More Gains Ahead For The Dollar?

Technical Outlook

#BONDS (JUN) 04/22/04: The daily closing price
reversal up is positive. With the close higher than the pivot swing number, the
market is in a slightly bullish posture. Near-term resistance for bonds is at
108.05 and then again at 108.18, while swing support hits at 107.05 and below
there at 106.18. 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
106.18. The 9-day RSI under 30 indicates the market is approaching oversold
levels.

T-NOTES(JUN) The daily stochastic’s gave a
bearish indicator with a crossover down. The next downside objective is now at
110.04. The market’s close below the 1st swing support number suggests a
moderately negative setup for today. Near-term resistance for the T-Notes is at
111.09 and then again at 111.19, while swing support hits at 110.17 and below
there at 110.04. The market’s short-term trend is negative as the close remains
below the 9-day moving average. With a reading under 30, the 9-day RSI is
approaching oversold levels.

 

STOCK INDICES RECAP

4/21/2004

Finally the stock market managed to factor some
of the improvement being seen in the US economy. While some might suggest that
Greenspan dialogue was responsible for the rally we have to think that Motorola
and Coke earnings gave the market the lift and what Greenspan didn’t say allowed
the market to rally. In other words, the market didn’t come away with the idea
that the Fed was primed to hike and that the chance for above normal growth
ahead was possible, at least until the Fed does throw water on the parade. There
continues to be significant geopolitical headwinds from Iraq but a slightly
lower energy price seems to take some of the economy fears away.

Technical Outlook

#S&P500 (JUN) 04/22/04: It is a mildly bullish
indicator that the market closed over the pivot swing number. Underlying support
comes in at 1117.30 and 1110.60, with overhead resistance at 1127.70 and
1131.40. The downside crossover (9 below 18) of the moving averages suggests a
developing short-term downtrend. 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 1110.60.

S&P E-Mini (JUN): Momentum studies trending lower
at mid-range could accelerate a price break if support levels are broken. The
next downside objective is 1110.50. The market has a slightly positive tilt with
the close over the swing pivot. The market back below the 40-day moving average
suggests the longer-term trend could be turning down. Near-term resistance for
the S&P Mini is at 1127.75 and then again at 1131.50, while swing support hits
at 1117.25 and below there at 1110.50. A negative indicator was given with the
downside crossover of the 9 & 18 bar moving average.

NASDAQ (JUN) 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. The market should run into resistance at 1458.50 and above there at
1466.00 with support at 1439.50 and 1428.00. Negative momentum studies in the
neutral zone will tend to reinforce lower price action. The next downside target
is 1428.0.

MINI DOW (JUN) The daily closing price reversal
up is positive. The moving average crossover down (9 below 18) indicates a
possible developing short-term downtrend. The market should run into resistance
at 10344 and above there at 10375 with support at 10254 and 10195. Negative
momentum studies in the neutral zone will tend to reinforce lower price action.
The next downside target is 10195. It is a slightly negative indicator that the
close was lower than the pivot swing number.

 

CURRENCY MARKET RECAP

4/21/2004

After a massive gap up trade, the Dollar slid
back but still managed to hold a fairly impressive performance on the day. The
fact that the US economy might be allowed to grow further before the Fed begins
to brake is a benefit to the Dollar. However, it would seem that the Dollar
easily becomes overbought but the background fundamentals seem to advocate even
more gains. For some reason the Pound is taking the most heat and that might be
the result of their premature interest rate hike and the slowing that is still
being seen in Europe.

Technical Outlook

#CURRENCIES 04/22/04: YEN (JUN): The market’s
close below the 9-day moving average is an indication the short-term trend
remains negative. The gap lower price action on the day session chart is a
bearish indicator for trend. The close below the 2nd swing support number puts
the market on the defensive. Swing resistance is targeted at 91.95 and above
there at 92.52, with the yen finding support around 91.03 and below there at
90.68. The close under the 40-day moving average indicates the longer-term trend
could be turning down. Momentum studies are declining, but have fallen to
oversold levels. The next downside target is 90.68.

