Metals Under Pressure — Here’s Why…
BOND MARKET RECAP
8/24/2004
September Bonds closed unchanged at 110-16. This
was 0-13 up from the low and 0-01 off the high.
September 10 Yr Treasury Notes finished up 0-010
at 112-135, 0-005 off the high and 0-100 up from the low.
After remaining under pressure for most of
the session Tuesday the Treasury market managed an impressive recovery move into
the close. With Treasury prices paying more attention to energy prices than
scheduled economic reports, it is clear that the overwhelming focus of the
financial market remains on the energy threat. The fact that equity prices
slumped into the afternoon seemed to give the Bonds a lift into the close and
with some traders expecting a soft homes sales reading Wednesday morning we can
understand the desire to short cover.
Technical Outlook
BONDS (SEP) 08/25/2004: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. The upside daily closing price reversal gives the market a bullish
tilt. The market tilt is slightly negative with the close under the pivot. The
next downside target is 109-30. The next area of resistance is around 110-25 and
110-29, while 1st support hits today at 110-10 and below there at 109-30.
TNOTES (SEP) 08/25/2004: Momentum studies
trending lower from overbought levels is a bearish indicator and would tend to
reinforce lower price action. The market’s short-term trend is negative as the
close remains below the 9-day moving average. The daily closing price reversal
up on the daily chart is somewhat positive. It is a mildly bullish indicator
that the market closed over the pivot swing number. The next downside target is
112-000. The next area of resistance is around 112-205 and 112-235, while 1st
support hits today at 112-090 and below there at 112-000.
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STOCK INDICES RECAP
8/24/2004
September S&P finished up 1.2 at 1097.4, 3.6 off
the high and 5.1 up from the low.
September S&P E-Mini closed up 1.25 at 1097.5.
This was 5.25 up from the low and 3.75 off the high.
September Dow closed up 27 at 10108. This was 47
up from the low and 37 off the high.
September Dow E-Mini finished up 27 at 10108, 37
off the high and 47 up from the low.
After a fleeting early attempt to rally the stock
market sagged into the early afternoon trade and that is surprising considering
that energy prices stayed down for most of the day. However some traders were
concerned that US economic numbers would remain soft and with recent weekly
retail readings also showing some weakness, it seems that the benefit of
slightly softer energy prices wasn’t enough to extend the recent pattern of
buying. Traders and investors also remain concerned about the situation in Iraq
were very heavy fighting continues.
Technical Outlook
S&P 500 (SEP) 08/25/2004: A positive indicator
was given with the upside crossover of the 9 & 18 bar moving average. Rising
stochastics at overbought levels warrant some caution for bulls. The market’s
short-term trend is positive on the close above the 9-day moving average. With
the close higher than the pivot swing number, the market is in a slightly
bullish posture. The near-term upside objective is at 1105.87. The next area of
resistance is around 1102.05 and 1105.87, while 1st support hits today at
1093.35 and below there at 1088.48.
SP EMINI (SEP) 08/25/2004: The moving average
crossover up (9 above 18) indicates a possible developing short-term uptrend.
Rising stochastics at overbought levels warrant some caution for bulls. The
close above the 9-day moving average is a positive short-term indicator for
trend. The upside closing price reversal on the daily chart is somewhat bullish.
With the close higher than the pivot swing number, the market is in a slightly
bullish posture. The near-term upside target is at 1106.12. The next area of
resistance is around 1102.00 and 1106.12, while 1st support hits today at
1093.00 and below there at 1088.13.
NASDAQ (SEP) 08/25/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The market’s short-term trend is positive on the close above the
9-day moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The near-term upside objective is at
1390.75. The next area of resistance is around 1382.50 and 1390.75, while 1st
support hits today at 1363.50 and below there at 1352.75.
