New Developments Reconfirm Trend In Treasuries

Technical Outlook

#BONDS (JUN) 05/20/04: The swing indicator gave a
moderately negative reading with the close below the 1st support number.
Near-term resistance for bonds is at 105.03 and then again at 105.19, while
swing support hits at 104.07 and below there at 103.27. 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 105.19.

T-NOTES(JUN) Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 109.15. The market is in a
bearish position with the close below the 2nd swing support number. Near-term
resistance for the T-Notes is at 109.06 and then again at 109.15, while swing
support hits at 108.20 and below there at 108.11. The market’s short-term trend
is positive on a close above the 9-day moving average.

 

STOCK INDICES RECAP

5/19/2004

The stock market appeared like it was poised to
rally into the opening and it didn’t disappoint. More importantly it was clear
that rising energy prices weren’t an issue for those wanting to get long. With
favorable corporate earnings readings and vastly improved macro economic
expectations for China it’s understandable that stocks managed a short covering
run. It’s surprising that the aggressive fighting in the Gaza strip didn’t
deflate buying interest and that is another sign that bullish resolve has
strengthened.

Technical Outlook

#S&P500 (JUN) 05/20/04: The market’s close below
the pivot swing number is a mildly negative setup. The daily closing price
reversal down puts the market on the defensive. Underlying support comes in at
1077.70 and 1072.05, with overhead resistance at 1097.30 and 1111.25. The
market’s short-term trend is negative as the close remains below the 9-day
moving average. Daily momentum studies are on the rise from low levels and
should accelerate a move higher on a push through the 1st swing resistance. The
near-term upside objective is at 1111.25.

S&P E-Mini (JUN): The market could take on a
defensive posture with the daily closing price reversal down. A bearish signal
was triggered on a crossover down in the daily stochastics. The next downside
objective is 1071.25. The market tilt is slightly negative with the close under
the pivot. Near-term resistance for the S&P Mini is at 1096.75 and then again at
1111.25, while swing support hits at 1076.75 and below there at 1071.25. A
negative signal for trend short-term was given on a close under the 9-bar moving
average.

NASDAQ (JUN) 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. It is a
slightly negative indicator that the close was lower than the pivot swing
number. The market should run into resistance at 1414.50 and above there at
1439.75 with support at 1378.50 and 1367.75. 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 1439.8.

MINI DOW (JUN) 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. The
market should run into resistance at 10013 and above there at 10138 with support
at 9842 and 9796. Momentum studies are declining, but have fallen to oversold
levels. The next downside target is 9796. It is a slightly negative indicator
that the close was lower than the pivot swing number.

 

CURRENCY MARKET RECAP

5/19/2004

The Dollar Index opened weak, probed even lower
and generally remained weak for most of the session. With the US economic report
schedule thin over the last couple sessions it’s understandable that the trade
felt confident enough to attack the Dollar. However, with the outlook toward the
global economy improving it is possible that US numbers continue to improve and
that in turn shifts the Dollar back into favor off the macro economic and
interest rate differential arguments.

Technical Outlook

#CURRENCIES 05/20/04: YEN (JUN): The market’s
close above the 9-day moving average suggests the short-term trend remains
positive. The gap upmove on the day session chart is a bullish indicator for
trend. 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. Swing resistance is targeted at 89.16 and above there at 89.42, with
the yen finding support around 88.52 and below there at 88.14. The close under
the 40-day moving average indicates the longer-term trend could be turning down.
The daily stochastics have crossed over up which is a bullish indication. The
next upside target is 89.42.

EURO (JUN): Momentum studies are trending higher
from mid-range which should support a move higher if resistance levels are
penetrated. The near-term upside objective is at 1.2062. The market is in a
bearish position with the close below the 2nd swing support number. Swing
support for the Euro comes in at 1.1952, with overhead resistance at 1.2062. 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

5/19/2004

The gains in the metals seemed to start with the
weak Dollar but the news that Chinese growth might not be killed off with
tightening gave the markets an added buying lift. We also think that soaring
energy prices, optimism toward the world equity markets and the Chinese news
could combine to give metals bulls a sustained lift. With energy and grain
prices still capable of getting out of control, the whole inflation theme holds
some merit and maybe the gains Wednesday confirm that the market is sensitive to
price issues.

Technical Outlook

#P-METALS 05/20/04: SILVER (JUL): 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. Initial support for
silver is at 581.5 and below there at 565.2 with resistance likely at 590.0 and
604.0. 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 590.0.

