend
with demand fears the primary bearish force. A lack of news on the export front
from Egypt this week and overnight news that Taiwan millers bought 17,750 tons
of Australia wheat kept the demand tone bearish as Taiwan typically buys US
wheat but made the 2nd purchase of the year from Australia. The market is
oversold basis traditional technical indicators and funds are believed to have
increased their net short position in wheat which may be confirmed in the
Commitment-of-Traders reports for release this afternoon. The EU awarded export
licenses for 186,000 tons of soft wheat at their weekly tender which was only
the second tender for the 2004/2005 crop season. Support for September wheat
comes in at 332 and 330 1/2 with 338 and 343 as resistance.

Technical Outlook

#WHEAT (DEC) 07/19/04: It is a slightly negative
indicator that the close was lower than the pivot swing number. Look for
near-term support at 343 1/2 and below there at 341 3/4, with resistance levels
at 348 1/2 and 351 3/4. 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 341
3/4.

 

LIVE CATTLE RECAP

7/16/2004

August cattle closed higher Friday on a short
covering bounce as prices may have been pushed too low Thursday off rumors that
another test for Mad Cow came back inconclusive. Prices held support above 82
and news that Japan may ease its Mad Cow testing requirements may have prompted
traders to take some profits ahead of the weekend and since technical indicators
are showing the market to be over sold. August cattle market has had to absorb a
lot of negative news this week and cash cattle prices continued to weaken with
prices trading $3 lower on Thursday. Boxed Beef Cut-Out values rose $0.20 on
Friday to $140.59 and there was talk that packers needed cattle although margins
on Friday were estimated to be a negative $29.90 per head.

Technical Outlook

#CATTLE (AUG) 07/19/04: Momentum studies are
declining, but have fallen to oversold levels. The next downside target is
81.75. It is a slightly negative indicator that the close was lower than the
pivot swing number. Support should be encountered at 82.45 and below there at
81.75. Market resistance is at 83.70 and then again at 84.20. The daily closing
price reversal up is positive. The market’s close below the 9-day moving average
is an indication the short-term trend remains negative.

 

LEAN HOGS RECAP

7/16/2004

Weakness in the cash market with many locations
down $1.00 on the session along with the sharp break in cash bellies on the pork
product report from Thursday night was enough to trigger another round of long
liquidation selling in hogs. August continues to slide on the charts and would
not seem to have much in the way of chart support until the bottom of the May
consolidation is encountered at 70.90. Liquidation in Pork bellies makes it
extremely difficult to shut off the recent selling trend especially with demand
expectations deteriorating. Overall activity was reported to be light but it did
seem like the spread interest was impacting the market from a negative
perspective.

Technical Outlook

#HOGS (AUG) 07/19/04: The market’s close below
the pivot swing number is a mildly negative setup. Resistance levels comes in at
73.55 and 74.07 today, while support is around 72.75 and then 72.47. 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 72.47.

 

COCOA MARKET RECAP

7/16/2004

The cocoa market managed to climb above the prior
sessions high and that move could have given the bull camp confidence ahead of
the weekend but prices failed into the close giving the impression of a top. The
US cocoa grind could have disappointed the trade with a less than expected gain
of .55% for the second quarter and that suggests to us that the bull camp is not
being motivated by strict supply and demand developments. Maybe near term
physical supply is tight but the longer term big picture outlook doesn’t look
tight at all. We also have to think that a sharply lower Dollar and sharply
higher Pound made US cocoa look more attractive than London cocoa.

Technical Outlook

COCOA (SEP) 07/19/04 The downside closing price
reversal on the daily chart is somewhat negative. The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1541 and above there at 1555 with support at 1516 and 1505. The
9-day RSI over 70 indicates the market is approaching overbought levels. Studies
are showing positive momentum, but are now in overbought territory so some
caution is warranted. The next upside target is 1555.25.

 

COFFEE MARKET RECAP

7/16/2004

The coffee market continues to waffle just above
the recent lows but certainly doesn’t seem to have the impetus to forge a sudden
recovery rally. Since the Brazilian weather forecast isn’t threatening for the
coming 10 days the bull camp has little to stand on, while the bear camp would
seem to have control. Talk of a squeeze seems to be misguided but without such
talk the bulls have little to throw against the tide of negative news flow.
Since the coffee market managed a slight rise since the last COT report, it is
unlikely that the market is so oversold that a technical bottom is expected.

Technical Outlook

COFFEE (SEP) 7/19/04 The market tilt is slightly
negative with the close under the pivot. Daily stochastics are showing positive
momentum from oversold levels which should reinforce a move higher if near-term
resistance is taken out. The near-term upside objective is at 72.75. The Coffee
contract should run into resistance at 72.30 and above there at 72.75 with
support at 71 and 70.15. The market’s short-term trend is positive on a close
above the 9-day moving average.

 

SUGAR MARKET RECAP

7/16/2004

October sugar saw another sideways trade Friday
as the market tries to digest recent sharp price gains. The 8.40 level remains
solid resistance and the market seems to have decent consolidation support down
around 804. Talk that Russia and India might be primed to resume buying remains
just under the surface but some hedge selling Friday served to limit the market
into the close. Reports that some August shorts were forced to cover gave the
market its initial strength but the origin selling pushed prices back down
toward the middle of the days range. The sugar market finished the week only 12
ticks above the level where the new COT report reading will be measured so the
magnitude of the fund and spec long in the COT report will only be partially
understated.

Technical Outlook

#SUGAR (OCT) 07/19/04: The market’s close below
the pivot swing number is a mildly negative setup. Swing resistance comes in at
8.44, with support found at 8.08. 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 8.08.

 

COTTON MARKET RECAP

7/16/2004

About the most that can be said about cotton is
that the market seemed to reject the early July low and managed to show some
light short covering follow through in the action Friday. Some traders suggested
that crop condition in India and Texas are no longer absolutely perfect and that
could inspire some shorts to exit and some small specs to get long through the
options. In short, the market might be seeing a slightly more balanced outlook,
instead of a patently bearish outlook.

Technical Outlook

#COTTON (OCT) 07/19/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. Next resistance area comes in at 47.60 and then again at 48.05,
while support is targeted at 47.00 and 46.85. 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 48.05. The 9-day
RSI under 30 indicates the market is approaching oversold levels.