EURO (JUN): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
1.1744. The market is in a bearish position with the close below the 2nd swing
support number. Swing support for the Euro comes in at 1.1744, with overhead
resistance at 1.1926. 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. The gap down on the day session chart
is bearish with more selling pressure possible today.

 

PRECIOUS METALS RECAP

4/21/2004

Both gold and silver came under extensive fund
and small spec liquidation and with both markets recently holding record long
positions the magnitude of the wash is only slightly surprising. However, with a
soaring US Dollar and strength in the US equity market the funds seemed to think
that their money was better off in other markets. The fact that the Fed backed
away from higher interest rates (for the time being) seemed to add to the
selling but we are not sure why. In short the precious metals are in a capital
and margin inspired break and might simply ignore most of the usual day to day
fundamental developments.

Technical Outlook

#P-METALS 04/22/04: SILVER (MAY): The close below
the 2nd swing support number puts the market on the defensive. Initial support
for silver is at 591.5 and below there at 577.3 with resistance likely at 633.4
and 642.5. 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 577.3. The 9-day RSI
under 20 suggests the market is extremely oversold. The gap lower price action
on the day session chart is a bearish indicator for trend.

GOLD (JUN): Support for gold today comes in near
386.43, while resistance is pegged at 398.23. Daily stochastics are trending
lower, but have declined into oversold territory. The next downside objective is
now at 386.43. The market is in a bearish position with the close below the 2nd
swing support number. 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.

 

COPPER MARKET RECAP

4/21/2004

While we think that the break in copper was
overdone the market certainly didn’t manage to bounce very far off the low
Wednesday. The fact that a shuttered mine restarted production at the same time
that the Dollar exploded, LME stocks jumped and the funds decided to liquidate a
number of holdings justifies the washout. However, the copper market still has
decent fundamentals and could have actually become net spec short around the
lows Wednesday. In order to see the copper bottom the trade is looking hard for
signs that Chinese buyers still need supplies. In other words, to make 122
prices cheap, copper might have to physically see renewed Chinese buying.

 

ENERGY MARKET RECAP

4/21/2004

The energy complex weakened despite news that
crude stocks declined at the API. The fact that gasoline stocks increased
combined with a moderate rise in the refinery operating rate simply took charge
of sentiment. The action Wednesday shows that the market focus is trained on the
level of gasoline stocks and not the level of crude stocks. The market could
have found support from statements from the US President that Chinese demand was
serving to drive up energy prices as that dialogue keeps the whole demand talk
idea alive.

Technical Outlook

#ENERGIES 04/22/04: CRUDE OIL (JUN): The market
is in a bearish position with the close below the 2nd swing support number.
Support for crude is keyed on 35.22 and below there at 34.78, with resistance
pegged at 36.24 and 36.82. The market’s short-term trend is negative as the
close remains below the 9-day moving average. The daily stochastic’s gave a
bearish indicator with a crossover down. 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 34.78.

UNLEADED GAS (JUN): 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
110.62. The close below the 2nd swing support number puts the market on the
defensive. Resistance today is at 115.62, while support should be found around
110.62. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative.

HEATING OIL (JUN): The market is in a bearish
position with the close below the 2nd swing support number. Heating oil should
encounter support around 88.69, with resistance is at 92.69. The market’s
short-term trend is negative as the close remains below 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 88.69.