GOLD (AUG): Support for gold today comes in near
378.63, while resistance is pegged at 387.63. The daily stochastics gave a
bullish indicator with a crossover up. The near-term upside objective is at
387.63. The market’s close above the 2nd swing resistance number is a bullish
indication. The market’s short-term trend is positive on a close above the 9-day
moving average. The gap up on the day session chart gave a bullish indicator and
more follow through could be seen this session.

 

COPPER MARKET RECAP

5/19/2004

The copper market certainly showed how important
the Chinese situation is to the direct of copper prices as the news that China
might not have to implement further tightening measures allowed the market to
explode. We also think that significant improvements in equity market sentiment
and therefore macro economic sentiment gave the market an added lift. The trade
suspects that copper was net spec and fund short around the recent lows and that
certainly suggests that short covering was to be expected. With concerns of
sagging Chinese copper put aside for the near term it is possible that the down
trend in copper is reversed!

 

ENERGY MARKET RECAP

5/19/2004

The energy complex basically discounted the
weekly inventory stats as they showed minor builds in gasoline stocks. However,
the trade could easily suggest that the overall build in gasoline stocks thus
far in May hasn’t been sufficient to wave off the staunchly bullish setup in
gasoline and that is why prices rallies. It is also possible that the improved
attitudes toward Chinese demand and escalation of tensions in the Middle East
provided the market a lift to prices despite the potentially negative
fundamental news flow. Several world leaders officially asked OPEC for more
supply (US, UK and EU) and that could have caused prices to weaken if there
weren’t so many ongoing threats against supply. With the Israeli Defense
Minister indicating that they would continue an offensive in Gaza we suspect
that Arab terrorists will escalate their backlash against the west.

Technical Outlook

#ENERGIES 05/20/04: CRUDE OIL (JUL): 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.
The market’s close above the 2nd swing resistance number is a bullish
indication. Support for crude is keyed on 40.69 and below there at 39.46, with
resistance pegged at 42.36 and 42.80. 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 39.46.

UNLEADED GAS (JUL): 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
128.11. 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. Resistance today is at 143.71, while support should be found around
128.11. The outside day up and close above the previous day’s high is a positive
signal. A new contract high was made on the rally. The daily closing price
reversal up is positive. The market’s close above the 9-day moving average
suggests the short-term trend remains positive. The 9-day RSI over 70 indicates
the market is approaching overbought levels.

HEATING OIL (JUL): The market’s close above the
2nd swing resistance number is a bullish indication. Heating oil should
encounter support around 98.66, with resistance is at 108.56. 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
98.66. 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.

 

CORN MARKET RECAP

5/19/2004

While the weather forecast is still favorable to
crop growth, there were some light concerns with too much rain which may limit
nitrogen use before the crop is too high to apply. Some thoughts that China will
take more time before deciding to raise interest rates to cool the economy
helped to boost many commodity markets and corn was no exception. Strength in
soybeans and wheat and a slowdown in the fund selling pace helped to support the
market and so did talk of an oversold condition. The market is still operating
under the positive influence of the May 17th reversal but follow-through
confirmation with a move over 295 1/2 for July corn has still not occurred. The
weather remains as a negative force with more and more talk of the record yield
pace. Weekly export sales, released before the opening, are expected to come in
near 600,000-900,000 tons as compared with 604,200 tons last week. South Korea
is tendering for 110,000 tons of optional origin corn. December corn support
moves up to 285 and 283 with 290 1/2 and 296 1/2 as short-term resistance.

Technical Outlook

#CORN (JUL) 05/20/04: The daily stochastics gave
a bullish indicator with a crossover up. The near-term upside objective is at
302 3/4. The market’s close above the 2nd swing resistance number is a bullish
indication. Market resistance comes in at 302 3/4 today, with support at 291
3/4. The market’s short-term trend is positive on a close above the 9-day moving
average.

 

SOY COMPLEX RECAP

5/19/2004

Continued tightness concerns for the cash market,
export problems from Brazil and lower than expected production from Argentina
helped support the solid gains on the session. Argentina Agriculture officials
revised lower their 2003/2004 soybean production estimate to 32 million tons
from 33 million last month and compared with the USDA forecast at 34 million
tons. News that soybean exports from Brazil’s third largest port have been
halted after new cargoes indicated signs of fungicide contamination. Overnight
trade in China was mixed with strength noted in the deferred soybean and meal
markets. A near perfect weather forecast for the next ten days and recent
concerns with the demand from China have been the source of pressure on the
market recently, but some ideas that China will take more time before deciding
to raise interest rates helped to boost many commodity markets including
soybeans today. Commercial interest has supported a minor pop in the river basis
bids after recent weakness. Weekly export sales, released before the opening,
are expected to come in near 0-200,000 tons for soybeans, 10,000-50,000 tons for
meal and 0-5,000 tons for oil. July soybean resistance comes in at 910 and 932
1/2 with support at 881 and 871. Support for November soybeans moves up to 698
1/2 and 687 with resistance at 710 and 726.