MINIDOW (SEP) 08/25/2004: The market now above
the 40-day moving average suggests the longer-term trend has turned up. The
moving average crossover up (9 above 18) indicates a possible developing
short-term uptrend. Momentum studies are trending higher but have entered
overbought levels. A positive signal for trend short-term was given on a close
over the 9-bar moving average. The daily closing price reversal up on the daily
chart is somewhat positive. The close over the pivot swing is a somewhat
positive setup. The near-term upside target is at 10189. The next area of
resistance is around 10150 and 10189, while 1st support hits today at 10066 and
below there at 10022.
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CURRENCY MARKET RECAP
8/24/2004
September US Dollar finished up 37 at 8955, 11
off the high and 54 up from the low.
September Euro finished down 0.7 at 120.71, 0.63
off the high and 0.14 up from the low.
September Euro Dollar closed down 0.0125 at 98.1.
This was 0.0075 up from the low and 0.005 off the high.
September Canadian Dollar closed up 0.07 at 76.5.
This was 0.16 up from the low and 0.38 off the high.
September British Pound finished down 1.79 at
178.71, 1.36 off the high and 0.19 up from the low.
September Swiss closed down 0.23 at 78.58. This
was 0.13 up from the low and 0.31 off the high.
September Japanese Yen closed up 0.2 at 91.37.
This was 0.42 up from the low and 0.18 off the high.
At times during the session the US Dollar managed
to rise sharply and managed the most significant gains against the Euro and the
Pound. As has been the case recently the Canadian Dollar did manage to rise
against the Dollar even with the Dollar strong. The Bank of Canada seemed to be
make some aggressive comments in the wake of the inflation report released early
in the session and that created the idea that the Central bank might be poised
to hike rates again. The BOC also seemed to foster ideas that growth in that
country might come in closer to 5% in the second quarter and that is arguably
better than the US growth track.
Technical Outlook
YEN (SEP) 08/25/2004: The cross over and close
above the 40-day moving average is an indication the longer-term trend has
turned positive. Studies are showing positive momentum but are now in overbought
territory, so some caution is warranted. A positive signal for trend short-term
was given on a close over the 9-bar moving average. The daily closing price
reversal up on the daily chart is somewhat positive. With the close higher than
the pivot swing number, the market is in a slightly bullish posture. The next
upside target is 91.91. The next area of resistance is around 91.67 and 91.91,
while 1st support hits today at 91.07 and below there at 90.71.
EURO (SEP) 08/25/2004: Momentum studies trending
lower at mid-range should accelerate a move lower if support levels are taken
out. The close below the 9-day moving average is a negative short-term indicator
for trend. The gap lower price action on the day session chart is a bearish
indicator for trend. The market setup is somewhat negative with the close under
the 1st swing support. The next downside objective is 120.07. The next area of
resistance is around 121.09 and 121.60, while 1st support hits today at 120.33
and below there at 120.07.
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PRECIOUS METALS RECAP
8/24/2004
October Gold closed down 7.8 at 403.5. This was
0.8 up from the low and 6 off the high.
September Silver finished down 0.168 at 6.577,
0.133 off the high and 0.037 up from the low.
October Platinum closed up 8.6 at 845.2. This was
3.2 up from the low and 0.8 off the high.
All the metals came under liquidation pressure
Tuesday partly because of the perpetually rising Dollar and partly because the
geopolitical headwinds seemed to be abating. While there continues to be
significant economic uncertainty seeing the edge come off energy prices seems to
tone down the inflation threat and the overall level of uncertainty. Talk from
the Bank of Canada that growth in that country might reach 5% seemed to spark
inflation talk but with the metals already under pressure for the session
inflation dialogue failed to move the market.
Technical Outlook
SILVER (DEC) 08/25/2004: Negative momentum
studies in the neutral zone will tend to reinforce lower price action. A
negative signal for trend short-term was given on a close under the 9-bar moving
average. The swing indicator gave a moderately negative reading with the close
below the 1st support number. The next downside objective is now at 647.0. The
next area of resistance is around 669.8 and 680.9, while 1st support hits today
at 652.9 and below there at 647.0.