 

CORN MARKET RECAP

4/21/2004

The market was under heavy selling pressure from
funds, thought to be long liquidation selling for much of the session. As of
April 12th, funds were noted as holding a record net long position (futures and
options combined) of 171,000 contracts. While fund traders have been noted
sellers of near 75,000 contracts since the report date, it is still difficult to
determine the extent of the long liquidation sell-off which might occur due to
money management wash-out from funds. The bearish macro-economic news for
commodity markets in general helped to trigger aggressive fund long liquidation
selling with indications by mid-session that funds had sold near 8000 contracts.
Basis at the gulf is firm and the USDA reported another sale today of 120,000
tons of US corn for unknown destination. While this helped support ideas of
strong demand, news that Indonesia has signed deals to export 1 million tons of
corn to mostly Southeast Asia countries was seen as a factor which might limit
demand for US corn. The weather set-up is also seen as bearish as the early
planted corn in the Midwest received timely rains which will help germinate the
crop and after a few days of scattered rains, the Midwest could return to a
drier than normal trend for new week which is seen as a bearish development.
Weekly export sales, released before the opening, are expected to come in near
700,000-950,000 tons as compared with 1.335 million tons last week. July corn
short-term support comes in at 304 1/4 and 300 3/4 with 310 1/2 and 315 as
resistance.

Technical Outlook

#CORN (JUL) 04/22/04: Daily stochastics are
trending lower, but have declined into oversold territory. The next downside
objective is now at 300 1/2. The market is in a bearish position with the close
below the 2nd swing support number. Market resistance comes in at 317 1/2 today,
with support at 300 1/2. 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. The gap down on the day session chart
is bearish with more selling pressure possible today.

 

SOY COMPLEX RECAP

4/21/2004

The market gapped below the 50-day moving average
today which could attract additional long liquidation selling from trend
following systems and technical traders. The move to the lowest level since
March 11th has been triggered by waves of long liquidation and from ideas that
world prices were too high to keep demand strong. A surge in the US dollar and
major fund long liquidation noted in copper, silver and other commodity markets
this morning has added to the bearish tone. The bearish macro-economic news for
commodity markets in general helped to trigger aggressive fund long liquidation
selling with indications by mid-session that funds had sold near 9000 contracts.
In addition, the market is under pressure from forecasts for rains across the
Midwest this week which will help prepare soils for the planting season just
ahead. The oil market found some underlying support from talk that India could
cut the base import price for soybean oil in the next few weeks which might
attract increased interest in imports from the world’s largest edible oil buyer.
Soybeans seem unaffected by an overnight production forecast for Brazil from
AgRural who pegged production at just 49.3 million tons as compared with the
last USDA forecast at 56 million tons. Ag officials in Argentina pegged their
crop at 33 million tons, down from 34.7 million last month and down from the
last USDA estimate of 35 million tons. Weekly export sales, released before the
opening, are expected to come in near 200,000-400,000 tons for soybeans (497,300
last week), 0-50,000 tons for meal (16,700 last week) and 0-5,000 tons for oil
(2900 last week). Short-term support for July soybeans comes in at 932 1/2 and
916 with 948 3/4 and 956 1/2 as resistance.

Technical Outlook

#SOYBEANS (JUL) 04/22/04: The gap lower price
action on the day session chart is a bearish indicator for trend. The swing
indicator gave a moderately negative reading with the close below the 1st
support number. The next area of resistance is around 945 1/2 and 957 1/4, while
1st support hits today at 921 1/2 and below there at 909 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 909 1/4. Short-term indicators on the defensive.
Consider selling an intraday bounce.

MEAL (JUL): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
286.4. The gap down on the day session chart is bearish with more selling
pressure possible today. First resistance comes in at 295.6, with support at
290.1. 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 (JUL): The market’s close below the
9-day moving average is an indication the short-term trend remains negative.
Positive momentum studies in the neutral zone will tend to reinforce higher
price action. The next upside target is 32.23. The close below the 2nd swing
support number puts the market on the defensive. The gap lower price action on
the day session chart is a bearish indicator for trend. Daily swing resistance
is found at 31.80 and above there at 32.23. Support should be encountered at
30.90 and 30.43.