Technical Outlook

#SOYBEANS (JUL) 05/20/04: A positive setup
occurred with the close over the 1st swing resistance. The next area of
resistance is around 924 1/2 and 935 3/4, while 1st support hits today at 890
1/2 and below there at 867 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
867 3/4.

MEAL (JUL): Daily stochastics are trending lower,
but have declined into oversold territory. The next downside objective is now at
280.7. First resistance comes in at 300.0, with support at 288.5. The market’s
short-term trend is negative as the close remains below the 9-day moving
average. With the close over the 1st swing resistance number, the market is in a
moderately positive position.

BEAN OIL (JUL): 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 28.95. A positive setup occurred with the close over the 1st
swing resistance. Daily swing resistance is found at 30.10 and above there at
30.35. Support should be encountered at 29.40 and 28.95.

 

WHEAT MARKET RECAP

5/19/2004

Commercial buying was active early in the session
to set a bullish tone and there continues to be rumors of China buying wheat on
the world market with today’s talk centered on 750,000 tons from Australia,
250,000 from Canada and negotiations with the US underway. The forecast for
little or no rain and temperatures moving into the mid-90’s in the central and
southern plains has increased fears of declining crop conditions in the weeks
just ahead. Cash markets hold a firm tone with hopes of business to Pakistan and
a slowdown in producer selling. Pakistan is tendering for 1 million tons to
build a reserve. Jordan set a tender to buy 150,000 tons of hard wheat. A lack
of confirmation of rumors of interest from China was seen as a limiting factor.
South Korea bought 22,000 tons of US wheat overnight. Crop stress concerns seem
to be the primary supportive factor, but a report that China would postpone an
interest rate increase was supportive to commodity markets in general. Weekly
export sales, released before the opening, are expected to come in near
250,000-400,000 tons as compared with 167,100 tons last week. Good crop weather
for the spring wheat early growing season helped deflect some of the buying.
July wheat support moves up to 372 1/2 and 368 with resistance at 379 1/4 and
then 386 1/4.

Technical Outlook

#WHEAT (JUL) 05/20/04: Short-term indicators
suggest buying dips today. A positive setup occurred with the close over the 1st
swing resistance. Look for near-term support at 373 1/2 and below there at 369
3/4, with resistance levels at 380 and 382 3/4. 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 382 3/4.

 

LIVE CATTLE RECAP

5/19/2004

June cattle closed 130 higher on the session
supported by hopes for a better export market into the summer and from the stiff
discount of futures to the cash market. Feeders pushed to a new contract high
for the second session in a row. Boxed-beef cut-out values were down $1.10 to
$154.39 as compared with $158.94 last week at this time. Slaughter came in at
126,000 head as compared with trade expectations of 125,000-130,000 head.
Positioning ahead of Friday’s Cattle-on-Feed report and hopes for a
break-through in the stalemate with Japan over exports added to the more
positive tone.

Technical Outlook

#CATTLE (AUG) 05/20/04: Negative momentum studies
in the neutral zone will tend to reinforce lower price action. The next downside
target is 83.27. 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. Support should be encountered at 84.37 and below there at 83.27.
Market resistance is at 85.87 and then again at 86.27. The market’s close above
the 9-day moving average suggests the short-term trend remains positive.

 

LEAN HOGS RECAP

5/19/2004

The hog market closed mixed with June down and
July hogs moderately higher on the session. June was pressured by news that cash
hogs were down .50-$2.00 on the session and from concerns that the potential
strike at a pork plant in Canada could boost near-term slaughter in the US. The
plant has been buying near 35,000 head per week recently. News that pork cut-out
values were lower for the first time in 11 sessions added to concerns of a
near-term peak. Bellies were limit down with news of 13 deliveries against the
May contract helping to pressure. The 2-day lean index was up $.78 to $83.05 as
compared with $71.62 as of the end of April. Slaughter came in at 376,000 head
as compared with trade expectations at 373,000-380,000 head. Cumulative
slaughter for the week has reached 1.124 million head as compared with 1.096
million last year and 1.094 million last year at this point.