GOLD (DEC) 08/25/2004: 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. A negative signal for trend short-term was given on a close under
the 9-bar moving average. The gap lower on the day session chart is bearish and
puts the market on the defensive. There could be some early pressure today given
the market’s negative setup with the close below the 2nd swing support. The next
downside objective is 400.7. The next area of resistance is around 407.7 and
411.6, while 1st support hits today at 402.3 and below there at 400.7.
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COPPER MARKET RECAP
8/24/2004
September Copper finished down 0.25 at 123.90,
1.60 off the high and 0.15 up from the low.
Copper prices were mostly choppy during the
session with existing home sales readings coming in down 2.9% and the US equity
market weak. Some traders were expecting copper to be lifted by more declines in
energy prices but even after a massive slide in energy prices copper weren’t
supported by fresh buying. The copper might also have been under some light
pressure off the fact that the Dollar has managed a very significant rally and
that makes US copper more expensive in the eyes of the world. Apparently a story
out of Asia overnight, suggesting that Chinese demand for scrap copper remains
high, wasn’t enough to provide the market with enough fresh news to hold the
early gains.
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ENERGY MARKET RECAP
8/24/2004
October Crude Oil closed down 0.84 at 45.21. This
was 0.46 up from the low and 0.78 off the high.
October Heating Oil closed down 2.12 at 120.76.
This was 1.16 up from the low and 1.74 off the high.
October Unleaded Gas finished down 0.29 at
124.75, 1.50 off the high and 1.55 up from the low.
October Natural Gas finished up 0.01 at 5.48,
0.04 off the high and 0.09 up from the low.
October Propane closed down 0.03 at 0.84. This
was equal to the low and 0.00 off the high.
The energy complex weakened again and with prices
generally lower for three sessions in a row it is possible that longer term stop
loss selling begins to perpetuate the selling. Reports that US planes were
attacking multiple targets in Iraq at the same time that the Press suggested
that Iraqi forces have the Najf Shine surrounded could be suggesting to the
energy complex that the extreme battling is coming to an end. Also putting
pressure on prices around mid session were suggestions from the Press that
Al-Sadr was sending off signals that he was willing to negotiate but we are not
sure that the forces outside the Shrine are going to fall for that stance again.
Technical Outlook
CRUDE OIL (OCT) 08/25/2004: Momentum studies
trending lower at mid-range could accelerate a price break if support levels are
broken. A negative signal for trend short-term was given on a close under the
9-bar moving average. More selling pressure is likely given yesterday’s gap
lower price action on the day session chart. There could be some early pressure
today given the market’s negative setup with the close below the 2nd swing
support. The next downside target is 44.05. The next area of resistance is
around 45.83 and 46.53, while 1st support hits today at 44.59 and below there at
44.05.
UNLEADED (OCT) 08/25/2004: Stochastics trending
lower at midrange will tend to reinforce a move lower especially if support
levels are taken out. The close below the 9-day moving average is a negative
short-term indicator for trend. The market tilt is slightly negative with the
close under the pivot. The next downside objective is 121.69. The next area of
resistance is around 126.27 and 127.78, while 1st support hits today at 123.23
and below there at 121.69.
HEATING OIL (OCT) 08/25/2004: Momentum studies
trending lower at mid-range should accelerate a move lower if support levels are
taken out. The market’s short-term trend is negative as the close remains below
the 9-day moving average. The gap lower price action on the day session chart is
a bearish indicator for trend. The close below the 1st swing support could weigh
on the market. The next downside target is now at 118.01. The next area of
resistance is around 122.21 and 123.80, while 1st support hits today at 119.31
and below there at 118.01.