 

WHEAT MARKET RECAP

4/21/2004

The early break weakness was triggered by
forecasts for good rains in the winter wheat belt for late this week and from
fears of higher interest rates and the impact of the soaring US dollar on dollar
denominated commodities. The bearish macro-economic news for commodity markets
in general helped to trigger aggressive fund long liquidation selling with
indications by mid-session that funds had sold near 5000 contracts. Rains are
expected to be widespread for late this week with some rain even expected to hit
in the dry areas of western Kansas and Eastern Colorado. The market has failed
to react to poor crop conditions and informal reports of some fields taking on
significant permanent damage from last weeks freeze. The lack of news on the
export front from China, Egypt or Iraq added to the bearish tone on the floor.
Taiwan bought 43,000 tons of US wheat. French wheat officials are hopeful to
export near 1.5 million tons of wheat to Egypt and near 1 million tons to China
for the 2004/2005 season. The sharp rally in the dollar and the outlook for a
much larger crop from the EU this year sets the stage for France to re-capture
some market share on the world export market. Weekly export sales, released
before the opening, are expected to come in near 100,000-450,000 tons as
compared with 451,700 tons last week. Short-term support for July Wheat comes in
at 392 and 389 1/2 with 402 1/4 and 406 1/2 as resistance.

Technical Outlook

#WHEAT (JUL) 04/22/04: The close below the 2nd
swing support number puts the market on the defensive. Look for near-term
support at 388 and below there at 384, with resistance levels at 398 1/2 and
405. The market’s close below the 9-day moving average is an indication the
short-term trend remains negative. The close under the 40-day moving average
indicates the longer-term trend could be turning down. Momentum studies are
declining, but have fallen to oversold levels. The next downside target is 384.

 

LIVE CATTLE RECAP

4/21/2004

June cattle closed sharply lower on the session
as the early fund buying was met with active selling from commercial-based firms
and then local selling and long liquidation selling from speculators. The higher
opening and lower close could attract some technical selling on Thursday. Ideas
that the supply is on the rise and should eventually pressure prices helped to
drive the market down. Boxed-beef cut-out values were down 15 cents to $160.31
as compared with $162.34 last week at this time. Slaughter came in at 127,000
head as compared with trade expectations at 120,000-129,000 head. Cash bids came
in at $83 this week with offers at $88 as compared with $86 trade last week.

Technical Outlook

#CATTLE (JUN) 04/22/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 75.87. The swing indicator gave a moderately negative reading with the
close below the 1st support number. Short-term indicators on the defensive.
Consider selling an intraday bounce. Support should be encountered at 76.25 and
below there at 75.87. Market resistance is at 77.60 and then again at 78.57. The
downside closing price reversal on the daily chart is somewhat negative. The
market’s close below the 9-day moving average is an indication the short-term
trend remains negative.

 

LEAN HOGS RECAP

4/21/2004

June hogs closed 1 tick higher on the session but
102 off of the highs of the day. A lack of fund selling was seen as positive and
traders expect a seasonal decline in slaughter in the weeks ahead to help
support. Positioning ahead of the monthly cold storage report helped to support
the belly market. The CME 2-Day lean Index was up 74 cents to $66.06 as compared
with 63.11 last week at this time. The monthly cold storage report is expected
to show belly stocks at 50.7 million pounds (range 48.3-52.0) as compared with
57 million pounds last month and 43 million pounds last year. A 6.3 million
pound drawdown in stocks would be a record for the month on March. In the past
14 years, there has been only 1 year in which stocks fell more than 1 million
pounds and that was in 2001 when stocks fell 1.714 million pounds. In 9 of the
14 years, stocks have increased by more than 3 million pounds with 6 years
showing a jump in excess of 8 million pounds. Slaughter came in at 382,000 head
as compared with expectations at 380,000 to 392,000 head.

Technical Outlook

#HOGS (JUN) 04/22/04: The market’s close below
the pivot swing number is a mildly negative setup. Resistance levels comes in at
71.22 and 72.05 today, while support is around 70.02 and then 69.65. 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 69.65.