Technical Outlook

#HOGS (JUL) 05/20/04: With the close over the 1st
swing resistance number, the market is in a moderately positive position.
Resistance levels comes in at 75.45 and 75.82 today, while support is around
74.15 and then 73.22. The market’s short-term trend is negative as the close
remains below the 9-day moving average. Momentum studies trending lower at
mid-range should accelerate a move lower if support levels are taken out. The
next downside objective is now at 73.22.

 

COCOA MARKET RECAP

5/19/2004

A major gap up move failed to hold in cocoa as
the market finished near its lows. The market seemed to think that commercial
buying was behind the initial burst but we still see mostly negative issues
coming from the production side. In fact, both the Ivory Coast and Nigeria have
reported conditions that are conducive to good production. Maybe the
professional trade thinks that cocoa has reached a fair value and some
additional forward coverage was secured on the open. It would not seem like a
major fundamental shift has taken place but it is possible that some short funds
decided cover their positions.

Technical Outlook

COCOA (JUL) 05/20/04 The gap upmove on the day
session chart is a bullish indicator for trend. The market has a slightly
positive tilt with the close over the swing pivot. Cocoa should run into
resistance at 1336 and above there at 1348 with support at 1318 and 1312.
Momentum studies are declining, but have fallen to oversold levels. The next
downside target is 1312.00.

 

COFFEE MARKET RECAP

5/19/2004

September coffee closed sharply higher and moved
to the highest level since April the 13th with a lack of producer selling and
active speculative buying helping to support. Weather does not seem threatening
on the 7 day forecast models and moving much beyond this level seems to be a
crap shoot. The lack of new news combined with the lack of selling interest from
commercials into the cold season seemed to be enough to support the strong
gains. CSCE exchange stocks were down 4,859 bags to 4.909 million bags with
126,005 bags pending review.

Technical Outlook

COFFEE (JUN) 5/20/04 The market has a slightly
positive tilt with the close over the swing 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 75.40.
The Coffee contract should run into resistance at 74.30 and above there at 75.40
with support at 71.55 and 69.90. The market’s short-term trend is positive on a
close above the 9-day moving average. The major trend could be turning up with
the close back above the 40-day moving average.

 

SUGAR MARKET RECAP

5/19/2004

The turn lower from a key resistance level turns
the minor trend back down for the July contract and into the Brazil harvest, the
market may need to absorb increased producer selling on minor rallies. The trade
is caught with choppy trade as the longer-term bullish fundamentals clash with
the short-term negative influence of a record crop harvest from Brazil. The
outside-day down in London after touching the 40-day moving average added to the
negative tone on the floor as London moved to a new 7-session high before the
lower close. Syria seeks 26,000 tonnes of white sugar and 26,000 tons of raw
sugar. Russia’s planting pace for spring crops was reported to be running well
ahead of last years pace. The Ukraine Sugar Association cut their white sugar
production forecast to 1.6 million tons from 1.8 million previous and 1.45
million tons last year.

Technical Outlook

#SUGAR (JUL) 05/20/04: The daily closing price
reversal down puts the market on the defensive. The market’s close below the 1st
swing support number suggests a moderately negative setup for today. Swing
resistance comes in at 6.72, with support found at 6.40. The market’s short-term
trend is positive on a close above the 9-day moving average. Daily momentum
studies are on the rise from low levels and should accelerate a move higher on a
push through the 1st swing resistance. The near-term upside objective is at
6.72.

 

COTTON MARKET RECAP

5/19/2004

December cotton closed 69 higher on the session
and up 240 from the lows of the day. A perception that China officials will wait
to see the impact on the economy before taking further measures to slow growth
was seen as a bullish factor for commodities (like cotton) which are sensitive
to China imports. Trade house buyers were active which helped the market forge a
low and the reversal might attract technical short-covering ahead. Weekly export
sales, released before the opening, are expected to come in near 130,000-200,000
bales as compared with 222,000 bales last week. Shipments are expected to come
in near 280,000-350,000 bales. Certified Cotton stocks deliverable to the
exchange (as of May 18th) totaled 354,142, down from 359,786 bales the previous
session with 5683 decertifications.

Technical Outlook

#COTTON (JUL) 05/20/04: The market’s close below
the 9-day moving average is an indication the short-term trend remains negative.
A positive setup occurred with the close over the 1st swing resistance. Next
resistance area comes in at 64.94 and then again at 65.43, while support is
targeted at 63.01 and 61.57. The cross over and close above the 40-day moving
average indicates the longer-term trend has turned up. 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
61.57. The daily closing price reversal up is positive.