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CORN MARKET RECAP
8/24/2004
September Corn finished down 2 at 232 1/4,
1 1/4 off the high and 1 up from the low. December Corn closed down 2 1/4 at
242. This was 1 1/2 up from the low and 1 3/4 off the high.
The market drifted lower in quiet and choppy
trade with the near-term weather seen as a bearish influence and the lack of new
export news also adding the negative tone. Weakness in the other grains, rain
and warmer weather across the Midwest and ideas that the market is overbought
after a 20 cent bounce off of the August lows are all factors which may have
slowed the short-covering trend of fund traders from yesterday and attracted
some selling pressures today. News that US crop conditions declined 2% in the
good to excellent category to 71% was seen as neutral or expected but the weekly
progress reports did show the slow pace of the northern cornbelt crops toward
maturity which will leave these crops vulnerable to damage if the growing season
ends early. Midwest basis was steady to a little weaker and export news is
quiet. Support for December corn comes in 240 1/2 and 239 with 245 and 248 1/2
as next resistance.
Technical Outlook
CORN (DEC) 08/25/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is positive on the close above the 9-day moving average. It is a slightly
negative indicator that the close was lower than the pivot swing number. The
next upside objective is 245 1/4. The next area of resistance is around 243 1/2
and 245 1/4, while 1st support hits today at 240 1/2 and below there at 239.
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SOY COMPLEX RECAP
8/24/2004
September Soybeans finished down 3 at 620, 9 off
the high and 5 up from the low. November Soybeans closed down 4 3/4 at 606 1/4.
This was 3 1/4 up from the low and 5 1/4 off the high.
December Soymeal closed down 2.2 at 181.2. This
was 1.0 up from the low and 2.6 off the high.
December Soybean Oil finished up 0.01 at 23.52,
0.13 off the high and 0.27 up from the low.
Warmer weather in the Midwest this week and rains
across the Midwest this morning helped to pressure the market as the active fund
buyers from yesterday were on the sidelines. The market found support into the
mid-session with September soybeans finding some support from tightness concerns
and ideas that a wetter weather trend ahead could slow harvest. A USDA
meteorologist indicated to Reuters that freezing temperatures last week in the
northern Midwest were locally isolated and unlikely to have a significant impact
on production. In addition, Stats Canada pegged canola production at 8.244
million tons, up 23.6% from last year but the survey was done ahead of the frost
problems from last week and traders are still uncertain over the extent of the
damage. Spot cash bids were steady to firm in the Midwest. News that US crop
conditions declined 2% in the good to excellent category to 67% was seen as
neutral or expected. Ideas that the short-term technical indicators are a bit
overbought after a 62 cent jump from the August lows helped to trigger light
long liquidation selling and added to the bearish tone early today. Weakness
across a wide spectrum of commodity markets was also seen as bearish. November
soybean support comes in at 594 1/2 and 590 3/4 with 611 and 613 3/4 as
resistance.
Technical Outlook
BEANS (NOV) 08/25/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The close above the 9-day moving average is a positive short-term
indicator for trend. The close over the pivot swing is a somewhat positive
setup. The near-term upside target is at 615 1/4. The next area of resistance is
around 610 1/2 and 615 1/4, while 1st support hits today at 602 and below there
at 598 1/4.
BEANOIL (DEC) 08/25/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. 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 next upside target is
185.2. The next area of resistance is around 183.0 and 185.2, while 1st support
hits today at 179.4 and below there at 178.0.
MEAL (DEC) 08/25/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. The market’s short-term trend is positive on the close above the
9-day moving average. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. The next upside objective is 23.88. The
9-day RSI over 70 indicates the market is approaching overbought levels. The
next area of resistance is around 23.72 and 23.88, while 1st support hits today
at 23.32 and below there at 23.09.
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WHEAT MARKET RECAP
8/24/2004
September Wheat finished down 9 1/2 at 311 1/2, 8 1/2 off the
high and 1/2 up from the low. December Wheat closed down 8 1/4 at 324 1/4. This
was 1/2 up from the low and 7 1/4 off the high.