 

COCOA MARKET RECAP

4/21/2004

The cocoa market might have been one of the few
commodity markets not to be impacted by aggressive commodity fund liquidation in
the action Wednesday. The fact that cocoa reportedly saw commodity fund buying
in the action Wednesday probably fosters the idea of a low more than the idea
that the net spec and fund is getting overextended. A sharply higher US Dollar
continues to dampen physical interest in US cocoa and that could mean that even
lower prices are needed to attract consistent buying.

Technical Outlook

COCOA (JUL) 04/22/04 The sell-off took the market
to a new contract low. The daily closing price reversal up is positive. The
market has a slightly positive tilt with the close over the swing pivot. Cocoa
should run into resistance at 1358 and above there at 1366 with support at 1333
and 1316. Momentum studies are declining, but have fallen to oversold levels.
The next downside target is 1316.25.

 

COFFEE MARKET RECAP

4/21/2004

July Coffee closed 220 lower on the session to
the lowest level since January 5th. The surge in the US dollar and active fund
long liquidation selling in many commodity markets helped to trigger fears that
funds would soon exit coffee as well. Increasing production forecasts for the
upcoming Brazil crop and continued increases in exchange stocks helped to
pressure the market. While the cash market in Brazil is tight, traders also see
demand as weak and the tightness as a temporary factor unless something adverse
develops for the Brazil crop.

Technical Outlook

COFFEE (JUL) 4/22/04 The gap lower price action
on the day session chart is a bearish indicator for trend. There could be some
early pressure today given the market’s negative setup with the close below the
2nd swing support. 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 objective is now at 68.00. The Coffee contract should
run into resistance at 70.75 and above there at 72.30 with support at 68.6 and
68.00. The market’s short-term trend is negative as the close remains below the
9-day moving average.

 

SUGAR MARKET RECAP

4/21/2004

July sugar pushed lower early in the session and
part way into the gap left on April 7th before closing slightly lower on the
session. The close, however, was above the opening and up 12 from the lows of
the day and might be considered opened lowed and closed slightly higher but the
market ran into hefty selling overhead and closed 9 points off of the highs of
the day. March futures experienced a new contract high close. Traders appeared
relieved when funds did not aggressively exit longs which occurred in many other
commodity markets and this week seen as a positive development. London futures
for the August contract closed at a new contract high close which added to the
positive tone but the market was only slightly higher on the session with an
inside trading day.

Technical Outlook

#SUGAR (JUL) 04/22/04: The market’s close below
the pivot swing number is a mildly negative setup. Swing resistance comes in at
6.99, with support found at 6.67. The market’s short-term trend is negative as
the close remains below the 9-day moving average. The daily stochastic’s gave a
bearish indicator with a crossover down. The next downside objective is now at
6.67.

 

COTTON MARKET RECAP

4/21/2004

The cotton market turned higher with an outside
day up with December cotton taking out the previous two-day range before closing
70 higher on the session and up 120 off of the lows. The general long
liquidation tendency from fund traders in many other commodity markets helped
contribute to the lower opening but the weekly spec/hedge report showed that
speculators were building a hefty net short position and fund short-covering
supported the cotton market. Expectations for continued strong export demand and
talk of losing acres in the south due to higher grain prices helped support. In
addition, a dry trend is developing for the southeast which added to the
positive tone. Weekly export sales, released before the opening, are expected to
come in near 175,000-225,000 bales as compared with 201,400 bales last week.

Technical Outlook

#COTTON (JUL) 04/22/04: The market’s close above
the 9-day moving average suggests the short-term trend remains positive.
Short-term indicators suggest buying dips today. A positive setup occurred with
the close over the 1st swing resistance. Next resistance area comes in at 63.91
and then again at 65.06, while support is targeted at 61.31 and 59.86. Positive
momentum studies in the neutral zone will tend to reinforce higher price action.
The next upside target is 65.06. The outside day up and close above the previous
day’s high is a positive signal. The daily closing price reversal up is
positive.