Fears that the rally this week will only make US
wheat less competitive on the world market and talk of a larger world crop
helped pressure the wheat market early and then long liquidation selling from
speculators kept the market lower into the close. In addition, news that Jordan
had rejected all offers in their tender to buy 50,000 tons of wheat added to the
bearish tone. Stats Canada pegged the Canadian crop this year at 25.62 million
tons, up 8.8% from last year and up from the last USDA forecast of 24.5 million
tons. Declining crop conditions for the spring wheat crop and forecasts for
rains in North Dakota over the next week helped to provide some underlying
support. Minneapolis wheat futures gave back nearly all of the gains from
yesterday which could be an indication that the “market” feels the damage from
the cold weather last week was minimal. Egypt announced a tender to buy
50,000-60,000 tons of US, French of Australia wheat for early October delivery.
This news may help firm the tone overnight and the market will react to the
outcome. Support for December wheat comes in at 323 3/4 and 321 with resistance
at 331 1/2 and 336 3/4.
Technical Outlook
WHEAT (DEC) 08/25/2004: Momentum studies are
rising from mid-range, which could accelerate a move higher if resistance levels
are penetrated. The close above the 9-day moving average is a positive
short-term indicator for trend. The market’s close below the 1st swing support
number suggests a moderately negative setup for today. The next upside target is
333 1/2. The next area of resistance is around 328 and 333 1/2, while 1st
support hits today at 320 1/2 and below there at 318 1/4.
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LIVE CATTLE RECAP
8/24/2004
October Live Cattle closed down 1.87 at 83.95.
This was 0.15 up from the low and 1.65 off the high.
October Feeder Cattle finished down 2.25 at
110.65, 1.80 off the high and 0.15 up from the low.
October live cattle closed sharply lower on the
session led by active selling from fund traders. The slow slaughter pace which
may be causing a back up of cattle at the feedlots has helped bring about a fear
of a downtrend in the cash market into the fall and news that an agreement with
Japan on provisions necessary to end the ban on US imported beef might be
delayed further helped to trigger the selling. Funds were holding a net long
position of near 28,000 contracts coming into the week and the move to the
lowest level since May 18th added to the bearish tone. Boxed beef cutout values
were up 51 cents at mid-session to $140.83 from $140.24 last week at this time
but this news failed to support.
Technical Outlook
CATTLE (OCT) 08/25/2004: Daily stochastics are
trending lower but have declined into oversold territory. 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 next downside objective is 82.520. With a reading under 30, the
9-day RSI is approaching oversold levels. The next area of resistance is around
84.850 and 86.120, while 1st support hits today at 83.070 and below there at
82.520.
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LEAN HOGS RECAP
8/24/2004
October Lean Hogs closed down 1.42 at 63.27. This
was 0.07 up from the low and 1.72 off the high.
February Pork Bellies finished down 1.45 at
92.90, 1.45 off the high and 0.05 up from the low.
October hogs pushed sharply lower on the session
following the weakness in the other meat and commodity markets and a bearish
trend in cash hogs. Cash hogs were $1.00 at Peoria as the market is trying to
absorb record high slaughter for the month of August and massive weekly pork
production from last week. The huge discount to the cash market failed to
provide support due to the decisive downtrend in the cash market and the active
selling from fund traders added to the bearish tone. The CME 2-day lean index
for the period ending August 20th was down 44 cents from the previous session to
$75.37 as compared with 79.53 on August 11th.
Technical Outlook
HOGS (OCT) 08/25/2004: Daily stochastics are
trending lower but have declined into oversold territory. 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 next downside target is 61.900. The market is approaching
oversold levels on an RSI reading under 30. The next area of resistance is
around 64.150 and 65.470, while 1st support hits today at 62.370 and below there
at 61.900.
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COCOA MARKET RECAP
8/24/2004
September Cocoa finished down 55 at 1679, 41 off
the high and 21 up from the low.
Cocoa prices slumped aggressively, fell below
recent consolidation support but eventually managed to close above the prior
days low. We suspect that ongoing rainfall events at the Ivory Coast are
dampening spec interest in the long side even if the dry impact of the crop is
already entrenched. Considering that cocoa has been periodically dominated by
aggressive spec buying seeing weather conditions discourage buying means that
market is left without a key supporting element.
Technical Outlook
COCOA (DEC) 08/25/2004: Rising stochastics at
overbought levels warrant some caution for bulls. The market’s short-term trend
is positive on the close above the 9-day moving average. The swing indicator
gave a moderately negative reading with the close below the 1st support number.
The next upside target is 1777. The next area of resistance is around 1737 and
1777, while 1st support hits today at 1669 and below there at 1640.
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COFFEE MARKET RECAP
8/24/2004
September Coffee closed down 0.40 at 69.45. This
was 1.45 up from the low and 0.75 off the high.
The coffee market closed lower but managed to
bounce 145 points off of the lows into the close to close near the high end of
the last 1 month trading range. Talk of origin selling in London and some
selling in New York along with ideas that the market was overbought helped to
trigger additional selling. Imports for Germany during June came in at 763,472
bags as compared with 858,979 bags the previous year and 1.505 million bags the
previous month. Coffee consumption in Brazil was seen at 13.81 million bags in
the past year from 13.45 million bags last year.
Technical Outlook
COFFEE (DEC) 08/25/2004: Daily stochastics have
risen into overbought territory which will tend to support reversal action if it
occurs. The market’s short-term trend is positive on the close above the 9-day
moving average. The market could take on a defensive posture with the daily
closing price reversal down. The market has a slightly positive tilt with the
close over the swing pivot. The near-term upside objective is at 75.30. The next
area of resistance is around 74.35 and 75.30, while 1st support hits today at
72.00 and below there at 70.55.
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SUGAR MARKET RECAP
8/24/2004
October Sugar closed down 0.13 at 7.64. This was
0.01 up from the low and 0.13 off the high.
October sugar closed moderately lower on the
session after the steady opening failed to generate new buying interest and the
weakness in other commodity markets contributed to increased speculative long
liquidation selling. The weak technical action increases the odds of further
speculative selling ahead and the last traders report with options showed
speculators still net long over 113,000 contracts. Weakness in the London market
added to the negative tone. Talk of some increased interest in the cash market
on the recent break helped provide some support and traders remain hopeful that
India will be an importer soon but India officials continue to discuss large
stocks to work through before imports become more necessary. Production for the
2004/2005 season is thought to be near 12.5 million tons while consumption is
around 18 million tons. India is the largest consumer in the world.
Technical Outlook
SUGAR (OCT) 08/25/2004: Daily momentum studies
are on the rise from low levels and should accelerate a move higher on a push
through the 1st swing resistance. A negative signal for trend short-term was
given on a close under the 9-bar moving average. The swing indicator gave a
moderately negative reading with the close below the 1st support number. The
near-term upside target is at 7.81. The next area of resistance is around 7.71
and 7.81, while 1st support hits today at 7.57 and below there at 7.53.
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COTTON MARKET RECAP
8/24/2004
October Cotton finished up 0.40 at 51.00, equal
to the high and 1.00 up from the low.
December cotton closed at the highest level since
June 30th which keeps the bulls in control as declining crop conditions and fund
short-covering has helped support the recent uptrend. In fact, the market has
closed higher for the 8th session in a row with the market up 960 points from
the August 12th lows. Short covering of a hefty net short position from fund
traders and some weather concerns from the hurricane damage last week continue
to provide support but there is also growing concerns for large crops in the US
and China and uncertain demand from China or Asia due to economic concerns.
Technical Outlook
COTTON (OCT) 08/25/2004: Studies are showing
positive momentum but are now in overbought territory, so some caution is
warranted. A positive signal for trend short-term was given on a close over the
9-bar moving average. The close over the pivot swing is a somewhat positive
setup. The near-term upside objective is at 51.75. The market is becoming
somewhat overbought now that the RSI is over 70. The next area of resistance is
around 51.50 and 51.75, while 1st support hits today at 50.50 and below there at
49.75.